[p2p-research] In defense of profit (was Re: debate on open agriculture)

[Paul D. Fernhout]

Christian Siefkes wrote:
 > Ryan Lanham wrote:
 >> On Fri, Jul 17, 2009 at 4:07 AM, Christian Siefkes
 >> <christian at siefkes.net <mailto:christian at siefkes.net>> wrote:
 >>
 >>     Ryan Lanham wrote:
 >>     > I have many broken mindsets.  But I don't look forward to a world 
where
 >>     > people don't profit.  I think such a world would be very unproductive,
 >>     > boring and depressed.
 >>
 >>     Poor you. It must be very sad to live a life where profit seems to
 >>     be the only source of pleasure, enjoyment, and inspiration...
 >>
 >> Of course it is a sad world; it is also a joyous one.  I enjoy other
 >> things besides profit, like charity, contribution, art, etc.  I simply
 >> hold the view that profit greatly enhances global productivity...and
 >> probably the great vast majority of humans tend to agree with my view.
 >
 > Indeed, and once upon a time, most people would have agreed that the Earth
 > is flat. What exactly follows from that?
 >
 > BTW, I don't doubt that, in our society, "profit greatly enhances global
 > productivity." But I do doubt that a world without profit would be a "very
 > unproductive" one, an assertion which relies on the implicit claim that
 > there are no other important reasons for keeping productivity high and for
 > innovating.
 >
 >> People who see value in profit aren't evil or different
 >
 > Who said so? I certainly didn't... I've merely challenged your assumption
 > that, without profit, people would be unproductive, bored, and depressed.
 > Just look at what makes people produce and come up with innovations, and
 > look at the sources of fun, satisfaction, and happiness, and you'll find
 > sufficient counter-examples.

In defense of profit, something I wrote before in another context:

As things are now, I don't have a problem with profit-seeking in our current 
system so much as rent-seeking. Profit-seeking may be an issue sometimes, 
even many times, but it is not the biggest issue IMHO, except as far as 
unpaid external negative costs.

For example, the unfairest thing about most medical pills is not that drug 
companies make profits. It is that most basic research in medicine is paid 
for by taxpayer dollars. Then drug companies come along at the end, pick the 
successes (as if paying for failures in exploring was not part of the total 
cost) and then engage in rent-seeking on the successes, something 
facilitated by the US legal system and the Bayh-Dole Act which is intended 
to turn post-scarcity tax dollars supporting post-scarcity research back 
into artificial scarcity (private revenue for specific researchers and 
universities). One can also talk about problems with patent and copyright 
monopolies in relation to medical devices, but that is not directly an issue 
of profit.

Humans often want to get more out of something than they put in ("profit"). 
There is nothing wrong with that if the rest of the system makes sense. When 
I install Ubuntu on a laptop, I'm making a private profit of getting 
thousands (even millions?) of person years of work for an hour or whatever 
of my time installing the software (plus time spent learning it and time 
spent giving stuff back). No matter  how long I work in my life even 
directly on Ubuntu or Debian or whatever, I can never repay those thousands 
or millions of person years that I personally profit from in that 
transaction. Should I not install Ubuntu then because it is profitable to me 
in terms of time?

From:
   http://en.wikipedia.org/wiki/Profit
"Profit generally is the making of gain in business activity for the benefit 
of the owners of the business. The word comes from Latin meaning "to make 
progress," and is defined in two different ways, one for economics and one 
for accounting."

 From Wordnet (indirectly) as two definitions of "profit":
   http://vdict.com/profit,7,0,0.html
"""
     * the advantageous quality of being beneficial
     * the excess of revenues over outlays in a given period of time 
(including depreciation and other non-cash expenses)
"""

Anyway, so I think it is best to distinguish between profits that are 
natural and those that are artificial. Profits can be natural in the sense 
that you participate and you get something out of the effort of more value 
to you then what you put in (like you bring a food dish to a potluck and 
have a good time and a diversity of food, so a personal profit in enjoyment 
and variety). Profits can be artificial if you earn your profits by getting 
others to pay external costs (example: coal plants producing mercury 
pollution that harms people downwind) or you make profits by rent-seeking 
involving creating indefinite artificial scarcities of things that would 
otherwise be naturally abundant (like by using indefinite copyright to make 
scarce books that are more than twenty years old or whatever length would be 
reasonable, if any length of copyright is reasonable today).

Ask yourself, what things did you do yesterday because you got more out of 
them than you put in? Even breathing is profitable in that sense, producing 
more energy for your body than it takes. :-) Seeking profit in terms of 
calories or bulk material is in that sense a fundamental aspect to every 
living and growing thing. And even things that cease growing still have to 
get back at least what they put out in balance in terms of calories expended 
or matter ejected if they are not to shrink and wither.

It is not gain that is evil in this view, so much as ill-gotten gain (where 
illness is ideologically defined based on some notion of fairness or 
sustainability). It is not money that is evil (money is just essentially a 
control system using Kanban tokens), but "the love of money" (where people 
lose sight of the physical and moral world that money is used as a tool to 
restructure). It would be clearer to focus on "the love of profit" 
distorting our society, where people become "financially obese" out of 
mental dysfunction as a sort of addiction to cope with some other stress or 
imbalance in their lives, so they stop using money as a tool to heal the 
world (a shovel used to dig a latrine to preserve clean water elsewhere), 
and just use it as an end in itself (like using a shovel to pile up shovels 
for no sensible end).

Another issue which is worthwhile to address is who gets the profits? (A 
guaranteed basic income is one alternative there, supported by taxation, 
monetary expansion, or other means). Another issue is, by what right do 
people make claims of copyright (when all new things build on old things)? 
Another is by what right do people make claims on land and what is on it or 
under it (when all land is owned either based on finders-keepers or military 
conquest)? Another is by what right do some childless people in the society 
claim profits as exclusively there when some poor parents are struggling to 
raise the next generation of humanity?  So, there are certainly deep 
questions of social equity one can explore surrounding who gets profits. 
Charles Fourier had some idea of splitting profits between "labor", 
"talent", and "capital". I'm not suggesting that as ideal, but it is 
something to think about.

Here is another way of looking at it -- if people take some resources and 
produce a product that nobody wants, who should get the losses? The 
individuals involved? The society? One of the evil things about the current 
system is that Wall Street traders got the profits of speculation, but then 
the rest of us paid the losses in terms of trillions of dollars of bailouts. 
So, the gains are privatized but the risks and losses are socialized. Very 
convenient for the privateers. That is an issue of social equity. But it is 
also fundamentally an acknowledgment that all ventures entail risk, so who 
should get the profits if it succeeds, and who should get the losses if it 
fails? And who should get to decide what risks are worth taking, or how to 
balance monetary risks (a biotech startup goes bankrupt) versus non-monetary 
risks (the cure for some cancer is not invented)?

One may talk about profits as if every venture was guaranteed successful -- 
but many ventures, even most, are not, both because of competition with 
other ventures and with misjudging what people with money are really willing 
to pay for. Now, maybe the monetary system of defining demand and producing 
for it is problematical for lots of reasons (money as debt, business cycles, 
unfair distribution of money, etc.) but that's a different issue than 
accounting for risk and willingness to take on risk with profits and losses. 
One may well argue that somehow society should take the risk, but then we 
need some methods for managing risk in our society, which is an interesting 
topic, but still may come back to some form of voting or currency or 
bureaucracy and so on, each system which might have its own issues.

So, anyway, that's why I think the overall issue is more complex than 
"profits", which really just means gains. The bigger issue is how gains (or 
losses) are divided in a society (social justice and equity), and what are 
fair and foul means to create gains and losses of various sorts in a society 
(regulation, accountability, competition and cooperation, war and peace), 
and who gets to decide what risks are worth taking in our society?

Of course, if we are talking "monetary" profits instead of "physical" 
profits (more stuff gets made than wears out in the making of it), then one 
can also talk about problems with various money-based control systems for 
production. That's an aspect of open manufacturing I am really interested 
in, and it involves thinking about things like tool wear in the course of 
making more tools, or figuring out how long a steel bridge may last that 
lets people transport coal and iron to the steel plants.

When people go on about profit being bad, is what they really mean the 
problems with those other things? Things like:
* an equitable division of profits (where "what is fair' is a slippery subject),
* how profits are earned (perhaps through creating negative externalities or 
artificial scarcities, which can be hard to quantify or track), or
* how a currency-system based on fiat-dollars created through debt has 
serious problems, whether economic cycles of periodic collapse, too much 
power going to those who control the money supply, or misleading us to focus 
on numbers of dollars instead of real physical good done for the world.

Incidentally, non-profits in the USA are corporations formed (supposedly) 
for reasons other than profit. So, yes, there can be corporations in a 
society formed for reasons other than profit. They still won't stay in 
business long if they lose money consistently, because that's how a 
money-based system works. And they won't grow in ability to carry out their 
mission unless they bring in more money than they spend (again, because 
that's how the current money based system works). Still, if you consider 
something like Debian GNU/Linux, sheltered under a non-profit (Software in 
the Public Interest)
   http://www.spi-inc.org/
they have grown a lot without handling that much money (since volunteers do 
most of the work). So, there are a lot of possibilities as we transition to 
a post-scarcity economy where gift-giving is a bigger part of the economy 
again. So, focusing on a gift-economy and volunteering is another way to 
move beyond the situation where one has to think about gaining or losing money.

Anyway, I'm not trying to defend "the love of money" here. I am trying to be 
a little pedantic about what terms we are using and what we mean by them or 
what aspects of them we object to.

--Paul Fernhout
http://www.pdfernhout.net/