There’d Be No Thanksgiving Without the Profit Motive

“The worst crime against working people,” so said Samuel  Gompers, “is a company which fails to operate at a profit.”

Gompers, of course, is known by the history books as the father of  the labor  union movement in America. He was founder of the American  Federation of Labor. It may seem incongruous for such an important labor figure to say such a  thing about profit, but Gompers appreciated  something back then that perhaps a  few of today’s labor leaders don’t.  An economy without profit is an economy in  deep, deep depression.

Profit and the self-interest motive behind it were under relentless  attack  not so long ago. The radicalism of the 1960s was dead set  against them, laying  most of society’s ills at the feet of greedy,  profit-hungry and selfish  capitalists. Anti-profit sentiment was even  more popular in Europe and Africa,  where it helped boost the socialist  agenda and a wave of  nationalizations.

In more recent years, however, a better understanding of profit has  taken  hold in surprising places. Communist China started implementing  it in the late  1970s as an incentive for moribund state industries and  previously prohibited  private enterprise. And in my files is an English translation of an article that  appeared in a most unlikely place.  Here’s a key excerpt:

“The economic situation of enterprises will have to depend directly  on  profit, and profit cannot fulfill its function until prices are  liberated from  subsidies. Over the centuries, humankind has found no  more effective measure of  work than profit. Only profit can measure the quantity and quality of economic  activity and permit us to relate  production costs to results effectively and  unambiguously . . . .  Our  suspicious attitude toward profit is a historical misunderstanding, the result  of the economic illiteracy of people . . .”

Those words were written by economist Nikolaay Shmelyov in the June  1987  issue of Novy Mir, the leading political and literary journal of  the then-Soviet  Union, no less. The Soviets, after years of anti-profit propaganda and policies  that produced a world-class basketcase  economy, were showing signs of shedding  some of that economic  illiteracy. There’s truth in one of the jokes that was  making the  rounds in Moscow just before the collapse of the Soviet system in  1991, namely, that to find a genuine believer in Marxism these days, one has  to  visit universities in the United States.

Thanksgiving Day is a particularly appropriate time to reflect on the meaning  and value of profit. The settlers at Plymouth colony who  started the holiday  tradition nearly wiped themselves out early on when they set up a communal,  socialistic economy. Each person was producing for everybody else and received  an equal share of the total  production. In the absence of a strong profit  motive, the settlers  starved until Gov. Bradford altered the arrangement.  Thereafter, men  and women produced for profit and the result was bountiful  harvests  with full Thanksgiving tables.

The people who don’t like profit prefer to extol the virtue of  selflessness,  the charitable motive. Don’t get me wrong here, I’m not  opposed to charity. A  loving, caring concern for others is a beautiful  thing, and Americans have  always been the most charitable, giving  people on the planet. But the fact  remains that profit is responsible  for more good things—by a long shot—than all  the charity in the world.

Consider this as you feast at the table today. The people who raised  the  turkey didn’t do so because they wanted to help you out. The others who grew the  cranberries and the yams didn’t go to the trouble and  expense out of some  altruistic, charitable impulse. If you think those  folks and the others who made  almost everything else you own performed  their tasks as sacrificial rituals,  then you probably believe McDonalds when they say, “We do it all for  you.”

In Marxist North Korea, they have a regime that works night and day  to see  that nobody makes a profit or owns a private business. There  won’t be anything  like Thanksgiving dinner in North Korea today, and  that’s no  coincidence.

As for me, you can count on me saying a prayerful thanks for more  than just  good food today. I’m going to say thanks for the profit  motive which made it all  possible. When God instilled a measure of  productive self-interest into the  human mind, he knew what he was  doing.

Lawrence W. Reed is president of the Foundation for Economic Education — www.fee.org — and president emeritus of the Mackinac Center for Public Policy.

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