Profit Motive

                                             Profit Motive

Despite the fact that business ranks as one of the top ten college majors, it is true that many college graduates today would prefer to work for a non-profit organization than a profit making one.  There would appear to be a stigma attached to working for personal gain.  To many working for profit is ignoble, even crass. 

This attitude is not just found in the young but in all levels of our society.  It helps to explain the contempt we see directed today at words like Capitalism and Capitalist, both of which are terms of opprobrium in more than progressive circles. Indeed, popular fiction has for centuries ingrained in us a cardboard stereotype of the crass, boring, money-grubbing, overweight, usually lecherous business tycoon. 

Although the caricature of the avaricious old miser can be found in literature almost from the beginning, it took American cinema to place it into our minds like an implant. One just has to think of the elaborate musicals of the 1930s where poverty stricken artists and showmen had to persuade paunchy old businessmen to come up with the dough to finance their creative ventures. Inevitably, they had to be plied with lovely young chorus girls.

No one did more to popularize this image than Frank Capra, the great director who was himself the son of poor Italian immigrants. Everyone remembers Mr. Potter, “the richest man in town”, from It’s a Wonderful Life, but the classic bad guy was J.B. Norton in “Meet John Doe” played to perfection by Edward Arnold. He was rich, power-hungry, and a proto-Fascist to boot with his own private band of motorcycle riding storm troopers.

I must confess that I became a Capitalist many years ago when as a young college instructor, I signed up to participate in the school’s 401k type retirement plan. Without realizing it, my monthly contribution gave me a very small stake in the largest companies in the American economy. Though I contributed for only seven years, I still get a monthly check from that investment of long ago. Today, most of my retirement income comes from a portfolio of about a dozen American corporations.

Nevertheless, because of the bad connotation of the word Capitalist, I prefer to think of myself as an advocate of a free-market economy based on private property rights. By law and tradition in America, we all have the right to profit from our education, our knowledge, our experience, and our labor. It is the key to our success.

Countless examples could be provided to demonstrate the success of a free market economy versus a government controlled socialist model. Here is one example that shows that modern China’s economic success is due more to the profit motive than socialist ideology. 

Just recently I read an op-ed in the Wall Street journal by Michael Meyer in which he noted a real revolutionary development in a Chinese village 40 years ago.  After taking power in China in 1949 Chairman Mao and the Communist party had effectively abolished private land ownership. Villages were organized into communes “crippled by production quotas that seized most of what they grew for redistribution.” 

The result was a disaster just as it had been in Communist Russia decades earlier. Meyer tells the story of the village of Xiaogang where by 1978 the villagers could no longer meet their quota because they were starving. They were eating roots, leaves, and tree bark. Driven to desperation the farmers decided to defy the authorities.

They signed a pledge to divide the village land into family plots whose produce could be kept by each family once it had paid the required quota or tax. The results were revolutionary. Next year saw a record harvest that led the local political boss to complain that the farmers “had dug up the cornerstone of socialism.” 

Inevitably, the news and the practice spread until the popular land reform that defied communist orthodoxy became officially adopted after Mao’s death. Deng Xiaoping, his successor, urged the Chinese to ignore political dogma and instead “seek truth from facts.”

Interestingly, this same revolution had an antecedent in early American history. After two years of near starvation, the Pilgrim fathers at Plymouth colony abandoned their experiment with communal farming and divided the land into family plots worked by all members of the family. The colony never starved again. 

Why should it be so hard for people today to understand the value of the profit motive? Not only do the companies in my investment portfolio turn a decent profit, but also they provide invaluable goods and services for millions of people. Some light and heat our homes as well as enable us to communicate easily with one another.

The little revolution in Xiaogang not only fed the people of that village but it also has enabled China’s population to eat and prosper as never before. 

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