Profit Maximization and Ethics

When businesspeople profit-maximize, that is, allocate scarce resources efficiently, people have more of the things they want, and that is good. When they do not profit-maximize, that is, allocate scarce resources inefficiently, people have less of the things they want, and that is bad. This is especially true if the things they want are food, health care, education, and other necessities of life.

Since ethics is basically the study of what is good and what is bad, then the decision to profit-maximize or not to profit-maximize becomes an ethical decision. Therefore, those resource allocators who try to use resources efficiently are ethical managers. Those resource allocators who do not try to use resources efficiently are not ethical managers.

There is more to profit maximization and ethics than the decision to use or not use resources efficiently. However, that discussion falls outside the scope of this book.