Somewhere out there is the concept that profit is a bad thing, that profit involves ripping people off, which certainly can happen.
I’m proud of being what I call a “Populist Capitalist.” I’ve got a whole riff on
- Why I detest “Cronyism Capitalism” (it gives the rest of us working capitalists a bad name)
- Why many boards of directors are a sad mockery of stewardship (effectively most corporations are owned by management and run for their benefit)
- Why “corporate welfare” is the worst kind (reach into the taxpayer’s pocket and give money to the rich? Robin Hood is spinning in his grave).
Those are all topics worthy of postings in their own right. But this one is about a wonderful concept called “Economic Democracy.”
For the free market to work properly*, certain conditions must exist:
- The market must present customers with viable choices
- Customers must have the resources (sufficient money and reasonable product knowledge**) to choose effectively and efficiently
Once these conditions exist to a reasonable degree, you can have Economic Democracy where making a profit equals winning the economic election.
You see, unlike the government, I can’t make you give me your money.
In a free market there is a business down the street selling a product or service similar to mine and I have to convince you (i.e., win your vote) that my product/service is a better deal, will make you happier, more content, better off than anyone else’s.
And unlike elected officials, I am much more motivated to deliver on that commitment because I’ve got to go out and win that election on an ongoing basis in an ever-more connected, constantly communicating globe.
So in a properly functioning free market, if I make a profit, it is because I’ve made a lot of people happy AND I’m continuing to do so on an ongoing basis. And that’s mainly what we want, right? Happy, satisfied customers.
* A free market works properly when it creates the greatest prosperity for the greatest number over the long term.
** Product knowledge does not have to be personal. It can be:
- Governmental (you know that there are regulatory limits to what Hertz can put in a car rental contract, so you sign it without reading it), or
- Organizational (Zagat’s restaurant ratings or Consumer Reports or Froder’s travel guides), or
- Societal (your best friend is a gadget guru and she recommends), or
- Networked consumers (on-line consumer driven, experience-based ratings)