[Updated from May 21, 2011 post] Sheldon Richman in The Morality of Profit has a link to a video from the Atlas Foundation where Tom Palmer discusses the morality of profit. (Also available direct here.) On October 21, 2011 Tom Palmergave another talk on this topic at the John Locke Foundation. I have been puzzling over this topic for a long time and the Atlas Foundation video helps nicely frame some of the issues. I think there is more to be said but this will be a start. Some of his lines are worth quoting:
“Favored businesses profit from subsidies or from the government’s exclusion of competitors. … But there’s a crucial difference between profits gained by violating the property rights of others through theft, pollution, or special favors and subsidies on the one hand and profits that are earned voluntarily through exchange on the other. Whether an exchange is voluntary or involuntary makes all the difference. … Profits … channel self-interest into advancing the projects and interests of others as the best way to advance their own projects and interests.”
People throughout history seem to have a suspicion of profit. I wonder where that comes from? I wonder if entrepreneurs are different from the average man and different is suspicious. Entrepreneurs profit from their actions, therefore profit is suspicious. That seems a stretch when phrased that way but I wonder if we put it in an evolutionary context if there isn’t something there? I’ll continue thinking on that. Let me know if you have any ideas.
[Update November 28 and December 2, 2011] Walmart is often trotted out as an example of a firm creating negative consequences from its profit seeking. Mark Perry nominates them for a significant award: “What single organization in human history has made the greatest contribution to enriching and improving the lives of the poor, the middle class, the average citizen, the bottom of ‘the 99%,’ etc.?Â I nominate Walmart.” Well said. Those seeking to reign in businesses often overlook the fact that the poor are helped more than most when competition leads to lower prices and improved efficiency. In a subsequent post, Perry discusses Walmart’s positive effect on neighborhoods, nearby businesses, and jobs. [HT Don Boudreaux at Cafe Hayek]
T. Norman Van Cott puts some numbers behind that point: “Scholars estimate that the presence of Wal-Mart in a community reduces food prices somewhere between 10% and 15%. That’s equivalent to shoppers receiving an additional 5.2 to 7.8 weeks of ‘free’ food shopping. That Wal-Mart’s customer base is skewed toward lower-income shoppers reinforces the beneficent consequences of its price effect.”