Talk:Profit (economics)/Archives/2017

Profit in health
Has anyone ever said that finding the cures to all illnesses/diseases would destroy a lot of profits, & it might stop people from curing diseases because certain people don't want to lose the pofits? Hillmon7500 (talk) 02:43, 2 April 2014 (UTC)
 * How does your question contribute to improving the article? Jibal (talk) 08:56, 27 February 2017 (UTC)

Removal and unusual editing
Since the November 2015 version of this article much has been removed and added, see diff Nov2015 - last edit and diff Nove2015 - penultimate edit. Jonpatterns (talk) 20:21, 24 March 2016 (UTC)
 * The old version is much better. Jibal (talk) 08:58, 27 February 2017 (UTC)

Profit is not the correct way to describe company gain
Strictly there is no such thing as profit because what we think of this money flow is actually a return for investment (dividend). We must first accept the fact that the three factors of production of Adam Smith (1776 Wealth of Nations) are a proper way of describing how goods are made. Smith correctly states that the combination of land, labor and durable capital goods (capital) are all that is required. One might claim that each of these factors has a returning "profit" for its use, because it seems to a provider of each factor (land-owner, worker and capitalist, respectively) that it is worthwhile to so do. But this is only true when such a provider compares his/her resulting return-sum with what would happen (nothing) were his/her particular production factor not used.

My claim that these 3 returns are not actually profits at all but are the proportions of the value which has been created in the produce by the production process, which makes it worthwhile for the particular factor of production to be employed. When the produce is sold to a consumer or user, this sum is effectively split into 3 returns of ground-rent, wages and interest (or dividends) respectively, and there is nothing left over.

If a producer has an advantage of some kind (such as a land monopoly) so that the selling price of the product significantly exceeds what appears to be the production cost, the extra sum is not to be regarded as profit. It simply means that the investment in the capital has become more worthwhile than in other situations. Then the (resulting) dividend is high and out of proportion with the average of all the other kinds of investment. This will have the effect of increasing the value of the shares in the company until its percentage of dividend is similar to the average amount gained from other kinds of investment. Thus what can be described as profit (being excess gain from selling a product at more than its production cost) is now better expressed as being the dividend from a company having a greater value. The greater value is the effect of the specific position or dominance it has from its advantageous situation.

Normally, when competition is free and there is no monopoly, other companies will join in the production and soon they will all be able to produce the goods or services at roughly the same cost. This means that each dividend will be about the same. There is no discussion as to whether a company occupying the above-mentioned advantageous position is morally right, it can simply occur and provide greater dividends compared to when the sum originally invested in the particular company is placed in a less lucrative business.Macrocompassion (talk) 07:30, 7 March 2017 (UTC)