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> The purpose of a business is always to maximize profit. That's false. The purpose of a business is whatever the owners of that business decide. I've known a

> The purpose of a business is always to maximize profit. That's false. The purpose of a business is whatever the owners of that business decide. I've known a large number of business owners that chose less profit in exchange for any number of other attributes they valued more than max profit: more of their own time (working less), better serving a local community by donating a lot of resources / air time (media company), paying employees abnormally higher wages (because said employees had been with them a long time and loyalty matters to some people a lot) - and so on and so forth. Max profit is one of a zillion possible attributes to optionally optimize for as the owner of a business. The larger the owner the more say they obviously will tend to have in the culture. Facebook as a prominent public example, hasn't been optimized for max profit at any point in the past decade. They easily could have extracted far more profit than what they did. Zuckerberg, being the voting control shareholder, chose to invest hilariously vast amounts of money into eg the Metaverse / VR. He did that on a personal lark bet, with very little evidence to suggest it would assist in maximizing profit (and at the least he was very wrong in the closer-term 10-15 year span; maybe it'll pay off 20-30 years out, doubtful). The pursuit of max profit is a cultural attribute, a choice, and that's all. It's generally neither a legal requirement nor a moral requirement of a business.

kbolino 2y ago
A majority of the shares in most publicly traded corporations are held by retirement funds, both "private" (BlackRock, Vanguard, State Street) and public (FERS, CalPERS, ...). These entities, generally, have no appreciable interest other than maximizing profit. They are all regulated financial entities, even the private ones are quasi-governmental (e.g., BlackRock has close business relationships with the Federal Reserve), and the public ones are just straight up government agencies. So, in a pretty real way, there is a legal requirement, though like many such things in the United States today, it is not properly formalized.
- AnthonyMouse 2y ago
  But then you have to make a different statement. The purpose of a large, publicly traded for-profit corporation is to maximize profit. This is quite an important distinction because it implies we may want to limit the prevalence of those things and increase the prevalence of small businesses and privately-held medium businesses that can advance other societal goals.
  - kbolino 2y ago
    It is not clear to me that large and/or publicly traded corporations must maximize short-term profit. The seminal case of shareholders vs management concerning the Ford Motor Company in its early days shows that the objectives and incentives are not beyond debate and thus not intrinsically tied to the size or ownership model of a company. The government has consolidated around the current set of incentives, both directly through its own arms and indirectly through legislation and policy, leading to the result we see today. Breaking these large businesses up may lead to some disruption for awhile, but if the incentives stay the same, the same end result will likely be arrived at again before too long.

kbolino 2y ago

A majority of the shares in most publicly traded corporations are held by retirement funds, both "private" (BlackRock, Vanguard, State Street) and public (FERS, CalPERS, ...). These entities, generally, have no appreciable interest other than maximizing profit. They are all regulated financial entities, even the private ones are quasi-governmental (e.g., BlackRock has close business relationships with the Federal Reserve), and the public ones are just straight up government agencies. So, in a pretty real way, there is a legal requirement, though like many such things in the United States today, it is not properly formalized.

AnthonyMouse 2y ago
But then you have to make a different statement. The purpose of a large, publicly traded for-profit corporation is to maximize profit. This is quite an important distinction because it implies we may want to limit the prevalence of those things and increase the prevalence of small businesses and privately-held medium businesses that can advance other societal goals.
- kbolino 2y ago
  It is not clear to me that large and/or publicly traded corporations must maximize short-term profit. The seminal case of shareholders vs management concerning the Ford Motor Company in its early days shows that the objectives and incentives are not beyond debate and thus not intrinsically tied to the size or ownership model of a company. The government has consolidated around the current set of incentives, both directly through its own arms and indirectly through legislation and policy, leading to the result we see today. Breaking these large businesses up may lead to some disruption for awhile, but if the incentives stay the same, the same end result will likely be arrived at again before too long.