Profit and Loss

Where does profit come from? Many say it comes because of exploited workers. Others say it is because of exploited natural resources. While others blame monopolies. When we begin to talk about profit a good place to start is in ignorance. When someone undertakes a business his profit will only come from accurate forecasting and planning. Nobody knows the future, or what it will bring. This means that whatever decision the business owner might take will be very important, for it will determine if there is profit or loss. However, profit only comes after everything has been paid. This includes factors of production, interest payments, and property and sales taxes.  Considering an eroneous forecast, then loss follows. New technologies or products may not necessarily produce profits, but losses may be made. It is customers that decide whether or not they will buy it, or use the service. Profit and loss are not automatic, but they are a result of decisions made with ignorance.
Categories: Economics | Tags: , , , , | Leave a comment

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