Aaron Clarey, a.k.a. Captain Capitalism, has written a very useful, easily understandable primer on why it's necessary for businesses to make a profit. Here's a brief excerpt.
The simplest way to understand why profits are necessary is to understand it from a perspective of providing goods and services. This is an oft forgotten or ignored aspect of economics because everybody seems to focus on MONEY and not the things that actually matter - GOODS AND SERVICES.
I cannot eat a dollar.
A Yen will not provide you surgery.
A pound will not feed your dog.
And a Euro will not fuel your car.
However, these currencies WILL buy us the goods and services that provide ultimate value and utility in life. A dollar will buy me an apple that I can eat. A Yen will buy me some gas that will fuel my car. A Euro will buy a dentist's services to repair your teeth. And a pound will buy some dental floss after your dentists lectures you for not flossing. So the whole point and purpose of an economy is to produce the stuff, not the money nor necessarily profits in the process of doing so.
Since it is the stuff that needs producing that ultimately matters you need to ask how stuff gets produced, and the answer is "not charitably."
In order for things to get produced, somebody has to inevitably forfeit some of their time to produce them. This can be done on an individual level as per subsistence type craphole economies like Africa, or in the awesome 1st world through organizations, namely, corporations and companies. Large and complex systems organizing capital and labor to produce an amazing plethora of things all on the cheap. But regardless of the size of the company, it has to ultimately be started. And since time is ultimately the ONLY resource that matters to humans, any sane and self-respecting human is going to demand he or she be compensated for it.
Thus introducing profit.
This is the problem most people who have a problem with profit face. They look at it backwards. The issue isn't whether somebody deserves profit or whether profit should exist. NOTHING would exist unless it was for profit. And the insurance industry explains this incredibly well.
There's more at the link.
This is the sort of thing that socialists can never seem to understand. Without the incentive of profit to motivate them, why should individuals or businesses work for the common good? They won't, of course, as the history of applied socialism makes dismally clear . . . but somehow a lot of young people are taken in by this false argument and fake philosophy.
If you have such people among your friends and/or acquaintances and/or colleagues, let them have a copy of Aaron Clarey's article. It might make them think - for once.
Peter
3 comments:
My family on my mother's side tried socialism before it was socialism. Stupid 'Pilgrims' tried communal/socialistic living when they first came to America.
This, communism/socialism, is why they almost died off the first year and had to have their asses rescued by the locals. After the first winter, they wisely went to a capitalist based system.
Fitting story, considering the time of the year.
And, I have shared my story with my more liberal friends. They ignore it. Something in a socialist's mind is wrong and can't make logical trains of thought. To a socialist, A does not lead to B does not lead to C, but A is C.
Socialism, a mental sickness.
many people have never made anything.
many have parents who go to an 'office' where no thing is produced.
this skews their reality.
a year on a farm and part-time in a factory would do every socialist much good maybe.
sweat all day to produce a real thing. return to the farm to put up hay and pick produce before nightfall.
fall dead into bed.
get up before dawn to feed animals and take produce to market before returning to the factory.
then when they go back to 'civilization' and enter, for example, a grocery store, they may find themselves thankful.
a new experience for them! thankfulness!
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