Tag Archives: Profits

Updates from Chicago Booth

When making a profit was immoral
By John Paul Rollert – Take the system of beliefs we commonly associate with capitalism. However familiar they might seem to us, if we date capitalism’s founding moment to the publication of Adam Smith’s The Wealth of Nations in 1776, the free-market nostrums that shape our views of business today are not even 250 years old.

In Religion and the Rise of Capitalism, a magnificent book that deserves to be better remembered, the English social critic and economic historian R. H. Tawney describes how the work of Catholic theologians in the late Middle Ages provided the “fundamental assumptions” that shaped Robert Keayne’s world and that capitalism’s proponents would later have to reinterpret, if not displace outright. Tawney said there were two central precepts that guided commercial activity: “that economic interests are subordinate to the real business of life, which is salvation, and that economic conduct is one aspect of personal conduct upon which, as on other parts of it, the rules of morality are binding.”

Taken together, these precepts are directly at odds with the central organizational assumption of capitalism, namely, that we should be guided by self-interest in commercial pursuits. more> https://goo.gl/72gRfL


Why Economists Don’t Know How to Think about Wealth (or Profits)

By Steve Roth – “Wealth” is just the beginning. As Noah Smith has said so aptly, economics terminology is a dumpster fire. The carnage extends right down to (necessarily accounting-based) definitions of income, saving, and investment.

The national accounts and the terminology therein have both embodied and promulgated an incomplete (and deeply regressive) economic world view. Even accounting-based adepts often find themselves conceptually trapped inside these incomplete, inconsistent, jumbled, and muddled concepts and definitions.

Everyone agrees that government deficit spending and bank lending create “money” (much better: “assets”) in ways that are impossible in the simplified spending-equals-expenditures circuit diagram.

Nevertheless, a huge amount of economic thinking quietly operates inside that simple circular model. more> https://goo.gl/HUF5RZ