nach oben

Constitutional Political Economy

Erschienen in:

17.04.2023 | Original Paper

The profit system: how (and why) to deflect the radical critique

verfasst von: Gregory Robson

Erschienen in: Constitutional Political Economy | Ausgabe 1/2024

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

What we may call the Normative Representativeness Requirement (NRR) is a necessary condition on any successful objection to a political-economic system that is decentralized and profit-oriented. This article applies the NRR to what I call “The Radical Critique” of the profit system. I argue that this critique, which is not only historically important (as reported by Marx (Capital: a critique of political economy, C.H. Kerr and Company, Chicago, 1867)) but also continues to circulate (e.g., as reported by Cohen (Why not socialism?, Princeton University Press, Princeton, 2009), as reported by Piketty (Capital in the twenty-first century, Harvard University Press, Cambridge, MA, 2014)), does not meet the NRR. The Radical Critique of diverse forms of the profit system (e.g., laissez-faire or a welfare-state) suffers from a fatal flaw that renders its logical force at best undiscernible.

Vorheriger Artikel U.S. Antitrust Policy in the Age of Amazon, Google, Microsoft, Apple, Netflix and Facebook

Nächster Artikel Deeds, not words? Speech and re-election of Japan’s local legislators

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

I wish to thank audiences at the Society for Business Ethics (2021), The Association of Private Enterprise Education (2022), and The Philosophy, Politics, and Economics Society (2022). For helpful comments and discussion, I am grateful to Jacob Barrett, Jason Byas, Sam Director, Mario Juarez-Garcia, Connor Kianpour, James Otteson, Karina Robson, David Schmidtz, and Alex Tuckness.

See, e.g., Bhattacharjee (2011, 2017) on popular pessimism about profit-making.

On the shift from managerial capitalism to financial capitalism in the 1980s, see Davis (2009).

See Gaus (2009), Otteson (2014), and Thrasher and Halliday (2020: 1–6).

For earlier development, see Robson (2023). There I focus on moderate proposals and corporate governance; here, radical proposals and market exchange.

In my language, human brains are the most complex objects in the known universe. The human societies they heavily influence are the most complex entities.

There are related considerations, of course: for instance, how likely it is that firms would be more valuable and how high our confidence in such claims should be.

Thanks to an anonymous reviewer for pressing me to elaborate on the specific importance of the NRR.

On the generation of consumer and producer surplus in win–win exchange, see Otteson (2019) and Robson (2021).

See also Child (1998) and Gaus (2009).

For replies, see Brennan (2013) and Brennan and Jaworski (2016).

Cohen’s enthusiastic support of proposals by Carens (1981) and Roemer (1994) to reform capitalism might seem to imply that he is a moderate critic. But the proposals he considers (2009: 63–76) are all fairly radical: for instance, taxing away and redistributing all profits from firms.

For instance, Brennan (2014: 57–69) argues that (i) Cohen illicitly compares the morality of ideal socialism to that of actual (nonideal) capitalism and (ii) misidentifies socialism, a system of control rights, with (mere) socialist values. I add that the intuitions Camping Trip elicits might be rather different if readers were asked to imagine sharing property for, say, ten years rather than ten days, better approximating traditional socialism.

As the profit system can have diverse effects on values and practices, “any normative evaluation of the role and scope of [markets] must attempt to take their cultural [and other] effects into account” (Bowles 1998: 105).

On recent wealth creation, see Clark (2007), McCloskey (2016), and Otteson (2019: 45).

See Clark (2007), McCloskey (2016), and Otteson (2019: 45).

Otteson (2019: 45) citing Clark (2007). The welfare gains from ordinary profitable exchange have been so considerable that some theorists have even argued that firms are morally required to maximize their profits. See, prominently, Jensen (2001: 8–21) and replies from Hussain (2012), Jones and Felps (2013), Van der Linden and Freeman (2017), Parmar et al. (2019), and Robson (2019).

For instance, “[t]he poorest 10 percent of those countries that most closely approximate Smithian [market-oriented] recommendations [e.g., Chile, Hong Kong, South Korea] are, in real terms, an order of magnitude more prosperous than the poorest 10 percent of those countries furthest away from Smith” (Otteson 2019: 117, italics mine). See also Smith (1776) and Robson (2021).

As Kevin Vallier (2021: 131) observes, “[f]ew today would dispute that a competitive marketplace, where firms are free to experiment with new methods of production that are then subject to the withering scrutiny of millions of consumers, is a kind of golden goose.”.

Common concerns about the profit system include, for instance, that it can block valuable traditional ways of life, jeopardize the psychological or spiritual health of market participants, yield problematic inequalities, and cause environmental damage.

Whether one has the external goods, says, Aristotle (2000), is partly a matter of luck. One can lose one’s wealth or health due to bad luck.

The proliferation of choice is not necessarily welfare-enhancing, however, even if it tends to be (Greenfield, 2011).

My argument does not imply that all reforms of the profit system are unjustified—many are, and in various respects. Moderate reforms and sometimes even radical reforms can be justified. If, however, the NRR is not met, there is a real risk that radical reform will be undertaken on the basis of a misguided moral assessment.

This, again, is not to say that certain versions of the system do not have problematic features. One can condemn deficient or excessive features of markets in various societies (e.g., gratuitous consumption) while not rejecting the market system itself. Sinnicks (2022) says that “for the most part, Aristotelian business ethicists [his focus] are not anti-market overall, just wary of its excesses.” This strikes me as reasonable depending on how “excesses” are understood and which social responses, if any, are recommended.

Notable arguments also suggest that the profit system helps to secure human goods such as political liberties (Friedman 1962; Sorkin 2020).

Agneman, G., & Chevrot-Bianco, E. (2022). Market participation and moral decision-making: Experimental evidence from Greenland. The Economic Journal. https://doi.org/10.1093/ej/ueac069CrossRef

Anderson, E. (2017). Private Government: How employers rule our lives (and why we don’t talk about it). Princeton University Press.CrossRef

Anderson, E. 2018. Library of Economics and Liberty (EconTalk podcast hosted by Russ Roberts). “Elizabeth Anderson on Worker Rights and Private Government.” https://www.econtalk.org/elizabeth-anderson-on-worker-rights-and-private-government/.

Aristotle. 2000. Nicomachean Ethics (transl. Crisp, R.). Cambridge: Cambridge University Press.

Beinhocker, E. D. (2006). The Origin of Wealth. Harvard Business School Press.

Bhattacharjee, A., Dana, J., Baron, J. (2011). “Is Profit Evil? Incentive Neglect and the Association of Profit With Social Harm,”In Dahl, D. W., Johar, G. V., van Osselaer, S. M. J., Duluth, M. N. (eds.) NA - Advances in Consumer Research, vol. 38, Association for Consumer Research.

Bhattacharjee, A., Dana, J., & Baron, J. (2017). Anti-profit beliefs: How people neglect the societal benefits of profit. Journal of Personality and Social Psychology, 113(5), 671–696.CrossRefPubMed

Bowles, S. (1998). Endogenous preferences: The cultural consequences of markets and other economic institutions. Journal of Economic Literature, XXXVI, 75–111.

Brennan, J. (2013). Is market society intrinsically repugnant? Journal of Business Ethics, 112, 271–281.CrossRef

Brennan, J. (2014). Why not capitalism? Routledge.CrossRef

Brennan, J., & Jaworski, P. (2016). Markets without limits. Routledge.

Carens, J. (1981). Equality, moral incentives, and the market: An essay in utopian politico-economic theory. University of Chicago Press.

Christian, D. (2004). Maps of time: An introduction to big history. University of California Press.CrossRef

Child, J. (1998). Profit: The concept and its moral features. Social Philosophy & Policy, 15, 243–282.CrossRef

Ciulla, J. B. (2019). Review of private government: How employers rule our lives (and why we don’t talk about it) by Elizabeth Anderson. Journal of Business Ethics, 156, 289–292.CrossRef

Cohen, G. A. (2009). Why not socialism? Princeton University Press.

Clark, G. (2007). A farewell to Alms: A brief economic history of the world. Princeton University Press.CrossRef

Davis, G. F. (2009). Managed by the markets: How finance re-shaped America. Oxford University Press.

Friedman, M. (1962). Capitalism and freedom. University of Chicago Press.

Gaus, G. (2009). The idea and ideal of capitalism. In G. George (Ed.), The Oxford handbook of business ethics (pp. 73–99). Oxford University Press.

Gibelyou, C., & Northrop, D. (2021). Big ideas: A guide to the history of everything. Oxford University Press.

Gintis, H. 2012. Response: Giving Economists Their Due. Boston Review. http://www.bostonreview.net/gintis-giving-economists-their-due.

Gioliti, V., Liden, R. C., van Dierendonck, D., & Cheung, G. W. (2021). Servant leadership influencing store-level profit: The mediating effect of employee flourishing. Journal of Business Ethics, 172, 503–524.CrossRef

Greenfield, K. (2011). The Myth of choice: Personal responsibility in a world of limits. Yale University Press.

Hayek, F. A. 2014. The Collected Works of F.A. Hayek. Vol. 15: The Market and Other Orders. Chicago: University of Chicago Press.

Hussain, W. (2012). Corporations, profit maximization and the personal sphere. Economics & Philosophy, 28, 311–331.CrossRef

Jensen, M. (2001). Value maximization, stakeholder theory, and the corporate objective function. Journal of Applied Corporate Finance, 14, 8–21.CrossRef

Jones, T. M., & Felps, W. (2013). Shareholder wealth maximization and social welfare: A utilitarian critique. Business Ethics Quarterly, 23(2), 207–238.CrossRef

Marx, K. (1867). Capital: A critique of political economy (pp. 1–3). C.H. Kerr and Company.

Marx, K., and Frederick, E. 1998 [1848]. The Communist Manifesto. London: Verso.

McCloskey, D. (2016). Bourgeois equality: How ideas, not capital or institutions. University of Chicago Press.CrossRef

Otteson, J. R. (2014). The end of socialism. Cambridge University Press.CrossRef

Otteson, J. R. (2019). Honorable business: a framework for business in a just and humane society. Oxford University Press.CrossRef

Parmar, B. L., Keevil, A., & Wicks, A. C. (2019). People and profits: The impact of corporate objectives on employees’ need satisfaction at work. Journal of Business Ethics, 154, 13–33.CrossRef

Piketty, T. (2014). Capital in the twenty-first century. Harvard University Press.CrossRef

Robson, G. (2019). To profit maximize, or not to profit maximize?: For Firms, this is a valid question. Economics & Philosophy, 35(2019), 307–320.CrossRef

Robson, G. (2021). “Profitable Business: Adam Smith’s Moral Assessment.” Available at: https://www.adamsmithworks.org/speakings/profitable-business-adam-smith-s-moral-assessment (Accessed January 21, 2021).

Robson, G. J. (2023). “How to Object to the Profit System (and How Not To),” Journal of business ethics.

Roemer, J. (1994). A future for socialism. Harvard University Press.

Sandel, M. J. (2012). What money can’t buy: The moral limits of markets. Farrar Straus Giroux.

Sandel, M. J. 2013. “Why We Shouldn’t Trust Markets with our Civic Life.” TED talk. https://www.ted.com/talks/michael_sandel_why_we_shouldn_t_trust_markets_with_our_civic_life.

Satz, D. (2010). Why some things should not be for sale: The moral limits of markets. Oxford University Press.CrossRef

SBA Office of Advocacy. 2021. “2021 Small Business Profile.” Available at: https://advocacy.sba.gov/2021/08/30/2021-small-business-profiles-for-the-states-the-district-of-columbia-and-the-u-s/.

Sinnicks, M. (2022). On the analogy between business and sport: Towards an Aristotelian response to the market failures approach of business ethics. Journal of Business Ethics, 177, 49–61.CrossRef

Smith, A. 1776. An inquiry into the nature and causes of the wealth of nations, Campbell, R. H., Skinner, A. S., and Todd, W. B. (eds.), Oxford: Oxford University Press.

Sorkin, A. R. 2020. A Free Market Manifesto that Changed the World, Reconsidered. New York Times. Available at: https://www.nytimes.com/2020/09/11/business/dealbook/milton-friedman-doctrine-social-responsibility-of-business.html.

Storr, V. H., & Choi, G. S. (2019). Do markets corrupt our morals? Palgrave Macmillan.CrossRef

Thrasher, J., & Halliday, D. (2020). The ethics of capitalism. Oxford University Press.

Vallier, K. (2021). Trust in a polarized age. Oxford University Press.CrossRef

van Schoelandt, C. (2014). Markets, community, and pluralism. The Philosophical Quarterly, 64(254), 144–151.CrossRef

van der Linden, B., & Edward Freeman, R. (2017). Profit and other values: Thick evaluation in decision making. Business Ethics Quarterly, 27(3), 353–379.CrossRef

Titel: The profit system: how (and why) to deflect the radical critique
verfasst von: Gregory Robson
Publikationsdatum: 17.04.2023
Verlag: Springer US
Erschienen in: Constitutional Political Economy / Ausgabe 1/2024
Print ISSN: 1043-4062
Elektronische ISSN: 1572-9966
DOI: https://doi.org/10.1007/s10602-023-09401-4

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 1/2024

Ricardo and the farmers

Natural amenities and Neo-Hobbesian local public finance

Fake marriages, asylum, and gas station robberies: institutional determinants of migrants' strategies

U.S. Antitrust Policy in the Age of Amazon, Google, Microsoft, Apple, Netflix and Facebook

Deeds, not words? Speech and re-election of Japan’s local legislators

The different facets of the proportionality principle as applied by the supreme court in India

Premium Partner