Friday, 28 April 2017

Excess Profit is deeply immoral

  • Profit shows that entrepreneurs are welcome.
  • Profit proves that the economy is not a zero-sum game.
  • Profit is a moral concept, since without profit we will suffer from a misallocation of resources, a failure to provide the goods and services that the economy needs, the loss of tax revenue, a reduction in employment and the inability to provide for social need whether through the private sector or the public sector.
  • Profit is the surplus generated by individuals (or groups of individuals) putting capital at risk. It is the price of risk. Hence profit is also the reward for innovation and ideas. Without a reward for risk capital and innovation then the economy will not grow, provide for the needs of people, or create the wealth necessary for well-being.
  • Profit is not exploitation. Profit generally arises from transactions that benefit both parties. Profit actually represents the creation of wealth from mutually beneficial transactions. Unless wealth is created there is no investment, no employment and no opportunity for social good.
  • Exploitation is not a good thing and economic surplus may arise as a result of immoral behavior. The problem there is the exploitation, rather than the profit itself. 
  • The idea that the economy is a zero-sum game. If one party makes a profit, that must be due to another making a corresponding loss, and moral outrage against capitalism ensues. Once profit is generated it is simply removed from the economy into the hands of the already wealthy.
  • Profit shows that entrepreneurs are welcome. Entrepreneurs are the lynchpin of an economy. They are the creators and innovators of new ideas which then attract the capital investment needed. If entrepreneurs are not welcome, then an economy will stagnate. Entrepreneurs needed to be attracted by the prospect of profit, so that they will bring their ideas to fruition for the mutual benefit of all. An entrepreneur is not there to be squeezed (or even exploited) but for the economic and social good of society.
  • Profit generates investment and employment. However, beyond the rewards which are taken, without profit then there is no means of investment whether in capital goods or human capital; in other words, no profit, no new markets, no new production and no new employment; indeed to the contrary we are likely to see a reduction in both. Many business people see the provision of employment, not necessarily as the primary aim of a business, but one of the aims of the business enterprise.  
  • Profit provides the means for social transformation in society. Perhaps this is more controversial. If we take that position we damage the moral underpinning of the rationale for profit. Profit is a surplus. To argue that profit provides a basis for social transformation is not a statement that such transformation has to be achieved by the state.
  • Government has a role to play and the generation of wealth and profit and lobbyists influencing for abnormal profits. Profit also allows individuals to act. Distributing profits for the well-being of individuals and families. Similarly profit provides the means for philanthropy. Profit doesn’t seem so bad.
  • While profit is moral if earned ethically, morally, legally and in reasonable quantities, while excess profit is deeply immoral. The diving line is hazy.

The vice of capitalism is its unequal sharing of blessings; 
the virtue of socialism is the equal sharing of miseries. 

Whatever moves, tax it. If it keeps moving, regulate it. 
And if it stops moving, subsidize it .... Ronald Reagan

My View:
There is no question that profit motivates entrepreneurs, boosts economy, creates jobs and boosts state revenues. Left view profit as exploitation. A company has profited at someone else’s expense. and that person stands exploited and hence profit is immoral. But unbridled profits arising out of monopoly or cartel forming or lobbying or consumer ignorance leading to abnormal profits is exploitation, immoral, illegal and crime. Excess profits also indicates that labour are underpaid and/or consumers over charged. Profits results in rich becoming richer while others remain as they are is socially unsustainable. All the above statements are true in a expanding economy but fails when economy is stagnating or shrinking. Excess consumption leads to wastage and ecological imbalances. Capitalists generally act harmoniously and in concert to fleece the people. While capitalists desires to keep all profits to themselves they will come out with evil plans to socialise the losses. Capitalism only produces a small privileged rich who are beyond conscience, and almost all others are doomed to be poor. Finally profit beyond certain point is immoral, exploitative and crime. 

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