The profit motive.

One thing is true: people like to complain about corporate profits. Who has not heard something like “it’s unfair that oil corporations make billions of dollars and we’re stuck with these gas prices!”

But the interesting thing is that whoever is telling you this always drives a car, and consumes, consumes, consumes. They have absolutely zero interest in changing that state of affairs. The best people can do is advocate a “don’t buy gas” day, which is so addle-headed that anyone smart enough to drive a car can figure out why that can’t possibly work (because unless you drive less, you’ll have to buy more gas later to compensate for the day you missed).

What we have is a paradox: people complain about profits that are abusive, but do not attack the underlying cause, which is the profit motive, and therefore modern capitalism. You cannot approve of the profit motive and then claim that a specific corporation is “abusing” the system. Any corporation put in the same position would do the same thing. If you accept modern capitalism, you have to accept the profit motive in all its possibilities. There is no middle ground.

Now if we are going to talk about profit, we need to define what profit is. In a free society, where there is no exploitation, the profit you make on a given product is, in general, the material expression of how other people evaluate the worth of your product. Now of course there are other considerations, such as how efficient the organization is: an inefficient organization will make less profits then an efficient one. We can make our definition more general and say that profit represents the ability to fulfill people’s desires in such a way that they will pay enough for it.

But a free society, which is to say an Anarchist society, would see little profit motive. Workers in general do not care about profits nearly as much as they care about their own wages and well-being. Let’s go through a likely and probable scenario for the creation of a new business in an Anarchist system:

1. A group of investors, be they relatively rich people, managers of a planned community or people interested in the boom of a town or neighbourhood, or a private bank acting for millions of normal people looking for a way to make some interest, see an opportunity, and pool their resources together.
2. These investors attract workers, who become the first owners of the new business. The investors give these workers a starting capital (as well as perhaps an ideal location or new ideas to use) in exchange for a set return on their investment.
3. The workers get to work and pay off the investment and interest.
4. Having paid off the investment and interest, the workers are now working solely for themselves (self-management). They decide of their own working conditions and wages. They decide of their management and the future of their business.

For the skeptics, please note that I did not pull this model out of my ass: similar systems are already widespread in South America, as well as a world-class network of businesses in Spain, a successful bicycle business in Germany, and many others.

It is likely that the profit motive would only exist in phrase 3, which is a temporary phase in the lifecycle of an Anarchist business (unless a percentage of profit is hardcoded, as in the Mondragon model, although it is to a certain extent justified). The workers would have a strong incentive to make the business grow so they can pay off the initial investment faster, and thus have free reign. But when that’s done, the workers (the only people who legitimately own the business) have a much stronger incentive to secure better wages and work conditions for themselves than they do of making more profits. So businesses (not corporations, obviously, since the corporate status is a creation of the State), as organizations, would seek to improve the quality of their work environment and their service, instead of trying to expand or make more profit.

In a capitalist society, however, we have a different context entirely. In capitalism, profit originates from, and is often sustained by, the fruits of exploitation, be it from eminent domain, subsidies, new laws and regulations, the advantage that corporations as entities have in having more rights than their customers (so-called “IP rights” being by far the most damaging), or from the inherently exploitative hierarchical work model which is universal in our societies.

This is not to say that profit in itself is immoral. Certainly we can understand why an individual might want to make more money. Some people actually do find happiness in the pursuit of wealth, or want to improve their situation, and we should not resent that. Greed, in getting people to assert their full potential, can be a force for good. But we’re talking about individual profit, something we can understand and contend with in a free society.

What about “corporate profit”? I have no idea what that means because a corporation, despite what the statist law says, is not a person. But people who manage corporations act as if it was, and thus ignore everything but profits as moral considerations. Combine this with the fact that the people who actually live in the work environment, the ground floor workers, have no power in the work hierarchy, and what you have is a system driven by purely abstract considerations at the expense of reality. It is a system where, as in any other collectivist system, people are means to an end: consumers, workers, and governments are a way to get more profit, somehow, by some method, any method, including war and tyranny.

The status of being a corporation. the economics of scale brought about by mass production, and the work hierarchies give any corporation a boundless potential to grow. Corporate oligarchies and monopolies (the latter, of course, enforced by the government’s guns) must necessarily arise as a result. What we end up with is not competition (as many ignorant critics complain), but cooperation between a tightly-knit corporate cabal of rich titans that could never outcompete each other.

Like modern democracy, modern capitalism is a system purely moved by automatisms. No one considers the morality of their actions. We are trained to be unthinking robots serving the nation/the party/the profit motive. When the flag comes up, as citizens (i.e. subjects) we’re supposed to salute and praise automatically. When an opportunity for making money comes up, as employees (i.e. servants of the corporate person) we’re supposed to grab it. No questions, anyone who refuses to follow the system is simply immature or anti-social.

If you’re a worker, and you go up to a manager, you can’t say “well, I don’t believe in the profit motive, so I don’t think we should be doing this.” That’s just not done. The whole point of these jobs is to make profit for the imaginary corporate person, the benevolent Big Brother, and you’d be fired in short order or seen as a whackjob. The corporation is exactly set up and exists for the one purpose of making profit. But there’s really little rational interest for a worker to value profit for his imaginary master above a healthier society.

Any idiot could say something like “well, the government should take over the oil industry, that way it’ll be fair.” But that changes absolutely nothing: either way, the State still wins. The only thing that changes is the balance of power within that industry: whether you are going from an oligarchy to a monopoly, or from a monopoly to an oligarchy. If you take control of the water supply away from a democratic government (an oligarchy) and give it to a corporate monopoly, then the situation will inevitably get worse. If you take control away from a dictatorship and give it to a capitalist oligarchy, then the situation will inevitably get better. All monopolies are gonna charge you monopoly prices, regardless of who’s in control. Privatization is not a permanent, stable solution, and neither is State socialism. Only Anarchy is a permanent stable solution.

9 thoughts on “The profit motive.

  1. Belinsky August 28, 2008 at 03:12

    Excellent post, Francois. As usual, I have some issues with your framing of the individualism-collectivism dichotomy, but otherwise, I totally agree.

  2. Anonymous August 28, 2008 at 08:08

    Profit isn’t the problem. Greed is the problem.

  3. Anarcho-pragmatiste August 28, 2008 at 15:34

    Great post François.

  4. notme August 28, 2008 at 16:47

    Greed is not the problem, abusively greedy to the extent the person takes immoral actions to acquire what one wishes is the problem.

    Everyone is greedy.

  5. Mike Gogulski August 28, 2008 at 20:07

    Hello Francois, hope you’re well. Just gave you a mild barbecuing at my site.

  6. […] Oh, it’s late. Anyway, here’s the original link… […]

  7. Black Bloke September 1, 2008 at 17:34

    Define “greed” for us, Anonymous.

  8. […] disagreed with the position I took in the aforementioned post) given in a post about the Corporate profit motive, with which I agree at least somewhat [1] in spirit: In a free society, where there is no […]

  9. Francois Tremblay August 14, 2009 at 16:53

    Greed is not the problem. Greed is the solution.

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