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Home› Part II - Political economy propositions› Chapter 6 - Profit›Proposition 6.4
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6.4 Profit is an objective necessity.

1. In an Objective Political Economy (OPE), the subtype of so-called market services and trade is the same as the subtype of so-called economic services and trade.

Market acts are nevertheless a subtype of economic acts. By definition, no economic transfer is a commercial act.

2. Profit makes the service of placements in capital marketable.130

Like the service of labor and wages, an placement in credit and the interest it earns are the two terms of a commodity exchange. An placement in capital or quasi-capital and the profit it is likely to bring are similarly the two terms of a economic exchange.

3. The necessity of profit flows from the necessity of capital.

Capital savings are necessary for the creation and development of viable and autonomous enterprises, a necessary condition for raising what is usually called "the standard of living". Whoever is opposed to the very principle of profit is only consistent if it is also opposed to the principle of interest and that of wages, since all three respond to the same necessity: to remunerate useful services.

4. Losses reduce capital and the lack of profit blocks a dynamic.

Losses instead of earnings reduce capital, until it becomes more and more negative. Insufficient earnings compromise the sufficient return on capital. The dynamic then blocked is the one that allows the enterprise to adapt its offers to the incessant transformations of techniques and outlets.

5. Sufficient earnings are the constraint that economic objectivity forces to make the most ubiquitous in enterprise management.

Sufficient earnings, and hence sufficient profit, are a vital constraint to which the enterprise is subject, regardless of anyone's psychology.

6. An enterprise does not economically own its earnings.

For what remains after wage-earner earnings-sharing, the earnings of an enterprise belong to the person who provides it with its capital. To see in the earnings or loss of an enterprise a difference of the same nature as that between the income and expenses of a household or a non-commercial association is an error of economic analysis.

Notes

  1. See P. Fabra, Capital for Profit, Rowman & Littlefield, 1991, pp. 89–90 and 134: exchange does not generate profit, yet there is no profit without exchange. Fabra’s merit is to have placed profit back into the circuit of exchange; the OPE retains this point, not his theory of deferred exchange (see the note to the argument of Proposition 6.2). ↩
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