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Is the Purpose of Business to Earn Profits for Shareholders and Investors?

by Bill Lasarow

February 1, 2025

So, is the purpose of business to earn profits for shareholders and investors? No it is not, not first and not foremost.


Jutta Haeckel, “Skin in the Game,” 2024, acrylic on jute (8 panels), 78 3/4 x 126”.
Courtesy of Hosfelt Gallery, San Francisco.

That idea equates to indentured servitude; no matter how well you are compensated you are trapped. The true first purpose, ahead of delivering profit, is to produce and offer a product or service that delivers value. If the demand is of sufficient scale that you can earn a living for yourself and your staff you are a success. A privately formed company may combine the investments of the principals joined with those of other investors to launch and operate. Value and quality coupled with marketing and demand, equals income for owners, investors, and employees. This is the primary reason that capitalism works, and it rests on a moral foundation shaped by devotion to quality and need that fosters a bond of trust built between producer and consumer. If that demand grows to a certain level, the company may opt to go public, the best way to raise a good deal of capital rapidly.


The trade-off in the latter case is that the shareholders assume direct influence over product and service decisions in return for enabling corporate expansion. Some companies are structured specifically towards that goal. Occasionally what was once a nice mom-and-pop small business becomes a corporate behemoth. Case in point: Walmart. The combination of delivering a quality product or service and the organic demand can propel a company towards exponential growth; but is that necessarily a good thing?


Tom Sachs, “The Cabinet,” 2014, mixed media. Courtesy Sperone Westwater, New York.

The downside has been not just the pursuit of prosperity but its transformation into a quasi-religious faith. In authoritarian America it has hardened into a dogma that has overtaken the moral foundation of capitalism in two critical ways. First, it has nurtured a minute class of senior executives whose personal wealth so far exceeds that of everyone else, the so-called 1%, as to disconnect them from the other 99%. Second, it has mutated many corporations away from the sound principles on which the public option rests. Rather than enabling accelerated product(s) development and the means to meet and grow consumer demand for quality products and services, it has evolved into a casino in which the money we invest is done so with the sole intent of maximizing financial return with a minimum of labor and risk. It ain’t illegal, but the morals and ethics are monstrous and getting worse.


And so we arrive at why the frequently stated purpose of these businesses is to earn profits for the shareholders is not only morally deficient, it is detrimental in terms of the long term self-interest of the company, its management, and employees. The exchange of ethical standards for profit is inversely proportionate, but the deterioration and ultimate failure of such companies takes time, sometimes decades. The period during which the senior management and shareholder enjoys their greatest financial return may assume the appearance of a golden age, but it can be the surest indication of an underlying rot. The risk of being a good citizen is often regarded as the ticket to financial disaster exactly when profitability comes easily and the financial stakes are at their peak. Therein lies the path to predatory capitalism. When predatory capitalism aligns with consumer passivity — in which the mythological status of a brand is no longer backed up by product or service quality — the concentration of wealth and influence paves the way to the collapse of both company excellence and consumer confidence.


Andreas Gursky, “Schweine II (Pigs II),” 2020, photograph. Courtesy of the artist.

What does this mean, “predatory” capitalism? In the midst of abundance there gradually evolves a mass psychosis in which an idealized past enters into a conflict with a corrupted present. The very richest gain the tools to control their markets irrespective of their product, those tools begin as mergers and consolidation, but eventually are spelled M-O-N-O-P-O-L-Y. For rank and file consumers, in America and elsewhere the vast middle class, there may still exist an enormous array of choices in the marketplace (just scroll about in Amazon for confirmation), but a given marketplace is in a small number of hands. Extracting small amounts of money from vast, mostly oblivious numbers of middle class consumers is one of the surest paths, hardly the only one, to predatory capitalism.


It is essential to distinguish “collaborative” from “predatory” capitalism. The first links profitability to quality of product or service to the principle of delivering both as the means for customers to enhance their quality of life within their means. The business objective is to produce reasonable profit for a long period of time that permits routine, sometimes dramatic, adjustments to be made in a dynamic business environment in which taste, needs, and technologies are constantly improved and revisited.


Walton Ford, “Falling Bough,” 2002, watercolor, gouache, ink and pencil on paper.
Courtesy of Kasmin Gallery, New York.

Consumer satisfaction is connected to both the baseline product or service and the company’s ability to respond to the evolving demands within its given marketplace. The more that ethical ground erodes — in which a company and its consumers mutually benefit — the greater the temptation becomes for predatory capitalists at the company to abandon service to their customers in favor of self-service. This cultural devolution is a primary (hardly the singular) cause of decline, and the more widespread the number of companies that succumb to this moral infection the greater the risk of national decline.


And that is the crossroads at which American presently stands, under the control of a tiny class of plutocrats whose brazen economic interests coincide or even merge with a tiny class of autocrats that lust after their own monopoly of political power. Control, in the predatory America currently in ascendance, today has the upper hand over service. The predators are now having their day. But at what cost to the rest of us — and, sooner or later, to themselves?


Bill Lasarow, Publisher and Editor, is a longtime practicing artist, independent publisher, and community activist. He founded or co-founded ArtScene Digest to Visual Art in Southern California (1982); the Mural Conservancy of Los Angeles (1987); and Visual Art Source (2009). Most recently he is also the founder and President of The Democracy Chain.
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