kwang

In 1950, the eponymous founder George Wilhelm Merck said that “We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear.” In 1970, Milton Friedman wrote an NYT column titled “The Social Responsibility of Business Is to Increase Its Profits” In the same historical era, Nun-CEO Sister Irene Kraus coined an apparent synthesis: “No margin, no mission”. Here are some claims I think are true about Profit and Value: Profit and Value aren’t the same The difference between capitalism and shmapitalism, as I call it, is in precisely whether Profit or Value is more important: * Capitalists view organizations as financial instruments with which they maximize Profit. Capitalists are concerned first and foremost with extracting Profit. Capitalists seek to maximize the Profit they capture. Capitalists sacrifice their long term sustainability in order to increase near term Profit. Capitalists use Profit to maximize the Profit they extract. A capitalist justifies a human life by its economic value. * Shmapitalists view organizations as generative instruments with which they maximize Value. Shmapitalists are concerned first and foremost with delivering Value. Shmapitalists ensure their long term sustainability at the expense of their near term Profit. Shmapitalists seek to maximize the Value they deliver. Shmapitalists use Profit to maximize the Value they deliver. A shmapitalist grounds economic value in the human lives which constitute it. Boeing’s ongoing troubles are perhaps the best case study to understand this difference (1, 2, 3, 4). Boeing chases Profit at the expense of Value when it minimizes costs at the expense of passenger safety. Boeing helps us understand the failure of asserting Profit as ultimately and intrinsically valuable. Profit and Value can sometimes align Pr