The origin of the word ‘Profit’ is from the Latin word profectus meaning to advance, progress,increase. If it were to mean that and that alone it would probably be not such a contentious term. However, it does not mean just that , it is the main driver that underpins the markets within capitalism. Until now perhaps ?
this cruel pandemic is showing us much about what really matters …..This crisis has helped make clear that the world in which the sole objective of a company’s purpose is to maximise profit is no longer acceptableThis a quote from Bernard Looney, Chief Executive of BP , taken from his linkedin blog and reported in The Times April 6th 2020.
I am not against people making buckets loads of dosh. I am against those making tanks full of dosh. I dont understand why and I dont understand how anyone benefits apart from the individuals concerned . Then I dont understand what they benefit they derive from the vast wealth except knowing they have vast wealth. I think the likes of the Bill Gates Foundation is laudable but how is a point reached where one man is able to setup a charity involving billions of dollars , without having any material effect on on his own lifestyle. What if during his presence at Microsoft , he had slightly reduced profit margins and paid his colleagues more (I know they are reasonably well paid anyway ) , what if he had made his products slightly cheaper so they were more available to a wider audience . I am not picking on Bill Gates, it is justthat he is, probably, the best known amongst the current crop. Warren Buffet, an associate of Bill Gates, in his philanthropy, made a fortune out the fincial crisis alone. How does that stack up? Nor is it confined to todays billionaires, history is littered with fabulously wealthy individuals who funded amazing projects but still pocketed excessive amounts, at the same time as employing very dubious commercial practices. Carnegie, Randolph Hearst, and JP Morgan to name but a few.
Hans-Christoph Hirt of funds giant Federated Hermes wrote to businesses last week, saying: “The world will not be the same again — or, at least, it should not be.”
Hirt talks of a “more sustainable form of capitalism”, while Deloitte’s team refer to “stakeholder capitalism”. Shareholder returns may take a back seat, although Alex Edmans, professor of finance at London Business School, reckons companies that serve wider society can perform better.Jill Treanor
Sunday April 19 2020, 12.01am, The Sunday Times
I think Bernard Looney is being relatively honest about his approach . Although, some may think he is trying to Big up BP’s environmental and social credentials . It has had its fair share of disasters in recent years. But so have all the fossil fuel companies. If he follows up the words with actions, I am pretty sure it will pay dividends , in all senses of the word.
Good profitable organizations are fundamental to all economies. They feed our pension funds (private and public) they create employment , they enhance their national treasuries (some more than others) and they create general wealth. It is that vastly excessive wealth, that does not actually do anything apart from making a few people , fabulously wealthy and in most cases powerful.
To illustrate that, this time last year, Oxfam told us that eight individuals have as much wealth as the poorest half of the world’s population. Now it has revised that figure to 61 people for last year, falling to 42 people this year – that’s a pretty big revision.Anthony Reuben, BBC Reality Check January 2018
Many commentators and journalists , say this approach is down to envy. I would counter that with vanity. Much (I hasten to add not all) philanthropy contains a large lump of vanity. When it comes to envy , I can very clearly state from my own point of view , that this is really not the case. Under no circumstances do I ever want to be in a position that I and my family are surrounded by security. We can not go about freely. We cannot truly trust anyone. We have to be wary of every move we make or things we say and to whom. We have so much property that most of it rarely gets used. We have cars, boats and planes that are only used to be kept in working order. But perhaps most importantly completely distanced from everyday life. An apartment in town, a country pad , somewhere warm to go to in the winter , flying first class ,would all be very nice. But you dont need billions for any of that. Just a few hundred million !
My belief is that if the significant few (individuals), and as a consequence the significant many (organisations) were to rearrange their business models to be slightly less focused on pure profit and added some dollops of social, environmental and corporate awareness they would benefit financially from more investors, of all shapes and sizes, and better performance within their own markets through increased global consumer acceptance of their product and services. And just maybe the world would then be a marginally better place.