25A030 A Very Good Word by Jim Davies, 7/29/2025

Due to the malignant influence of Marxist teachers at schools and colleges, the word "profit" is often said to be dirty. That is clear from numberless bigoted posts on social media.

Stand by for a shock: they are all wrong.

Marx supposed that if (say) a factory owner made a profit, he was exploiting his employees, or workers. Their labor alone had fashioned the products he was selling, so all the profits belonged to them, not him. This amazing theory sprang from his absurd and unsupportable premise that labor has an objective value. It also very conveniently overlooked the fact that if he had a bad year and made a loss, his workers never volunteered to share it.

Low-skilled workers arrive rather late in the cycle of enterprise. First comes an idea, to the mind of the founder. Then follows his diligence in obtaining capital, to start the venture; saving his own from the fruits of his own labor up to the time in question, plus that of anyone else who cares to share his risks. Then he must build the means to produce it. Then promote or adverstise it, to generate sales. Only then can he hire help to produce it in a quantity he hopes will match the demand. If he gets all those estimates right, he'll have enough revenue to pay all expenses and then some; that "some" will be his profit. Otherwise, not.

Suppose he does. What's next? - unless he chooses to destroy those profits (which, while completely irrational, would actually benefit all in the society by reducing the supply of money and hence lowering prices generally) he will spend them or save them (there are no other choices) or both. Assume, both.

The profits he spends, whether on life's necessities or on expensive toys, will bring employment (and, so, wages) to all who supply them. I say that is good. Perhaps Marx would have disagreed, though he did live at the expense of his friend Engels, whose money came from a job he held in a capitalist thread mill in Manchester owned by his uncle.

Those of his profits that he saves will be invested, either directly by him in his own factory firm or in someone else's - or indirectly by letting the savings fund owner make the investment choices. Either way, his profits will enable the start or the growth of enterprises, along with the goods they produce and the jobs they provide. I say that too is good. It is for sure vastly better than the government alternative, which is to steal some of his profits as tax, then use the loot to do things that nobody else found worthwhile - so diverting human and other resources from their optimal uses.

So, profits are good for those reasons, and together those results can be called "wealth." Wealth consists of having enough to live on, plus a surplus to enjoy; things or services that give the buyer pleasure and/or leisure, an important and sometimes overlooked component. Another sometimes neglected component is benevolence; that is, the pleasure we derive from giving away some of what we have earned, to those we think are needy and deserving. The ZGBlog Saving Ebenezer has more about that.

Note the benefits of this capitalist, free-enterprise activity: the founder grows wealthy with profits and must use them to benefit others; more jobs are created; more charitable help is given to those who need it; and the whole society enjoys the use of the goods or services he produces. Humans make progress. I say that is good. Do you agree?