I used to think someone who pursues the profit is bad behaviour. Some of my friends who hate capitalism stick it deeper on my mind. Then, I think that profit similar to greediness. All business tends to be greed than others occupation like doctor or farmer.
Conversely, Social mission is precious when you help someone or other people without hope nothing. My religion also taught me to be a sincere person. When you want to help others, just help. Don’t think you will get any reward such as money or social status. Of course, this doctrine strengthens the “anti-profit” in my minds.
Then, I used building social activities for a year. Helping pedicab drives to get money for fulfilling their life. Of course, this is a social project. I was not hoping any reward in money or such things. I just want to help the pedicabs get enough jobs for a day. However, this project couldn’t survive for more than one year.
After that social project, I decided to build my first serious business. I make a startup called homipedia.com. During my time running the business, up and down, I learned much about the concept of money, wealth, and what profit actually is.
Today, I want to share about some misleading about profit-based my experience and intellectual journey.
What profit actually is?
The basic definition of profit is simple. I will give you a short story. If you are a trader than get a pen from factory $ 1 each pen. Then you sell to your agent for $2. So you get margin $ 1 for each pen. We call this 1$ as a profit, a deviation between buying and seller prices.
Most people things profit system rooted in capitalism. It is actually wrong. The profit system was an old system, used by traders in ancient times. Then when people invented money, the trader easier to get profit. So, the profit system not invented by capitalism system.
Capitalism is not simply as profit-oriented. Because capitalism raised in England around 18 centuries. But, the profit system had been invented a long time before capitalism era. The trader in Ancient Greek, Arabian or Chinese takes the profit from goods that they sell.
Profit and Greediness
Many people associated profit with greediness. If you sell service and goods and you take high profit, you will be accused as an agreed person. Taking profit to high that advantages yourself. This kind of thing is not totally wrong or true.
If you take advantage to sell goods in crisis times this is not wrong, but ethically incorrect. For example, people who sell medical masking with the ultra-high price during Covid-19 outbreaks are not ethics. Why profit or not is not about right or wrong, because the rooted of economic itself is from ethics.
For me, profit is not similar with greediness. But it has power to encourage someone to be more greedy than before. Because human desire is unlimited and the profit can be a perpect way fasilitate this desire. That’s way capitalism oftentimes accused as profit-oriented.
Profit and Non-Profit oriented
I bet you ever hear about these: Profit and non-profit bussiness. Profit associated with bussiness as usual that make product or service for commercial purpose. While non-profit referes to an institutions that produce the product and service not for commercial purpose.
However, do non-profit bussines don’t take a profit? Even a cent?
Here is the misleading. Even a non-profit bussiness take also takes a margin like other trader or bussiness. But they don’t take the profit not for capital acumulation purpose. They take it for funding the their daily operation or finance their project.
I have a friend working in a foundation called Aksi Cepat Tanggap (ACT). The foundation collection get money from the crowd and deliver it to their humanity program. They also took certain percent to pay their staff and operational. Do they take profit? Yes. Do they accumulate the profit? No.
Profit and Accumulation
One of the common doctrine on capitalism is the capital accumulation. You must accumulate the capital and make it bigger and bigger everyday. This is the fundament doctrine of capitalism in micro economics sectors. So, the doctrine of capitalism is not how you take the profit as much as possible, but how can you accumulate it.
Why not take much profit? Because it will make your good price increase significantly. In free market, the consumer will come to your competitor that offer more good price. That why in capitalism market, the doctrine says the market can regulate itself.
However, many people misleading about capitalism is about the profit. Sometimes, a beginner anti capitalism become anti profit as well. But actually capitalism is about accumulations. That why they advice the people to invest not saving. Because investing makes you possible to accumulate capital, but saving not.