The Profit Motive
While it's easy to paint greedy hedge fund managers in sinister colours, there is much about business profits to be thankful for.
For the past few months, my little startup business has had the good fortune to occupy borrowed office space in a newer office building that was custom-built for the company that is—apart from my firm—its only tenant. It is a far better than average office building, with intriguing details at every turn. You could spend hours just wondering why a wall meets the ceiling the way it does.
One day, while wandering the halls of this handsome building, I suddenly realized that the architecture I so enjoy here was entirely made possible by profit—the profits, current and projected, of the company that paid to have it built, and that paid its architects to have a bit of fun with the design.
Corporate profits are sometimes viewed with suspicion by well-meaning people of faith. They wonder if ungodly mammon has got the better of our culture—and at times it seems that it has. The recent meltdown of the financial markets seems to have more to do with avarice than it does with any ordinary economic cycle. But while it's easy to paint greedy hedge fund managers in sinister colors, there is much about business profits to be thankful for. My hallway epiphany only started the ball rolling.
For one thing, company profits make every single non-profit organization in the world possible, including the one that published this article. If there were no companies selling their wares for a bit more than they paid for them, there would be no non-profits. Everything from your local church to your metropolitan art museum is dependent on the generosity of corporations, either directly or indirectly through individuals who tithe or donate from the overflow of their own labours. Most non-profits have gotten fairly good at thanking their donors. I'd like to take a moment to thank the companies, large and small, that make it possible for there to be donors.
Companies do things they think people will pay to have done, and that they think they can do profitably. When they succeed, they create work, wealth, and sometimes even interesting office buildings. The word that most succinctly characterizes business success is profit.
Profit is what allows you to drink a glass of wine at dinner, instead of a glass of water.
- When you undertake a small project to improve your dwelling, you are investing the profits of your own labour.
- The entire system of Western education, from preschools to great universities, runs on dollars whose source is, somewhere, a profitable business.
- When you spend a day with a mission organization, you are serving from the profitability of your employer, either directly, through paid time off, or indirectly, enjoying the weekend that your work affords you.
- When you attend an orchestra concert, a museum, or visit a heritage site, you are benefiting from the reallocated profits of companies and individuals.
- When a company builds a headquarters, whether a modest suburban building or a glittering skyscraper, it does so by investing past and expected profits in the venture.
- Television and newspapers, magazines and a good chunk of the Internet are brought to you by advertising, purchased by businesses hoping to sell you something at a profit.
- The Empire State Building was built "on spec," with the hope that people would be compelled to lease space in what was then the world's tallest building. Come to think of it, so was the Burj Khalifa in Dubai.
- Apart from skyscrapers, the great architecture of the world has been largely undertaken by non-profit organizations (churches, universities, arts organizations). But those organizations are funded by donors who are donating profits.
Profit makes the world go round. If we could envision a world where everyone left their corporate work and signed on to work at a non-profit, the entire non-profit world would collapse almost instantly. Without working people working for companies that earn profits, there is no financial model for a non-profit—unless your utopia is a commune, but that model has its own rather large flaws.
(Hospitals are the exception here. Hospitals have solved the eternal riddle of how to be a profitable non-profit. Asking how this is done is likely to be very disillusioning, so let's not.)
Instead, let's consider profitability at street level. One sign of a thriving neighbourhood is a crowded retail street, with merchants striving and hustling to gain attention, customers, and profits in a crowded marketplace. The saddest streetscape you will ever see is abandoned storefronts filled with a succession of non-profit organizations, each in its own way trying to assuage suffering, bring hope, or deliver services, but collectively making the statement, "This is an unhealthy neighbourhood. No one here has a job. Everyone here needs charitable services." Every non-profit organization tries to bring hope to the world. But gather too many in one spot, and you create the very picture of hopelessness.
There is a dark side to profit—but it's not seen by throwing rhetorical rocks at greedy Wall Streeters. It is seen in the tendency of well-meaning people to look to corporate beneficence to solve all the world's problems. The free-market corollary to the silly formulation "The government should make it so that . . ." is equally silly: "If we could just get a billion dollar corporate grant, we could . . ." We must be wary of simplistic solutions from both the government and the private sectors.
Finally, a word about the "social entrepreneurs" that are the talk of the moment. I like social entrepreneurs like Matt Flannery and Jessica Jackley of Kiva.org, which brings microloans to disadvantaged populations around the world. Microloans are a healthy way to incubate very small businesses that can bring profits—and well-being—to their founders. But if by "social entrepreneur" you mean someone who is good at thinking up ideas for new non-profits, I refer you to my earlier point: Without profitable companies, the non-profit model is a non-starter.
It's Friday. For most of us, the week's work is done—or nearly so. I'd like to propose a toast to your employer: that greedy, heartless, rapacious company that makes it possible for you and I to have a weekend, and even makes it possible for there to be a church to visit the day after next.