Profit is not an easy concept. Is it possible for everyone in a society to make a profit over the same time span? Yes and no. There are two ways everyone can make a profit, and one way in which not everyone can. In one sense, not everyone can make a money profit if there is a given, or relatively constant, number of people with a given, or relatively constant, aggregate amount of money. For someone to make a money profit in such a society, the money he accrues that is more than the money he spends must have been money that another person or other people lost. To make a profit that is not at someone else's expense, more money must come into the group. Of course, it could come from some other group or society, but that simply pushes back the question to whether all people can make a profit without someone's taking a loss. Again, the answer, if one is speaking of money profit, would have to be "No" if the amount of money remains constant.

If the money supply is increased, by, say, the government, or by a gold strike (if society is on a gold standard), then people could all make a monetary profit if they all got some share of the increased amount of money.

However, such an increase in money, or in money profit, may not make people any better off in terms of the amount of Goods and Services available, or available for them to purchase. If two men marooned on a desert island, working as hard as they can to cooperate and build a better life for both of them, find a chest of buried treasure --if it consists merely of paper money, or of gold or silver in a form that they cannot use-- they will not profit in any real sense by that find or increase in "money". It will not help them build anything or meet any of their needs, other than possibly aesthetic ones, any more efficiently or any better than if they had not found it. On a two-man island of plenty (food, comfort, climate, shelter, mental stimulations, health, etc.) the discovered treasure would also not add to their real wealth, other than in providing additional aesthetic pleasures or exploratory or historical issues to think about. Similarly, in any (bounded or closed) society working at full capacity to meet its needs, finding gold or diamonds or increasing the money supply among everyone equally (or proportionally somehow) would be of no help (other than, of course, the non-monetary uses that could be made of gold or diamonds or paper). Everybody would be richer in money, but not in the things that one buys with money -- the things money is for. When there is more money, but no more Goods and Services to be had with it, the money becomes worth proportionally less. What essentially happens is that the value of the unit of money, in terms of what it might purchase (as an intermediate in trade) is less.

However, if the money is not distributed evenly or proportionally, people who find it might even quit working or reduce their work load, and simply trade their newly found money to others for their needs. In such a case, they, as individuals, make a money profit and a life-style or material profit, but the total profit in the society may actually decrease as the total amount of Goods and Services decreases because of the idle potential labor. The person with the money may be better off in the sense of having a bigger benefit and less burden than he had before, even though there is more burden for everyone overall and less benefit for everyone overall than there was before. If the kind of work the person was doing previously cannot be done by someone else, than an entire kind of Good or Service may be lost, not just a certain amount.

In a society that uses money as a means of exchange, an increase or a decrease in money can affect the amount and kind of Goods and Services available, depending upon the kind of person who receives it and what he chooses to do with it. This is also true with regard to a constant money supply that becomes concentrated into the hands of fewer people. If people work primarily or only for money, and if money is unavailable to them for the labor they are doing, than they either have to change their labor to provide products and services those with the money will purchase, they have to rely on the charity of the people with the money, or they will have to do without money. [Even if people labor in a direct barter method, they still have to do the kind of work someone with access to the kinds of things they want is willing to trade for.]

Obviously we believe there is something wrong with a person's counterfeiting money, and I would argue that is because we believe he does not deserve to benefit from the distribution of other people's labor since he has contributed nothing important to the total amount of Goods and Services available to others. He has nothing of any real value to trade. He is receiving distribution of society's benefits without contributing to them for no reason other than his greed and sloth. This is a problem of fairness, and is separate from the other, also serious, problem that undetected counterfeit money can cause inflation or some other kind of imbalance between available money and available labor and products. 

The situation with regard to fairness and desert is very similar for someone who might find a great deal of lost money, or who might be given some largess, for no particularly good reason by others acting individually or by the government (i.e., others acting in concert, perhaps in some official way). The money he is trading for Goods and Services does not represent any contribution he has made. He is taking from the total stock of Goods and Services without giving anything to it. Similarly, gambling --except for its entertainment value of excited anticipation and hope-- provides no Good or Service and is simply a mechanism for re-distributing money in society, not adding to the total amount of Goods and Services. And by taking out of useful work those who work in the gambling industry, and those who win enough at gambling that they give up useful work, gambling as a professional industry, apart from its entertainment or thrill value, decreases the total amount of Goods and Services available. (The difference between gifts and gambling winnings on the one hand compared with counterfeiting on the other is that counterfeiting adds to the (apparent) money supply and can imbalance the money/labor relationship, whereas gambling and money-gifts do not change the overall amount of money available compared with the amount of available labor.)

On the other hand, a person who collects a great deal of money in a money economy (an economy where people primarily work and trade for money), whether by gift or by earning it, who then for whatever intention, burns that money or buries or hoards it so that it is no longer available for trade or for paying labor, may seriously disrupt or reduce the amount of labor people will do (and thus the total contribution of Goods and Services to society), because he has taken away the means of paying for that labor. This is true as long as no one who could replace the "lost" money realizes the need to do so. Labor will be lost until the money supply is increased or the value of the remaining supply is increased by people realizing they need to work and trade for less money -- and (when all do this) still get the same amount of individual and total benefit and burden.

And, consider the case of someone who collects a great deal of money and chooses to employ people with it who he can find willing to work for it. If the labor is available, the money may be used to build and run a cathedral. Or it could be used to build and run a brothel. Or it could build and run a good school; or a lousy school. Or a hospital, or research center, or automotive design shop, or social/political research center, or a dog food factory. Whatever route is taken with money, as long as the labor is available and willing to be employed in that way for it, the money has material impact on the quality of life in the community it serves -- because of the kinds of products and labor that it stimulates and thereby produces. Money that is channeled toward products and labor that do not provide real Goods and Services is like money that is buried or burned. If those products and labor not only have no benefit, but are harmful as well, than they not only waste labor that could have produced Goods and Services (benefits) but create additional burdens as well. It is not the amount of money available, but the amount that is available in relationship to available labor, and how it is used to employ labor, that influences the quantity and quality of benefits and burdens in a given society.

Finally, people can can, as many people do, not end up showing a money profit (i.e., not increase their  financial savings) in some period of time because they spend all they make.  Nevertheless, they have profited from the money they made and spent by being able to purchase products and labor (or Goods and Services) they wanted for their labor.  There is a vast difference in a money economy between making and then spending all of an amount of money (whether we are speaking of individual income, corporate income, or government income and expenditures) on the one hand, and making and spending no money on the other, even though the monetary balance in both cases ends up zero.  The difference is that when you make and spend money, you produce things for others and you get things from others; trade occurs, to the mutual beneift of the participants.  You gain in the things you have purchased and others gain by the things you have sold.   If you neither make nor spend any money in a money economy (and are not bartering) you are not trading and therefore you are not benefiting from trade and you are not benefitting others by trading with them.  If you are not self-sufficient, you may even starve to death or live a very poor existence.  Whatever potential labor you could do, whatever Goods or Services you could provide for others in trade, remains potential, not actual, and is ultimately wasted and lost.  The flow of money is important in a money economy in order to allow for trade (other than barter), and it is what keeps the economy working, even if no one were to make a monetary profit.  There would still be real profit, in terms of what is gained by having participated in the trading --the economic-- system.  When the flow of money is impeded for any reason, trade is impeded and the gains from trading are lost because trading is diminished or lost. Potential labor goes unused and never becomes productive labor, so the benefits and "profit" (in terms of Goods and Services) do not materialize and are therefore lost.

Social profit is the total addition of benefits (i.e., Goods and Services), minus any increased burdens, of course, contributed to a society for whatever reason or by whatever means (i.e., inventions, efficiency, management, available labor supply, techniques, technology, greater accumulated knowledge, change in economic system, or whatever). Individual profit is the addition of such benefits, minus increased burdens, that an individual receives. (There can be, therefore actual individual profit, or average individual profit.) 

Absolute profit is the amount of increased benefits (minus increased burdens) a society or individual gets from working in an economic system with others (specializing and trading surpluses, etc.) rather than by everyone's individually trying to meet their own needs. Relative profit is an increase in absolute profit from the absolute profit of some previous period, some other system, or some other set of conditions. We tend to think in terms of relative profit almost exclusively, but it is important to recognize that there is a great deal of (absolute) profit in many societies and systems which we tend to take for granted and not notice.

Further, we might speak of profit in certain kinds of Goods and Services, as opposed to overall or total benefits -- for example Americans and Western Europeans on average profit more in food and medicine than did their counterparts of the 17th or 18th centuries. At the same time they may profit less in terms of friendships or public safety.

This notion of profit, in these forms, corresponds to the notion of being better off than one was, or would be, in a different kind of social and/or economic system or stage of knowledge and technology. This has nothing necessarily to do with the amount of money one makes or keeps, but with what increased benefits one has or can get. Even in a money economy, it concerns not how much more money one makes than he needs to spend, but how much more benefit he has, or has been able to purchase, than he had before. Benefits that are had but not purchased may be in the form of beneficial "externalities" (e.g., cleaner air, better public health, more abundant food supplies, new discoveries and inventions, etc.) Or they may be in the form of increases in things of intangible value, such as leisure, for all other things being equal, increasing the amount of leisure⁽¹⁾
available to anyone or everyone profits them. 

When profit is thought of in terms of money rather than in terms of the additional benefits people have, anomalies occur in those situations where money profits do not actually bring increased benefits to society or even to the individual who makes the money profit. 

In this notion of profit -- increased benefits in proportion to burdens-- which I believe is the most important sense of profit, everyone in a society can make a profit at the same time. If an invention or a business arrangement, management plan, or a new form of cooperation increases everyone's standard of living --increases everyone's benefits and/or reduces their burdens-- then everyone has profited from that even if not everyone has made more money. (This profit does not have to even be excess accumulation or accumulation of more goods. If three people, for example, go into a Chinese restaurant and order three different, say, equally priced, dishes that they share equally among themselves, they each have a greater variety than if they had each dined on only one dish. If that variety in itself is an additional benefit, they have profited from dining together and sharing, even though they each had the same amount of food and spent the same amount of money as they would have, had they dined alone or not shared.)

Suppose three computer companies develop significantly faster computers at the same time, and suppose that businesses who use computers purchase these kind instead of the previous models. Assuming these coompanies produce higher quality Goods and Services, there might be any number of scenarios where no one makes any more monetary profit than they did before, yet more people are better off because of the improved computers. Everyone who uses the improved products benefits or profits from those improvements, even though competition may have kept any one company's monetary profits from increasing.

Society seems to me to recognize to at least some extent that free market monetary profits are not the most important ends or even means to good ends. Through social pressure or through law, society often forbids or attempts to forbid doing certain kinds of labor and hiring, or trading for, certain labor; e.g., prostitution, gambling, counterfeiting, moonshining, stealing, fraud, certain kinds of advertising, murder or contract killing, insider trading, selling military capabilities or information to enemies or potential enemies, etc., etc. The rationales for making activities illegal would be interesting to examine. I suspect there are at least two basic rationales: (1) the work creates more harm than good; i.e., it brings harm or risk to society and thus is a cost (whether monetarily or non-monetarily) to society, as in unlicenced or unregulated medical practice, drug dealing, contract killing, and selling military secrets; and (2) payment for the activity is an unfair and undeserved distribution of the profits or benefits of society when the activity is clearly not work that contributes to the benefit or profit of society, as in counterfeiting, theft, fraud, insider trading.

Arguably there are other activities, now legal, socially acceptable, and even psychologically attractive, where money profits actually work against increasing benefits, and may even work toward greater harm. Technology and industry that causes regional or global health and safety risks only in order to make available more items of mere convenience or to insure the availability of luxury items to a few, may be profitable in a monetary sense and even in some psychological or ephemeral way, but they would not be beneficial overall. (Sometimes short-term money profits even prevent longer term money profits, when prudent investments are not made with the money to insure the continued success of a given business; but my principle concern here is that even when short-term and long-term monetary profits do not conflict, such profits may not really present real increased benefit to society, or even sometimes to the individuals who earn them -- as when someone works long hard hours at producing a financially profitable, but marginally important or useful, faddish product, and misses out on helping rear his children or developing significant relationships with family and friends, or forfeits personal activities that might make his life healthier and more worthwhile, though less financially wealthy. Some of the types of things in which increased money profits cause overall burden rather than benefit are just being discovered; others have been known for some time. Unfortunately that knowledge is not always widespread enough to work against the attraction of producing monetary profits. It is important that the concepts of monetary profit and monetary cost are not the only concepts businessmen and economists understand as benefits and burdens -- as profit and loss. They need to understand that, at present anyway, monetary profits and costs are only one kind of profit and cost. Many businessmen, of course, already recognize this, as do many workers. So a company may build a building in a pretty site with a great number of amenities, such as a gym or walking area around a lake, providing, for a fixed one time cost, attractive conditions that will attract workers for perhaps sufficiently less salary to more than pay for itself in the long run. Or that may make them more productive because of increased health, happiness, vigor, or longevity. Where people live near the businesses they own, they may make decisions or improvements that are not cost-effective but which improve the quality of life for all in the area, including themselves. For example, a local owner is less likely to want to pollute his own water supply with probable carcinogens just to make a greater monetary profit. A business may want to make college scholarships available to members of its community, not just because it may be good advertising for the company, but because it arguably will help produce a better overall community -- a community of more productive and capable citizens.

Economists are now trying to quantify benefits and burdens in order to put a money value on them. Recent efforts have been made to try to put a dollar value on leisure or on pollution (clean-up) costs or even on human life in cost/benefit analyses. Such methods may work, but they seem to me to be working backwards and may ultimately prove very harmful. Cost/benefit analyses work backwards when they give people the idea that things are only bad, wrong, or burdensome because they cost more money than one wants to spend on them, rather than that the cost is imposed as a sanction --as one additional way of trying to prevent the harm from being done. And they end up being harmful when people with sufficient money decide that the cost is worth the wrong-doing, as when a wealthy person disdains driving safely because he can easily pay the fines if he were to be caught, or as when a car company decides it is more financially profitable for them to neglect certain reasonably remedial safety defects than to build them and add them to the price of the car. It seems to me that money costs ought not to determine nor risk determining our important values, but ought to reflect them when possible and ought not to be made to seem equivalent or more important to them when they are not. Certainly we would not want murder to be sanctioned only by a costly fine, so that those willing and able to pay would be free to commit the crime. Similarly, one does not want harmful negligence or gross incompetence to be allowed to continue simply because someone's insurance company is willing to pay for it and spreads out the costs among clients who are not negligent or incompetent. Monetary costs and monetary sanctions are not sufficiently strong enough sanctions to discourage some people from wrongdoing, especially, of course, if they can make a profit in spite of paying fines. Grossly negligent medical malpractice, for example, as long as it is not a criminal matter, simply costs everyone but the offending physician more money --by raising all physicians malpractice insurance premiums, the costs of which are passed on to patients-- and does not curb the malpractice. 

Thinking of profit in terms of money is, however, primarily backwards because real profit is made, not when one makes more money, but when one uses that money to acquire Goods or Services that improve ones life. In this sense, spending money (wisely) is when one makes the profit. (The only exception to this is when money savings gives one a feeling of security about being able to meet one's needs or desires in the future for things that are more expensive than what one might be able to buy at that time otherwise.) 

Also, it is extremely difficult, if not impossible, to try to express certain benefits or burdens in terms of money. Even trying to determine a monetary value of something as apparently innocuous as leisure time (see Chapter 22, "Quantifying Qualities of Value) seems to me to be fraught with more than just mathematical problems and concerns. Obviously some hours of leisure are worth far more than others -- leisure to do something you really want or need to do is worth far more than leisure time that you have nothing personally necessary or interesting to do. Vacation time for your honeymoon or to attend your child's wedding is more significant than a week off when there is little to do or to be able to plan or enjoy. So therefore no fixed, permanent, absolute monetary value can be placed on "a leisure hour", especially if such a value encourages, say, employers or customers, to expect you to work for them for any "overtime" hour they want just because they are willing to pay you slightly more than the value of "a leisure hour", or if it leads to the false notion that the value of any leisure hour is the same as that of any other leisure hour. One employer I knew thought you owed him whatever forty hours each week he wanted, even if they were at odd times, and even if they were not continuous on a given day, as if working 8-10 a.m., then 11-1, 3-5 p.m., and 9-11p.m. on one day constituted an eight hour work day. 

Also, different people put different value on an hour of their work or an hour of their leisure. Some people prefer leisure to work, in general; others prefer their work to leisure because they enjoy their work, and the money it brings, more than they enjoy their average time away from work. One corporate administrator told me that his company has two virtually identical operations in two separate cities, one city in the South and one in the Pacific Northwest. Employees in the South request weekend work and even frequently request to be allowed to work instead of taking vacations. They want their vacation pay and the pay for the work they do (which would otherwise be done by a substitute who would be paid). Employees in the Pacific region live for their leisure time and do not make polite responses when asked to work overtime on weekends. Overtime pay is not sufficient to make them even consider giving up their weekend time let alone a vacation. Traffic becomes congested beginning about 4:30 every Friday afternoon as campers and cars with boats in tow head out of town to nearby recreation areas.

I am not saying that there are no ways to formulate or represent some of this in monetary numbers; but that the danger is that the original numbers might take on a life and significance of their own that overshadow their intent to be a representation of reality, not a reality itself. If a worker needs or strongly wants leisure at certain times, it would probably sometimes be beneficial for an employer to recognize the importance of that leisure and not just to assume some amount of money could automatically compensate for the person being asked or forced to work at that time. I do not know that all these kinds of things can be made concrete in a formula, especially a formula that an employer might expect an employee to have to be happy with. 

It is an empirical question whether employees who have flexible working hours and flexibility about overtime, with understanding employers or managers, are more productive or not. And it may be able to be determined empirically whether they are more satisfied employees or not. If so, an economic concept such as "the financial value of a leisure hour" may jeopardize that flexibility and attendant productivity and job satisfaction.

I own my own business and set my own fees and hours. I try to be fairly consistent, but there are some jobs and clients and times that I bid higher for and others that I will bid lower for than the average. Some times are more convenient (have less opportunity personal costs), some jobs are more interesting, and some people are nicer to work with than others, so that the monetary value of it does not need to be as compensatory as would be doing other jobs for different people or at a different time. There are some jobs I would not do, and some people I would not work for (unless absolutely forced to) for any price, so I do not quote a price, even a ridiculously high price, that might be accepted. There is an old joke about the man who asks a woman if she would sleep with him for $1,000,000. She ponders that for a minute and says she probably would. So he asks if she would sleep with him for $10. She angrily asks him what kind of a woman he thinks she is; and his response is "We have already determined that; now we are just haggling about the price."

What is necessary is that research, discussions, and debates about burdens and benefits, costs and profit not be limited to those things that are especially quantifiable or that can be easily understood in terms of money. The notion of benefits and burdens is likely to be fairly complex. Even "happiness", if that were quantifiably measurable, would not correspond very well to our everyday notions of benefit, since our level of expectations tends to increase with our successes. New benefits tend to long outlive the happiness they first generate, as we come to take them for granted. Many proposed burdens and benefits may be intangible or difficult to demonstrate or even describe, let alone quantify in financial terms, but that just means we need to be more attentive and understanding, not purposely less sensitive to them because they are not (initially) recognized financially.

1. Although it will not usually be problematic for discussion, the concept of "leisure" is more complex than it appears. One may or may not, for example, earn money in one's leisure; one may or may not work very arduously in one's leisure. For example, one might go to college at one's leisure even though doing homework, attending class, and studying for exams is a lot of work. Yet one may also have leisure time at work, during working hours. And if one's everyday labor is something one really enjoys or feels "called" to do, one may find it difficult to distinguish between one's work and one's leisure; one may even do extra work during one's leisure because one enjoys it so much, and not consider it work. Or two people might disagree about what constitutes work and what constitutes leisure. A golf enthusiast, for example, may think that golf professionals having nothing but leisure, though the professional may feel he works hard at his career. 

I believe that a helpful definition of leisure is that time, or those activities, not spent in pursuit of earning or acquiring the necessities (and to some extent, the normally expected conveniences) of life, nor in doing what one has to do, but in doing something one wants to do. This leaves open the question of whether someone who works hard, at something s/he may not particularly enjoy doing, in order to make a great deal of money to buy very expensive conveniences and luxuries, is spending leisure time working or not. They would probably not see it as leisure time, but those who think s/he is working much harder than s/he needs to might see it as spending his/her leisure working.  (Return to text.)