Kitty Sullivan

Reminder: Profit is a good thing. This should be an obvious statement. But, since our youngest and most educated citizens keep voting for people like Zohran Mamdani and AOC, apparently it needs to be reiterated. Profit is a good thing. It is critical for a progressive, flourishing society, and the ethical pursuit of it should be celebrated, not criticized. What is profit? Profit represents the financial gain that accrues to owners of a business when total revenue exceeds total costs. Put simply, it’s how much business owners get to keep when they’re able to sell things for more than it costs to create them. Socialists commonly denigrate profit as “exploitative” or “parasitical”; if they’re trying to sound fancy, they’ll say things like “the surplus value of labor that the bourgeoisie capitalist class has extracted from the working class.” They are wrong. Profit serves two extremely valuable—and irreplaceable—roles in society, even for people who don’t own businesses: 1. Profit rewards risk and incentivizes growth. All economic ventures that create value for the wide range of stakeholders in our society—from financial parties, such as investors and lenders, to customers, suppliers, employees, governments, and community organizations—have financial outcomes that are inherently uncertain. This uncertainty is called risk, and, in varying levels, it is inherent to any project without a guaranteed and instantaneous payout. Without profit, there would be no incentive for companies and their shareholders to assume these risks. Without profit, there would be no capital investments (e.g., equipment purchases, new factories), innovation (e.g., new technologies, pharmaceutical R&D), or entrepreneurship. Without profit, there would be new jobs created, no new restaurants to enjoy, no tax revenue to fund government benefits, national defense, public education, municipal parks. Profit is the mechanism that makes progress possible, for business owners and employees alike. 2. Profit sends a signal to the rest of the economy that a certain product or service is valuable, and that someone should make the investments necessary to supply more of it. Economists refer to this as a price signal, and it’s virtually impossible to replicate outside of profit creation in a market-based economy. When auto manufacturers are able to sell cars profitably, it sends a signal to the market for competitors to produce more of them (whether through greater capacity utilization at existing facilities or by constructing new factories). This leads to more cars being produced and sold, lower prices for customers, greater labor demand, and, over time, stronger wages for employees. The same applies to plumbing companies, iron ore mining, wheat production, new medications, video games, coffee shops, and every last job in the labor market. Profit provides the signal that subtly directs every economic decision across our complex, wonderful, multifaceted society. It sounds simple, right? But there are millions of variables here across millions of economic participants, all of them changing continuously. What looks seamless in a market-based economy becomes impossible to model in a centrally planned one. It’s laughable to even try. Our modern-day capitalist society is nothing short of a miracle. It may not be perfect, but it’s vastly superior to any other economic system ever attempted or imagined. Profit is a foundational pillar of that system, and it deserves respect as such. Keep that in mind next time you’re at work, checking out at the grocery store, or filling out your ballot in a voting booth.