People before profit

Once in a while socialists say stuff like we should put people before profit:

This doesn’t make sense.

How does a business make a profit? A business uses stuff to provide other stuff to its customers. A factory owner uses machines, workers, people who do quality assurance and so on to make items for people to buy. A shop uses floor space, checkout machines, checkout operators, shelf stockers, customer service representatives etc to provide a place where people can buy goods. If customers pay the business more money than was required to buy the stuff used by the business, then the business makes a profit. A customer will pay the business some money if the customer judges that the stuff he is buying is better than the other stuff he could buy with the same money. So if a person buys from shop X, then he prefers the way shop X uses all the available resources to the other ways those resources could be used are being used in products that are currently being sold.

So profits exist where a business is satisfying the preferences of its customers better than all the alternatives the customer knows about. So profits are a sign that a business is helping people. If a business doesn’t make a profit, then it is using resources in a worse way than some of its competitors as judged by customers.

So “people before profits” doesn’t make much sense since profits are a result of satisfying the preferences of people. Also, the examples of socialism in the tweet are odd since building societies and the Co-op both make profits.

UPDATE –  The “socialism can’t be found in books” idea is bad. If you can’t explain a system of political economy how are you going to implement it? You have objective record of what you wanted. Without such a record you can’t tell whether you’ve implemented your ideas properly. Nor can you tell whether your ideas are producing different results than you expected. Having no written description of your ideas also makes it almost impossible to convince anyone who disagrees with you to change his mind. This means that the main way of spreading and implementing your ideas has to be coercion.

About conjecturesandrefutations
My name is Alan Forrester. I am interested in science and philosophy: especially David Deutsch, Ayn Rand, Karl Popper and William Godwin.

2 Responses to People before profit

  1. > So if a person buys from shop X, then he prefers the way shop X uses all the available resources to the other ways those resources could be used.

    no, he might prefer to buy stuff that no one is producing.

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