Profits

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

WITH profits this inquiry has manifestly nothing to do. We want to find what it is that determines the division of their joint produce between land, labor, and capital, and profits is not a term that refers exclusively to anyone of these three divisions. Of the three parts into which profits are divided by political economists — namely, compensation for risk, wages of superintendence, and return for the use of capital — the latter falls under the term interest, which includes all the returns for the use of capital, and excludes everything else; wages of superintendence falls under the term wages, which includes all returns for human exertion, and excludes everything else; and compensation for risk has no place whatever, as risk is eliminated when all the transactions of a community are taken together.  — Progress & Poverty — Book III, Chapter 1: The Laws of Distribution: The Inquiry Narrowed to the Laws of Distribution — The Necessary Relation of these Laws

INTEREST, as an abstract term in the distribution of wealth, differs in meaning from the word as commonly used, in this: That it includes all returns for the use of capital, and not merely those that pass from borrower to lender; and that it excludes compensation for risk, which forms so great a part of what is commonly called interest. Compensation for risk is evidently only an equalization of return between different employments of capital. — Progress & Poverty — Book III, Chapter 3: The Laws of Distribution: Of Interest and the Cause of Interest

... go to "Gems from George"

Peter Barnes: Capitalism 3.0 — Chapter 4: The Limits of Privatization (pages 49-63)

Socially Responsible Corporations
To survive over time, every organization needs to take in more money than it spends. (The only possible exception may be the U.S. government.) This means that even nonprofit organizations must, in a sense, make a profit. But making a profit isn’t the same as maximizing profit. In the first instance, profit is a means to an end; in the latter, it’s the purpose that trumps all others. Millions of organizations earn enough money to stay alive, yet pursue goals other than profit. Is it possible for publicly traded corporations to be like that? Can they have multiple bottom lines? Can they, in other words, rise above their profit-maximizing algorithm?

There are several ways this might be possible: enlightened managers might choose a higher goal than profit, shareholders might insist on it, and government might require it. Let’s consider each possibility. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 10: What You Can Do (pages 155-166)

This third version of capitalism is a logical successor to the first two. In Capitalism 1.0 we had a shortage of goods, in Capitalism 2.0 a surplus. In Capitalism 3.0 we’ll have plenty, but not too much. We’ll have more things we truly need — healthier ecosystems, communities, culture — and fewer thneeds. We’ll have a proper balance between our “me” and our “we” sides. We’ll be more connected and less isolated, more secure and less stressed. Overall, I’d venture, we’ll be happier.

We’ll have some new traffic rules on this road. Rights now enjoyed exclusively by private capital will be matched, or even trumped, by rights held in trust for future generations. Similarly, the ability of private wealth owners to receive income and inheritances will be matched by the ability of everyone to receive them. And risks we now face individually, such as illness, will be tempered by shared risk pools that exclude no one.

The biggest change will be in the third algorithm I described in chapter 4: the price of nature will no longer be zero. Instead, the price of nature — or at least, of the scarcest and most endangered parts of nature — will gradually rise. This will compel corporations (and consumers) to internalize many of the costs they now externalize.

This, in turn, will drive them to invest and consume in ways that, over time, do less harm to nature. Businesses will invest in clean and renewable energy technologies. Farmers will use fewer chemicals, and local food will outcompete food grown far away. Consumers will shift from driving alone in gas-guzzlers to more convivial forms of transport and less dashing about. Housing will move from sprawling suburbs to small towns and tall cities.

Not everything, however, will change. Winners in the marketplace will still enjoy privileges. Government won’t overregulate our private lives or businesses. Nobody’s private property will be expropriated. Markets will remain dynamic.

And, for businesspeople, here’s the best part: Capitalism 3.0 will preserve the driving force of American capitalism, the profit-maximizing algorithm. It will do this not only by leaving the algorithm alone, but also by giving all Americans, via the American Permanent Fund, a financial stake in its success. All Americans will benefit both from nature’s health and from the health of corporations. ... read the whole chapter