This observation is one of those that today's dominant economic thought represses. What are enterprises for? The most common answer springs up: to make as much money as possible for their owners and operating officers! Many of those who see in this way consider morality to be safe, provided that there is a good use of this money, but without explaining why in such a matter the end would justify the means.
1. The goal of maximization of profit is useless and dangerous.
The “pope of management", the American Peter F. Drucker wrote the following about maximization of profit52:
If you ask a typical businessperson to define an enterprise, they will probably say that it is an organization that should make a profit. The typical economist will probably give the same answer. This answer is not only false, it bears no relation to the facts.
The predominant economic theory of firm and business behavior, the maximization of profit – which is simply a complicated way of expressing the old refrain of buying cheap and selling at a high price – may, more or less, explain the way Richard Sears worked. What it cannot explain is how Sears Roebuck or any other business enterprise operates, or how such business should operate. The concept of profit maximization is, in fact, meaningless.
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2. The imperative of maximization of profit is anti-liberal.
The freedom to conduct a business inherently entails the free choice of its lawful purposes. However, when profit maximization is elevated to an imperative, this freedom of choice is constrained. This impoverishes the very exercise of entrepreneurial liberty and leads to a proliferation of anti-competitive practices, which become essential to enforce a regime of maximum enrichment for owners and managers.
3. The alternative of the maximization of surplus value is even more detrimental to the enterprise and the economic fabric.
Consider a property owner who rents out their asset. If the tenant unilaterally decides to pay only a fraction of the agreed rent, justifying this by stating that the owner's enrichment is already ensured by rising property values, the absurdity and unacceptability of this breach of contract become self-evident.
However, this is precisely what a prevailing school of thought encourages enterprises to do: limit dividends to a small fraction of benefits, or forgo them entirely. This strategy relies on using—and, wherever possible, covertly manipulating—market mechanisms to ensure that the surplus value (capital gain) realized upon the liquidation of the investment reaches a level that is, at a minimum, comfortable and at best, miraculously high.
4. Is a sufficient rate of profit on capital a norm that a market economy is able to uphold?
Postulating a positive answer to this question is methodologically wrong. But it is also important to place at the beginning of the theory of the market economy an a priori which distracts from the provision of a positive answer in the course of theoretical elaboration.
5. A claim about some kind of gain is a one-condition definition.
The property that this statement states must indicate what is specific about this gain and who perceives it, otherwise its definition, in the sense of this concept in the logic of non-fuzzy sets, is a deception.
6. What is proven for any gain is not a defining element of any of them.
All winnings, including those acquired from games of chance, have in common that they constitute a goal for someone (strictly speaking, a thing has no purpose and an enterprise is a thing); to be exposed in search of their as much as possible; require the taking of a risk of losing a bet or a situation or both; to be considered as a "reward".
7. Talk about profit, which only repeats what all gains have in common, harms the quality of "social dialogue".
At the forefront of these remarks is: "Profit is the goal of the enterprise" or "maximization of profit is the goal of the enterprise" (sic, in both cases, as far as "the enterprise" is concerned). Its variant "The enterprise is an association for profit" (Medef, 2007) reinforces this belief more than it contributes to its evolution. In the same vein, the "risk premium" and the "reward" are invoked to justify profit.
The emphasis on objective considerations specific to the issue of business ownership is left aside. An increase in the number of points of substantive agreement between the "social partners" has been postponed indefinitely.
8. The "social refoundation" without a refoundation of the doctrine of profit comes up against an impossibility.
The "social refoundation" aims to reduce the systematization of abuses of power and power relations, particularly in relations between employers and employees. Its success requires less arbitrary discourses on the enterprise.
The spread of such discourses is blocked as long as the most objective aspects of profit are sacrificed to the perpetuation of ideological traditions. It is, in fact, logical that the advocates of the class struggle, even in its most reformist form, or of economic war, even in the most policed form, pretend not to see that this most objective exists.
9. The distinction between "internalities" and "externalities" serves to avoid questioning marginalist axioms.
In The Theory of Corporate Finance (2006, Princeton University Press), Professor Jean Tirole (Nobel Prize in Economics 2015), after recalling on page 57 "that prices reflect the scarcity of resources, that management should aim at maximizing shareholder wealth", states (same page, first paragraph of section 1.8.1): "An economist would rephrase the position of the proponents of the stakeholder society on the recommendation that management and directors internalize the externalities that their decisions impose on various groups". In other words, the maximization of "shareholder wealth" is at the forefront of internalities, but it must be tempered by taking into account the externalities that constitute the "stakeholder society".
Economists on this line say to the officers and directors of tradable joint-stock enterprises, on the stock exchange or over-the-counter: take a broader view of what is at stake. In doing so, these economists implicitly recognize that the axiom of prices, always a function of scarcity, as well as the axiom of maximizing shareholder wealth, may not be objective realities that enterprises and nations can ignore with impunity because they are "internal" – inherent – to the economic system. To arrive at a scientific point of view where this hypothesis leads, it is necessary to engage in a whole reconstruction, refusing to presuppose in particular:
1e) that there is a common determinant of all prices – while accepting that the study of price formation in each of the main categories of economic exchange leads to the finding of the existence of such a determinant –;
2e) that the economic system excludes Profit the possibility of a sufficient price for the investment of savings in shares of capital in terms of profits – this is false, it is demonstrated –;
3e) that the economic system excludes in the matter of wages the impossibility of finding an objective sufficiency in their national averages – it is their inadequacy that is everywhere and always true. – ;
4e) that the economic system excludes, also in the matter of wages, their differences from being keys to the distribution of total labor income – it is in fact unfair not to take into account, from the stage of the theory of the price of labor, the fact that the highest wages reduce those below them –;
5e) that the normal effect of the market economy is the maximization of saving placement income by compressing small and medium income from labor – the opposite is demonstrated with the help of concepts that are admissible in the logic of finite sets: the normal tendency in a competitive economy is the maximization of small and medium income from labor through the sufficiency of saving placement income;
6e) that capitalism dominated by the search for surplus value is necessarily the ultimate of economic liberalism;
7e) that Yield Capitalism deserves the contempt in which it is held because its systemic properties are not superior to those of capitalism dominated by the search for surplus value. Peter F. Drucker, an economist by training and then a very committed actor, has repeatedly declared himself convinced that great progress remains to be made by daring to restart the objectivist theory of basic economic theory.