Tony Deden on the business owner

Instead of taking our cues from financial types, let’s consider the owner of a long-standing enterprise.  He wants to avoid going out of business (and so do I).  He is entirely uninterested in what others do (and so am I).  He wants to remain competitive, relevant and enduring (so do I).  Yes, he aims to be profitable but, he really knows that, in the long run, profit is the result of being successful at what you produce, not the result of chasing higher securities prices.  He, too, deploys irreplaceable capital.  He, too, considers the scarcity of his resources and the value they reflect in all his actions.  He knows the difference between something that has financial value and something that has true economic value (so do I), and he wishes to leave something meaningful to the next generation (so do I and so should all of us).

~ Tony Deden, "Arise, prudent man," Grant's Fall 2018 Conference, October 19, 2018

Steve Forbes on the role of profit (and the contrasting views of Adam Smith and Joseph Schumpeter)

Smith, Marx and Keynes all believed in various ways in what you might call an equilibrium, that the economy is a steady state and you get disruptions from time to time, whether wars, earthquakes or new inventions.  You get some turmoil and then things settle down and you have an equilibrium, which is why even John Stuart Mill became a socialist (not because of the influence of his young wife).  He couldn’t understand the role of profit. 

Even Adam Smith did not understand the role of profit.  If you have an economy where you are striving for a perfectly competition equilibrium, there is no role for profit, other than as a bribe for entrepreneurs to do things.  Schumpeter was an infidel, in the words of Peter Drucker.  That is, he saw profit as a cost of doing business, as a moral force.  Why?  Because in his mind the economy is always dynamic.  A free market is dynamic, always changing, what he called creative destruction.  You focus on the creative side.  But it’s also destroying, which means it’s destroying capital and you have to replace that destroyed capital with new capital. 

Also, how does an economy advance?  It advances with new knowledge.  Where does knowledge come from?  Through constant experimentation by entrepreneurs in the marketplace.  Look at Silicon Valley.  Look at Peter Thiel.  He says eight out of ten ventures, even with great brains like his, will fail.  Only two out of ten, maybe one out of ten, will really be successful. 

So, profit is essential if you’re going to have a growing economy.

~ Steve Forbes, "Full Remarks by Steve Forbes On the Presentation of a Triple Crown in Economics to Mark Skousen," July 19, 2018

Friedrich Hayek on and profit and loss

As we now know, in the evolution of the structure of human activities, profitability works as a signal that guides selection towards what makes man more fruitful; only what is more profitable will, as a rule, nourish more people, for it sacrifices less than it adds.

~ Friedrich Hayek, The Fatal Conceit (1988), Chapter 3: "The Evolution of the Market", p. 46

WeWork CFO on how investors should treat losses

We really want to emphasize the difference between losing money and investing money. You can lose money or you can invest money. At the end of this quarter, we have these cash flow-generating assets.

~ Artie Minson, WeWork CFO, as appeared on CNBC, May 22, 2019

Nassim Taleb on profit, loss and opportunity

The characteristic feature of the loser is to bemoan, in general terms, mankind's flaws, biases, contradictions, and irrationality - without exploiting them for fun and profit. 

~ Nassim Taleb, The Bed of Procrustes, p. 12

John Mackey on exploitation, entrepreneurship, and the profit motive

Politically, I drifted to the Left and embraced the ideology that business and corporations were essentially "evil" because they sought profits. I believed that government was "good" (if the "right" people had control of it) because it altruistically worked for the public interest.

[I'd been taught that] business and capitalism were based on exploitation: exploitation of consumers, workers, society and the environment. I believed that "profit" was a necessary evil at best and certainly not a desirable goal for society as a whole. However, becoming an entrepreneur completely changed my life. Everything I believed about business was proven to be wrong.

No one is forced to trade with a business; customers have competitive alternatives in the marketplace; employees have competitive alternatives for their labor; investors have different alternatives and places to invest their capital. Investors, labor, management, suppliers — they all need to cooperate to create value for their customers.

In other words, business is not a zero-sum game with a winner and a loser. It is a win, win, win, win game.

~ John Mackey, founder and CEO, Whole Foods Market, "The Transformation of John Mackey," Mises.org, June 13, 2008, by Ralph R. Reiland

Wilhelm Röpke on the profit and loss guide to a "rational economy"

The individual is forced by competition to seek his own success in serving the market, that is, the consumer. Obedience to the market ruled by free prices is rewarded by profit, just as disobedience is punished by loss and eventual bankruptcy. The profits and losses of economic activity, calculated as precisely and correctly as possible by the methods of business economics, are thus at the same time the indispensable guide to a rational economy as a whole. Collectivist economies, of whatever degree of collectivism, try in vain to replace this guidance by planning.

~ Wilhelm Röpke, from a section titled "The Spiritual and Moral Setting," A Humane Economy

Mises on foresight and profit

Entrepreneurial judgment cannot be bought on the market.  The entrepreneurial idea that carries on and brings profit is precisely that idea which did not occur to the majority.  It is not correct foresight as such that yields profits, but foresight better than that of the rest.  The prize goes only to the dissenters, who do not let themselves be misled by the errors accepted by the multitude.  What makes profits emerge is the provision for future needs for which others have neglected to make adequate provision.

~ Ludwig von Mises, Human Action