Table of Contents
What is Profit Motive?
Profit motive quite simply refers to the desire for monetary gain.
For most people, making a profit is necessary to living a secure and healthy life. How else would you have the means to pay for food, shelter, medicine, and the occasional (or frequent) luxury purchase?
But the profit motive doesn’t just apply to individuals; businesses have major incentives to turn a profit. Without it, companies will have a hard time thriving, or even surviving. Profits often top their list of priorities, but not necessarily at the expense of their morals or ethics.
For both individuals and businesses, profit does not have to take precedence over everything else; nevertheless, it will still be an important consideration for most. Some economists think that humans inherently have a profit motive. For example, Adam Smith, the ‘Father of Economists,’ wrote “…a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.”
Some immediately associate the profit motive with greed. But that’s not exactly fair. Many innovations that have expanded our possibilities and improved our quality of life were created, in part, to turn a profit. Just think about the smartphone, computer, or tablet, which you’re using to read this article, get your work done, and communicate with people across the globe; or the vehicles that get you to places near and far; or the advancements in medicine that have increased the average life expectancy.
For the value provided, shouldn’t investors and/or service providers receive some reward or profits? The same question applies to employees and businesses of all kinds who provide value in exchange for profit.
We at the Zero Theft Movement are dedicated to eradicating the rigged economy so that all Americans can thrive. A major issue does emerge when the profit motive turns into greed, when individuals or companies try to maximize profits at all costs. Without regard for morals, ethics, or even legality, some will commit all kinds of white-collar crimes to boost their profits as much as possible. And oftentimes it’s the consumer who has to pay for this corruption, potentially achieved through rigging the prices for goods and services, increasing tax burdens, market manipulation, and a whole host of other unethical and sometimes illegal practices.
The Profit Motive Theory
The profit motive can simplify business decisions for corporations and individuals. It really just comes down to what brings in money and what does not.
Let’s say you have a restaurant that has 50+ different food items on the menu, as depicted in picture below. Maybe—maybe—ten of them sell well and generate the lionshare of the restaurant’s profits.
source: Rufus UX
If the owner takes the profit motive approach, they can strike the ten unpopular dishes from the menu and focus on selling their best sellers. Immediately, that would eliminate future food and economic waste. But the smaller focused menu also lets the restaurant shine, potentially resulting in better reviews, more customers, and ultimately more profits.
In a similar vein, many people pursue careers primarily based on earning potential. For the number of hours you spend working in your life, you’d like to come out with enough money to enjoy your retirement, no? That’s why many try to maximize their earning potential by seeking out the professions that guarantee high(er) income.
The profit motive essentially reflects the fundamental principle of economics: supply and demand. The greater the actual or potential demand, the higher the actual or potential profitability. But when profitability is high, you can bet you’ll find a commensurate level of competition. Again, we see the profit motive in operation.
When an economy has no market imperfections (e.g. externalities, monopolies, corporate crime, etc.) the profit motive guarantees that all participants maximize their value.
Profit in Practice
But it would be wildly inaccurate to argue that all people act based on the profit motive.
The profit motive represents but one of a myriad potential factors that can impact business decisions. Some individuals pursue their unprofitable passions over all else, knowing how much money they could be leaving on the table. You have, for instance, probably heard of the ‘struggling artist.’ Think of the likes of Vincent Van Gogh who lived in poverty due to his commitment to painting. Not a cent of the many millions made from the sales of his paintings obviously went to the long-deceased painter.
The Red Vineyard (above) is the only painting Van Gogh ever sold while alive. It went for 400 francs ($2,000 now).
That simply goes to show, where profit sits on your list of priorities ultimately depends on…well, you, your circumstances, and how you wish to live your life.
It’s no mystery that we all have our own wants, desires, beliefs, and goals that all factor into how we make our economic decisions. To think that profit acts as the primary motivator for each and every one of us might work in theory, but definitely not in practice.
The Profit Motive Debate
In certain contexts or markets, the profit motive has divided public opinion. Particularly when the market deals in an essential good or service such as healthcare. Some critics believe that profits should have no relation to treating the sick as it distorts what arguably should be the main goal of doctors, hospitals, and all other entities on the supply chain.
Arnold S. Relman, professor at Harvard Medical School, writes: “The U.S., more than any other advanced country, has come to rely mainly on private markets to deliver medical care, and on fee-for-service to pay its physicians. The incentives in such a system reward and stimulate the delivery of more services. That is why medical expenditures in the U.S. are so much higher than in any other country and are rising more rapidly.”
Free-market economists counter that the profit motive, in tandem with stiff market competition, reduces the final price of a good or service. Essential or otherwise. Economist Thomas Sowell argues, “Why have both local and national governments in recent years begun having many of their traditional functions, from garbage collection to running prisons, done by private companies? Because these private, profit-making companies can usually get the job done cheaper and better.”
Take the classic case of when a brand name drug loses its patent. Generics start to flood the market, opening up many more cheaper options for patients. According to the General Pharmaceutical Association, generics accounted for $254 billion in savings in 2014, and $1.68 trillion from 2005-2014. With competition and a free market, huge potential savings are possible.
But is the U.S. economy truly competitive and free?
When Greed Consumes
The profit motive can push individuals and businesses to do anything to maximize their profits. This can have massive economic and even health consequences, especially when we’re dealing with megacorporations and billionaires.
Potential economic damages
While some companies will try to illegally collude in order to create an unnatural oligopoly, corporations will often go a much safer route. They can hire lobbyists to influence rent-seeking legislators and regulators.
To return to the healthcare industry, Citizens for Responsibility and Ethics in Washington reported that “Many of the nation’s largest pharmaceutical companies hired lobbyists to oppose [bills to control drug prices]. Thus far, they have stalled in committee or gotten little traction on the House or Senate floor…Big Pharma [also] utilizes the ‘revolving door’ between government agencies and lobbying firms to push back against new regulations. These cases revealed that because of the industry’s lobbying power, it is incredibly difficult for the government to implement meaningful reform.”
Another alternative strategy is when pharmaceutical manufacturers establish a ‘patent thicket,’ creating a legal minefield that makes it nearly impossible for competitors to break into a monopolized market. Some have, for example, accused Abbvie of setting up a patent thicket for its best-selling biologic, Humira. A year’s prescription costs upwards of $84,000.
The prioritization of the profit motive can account for major problems across the economy. From financial collapses and recessions such as the 2008 subprime mortgage crisis to the hundreds of billions in tax evasion. Crony capitalism is what it’s typically called, but that’s a misnomer. This kind of rigged behavior has no place in any healthy and just economic system.
Potential health damages
When the profit motive takes over, it can also cause serious health problems as well.
For example, a prominent case emerged involving PFAS, a ‘forever’ chemical that has been linked to birth defects, cancer, obesity, and diabetes. These harmful chemicals never break down (hence the ‘forever’ chemical name). Researchers have found PFAS in non-stick cookware, food packaging, and even tap water.
source: EGLE via The Conversation
The Environmental Working Group (EWG) claims that “Since the 1940s, DuPont made and used PFAS chemicals to make highly profitable consumer products, including Teflon, which at one point earned $1 billion a year for the chemical giant.” Over the years, Dupont has faced thousands of lawsuits, and by 2017 had paid $671 million to settle the cases.
Robin Andrew lived near a Dupont plant in South Jersey. She’s been fighting an autoimmune disease, a thyroid condition, severe dental problems, hair loss and a long list of other ailments. In an interview with NBC News, she states “[Dupont] could have been a great company and a very good thing for this area had they chosen to take care of people and to be responsible with the way they disposed of these toxins…But they weren’t. I believe it was an economic decision to put people at risk.”
What to do about the Profit Motive?
The profit motive is perhaps inherent in us, but that does not mean it must devolve into unchecked greed. For many individuals and businesses, we need to make a profit to not only survive but thrive.
But when is enough really enough? And to what extent do the powerful go to maximize their bottom line?
The Zero Theft Movement, along with our growing community, works to calculate the best estimate for the monetary costs of corruption in the U.S. Corporate, political, and everything in between.
We have built a safe and independent voting platform where you and your fellow citizens collaborate to thoroughly investigate potential problem areas across the economy, including the biologics and biosimilar markets. Everyone votes on whether (1) theft is or isn’t occurring in a specific area of the economy, and (2) how much is being stolen or possibly saved. Through direct democracy, we can collectively decide where the problem areas are and start working on addressing them systematically.
Only through hard evidence can we prove where the rigged parts of the economy exist and force Congress to hold the bad actors accountable. We can achieve economic justice, a financial system that allows the many good businesses (big, medium, and small) and good individuals (regardless of their socioeconomic status) to thrive.
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.