Profit Motive

How can society depend on capitalism, or an unregulated market system? Adam Smith replies with two laws of this market. The first is the desire for wealth that permeates all human activity. Therefore, self-interest, or profit, motivates people to perform necessary tasks for which society is willing to pay. As Smith writes, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from our regard to their self-interest.” Thus, the first law of the market is self-interest, or the profit motive.

  But how can the individual’s selfish desires benefit society? What stops greed from overwhelming the public, resulting in ruthless exploitation by profiteers? Smith second answer that the individual, in the process of providing for his personal interests, unintentionally contributes to the economic well being of society. Therefore, the second law of the market is competition. The individual who overcharges for products soon learns that competitors will take away business by offering more reasonable prices. If wages are too small, workers will hire out to another employer who will pay more for their services. Thus, selfish motives are tempered by interaction, resulting in social harmony. How does this economic theory effectively explain the basis of my actions? Do I really fit into this, or some other theory of work and profit?

As a student here in Utah Valley, I had to battle to find a good part time job that would pay for school, gas, and for some of the finer accouterments for my new fiancee. Today, Friday, February 18, I had to work hard. I have a job as a security consultant with Apex Alarm. I work from a leads database to call and create sales over the phone. This is a difficult, because people when called on any given day rarely have a need to spend a few thousand dollars on a new alarm system, or a few thousand more than that on video surveillance. Everyday I make a six dollars an hour, barely enough to put gas in my gar to get me to work and school. So, I have to survive, and keep my fiancee happy, so I have to make more than minimum wage. Lucky for me, commission is not included in my hourly salary. When I sell a new alarm system, I make $200. So, in my desire for $200, permeating from me in my selling techniques is the desire to protect my own self interest. It is what motivates me to try and sell someone on a product that will cost them at least $42.99 a month and trap them in a three year agreement.

Today, as I was working, I spoke with a woman that I have been working with for a few days now named Ffjorren Purcell. She was interested in getting an alarm in her new home that she and her boyfriend were moving into in Minneapolis, Minnesota. As I have worked with her this week, she has been shopping around the internet looking for a good deal that would compete with ours. I wasn’t too surprised when she told me that she had found a company that was fairly similarly priced, put offered a little more equipment. As Smith wrote, the unintended consequence of a free market is that there is competition, and that a person has to be flexible in there goods and services to accommodate the general public. Because as noted, if it is to expensive at Apex, they will surely turn to protectamerica.com for their alarm service. I then had to deal with the competition of this competitor by adding some equipment.

We see then, with my job, I work that I can have wealth, the simplest of all human desires. But, I have to follow both rules of Smith, for the two laws of the market, self-interest and competition, react upon each other and form a balance, guaranteeing the survival of society.

Author: Jake Spurlock

Jake is a geek, designer, HTML+CSS lover. Taker of photos, and sometimes skiing and biking... He spends his time day dreaming new WordPress themes and camping with the Boy Scouts. For some random posts, check out the link blog.

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