Profits: The Purpose of Business?

This chapter of Social Economics examines goals of businesses. As legal creations, corporations and some other forms of business are given protection that eludes people, including limited liability and, in the case of corporations, perpetual life. Do they consequently then have an obligation to the givers of said protection, i.e., society? In other words, should the business serve more than just its stockholders/owners? Should its goal, its purpose, extend beyond profit maximization? What obligations do they have to customers, workers, suppliers, and the community? Some assert that maximizing profit is the only valid purpose of business, that profit maximization is achieved in a competitive environment when firms efficiently provide the goods and services that consumers demand; by seeking profits, businesses satisfy their moral obligation to society and owners to use resources prudently. Profits represent a clear measure of the good done for society, as consumers freely choose which products and firms to patronize—and unprofitable firms, those not efficiently satisfying consumer demand, wither. Surely there is a great deal of logic to this. And yet, that is not the end of the discussion. Alternatives, including “shared value” are discussed in detail.