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Home› Part II - Political economy propositions›Chapter 6 - Profit

Chapter 6 – Profit

Profit — "The difference between an enterprise's total revenue and all of its expenses related to the production and sale of its goods and services. / Schematically, profit can be considered as "what remains" to the enterprise once it has paid the prices of its factors of production and, generally, all of its expenses. The existence of a profit naturally presupposes that all of its income (measured approximately by its revenue) is greater than all of its expenses"122

Another work of economic vocabulary, after having taken up: "Profit — Difference between the total revenue and the total cost of an enterprise",123 states in line with the prevailing economic teaching: "Profit is an objective to be achieved, which sums up all the goals that are pursued by the firm.124 ".But in this "summary", what about the maximization of profit? The propositions and arguments to be followed are, of course, in line with the statement stated above: enterprises are not inevitably enslaved to a maximum to the advantage of their owners or managers.

Here is a political economy that makes profit first and finally the end of a commodity exchange. Here is another one that does not, as is still the case today for the most taught. On this point, one breaks with the other. The one who does so pursues an overtly normative project that is very different from the apparently descriptive project of the other. By means of the methodological options from which the one who does so derives his capacity for objectivity, the atavistic and contradictory feelings that the notions of profit and capital continue to excite are stepped over. This is in order to base the primitive analysis of economic facts on concepts that are sufficiently defined and indispensable for their use to become impartial. The alternative, which is still the most commonly used, is the dead-end damnation of responses to ideology with ideology, in the pejorative sense of the word.

Propositions

  • 6.1 Let us reserve the term profit for distributed earnings provided in return for a placement in capital or quasi-capital.
  • 6.2 Profit is the dividend in the case of commercial companies of any kind.
  • 6.3 Profits are one of the allocations of enterprise earnings.
  • 6.4 Profit is an objective necessity.
  • 6.5 The full distribution of distributable enterprise earnings is sound.
  • 6.6 Standardizing the publication of rates of profit on capital is possible and necessary.
  • 6.7 A rate of profit measures rate of return or profitability.
  • 6.8 The publication of average rates of profit on capital is the responsibility of the public authorities.

Notes

  1. Dictionnaire économique et financier, Yves Bernard, Jean-Claude Colli, and Dominique Lewandowski, Inspectors of Finance, Éditions du Seuil, first published in 1975. In this quotation, “receipts” are the income (produits), in the accounting sense of the word, made up entirely of revenue in enterprises that, over the period considered, received no subsidy. ↩
  2. Vocabulaire économique, Frédéric Teulon, Agrégé de l’Université, Presses Universitaires de France, coll. « Que sais-je ? » n° 2624, 1996. ↩
  3. Same source as the previous quotation, with between these two excerpts: “Profit has three functions: – it remunerates the providers of capital who have taken risks and who have made contributions in labor; – it represents an efficiency constraint; – it makes it possible to free up resources to finance investments ”. In this assertion, “functions” is a disguised way of saying “reasons for being”, for one must divert attention from the logical status of the assertion that follows. To say, indeed, that profit “sums up the whole of the firm’s aims” is logically admissible only if it is a hypothesis demonstrated by the doxa. Since this is not the case, and since it will surely never be the case, because the enterprise is one thing and there are in reality only people who have aims, this assertion conveys an untruth administered by begging the question. ↩
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