Profits and Morality.

• Author: Davidson, Audrey B.

Are profits morally justifiable? This is the focus of the collection of essays edited by Cowan and Rizzo stemming from a 1990 symposium on profits and morality. The editors author an introductory chapter, which is followed by five essays, each of which approaches the issue in a somewhat different manner. Three of the essays address profits in the context of ethics while the other two essays discuss profits, and how they originate and function. One aspect of the book that many readers will find appealing is its interdisciplinary nature, with contributions representing economics, philosophy, and law.

Cowan and Rizzo's introductory chapter is both useful and informative in setting forth the issues at hand and portraying some of the various points of view for and against profit making. Profits can be interpreted in different ways depending on the type of profit being analyzed - normal profit, supernormal profit, rents, or windfall profit. In addition, there are various moral premises from which to analyze the question of the justifiability of profit. While there are clearly many ethical positions from which to argue the morality of profits, the editors are quick to point out that this is far from an exhaustive study, but that the arguments for and against profit making are equally numerous. Cowan and Rizzo stress that typical defenses of profits such as free trade and entrepreneurship must be considered more carefully since, for example, profits following an entrepreneurial activity may in fact be windfall profits, making the claim of the entrepreneur to the profit weaker. Hence, both the intent and beliefs of the entrepreneur must be considered in evaluating the morality of profit stemming from entrepreneurial activity.

Kirzner's chapter takes an interesting look at the early theories of profit of Clark, Hawley, Knight, and Schumpeter, all of which sketch out the disequilibrium nature of profit. From his examination of the earlier theories, Kirzner turns to what he calls the arbitrage theory of profit espoused by Mises, where profit is simply the difference between the price at today's market and tomorrow's market. Thus, like unexploited or unowned resources, those who identify and act upon such profit opportunities are entitled to the reward in accord with the finders - keepers ethic.

Narveson follows with an ethical treatment of profit, defining profit as the net monetary gain from free exchange that is voluntary from the perspective of...