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What is a Profit Motive?

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  • Written By: G. Wiesen
  • Edited By: Heather Bailey
  • Last Modified Date: 10 December 2016
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A profit motive is, quite simply, the goal of most businesses, to make a profit or have more money coming into the business than is spent by the business. In capitalism, it is generally considered to be the main reason most businesses exist and is closely tied to the concept of “self-interest.” It has also developed a fairly poor reputation and is considered by many to be one of the primary reasons that businesses or corporations are not trusted or require regulation. A profit motive, ultimately, should be devoid of morality, and the choices made by others in pursuit of higher profits should typically be considered rather than the desire for profit itself.

Most economists and financial experts consider profit motive to be the primary reason a business exists in a capitalist society. While this may seem somewhat simplified, all aspects of a business can typically be connected to how the business makes a profit and how those profits are used to continue growing the business. The relentless pursuit of financial gain, the profit motive in other words, may also be seen as a wholly selfish endeavor, but proponents of capitalism and self-interest in business would argue otherwise.

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For example, it may seem inherently selfish for a company to exist purely to make money and that all decisions within the company are made to further this pursuit. The profit motive can serve the customers and employees of a business however, since the company should consider how money comes into it. In a retail business, for example, unhappy customers are unlikely to give the business money and unhappy employees are unlikely to make sales or otherwise bring money into the company.

It can often be in the best interests of the company, even in pursuit of the profit motive, to keep employees happy and ensure that customers feel satisfied with their experience in dealing with the company. Of course, a purely financial goal for a business can certainly be a source of abuse and mismanagement as well. The profit motive can inspire actions that are short-sighted and only intent on making money immediately with disregard for the future or long-term financial goals.

This type of business strategy or planning often has a great deal to do with how the people running a business act, and is not necessarily a direct result of profit motive. Opponents of this type of self-interest, however, typically argue that the basest aspects of humanity tend to come out when greed and profit are placed over compassion and responsibility. This argument, however, is once again typically more indicative of how those in power within a company behave, rather than the pursuit of money in and of itself.

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Melonlity
Post 1

But is the profit motive that drives a company always amoral? There's a reason, for example, that Walmart talks about how much it gives back to communities, the fact the company has committed more money to purchasing American made products, etc. Walmart wants to be viewed as moral and hopes to generate good will that will, in turn, translate into more people shopping at its stores and boosting the companies profits.

In a sense, then, Walmart is very consciously making decisions that will be viewed as good works in the communities where it has stores. A completely amoral company, on the other hand, might focus on continuing to exploit the cheapest labor possible in order to provide the lowest prices possible to customers. That makes more sense in the "profit motive is amoral" context than buying potentially more expensive American made items.

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