Friday, October 16, 2015

The Choice is Not Principles or Profits, Because There are No Profits Without Principles

Altruism divorces virtue from personal gain, leaving the act of profitable productive achievement adrift in an amoral sea.

For example, after pharmacy chain CVS announced that it would rebuild its two Baltimore stores that were looted and destroyed in this year’s rioting, the New Jersey Star-Ledger lauded the company for being “willing to place principle over profit.” In Amid the riots and rubble, CVS stays righteous, the Star-Ledger editorialized:

"We have a long history of serving inner city communities," [CVS CEO Larry Merlo] said, "and we are 100 percent committed to serving our patients and customers in Baltimore."

And then, just to put his money where his mouth is, Merlo's company donated $100,000 to the United Way of Baltimore and the Fund for Rebuilding Baltimore.

No doubt, this is more than just an altruistic gesture; companies go where they can generate business, and that area of West Baltimore must buy whatever that CVS is selling. That community is a food desert for area residents, who also depend on it for their prescription drugs.

But CVS, which already has 20 other Baltimore outlets, has shown before that it is willing to place principle over profit.

Sure, the company has had its share of missteps over the years, which is to be expected for the second largest pharmacy chain in the country. But in an age when we are jaded by the corporate pursuit of profits, it's fair to say this without hesitation or trepidation: Bravo, CVS.

I left these comments:

“CVS . . . has shown before that it is willing to place principle over profit.”

It doesn’t take principle to earn a profit? Nonsense.

Profit is the reward for successfully producing goods that consumers value and are willing to pay for. We are literally engulfed in the gifts that profit-seeking business corporations deliver, without which our lives would be deeply impoverished.

And what does it take to profitably create those goods? Virtues like intelligence, imagination, long-term planning, skill, ability, problem-solving prowess, dedication, hard work. It takes an unrelenting  principled commitment to the productive purpose of the corporation, which requires management skills able to do the difficult job of integrating all of the factors of production and gear it toward the satisfaction and well-being of the customer—the ultimate source of profits. The customer benefits and the business benefits—Win-Win, a truly noble method of serving the community.

Hopefully, CVS donated their money and decided to rebuild as an act of goodwill with an eye toward producing future profits, rather than as an act of altruism (unrewarded giving, or lose-win). Altruism is easy; a one-shot act to make the giver feel good. It’s easy to give up what you have earned. What’s hard is the creating that makes giving possible. Profit is where the long-term benefit to the people of the community lies. Bravo to CVS for its principled, virtuous, and successful commitment to its corporate pursuit of profits, without which there could be no $100,000 donation, or stores that provide access to the economic values local residents need, desire, and benefit from.


Unfortunately, my comments came across as seeming to justify the pursuit of profit by benefit to the consumer or community, a collectivist-sounding rationalization. This I realized in preparing this post. Such is the danger of rushing to post a comment. The good of consumers does stem from the pursuit of profit. But that good is a consequence of profit-seeking, not the primary motive of the businessman, or the justification for his profits.

Related Reading:

Why Capitalism Needs a Moral Sanction

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