“The greater good” versus profit maximization

“The greater good” versus profit maximization

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In its annual survey, Edelman Trust Barometer, the public relations firm Edelman has found that Canadians’ trust in business has dropped significantly, from 62% respondents saying that they trusted business in 2014, to 47% this year. [Note that the 2021 Trust Barometer showed 56% of the pandemic-battered Canadians trusting business.]  

This is a significant drop, especially given that 33,000 people were surveyed in 27 countries, and the overall level of trust in business by respondents worldwide was down only 2%, from 59% to 57%. [In the 2021 survey, the average level of trust in business was 62% across the 27 countries].

So what do results like these tell us? In my view, not an awful lot, because the survey’s methodology is not clear. We don’t know how the sample was drawn and whether the results are representative (on average, about 1,200 people were surveyed in each country), statistically significant, and what the margin of error was.

We also don’t know how the survey defined and measured trust. The definition of trust on Edelman’s website does not shed much light on this: “Trust is a forward-facing metric of stakeholder expectation.”

If the survey’s methods are valid, it merely confirms that the Canadian respondents’ view of business has grown even dimmer since last year, and that the majority of them wants more government regulation of industry (because they trust government more than they do business). [In 2021, Canadians’ trust in their government was higher (59%) than their trust in business and also higher than the global average trust in government (56%).].

The real gem of a finding was this: 53% of the Canadian respondents “believe that businesses ‘failed to contribute to the greater good,’ and instead act in their self-interest for profit,” according to the National Post article. The wording must be Edelman’s, respondents being asked whether they agreed with the statement or not. But still, it resonated with 53% of the respondents.

Let’s see what this statement reveals about the “non-trusters’” anti-business mentality. What is “the greater good” and how is business supposed to contribute to it? Does profit maximization harm society?

The term “greater good” is used to refer to the “good of society.” Since society consists of individuals, its good means the sum of the good of its individual members. And since individuals value different things and prioritize their values differently, there is no way of “summing up” their “collective” good. (Any attempt to do so would be merely the majority imposing its view of the good, with the government’s help, on the rest of society’s members).

The notion of business contributing to some vague, undefinable “greater good” can be dismissed (unless we want a tyranny of the majority). But what then is the role of business in society?

Businesses create and trade material values: food, clothes, houses and other buildings, medicine, insurance policies, hair salon services, cell phones, computes, natural gas for heating homes, fuel for our vehicles, bank loans—an endless range of goods and services on which our lives and well-being depends on.

The creation and trade of material values, motivated by profit maximization, is the contribution of business—for which we should be grateful. Thanks to business and division of labor that it makes possible, we don’t have to live on self-sustaining farms and produce everything we consume by ourselves.

The notion that business should sacrifice its self-interest—profit—to some undefinable “collective good” is ludicrous. Such action would hinder the creation and trade of material values on which our survival and flourishing depends.

People like the 53% of the Canadian respondents to the Edelman survey (some 650 souls, assuming 1,200 respondents per country) want to have their cake and eat it, too. They want business to produce the material values that their lives depend on. At the same time, they want it to sacrifice some of the incentive for doing so, for the sake of the undefinable goal of “the greater good.”

There is no conflict between what is good for us (individuals in society) and the self-interested profit maximization by companies. Quite the contrary, they are in complete alignment.

To quote William Watson, who in a recent column discusses the Edelman survey: “… put me down as one of the 47% … who are happy Canadian businesses have been focusing on profit. That focus, in a competitive environment, is what has given me decent haircuts, good dental care, safe, wholesome food, efficient custody of my financial assets, and dozens, probably hundreds of other goods and services that make my life immeasurably better. Forgive me, but I regard that as a major contribution to the greater good.”

Watson is right, of course, if by the “greater good” we understand the sum of the good of all individual members of society—which is best achieved by businesses seeking to maximize profits through producing goods and services and trading them in free markets.

Originally posted 7 February 2015.

Photo by Hanson Lu on Unsplash

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada.

She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada.

Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.