Ed Weick wrote,
>If I remember my economics, profit is not a reward to capital, but to
>enterprise. It is the reward going to the entrepreneur, the person who is
>successful in putting capital, labor and land together to some productive
>purpose. Capital accrues interest, which is the price which must be paid to
>the owner of the capital because, while it is in production, he cannot use
>it for any other purpose.
The problem with this definition is that it covers only a minor proportion
of what TODAY counts as profit. It also refers to only a small proportion of
what HISTORICALLY has counted as profit. Monopoly rents and seizures of
traditional common property are far more significant sources of wealth
accumulation than profits as Ed defines them. Contrary to Ed's recollection,
even Marx didn't scorn profits in the sense of a reward to the entrepreneur.
To be fair, not all monopoly rents and seizures count as profits. For
example, trade unions can also extract monopoly rents for labour. Squatters
seize public and private lands. But the great volume of such accumulations
of wealth are counted as profits.
Ed's cozy definition of profits runs into extreme contradiction when the
profits of the entrepreneur are expropriated by monopoly rents. Think of the
small business owners who feel squeezed by high taxes, high bank interest
payments and utility rates, and who dread unionization of their work force.
People who demonize profits also tend to lump the entrepreneur's return
together with monopoly rents and "primitive accumulation". The same people
like to think of all wage earners as "exploited". Perhaps the problem is
that the polarized concepts of "capital" and "labour", "profit" and "wages"
have come to connote ideals that are simply not applicable to the modern
economy. They are worn out metaphors. However, since these terms form the
basic vocabulary of "economics" -- both mainstream and marxist -- we are
compelled to somehow fit our discussion into the procrustian bed of an
inappropriate vocabulary.
For example, I received a reply from Harry Pollard to a passage I quoted
from J.M. Clark about labour as an overhead cost. Harry's reply showed total
incomprehension of Clark's point and complete confidence that he knew
precisely what Clark was getting at and exactly how wrong -- no, *how
dismissable* -- it was. Keith Hudson's reply to Ed Weick's message is
equally remarkable for its confidence that other views are contemptable: "A
final word about the dirty word "profits". There is nothing wrong with
profits . . . Profits is a good clean word and we should be thankful for
it." Isn't this a bit like saying "there is nothing wrong with sex and those
who whine about rape and worry about STDs are a bunch of puritans"?
I was at a labour convention in December where I listened with growing
dismay to a stream of self-righteous rhetoric about "the banks" and "the
right-wing corporate agenda". Nothing about the unions' own responsibility
to do anything other than rail at the "exploiters".
In closing, I can't resist quoting another comment from Keith Hudson,
>Without profits and without trade our total world population would be
>unlikely to be more than, say, chimpanzees or mountain gorillas. And our
>standard of living would be similar, too.
With all the economic chest thumping that goes on, how can we say that we
are "more" than chimpanzees or gorillas? If the best use we can find for
language and thought is as a mirror for our vanity, we'd be far better off
foraging for roots and small animals.
Regards,
Tom Walker
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