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 heads! Many who see things this way consider morality preserved, provided that this money is put to good use, 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 profit85:
Asked what a business is, the typical businessman is likely to answer, “An organization to make a profit.” The typical economist is likely to give the same answer. This answer is not only false, it is irrelevant.
The prevailing economic theory of business enterprise and behavior, the maximization of profit—which is simply a complicated way of phrasing the old saw of buying cheap and selling dear—may adequately explain how Richard Sears operated. But it cannot explain how Sears Roebuck or any other business enterprise operates, nor how it should operate. The concept of profit maximization is, in fact, meaningless.
<..> the opening pages of the chapter are reproduced in the appendix: What Is a Business?. <..>
2. The imperative of maximization of profit is anti-liberal.86
Freedom of enterprise entails the free choice of lawful ends. When maximum profit is raised to the rank of an imperative, the free choice of ends is exercised less, and the exercise of freedom of enterprise is impoverished. Restrictions of competition proliferate, because they are indispensable to keep an enterprise subservient to the maximum enrichment of its owners and managers.
3. The alternative of the maximization of capital gain is even more questionable.
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 current of doctrine encourages commercial companies to do: limit dividends to a small fraction of earnings, or forgo them entirely. This strategy relies on using—and, wherever possible, covertly manipulating—market mechanisms to ensure that the capital gain realized upon the liquidation of the placement reaches a level that is, at a minimum, comfortable and at best, fabulous.
4. Presenting profit as the purpose of the enterprise harms the quality of “social dialogue”
Statements such as “The enterprise is an association for profit” (Medef, 2007) reinforce the belief that profit is the purpose of the enterprise. They define that purpose by the lure of gain, that is, by what all gains have in common: being a goal for someone, being pursued to the maximum, entailing a risk, being regarded as a reward. What holds for every gain defines none of them: such statements say nothing of what is specific to profit, namely who receives it and in exchange for what. This belief supplies arguments to the advocates of class struggle, even in its most reformist form, and of economic war, even in its most policed form. As Peter Drucker observes, the profit motive and its offspring, profit maximization, are “in large part responsible for the prevailing belief that there is an inherent contradiction between profit and a company’s ability to make a social contribution. Actually, a company can make a social contribution only if it is highly profitable.”
Profit, the distributed part of earnings, is the price of placement in capital, one of the co-producers of the enterprise: it is neither its goal nor its purpose.
5. 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 enterprises with negotiable shares, 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 see scientifically where this hypothesis leads, a whole reconstruction is required, one that refuses 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 rules out, as regards profits, the possibility of a sufficient price for the placement of savings in shares of share capital – this is false, as can be demonstrated –;
3e) that, as regards wages, the economic system rules out finding an objective sufficiency in their national averages – as though their insufficiency held everywhere and always –;
4e) that the economic system, also as regards wages, rules out that wage gaps are keys to the distribution of total labor income – it is in truth unjust to disregard, 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 placement income by compressing small and medium labor incomes – 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 labor incomes through the sufficiency of placement income;
6e) that capitalism dominated by the search for capital gain is necessarily the nec plus ultra 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 capital gain. Peter F. Drucker, an economist by training and then a very committed actor, repeatedly declared his conviction that great progress remained to be made by daring an objectivist new beginning of basic economic theory.