Capitalism and virtue

If you start a company, you can say: “We are creating a company, and if it is successful, then we will make money.” That’s a perfectly reasonable thing to say, and it’s probably correct. Yet it misses an essential truth.

Suppose instead you say: “We are creating a company, and if it is successful, then what we are doing will be self-sustaining.” You are still describing the same endeavor, but now you’ve shifted the emphasis to a far more useful description of the process.

After all, the purpose of a company isn’t really to make you money — although it might end up making you a lot of money. The purpose of a company is to generate value in the world in a way that is self-sustainable.

Your company is in the business of providing a product or service. If people find that product or service to be useful, then they will pay for it. The revenue generated by that customer demand allows your company to keep going. The product or service thereby becomes stable and self-sustaining. Everybody wins.

Note that if you get greedy and take too much money out of the company to give to yourself, then the company can stop being self-sustaining. Such a short-sighted strategy might win you more money up front, but in the long term everybody loses, both you and your customers.

We sometimes reflexively associate capitalism with greed. Yet capitalism, when done properly, can create good in the world.

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