Does Capitalism Maximize Profit at the Expense of Other Values?

It seems to me that capitalism is a beneficial system in several respects, but that it comes with a huge flaw. It is obsessed with profit.

Now, so far as I can see, there is nothing wrong with profit in and of itself. But there is certainly something wrong with an obsession with profit. Anytime you maximize one and only one value, you create a system that denies other values. And capitalism, by maximizing profits, creates a system that denies other values — in fact, it denies all values that are in any way at odds with maximizing profit. So, for instance, capitalism becomes the enemy of sane ecological policies in so far as those policies interfere with maximizing profit.

At least, that’s how I see it.  What’s your take on it?

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50 thoughts on “Does Capitalism Maximize Profit at the Expense of Other Values?

  1. Capitalism doesn’t deny values, people do. A free market gives people exactly what they want. If they want to shop at Walmart to save a buck, it gives them Walmart.

    If they want to spend more and buy quality wholesome organic foods, it gives them Whole Foods.

    A free market is consumer-driven, and gives us choice. What people choose is completely up to them. Look at the green movement and hybrid cars for example.

    Boy-cotting companies who do not reflect our values is always an option.

    Blaming capitalism is a cop-out.

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  2. There are lots of companies who last because they have other values besides just profit. Look around, do some research. You are generalizing too much.

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  3. The bakery was started 20 years ago so you are around but my point is that profit is not the only reason businesses fail or succeed.

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    • I don’t doubt there could be apparent exceptions to the general tendency of competitive capitalism to require that businesses maximize their profits, but (1) I don’t know enough about Greyston to leap to any firm conclusions about it, and (2) I am still under the impression that most corporations operating in a competitive environment are necessarily bent on maximizing their profits. So I suppose we’ll just have to agree to disagree.

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  4. Ok, lets go the other way, if consumer choice is taken away, whose to say what you are “allowed” to buy is going to reflect your values either?

    Why is Russia and China moving towards more freedom of choice and not less? Was less freedom of choice working for them?

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  5. GM failed because they were not giving the consumer what they wanted.

    If they had not been bailed out they would not be here.

    And there would be even fewer jobs and fewer people who could afford to buy anything.

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  6. I would add a few stipulations and comments:
    1) maximizing profits is specific only to quarterly profits, most publicly traded companies maximize these at the expense of long-term profits. This is probably why energy companies invest very little in renewable energy sources; they have higher up-front costs, decreasing quarterly profits for that quarter.
    2) To the commenter who mentioned Whole Foods and what has become of the “organic,” as someone who worked in the biochemical side of the food industry, “organic” is just a means to mark up the price. One of the companies products was an “Organic” label vitamin blend. Provided no synthetic ingredients are used, it can have the “Organic” label. Unless these rules have changed in the past 2 years, I could make pretty much anything “organic.”
    3) Niche markets such as “organic” and “for-profit subsidiaries of non-profits” as well as a few others (free trade, local, etc) do maximize profits, just not in the overt we are accustomed to. These are niches, some people will purchase niche items such as “organic” and items produced by a non-profit subsidiary and locally made products, etc. It is a niche market, and as such, prices reflect production costs (which are slightly more expensive, usually) and decreased volumes. This is still maximizing profits even if it is within the niche.

    I can give specific examples of profit maximizing within the “Organic” and “Free-trade” sections if you would like…

    Pro-tip: Russia has had a wide selection of consumer goods since the mid 1990s; China has special economic zones within the country specifically geared towards niche and luxury items, they’ve had these for quite some time now.

    Another pro-tip, because I’m nice: GM failed because of a complex set of circumstances including the economic downturn which disproportionately affected the customers buying their vehicles and already being in a tough spot after being specialized in larger and less fuel efficient vehicles, gas prices decreased buyers of these vehicles, and while GM was researching and retooling for more efficient vehicles, the economic downturn decreased its income when it was spending all it had to develop vehicles for a larger customer set. It was in the process of maximizing profits and was caught at the wrong time by a recession.

    You’re last two comments are still irrelevant to the discussion at hand.

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  7. My intent was to point out that there are too many complexities in any business failure to point to profit only.

    No one person has all the answers to fix our economic problems.

    To take any -ism and blame it for human shortcomings is not the answer either.

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    • Kysha: “My intent was to point out that there are too many complexities in any business failure to point to profit only.”

      I will repeat my question: What do you suppose would happen, in the long run, to a corporation that was, say, consistently at least 7% less profitable than its closest competitor? Do you suppose that company would be around for the long haul?

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  8. Capital, as the name implies, needs capitalisation. That is were the Investors come in. Now the investor is in the game to make money from the return on his investment. To have returns and keep the investors happy and staying with the company, you need profits and you can quickly lose your investors if they can get better returns elswhere.
    Case in point: oil companies are making major profits from refining oil. Discussing with a woman who has investments in Esso I asked her what she tought of those margins while trucking companies were going under or charging fees that in turn drove prices up on everything. Her answer:”I don’t care as long as I make money.”

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  9. That is her choice. We all choose. Unfortunately, our collective choices are creating the results we see.

    Pointing the finger at “them” points three back at us.

    What choices are you making that contribute to the problem as well?

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  10. I look at capitalism as an inanimate tool which has profit as its only goal. Capitalism can be beneficial under proper governance, but profit and greed run rampant in a free market (i.e. free of all rules and laws) is almost always a disaster zone.

    Capitalism in the hands of clever manipulators has held sway for centuries and centuries, starting with the British corporate state. The American revolution was a direct rejection of this profit-driven state.

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  11. It would appear so. I hold the opinion that we have become the pawn of the UK’s latest corporate giant, British Petroleum, aka BP.

    It began in 1953 when we deposed the democratically elected prime minister of Iran, Mohammad Mosaddegh, per the command of British Petroleum and Winston Churchill. You see, Mosaddegh had injudiciously declared that the oil under the soil of Iran belonged to Iran, not to British Petroleum.

    He was taken down in a bloodless coup, but an Iranian cleric, Grand Ayatollah Sayyed Ruhollah Mostafavi Moosavi Khomeini, was forced to go into angry exile during the reign of British Petroleum’s puppet, Mohammad Rezā Shāh Pahlavi, to return to Iran in 1979 in order to royally bite us in the butt by seizing as hostage a number of American personnel, which seizure brought about the fall of Jimmy Carter and the surprise presidency of Ronald Reagan, not a surprise to our CIA and various Iranian operatives who wanted Reagan as our president.

    It must also be remembered that despite the dreary fact that British Petroleum has essentially ruined the Gulf of Mexico and the once relatively pristine American coasts, British Petroleum has been punished with a limp tap on its wrist.

    And British Petroleum is the reason why we are involved with Libya — and why we will probably be dragged into a land war in that country to depose Muammar Muhammad al-Gaddafi, who apparently has displeased British Petroleum.

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  12. How can I remove greed from the hearts and minds of other people? Each person can only find for themselves the liberation from fear and the greed that follows from fear.

    Many examples from history have shown me this. There are still, as we speak, confederate flag-waving people, winning the civil war did not win over the hearts and minds of all those who lost the war.

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    • Those people choose to believe lies, they choose to believe the rewritten history of the American South.

      The Civil War was a profit-driven war over the Southern exploitation of the labor of slaves. It was not about states’ rights, it was about the exploitation of human beings for pure profit.

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  13. Each of us can only liberate ourselves and once we figure out how, point the way for others to follow.

    No one can be “forcefully” liberated. It doesn’t work.
    It has to be a choice on the part of each individual.

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  14. Unfortunately, I don’t think we’ll have enough time for everyone to become “liberated.” Oh, wll, civilization was fun while it lasted.

    Will the last person in America please turn out the lights before you leave? Oh, wait, they’ve already been blown out. Never mind.

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  15. It really depends on the company. Do they file bankruptcy, receive bailouts and subsidies, change CEO’s, get bought by a larger company?

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  16. There are tons of restaurants in my neighborhood, the little hole in the wall has been there next to many of it’s larger and more profitable competitors for more than 40 years.

    It doesn’t look like it’s going to shut it’s doors anytime soon.

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  17. Oh, and by the way, the less profitable company gets bought by the more profitable one eventually, at least if there is no governmental regulation preventing it. It doesn’t mean the less profitable business closes its doors, just changes the signs.

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  18. I am not arguing the fact that other values get pushed aside for the sake of profit.

    I am pointing out that capitalism can work well when companies put other values ahead of profit.

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  19. You did not ask for an example of robust, you asked for an example of a company who made 7% less than its closest competitor and survived the long-haul.

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    • So you’re asserting that Apple could have lasted indefinitely with profits consistently below those of it’s competitor, Microsoft? If so, doesn’t that ignore the years in which Apple came close to going out of business? Or do I have the history wrong? It seems I used to read quite often that it was struggling.

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    • It appears we have different time frames for things, Kysha. I think of long haul as a bit longer than you appear to. About a hundred years ago, I am told there were 1500 automobile manufacturers in the US. Now there are three. I’m told that is the tendency of industries in capitalism — to consolidate companies over the long haul.

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  20. There are people I know who have liberated themselves from oil dependency. They use a combination of solar, electric and bio-fuels.

    They are not screaming and yelling at other people about what the oil-companies are doing, they are actually doing something to make a difference and are changing the future.

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  21. I have friends who scream and yell and are still oil-dependent.

    I am passionate about my ideas as well and did not mean to imply that you or anyone else is less dignified than I am.

    I imagine your voice to be even-keeled maybe even slightly monotone 🙂

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  22. Some people seem to want the world to change but are not willing to change themselves.

    They still financially support companies whose values do not reflect the values they profess.

    They are willing to sell out their own values in order to save a buck.

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  23. If I had a salary of, say, $60,000 per year, it would be easy for me to imagine what I could do with a salary of $80,000 per year. Very tangible imaginings– debts paid off, money put aside for retirement, lots and lot of special ed tutoring for my daughter and so on. Similarly, I could imagine what I could do with a salary of $200,000 per year. Does imagination have a limit? I suppose someone earning $200,00 per year would be able to imagine life at half a million per year. But what happens when a Fortune 500 executive is negotiating for a raise from $20 million per year to, say, $27 million per year? If we’re just talking about personal usage for one’s income, isn’t there a point where it just doesn’t make a difference any more? Somewhere there is a number that would cover all my severely disabled expenses for life. There is no number that would cover a cure for him, because there is no cure. If there were a cure, how many times over could he be cured anyway? Sooner or later, it’s hard to imagine what anyone could do with more than a certain amount of money strictly for himself and his family, no matter how large the family, no matter how many special circumstances might befall that family. What’s the point of arguing about $34 million per year versus $37.7 million per year. I guess it’s pride of place, not wanting to be paid less than the next guy with a job like yours. Nothing different from caring whether you ranked 7 or 8 out of a class of 700 students in your college graduating class.

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  24. Pingback: Sunday in Outer Blogness: Gender Equality Edition! | Main Street Plaza

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