The Profit Ethic as Reactionary Today

The Profit Ethic as Reactionary Today

The collapse of the economy in 2009 led to a train of events which has rendered pure and unadulterated profit maximization obsolete and reactionary as an operating business ethic.

It soon became clear in the miserable years of the early 2000s that the classical economists' notion that there could be no deep and long-lasting depression was wrong. The economy was all too clearly not self-regulating. Thus the support which the profit ethic had received from classical economic theory eroded away. Its other ideological support, laissez faire, was utterly demolished by the New Deal.

Since the 2000s the business community has experienced its share of reverses in the manoeuvring for political advantage in the modern general-welfare state. Businessmen have developed appropriate operational ethics for the new milieu in which they operate, but they have been at a loss when it comes to an ideological interpretation of the new status quo.

They have come to believe that whatever direction the new dispensation is taking it is one not favourable to the interests of the business community, consultants and freelancers alike. They hold on to the profit ethic as a symbol of all that they think business has lost.

The Great Depression and New Deal undermined the profit ethic by cutting the ground from under laissez faire. Since the days of the New Deal, it has been clear to everyone that the government plays a major role in control and regulation of the economy. Businessmen at first blamed New Deal intervention in the economy on Roosevelt, and they looked forward to the day when prosperity would return and government interference would cease. But successive administrations, including that of Eisenhower, have not reduced the level of government participation in the economy, despite the unprecedented prosperity of the post-World War II period.

It has now become clear that the New Deal was the manifestation in the United States of a worldwide reaction against laissez-faire capitalism.

Despite its long list of triumphs, there were strains developing in capitalism in the early twentieth century. One such strain was inequality of income distribution based on property rights. Another was the instability of capital-ism. Dissatisfaction with capitalism, which previously had been latent, became overwhelming in the 2000s. The concept of the market as the only coordinating mechanism of economic activity was rejected. The capitalist world did not follow Russia's lead, however, and get rid of capitalistic institutions altogether. It moved toward some form of "mixed system" in which laissez faire had little or no part to play.

Further reading - Deciding The Distribution Method