9/23/2008 www.wisopinion.com What is the purpose of business?By Paul RuxThe column below reflects the views of the author, and these opinions are neither endorsed nor supported by WisOpinion.com. As the Wall Street and Washington crime families loot banks, real estate, insurance, etc. it is a good time to ask what the purpose of business is. I love to ask this of my students. The usual student response is: “The purpose of business is to make money.” If all you want to do is to make money, join the Mafia. Colombian drug cartels work here too. For ethical reasons, I prefer the answer of Peter F. Drucker (1909-2005): “The purpose of business is to create jobs.” Money is simply a means to this end, not an end in itself. Drucker argues a sane society does not allow activities to exist that harm it. Think cancer. We do not want cancers in /on our bodies. They take, but they do not give. Activities that simply take from society and return nothing constructive in exchange – take the money and run to Cayman Island banks – are cancers. We cure cancer. Drucker’s cure is to understand and refocus on the purpose of business – to create and preserve jobs that support lives and families. Whatever undermines this gets outlawed. Drucker builds on the insights of economist Joseph Schumpeter (1883-1950). Schumpeter was the first economist to study carefully the dynamics of entrepreneurship. In entrepreneurship, profits exist to expand and improve the business. We plow profits back into the business to assure its survival. This in turn preserves and creates good jobs. Richard J. Needham (1912-1996), columnists for the Toronto Globe and Mail, pointed out the first two duties of society are to: 1) feed itself 2) defend itself. Jobs feed people. Or as Abraham Maslow (1908-1970) argues in his “hierarchy of needs,” our first task is to provide basic food, shelter, clothing, medicine, etc. We require physical security. The genius of Drucker was to balance profits – a measure of economic efficiency and fuel for innovation and improvement - with the basic needs of society to survive. Drucker respects Plato’s dictum about ethics being behaviors that do not injure – others and / or ourselves. Making and withdrawing money from productivity is unethical. I admire business persons who create jobs. Not everybody can do this. They are unique. They also are ethical, for they plow their profits back into helping people live good lives. I detest economic gangsters who loot businesses to create unemployment in the aftermath. I detest political gangsters who enable this kind of economic terrorism. I am hoping that it is not too late to insist on the ethical renewal that our business needs and our society deserves. We need to burn out the ethical cancer that is killing us.
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