Thursday, January 31, 2013

What is profit?

Every once in a while, a story that I read a long time ago bubbles through the depths of my memory into my present attention.  This post is about one such story.  I don't read very much, other than required reading, and this story is one that was part of our English curriculum while attending high school in India.

At first, I could vaguely remember only some of the details of the story.  It attempted to explain what  profit was.  The gist of the story was that it is possible to make a profit without taking from the work of someone else.  It used a primitive community as its example where the members of the community spent all day doing mundane tasks for bare existence.  It then discussed how the community evolved and everybody in the community benefited from ideas of one of the members of the community.  That member noticed they could improve the way they did things in such a way that everyone benefited, and in exchange, asked for slices of time saved by the other members of the community.

Thanks to Google, I was able to locate the story on the 'net.  The story is titled "Letter to His Grandson" by Fred I. Kent.  Here's how it starts out:
Mr. Kent’s grandson, then a schoolboy, was disturbed by the current fashion of disparaging the profit system. He had asked his grandfather to explain just how there can be a profit which is not taken from the work of someone else. 
April 1942 
My dear grandson: 
I will answer your question as simply as I can. Profit is the result of enterprise which builds for others as well as for the enterpriser. 
You can read the rest at the website of the Free Market Foundation.

(I stole the title of this post from a friend who incorrectly remembered the title of the essay as being "What is Profit?" And I was disappointed that most of my high school peers didn't even remember that we had such a story as part of our curriculum!)


  1. Thanks a ton Anoop! I was looking for this very story. It stayed in my mind. Part of the English textbook for the HSC i appeared for in 1992. Once again many thanks :)

  2. Thanks for the comment. The link to the FMF website was broken and I've fixed that now.

  3. I was looking for it too! thank you!!!!!!