Finance – What Is Profit?


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May 9, 2022 by Scott Crosby - Views: 93

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Finance – What Is Profit?

S330-1.jpgProfit – much maligned by Democrats, Leftists generally, Marxists of every ilk as something evil – what is “profit”?

Imagine living in a primitive wilderness – alone, or with a small group of people.  Why small?  Because you have to find enough food to eat for the next meal, and there is not enough food to be found to support a larger group.  Grow too large, and members of your group start to starve.

Berries, fruits, nuts – maybe an occasional fish or a small animal – just enough to be a meal.  Cooking requires fire, and you have none, so all food is eaten raw.  But several hours later, you will be hungry again; so you must continue the search for food almost as soon as your meal is finished.  That cycle never ends; you are always on the move.  Life is a constant search; a hunt for food, and the calories you burn in that search must be replaced by the calories in the food you find, or, slowly or quickly, you starve.  More, it must be a warm climate, because none of you have any clothing to keep you warm; there is nothing from which to make clothing.

You are living like animals:  if you do not find enough to eat, you will starve.  What food you find is barely sufficient to keep you alive.

That is a life without profit.  

Profit!

One day, someone figures out how to make a spear.  The effort used in the spear’s creation takes a not-insignificant number of calories; calories that could have been spent hunting and gathering food.  Some of your group are critical of your efforts as a result.  But you have seen a herd of some larger beasts close by; heretofore they have ignored your group; you present no danger.

But you have your first item of profit now:  your spear.  You get close enough to one animal to stab and kill it.

The dead beast is more than sufficient for a single meal.  It will last for several meals for your entire group.  Those many meals, like your spear, are a profit; in fact, your success produces a huge profit!

One of the women saves the animal’s skin, and makes a carrier for her baby, slung on her back.  Using the skin, both her hands are free to gather food:  another big profit!  She and her baby are more likely to survive.

For several days, your clan lives very well.  Some laze, wasting the profit.  Some, following your lead, use the time available due to the extra food to make spears for themselves:  the profits of your clan are multiplied.

A few days later, you and the others go hunting for the same herd of animals, and meet with astounding success:  six animals are killed!  The skins are all saved; someone suggests making clothes to stay warm, so that the clan can extend its hunting up into the cooler regions of the mountains.  You profits grow:  during the next hunt, some clan members stay in the camp, making the skins into clothes.

For the first time, there is a real camp to return to, after a day’s hunt.  For the first time, the clan does not simply sleep wherever the evening finds them.  For the first time, there is a reason to have a permanent camp.

What riches!  Never in the memory of anyone has it been possible to obtain enough food without everyone’s participation!

Those staying behind include pregnant women and older or injured members of the clan.  Before this time, the rigors of food gathering had to be borne by everyone.  If the infirm could not maintain the pace of the clan’s movement in search of food, they fell behind, and were effectively abandoned.  Now, they help the clan, even given their condition.

With all the new skins, the clan does something previously unimaginable:  they make a tent out of tree branches, draped with skins sewn together with rawhide strips, to protect themselves from rain and wind.  The structure is another huge profit:  comfort and protection from the weather!

Those new ideas are retained, as each generation teaches its children how to be profitable.  Education is essential to profit, and essential to the clan’s well-being.  Education allows each new generation to use what has already been invented as a starting point, from which to add further inventions, and advance to still higher levels.  Education is the pathway to culture and civilization.

From these spartan beginnings up to the present day, every advancement (and, regrettably, some destructive creations) are profit – the changes that keep all of us beyond a mere hand-to-mouth, meal-to-meal subsistence.

Those profits compound to bring ever higher levels of prosperity.  Profits lift us out of poverty.

"Poverty has no causes.  Only prosperity has causes." – Jane Jacobs

This was true at the time of humanity’s beginning; it has been true ever since.  When people are prevented from making a profit, prosperity is reduced; poverty returns.  We edge back towards subsistence-level living.

Prosperity is created by profit – by individuals endeavoring to achieve their “Pursuit of Happiness”.  

“Life, Liberty, and the Pursuit of Happiness”

America’s Founding Fathers understood the connection of life and profit very well.

Any impediment:  war, riots, destruction, regimentation – regardless of the words used by Socialists, Communists, Nazis, Fascists, and other would-be dictators to explain and justify their goals and their actions – reduces prosperity.  

Some of those dictators have survived longer than others, by permitting some degree of the personal pursuit of profit.  Examples abound throughout the world of the various degrees of profit – of liberty and freedom! – used by those with tyrannical intent to maintain their country’s existence.  

To paraphrase Dr. Michael Hurd, “If you hate business and profits, but love having an income, you have a real contradiction to resolve, don’t you?”

Reality keeps knocking on the door of every ruler, and of every human, to remind us:  profit is necessary, and liberty and freedom are necessary for profit.  Reduce those, and you will face the consequences:  inevitable economic decline into poverty.  

Profit brings prosperity.■

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