Monday, September 19, 2011

Defining Profit

A very successful fresh fish monger in the UK sold out his business, for despair of bankers and politicians doing what is right, and now fights the good fight here...

http://www.cobdencentre.org/

they refer to the austrian school of economics, which argues for free markets...

mises.org

Both sides agree on the problem (if not definitions) and one side says you'll never get rid of govt, so work for reform; the other side says you'll never get reform, so work to get rid of govt.   Problem is, they are both right.

What this leaves is secede in place, like the Amish or orthodox Jews or Sikhs, etc.   But those are all separatist movements, what about those who do not desire to separate, but participate, yet obviate the damage done by state?

To me this is an interesting problem...  but back to definitions, before one can even discuss a topic, definitions must be agreed upon... let's take one term in economics, profit. There many definitions, most contrary to another.



Profit as motivation, psychological, the goal: here the idea is profit is what what gets the ball rolling, what motivates the entrepreneur, both the austrians school and its arch-enemy the keynesians agree on this, and Keynes refined it as "animal spirits" putting a subhuman aspect to it.  I've met plenty of people who have great ideas for making "profits" or lots of money, but the are not entrepreneurs, at least by my definition.  Entrepreneurs solve problems, and make a living at it.  It is the joy in alleviating suffering that motivates the entrepreneur.  Always has been, always will be.


Some people call profits simply what is left over after all expenses are paid.


Drucker referred to profits as just another business expense.


Bankers study a given companies profits to judge against an industry standard, so its purpose if not definition is unique.


These are mere aspects of one term that ought to be simple when discussing economics, and not an exhaustive list.  If you'd like you head to swim, read what wiki has to say about profits.




0 comments: