Profit motive

About: Profit motive is a research topic. Over the lifetime, 607 publications have been published within this topic receiving 48929 citations.

An Evolutionary Theory of Economic Change

Abstract: This study develops an evolutionary theory of the capabilities and behavior of business firms operating in a market environment. It includes both general discussion and the manipulation of specific simulation models consistent with that theory. The analysis outlines the differences between an evolutionary theory of organizational and industrial change and a neoclassical microeconomic theory. The antecedents to the former are studies by economists like Schumpeter (1934) and Alchian (1950). It is contrasted with the orthodox theory in the following aspects: while the evolutionary theory views firms as motivated by profit, their actions are not assumed to be profit maximizing, as in orthodox theory; the evolutionary theory stresses the tendency of most profitable firms to drive other firms out of business, but, in contrast to orthodox theory, does not concentrate on the state of industry equilibrium; and evolutionary theory is related to behavioral theory: it views firms, at any given time, as having certain capabilities and decision rules, as well as engaging in various ‘search' operations, which determines their behavior; while orthodox theory views firm behavior as relying on the use of the usual calculus maximization techniques. The theory is then made operational by the use of simulation methods. These models use Markov processes and analyze selection equilibrium, responses to changing factor prices, economic growth with endogenous technical change, Schumpeterian competition, and Schumpeterian tradeoff between static Pareto-efficiency and innovation. The study's discussion of search behavior complicates the evolutionary theory. With search, the decision making process in a firm relies as much on past experience as on innovative alternatives to past behavior. This view combines Darwinian and Lamarkian views on evolution; firms are seen as both passive with regard to their environment, and actively seeking alternatives that affect their environment. The simulation techniques used to model Schumpeterian competition reveal that there are usually winners and losers in industries, and that the high productivity and profitability of winners confer advantages that make further success more likely, while decline breeds further decline. This process creates a tendency for concentration to develop even in an industry initially composed of many equal-sized firms. However, the experiments conducted reveal that the growth of concentration is not inevitable; for example, it tends to be smaller when firms focus their searches on imitating rather than innovating. At the same time, industries with rapid technological change tend to grow more concentrated than those with slower progress. The abstract model of Schumpeterian competition presented in the study also allows to see more clearly the public policy issues concerning the relationship between technical progress and market structure. The analysis addresses the pervasive question of whether industry concentration, with its associated monopoly profits and reduced social welfare, is a necessary cost if societies are to obtain the benefits of technological innovation. (AT)

The Achieving Society

Abstract: Examines the motivation for achievement as a psychological factor that shapes economic development. Refuting arguments based on race, climate, or population growth, the book instead argues for cultural customs and motivations - especially the motivation for achievement - as the major catalysts of economic growth. Considering the Protestant Reformation, the rise of capitalism, parents' influences on sons, and folklore and children's stories as shaping cultural motivations for achievement, the book hypothesizes that a high level of achievement motivation precedes economic growth. This is supported through qualitative analysis of the achievement motive, as well as of other psychological factors - including entrepreneurial behavior and characteristics, and available sources of achievement in past and present highly achieving societies. It is the achievement motive - and not merely the profit motive or the desire for material gain - that has advanced societies economically. Consequently, individuals are not merely products of their environment, as many social scientists have asserted, but also creators of the environment, as they manipulate it in various ways in the search for achievement. Finally, a plan is hypothesized to accelerate economic growth in developing countries, by encouraging and supplementing their achievement motives through mobilizing the greater achievement resources of developed countries. The conclusion is not just that motivations shape economic progress, but that current influences on future people's motivations and values will determine economic growth in the long run. Thus, it is most beneficial for a society to concentrate its resources on creating an environment conducive to entrepreneurship and a strong ideological base for achievement. (CJC)

The Achieving Society

Abstract: Examines the motivation for achievement as a psychological factor that shapes economic development. Refuting arguments based on race, climate, or population growth, the book instead argues for cultural customs and motivations - especially the motivation for achievement - as the major catalysts of economic growth. Considering the Protestant Reformation, the rise of capitalism, parents' influences on sons, and folklore and children's stories as shaping cultural motivations for achievement, the book hypothesizes that a high level of achievement motivation precedes economic growth. This is supported through qualitative analysis of the achievement motive, as well as of other psychological factors - including entrepreneurial behavior and characteristics, and available sources of achievement in past and present highly achieving societies. It is the achievement motive - and not merely the profit motive or the desire for material gain - that has advanced societies economically. Consequently, individuals are not merely products of their environment, as many social scientists have asserted, but also creators of the environment, as they manipulate it in various ways in the search for achievement. Finally, a plan is hypothesized to accelerate economic growth in developing countries, by encouraging and supplementing their achievement motives through mobilizing the greater achievement resources of developed countries. The conclusion is not just that motivations shape economic progress, but that current influences on future people's motivations and values will determine economic growth in the long run. Thus, it is most beneficial for a society to concentrate its resources on creating an environment conducive to entrepreneurship and a strong ideological base for achievement. (CJC)

The Corporation: The Pathological Pursuit of Profit and Power

Abstract: In this compelling opus on reform, driven by extensive research, authoritative anecdotes, and insider interviews, eminent law professor and legal theorist Joel Bakan points out that as a legal and economic entity, the modern corporation is essentially pathological in nature, placing the profit motive above any social value or accountability. But a change is in the wind. The recent spate of corporate scandals are causing companies to consider and put into effect a heightened social responsibility. In THE CORPORATION, Bakan backs his premise with the following claims: Corporations are required by law to elevate their own interests above those of others, making them prone to prey upon and exploit others without regard for legal rules or moral limits; The corporation's unbridled self-interest victimizes individuals, the environment and even shareholders, and can cause corporations to self-destruct; Governments have abdicated control over the corporation, despite its flawed character, by freeing it from legal constraints through deregulation and by granting it ever greater authority over society through privatisation Despite the structural failings found in many corporations, Bakan believes that change is possible and outlines a far-reaching programme to bring reform through legal regulation and democratic control.

Resources, values, and development

Abstract: Preface Introduction Part I: Institutions and Motivation Peasants and Dualism with or without Surplus Labour Labour Allocation in a Cooperative Enterprise The Profit Motive Part II: Isolation and Social Investment On Optimizing the Rate of Saving Isolation, Assurance and the Social Rate of Discount Terminal Capital and Optimum Savings On Some Debates in Capital Theory Approaches to to the Choice of Discount Rates for Social Benefit-Cost Analysis Part III: Shadow Pricing and Employment Optimum Savings, Technical Choice and the Shadow Price of Labour Control Areas and Accounting Prices: An Approach to Economic Evaluation Employment, Institutions and Technology: Some Policy Issues Part IV: Morals and Mores Ethical Issues in Income Distribution: National and International Rights and Capabilities Poor, Relatively Speaking Family and Food: Sex Bias in Poverty Economics and the Family Part V: Goods and Well-being The Welfare Basis of Real Income Comparisons Ingredients of Famine Analysis: Availability and Entitlements Development: Which Way Now? Goods and People Name Index Subject Index