We have all heard that money is the
root of all evil, or perhaps that the love of money is the root of
all evil. Some people equate profit with the love of money and
therefore with evil. As a result, many of those who speak about
"profit" and the "profit motive" load the word
"profit" with negative connotations.
At tosoc.org we do not have feelings
one way or the other about profit because one of our principles is
that those who can produce more than they consume should do so. Or,
if you prefer, we should all make more than we spend so that we can
build up savings. Savings, which is profit in the accounting sense.
See our post Theory
of Wealth.
While we think that the word "profit"
has an undeserved bad reputation, the rich do tend to increase their
own profits at times when the poor are losing their savings. For
example, hedge fund manager John Paulson is said to have earned,
personally, almost $4 billion in 1987 by using credit default swaps
to hedge against the US housing market. Mr Paulson and his investors
were raking it in while the rest of us were suffering. Yet Mr Paulson
and investors like him did nothing illegal or even overtly immoral as
far as we know.
Even so, there is currently an
economic ratchet effect in which the rich get richer in good times
and bad times while the rest of us lose our savings in bad times.
(See also our post Left
for Dead.) Unstopped, the ultimate result of this trend will be
that the rich will end up with almost everything and the rest of us
will end up with almost nothing. Ever-greater income and wealth
inequality is not sustainable. It is a harbinger of the breakdown of
the social contract between the rich and poor in the US.
See also our posts The
Capitalist Road To Serfdom, No
Sauce for the Gander, The
Guilty Innocents, and our very first post, The
Other Side of Capitalism.
So what is the real problem here? Are profits good or
evil? Should profit be our goal or not? The tosoc.org answer is that
profit should be our goal, but only in the context of balanced
competitive markets. Right now the markets are not as balanced or
competitive as they should be. Mr Paulson and his investors made
extraordinary profits only because he and other rich people were able
to hedge against our home loans, while, in effect, the rest of us
were not.
If we are to feel that our toil is really leading to a
better society instead of being, as we wrote in another post, The
Capitalist Road to Serfdom, then when we build up savings, they
should not be so vulnerable and so easily destroyed by the worldwide
financial shenanigans of the rich. But how can we do that when the
rich make the markets and have direct access to our savings; our
invested profits? We cannot.
Again, the only solution is to deny
the rich direct access to our markets and thus to our invested
profits. That is what tosoc.org's plan of multiple exclusive markets
and currencies is all about. So yes, we want profits. We need to
produce more than we consume so that we are not stuck in lives of
mere subsistence, of bare survival. We need the extra resources so we
can increase our capital and at the same time, build an ever-better,
ever-wealthier society. But it is pointless to do that when the
capital that we build up is so vulnerable to mistakes,
thoughtlessness, or even ill-will on the part of the rich. Support
tosoc.org.
The way capitalism
should be.
Socialism for the
socialists and capitalism for the capitalists.
TheOtherSideOfCapitalism
(admin@tosoc.org)
Copyright
© 2014 TheOtherSideOfCapitalism
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