It’s time to talk about money. Perhaps this is a taboo subject. But we all need to come clean. It is easy to reject profit and at the same time be mistress of the arcane art of grant applications. Community activity, just like business, depends on money.
This quotation is from a contemporary economist from Scotland, called John Kay:
Profit is no more the purpose of business, than breathing is the purpose of life.
Profit, or money in general, is not the purpose of business but its means. We think about money in the wrong way. It is essentially dynamic and has purpose when in use.
As soon as we think of money as something to accumulate, we lose sight of its purpose. The purpose of business is to do stuff. This is true whether you are a business, a community organisation, a church, a local authority …
Two massive mistakes seem to pull in opposite directions. Both believe business exists to generate profit. Profit is essential for business survival, just as breathing is essential for human life. We don’t live to breathe, do we? So, why do we think business exists for profit?
Because the profit motive is the root of modern economic thinking. There are broadly two mistaken approaches: one embraces profit as the purpose of business, the other rejects it.
Profit as the Purpose of Business
A profit-centred approach leads to inequality. Let’s clear away a few myths. First, there is nothing wrong with some people owning more than others, so long as everyone is able to live with dignity.
A strictly equal society would be equal at sword point. Only violence could enforce strict equality and those holding the sword would of course never succumb to temptation and accumulate more for themselves!
The problem is we are measuring the wrong thing when we measure personal wealth. We need to measure wealth to understand inequality but the most important measure is money in circulation.
Societies can be less unequal than they are today. They were, for example in the mid-twentieth century, when two world wars eroded inequality.
Profit-Centred Business Ideology
What does it mean when profit becomes the purpose of business? It legitimises selfishness and dishonesty. For the profit-centred business person the aim is to use any means to accumulate capital.
Regulation becomes offensive because in a completely unregulated market, personal power counts. Lust for power erodes human relationships and apportions blame to weaker people. Typically, subjugation of women and others on grounds of ethnicity happens because the powerful need groups they can blame when things go wrong.
This approach fixes on a mythical past when things were better. It is a nostalgic worldview, based on pure fantasy. But nostalgia plays well with many people and so populist movements can grow around charismatic business owners.
In 2016, we saw the triumph of Arron Banks in the UK and Donald Trump in the US. Both are billionaires with the common touch. Both focus solely on the profit motive. They exercise a reactionary power that targets democracy because they believe democracy gets in the way of business.
They exist because the ideology of profit-first lends them legitimacy. Their belief that business equates to profit leads to massive corporations extracting finance from the economy and so increasing inequality. On a smaller scale, business becomes cutthroat, reducing collaboration and denying society the contribution businesses can make when they recognise a role beyond their immediate profit.
Rejection of Business Because of Profit
No-one can afford to make this mistake any more. By rejecting business as a legitimate approach, we allow the political right to decide the purpose of business. The pendulum has swung so far in that direction that it is almost impossible to get alternatives heard.
The reactionary right has succeeded because they have created a delusional alternative to the prevailing economic system that will in all respects be worse because it is committed to deregulation and is anti-democratic.
Radical movements do not have to reject business and indeed the idea they must is a late twentieth century mistake. The problem radicals have is the mirror to the reactionaries, who focus on an imaginary past, while radicals live in an imaginary future.
Equality, democracy and all the freedoms we value depend upon people collaborating to resist those who would control our lives in the name of profit. This is true here and now.
By rejecting business, radicals have allowed the right to control the market. Now the reactionary right are seeking political control, where they can deregulate our markets, increase inequality and destroy democracy. They deploy their prejudices to mask their real values. Deregulation benefits the corporations and disadvantages local businesses. Those who would oppose them deny themselves the means to do so when they reject business as a legitimate activity.
So, this sequence will help you understand money, not in terms of nostalgia for a mythical past or dreams of an imagined future. We need business rooted in present realities, building localised markets and mutual values.