unit6-what-is-profit

Mydeargrandson:IwillansweryourquestionassimplyasIcan.Profitistheresultofenterprisewhichbuildsforotheraswellasfortheenterpriser.Letusconsidertheoperationofthisfactinaprimitivecommunity,sayof100personswhoarenon-intelligentbeyondthepointofobtainingthemerenecessitiesoflivingbyworkinghardalldaylong.Ourprimitivecommunity,dwellingatthefootofamountain,musthavewater.Thereisnowaterexceptaspringnearthetopofthemountain:therefore,everydayallthe100personsclimbtothetopofthemountain.Ittakesthemonehourtogoupandback.Theydothisdayinanddayout,untilatlastoneofthemnoticesthatthewaterfromthespringrunsdowninsidethemountaininthesamedirectionthathegoeswhenhecomesdown.Heconceivestheideaofdiggingatroughinthemountainsideallthewaydowntotheplacewherehehashishabitation.Hegoestoworktobuildatrough.Theother99peoplearenotevencuriousastowhatheisgoing.Thenonedaythis100thmanturnsasmallpartofthewaterfromthespringintohistroughanditrunsdownthemountainintoabasinhehasfashionedatthebottom.Whereuponhesaystothe99others,whoeachspendanhouradayfetchingtheirwater,thatiftheywilleachgivethemthedailyproductionof10minutesoftheirtime,hewillgivethemwaterfromhisbasin.Hewillthenreceive990minutesofthetimeoftheothermeneachday,whichwillmakeitunnecessaryforhimtowork16hoursadayinordertoprovideforhisnecessities.Heismakingatremendousprofit---buthisenterprisehasgiveneachofthe99otherpeople50additionalminuteseachdayforhimself.Theenterpriser,nowhaving16hoursadayathisdisposalandbeingnaturallycurious,spendspartsofhistimewatchingthewaterrundownthemountain.Heseesthatitpushesalongstonesandpiecesofwood.Sohedevelopsawaterwheel;thenhenoticesthatithaspowerand,finally,aftermanyhoursofcontemplationandwork,makesthewaterwheelrunamilltogrindhiscorn.This100thmanthenrealizesthathehassufficientpowertogrindcornfortheother99.Hesaystothem,”Iwillallowyoutogrindyourcorninmymillifyougiveme1/10thetimeyousave.”Theyagree,andsotheenterprisernowmakesanadditionalprofit.Heusesthetimepaidhimbythe99otherstobuildabetterhouseforhimself,toincreasehisconveniencesoflivingthroughnewbenches,openingsinhishouseforlight,andbetterprotectionfromthecold.Soitgoeson,asthis100thmanconstantlyfindswaystosavethe99thetotalexpenditureoftheirtime---onetenthofwhichheasksoftheminpaymentforhisenterprising.This100thman’stimefinallybecomesallhisowntouseasheseesfit.Hedoesnothavetoworkunlesshechoosesto.Hisfoodandshelterandclothingareprovidedbyothers.Hismind,however,iseverworkingandtheother99areconstantlyhavingmoretimetothemselvesbecauseofhisthinkingandplanning.Forinstance,henoticesthatoneofthe99makesbettershoesthantheother.Hearrangesforthismantospendallhistimemakingshoes,becausehecanfeedhimandclothehimandarrangeforhisshelterfromprofits.Theother98donotnowhavetomaketheirownshoes.Theyarechargedonetenththetimetheysave.The99thmanisalsoabletoworkshorterhoursbecausesomeofthetimethatispaidbyeachofthe98isallowedtohimbythe100thman.Asthedaypass,anotherindividualisseenbythe100thmantobemakingbetterclothesthananyoftheothersanditisarrangedthathistimeshallbegivenentirelytohisspecialty.Andsoon.Duetotheforesightofthe100thman,adivisionoflaboriscreatedthatresultsinmoreandmoreofthoseinthecommunitydoingthethingsforwhichtheyarebestfitted.Everyonehasagreateramountoftimeathisdisposal.Eachbecomesinterested,exceptthedullest,inwhatothersaredoingandwondershowhecanbetterhisownposition.Thefinalresultisthateachpersonbeginstofindhisproperplaceinanintelligentcommunity.Butsupposethat,whenthe100thmanhadcompletedhistroughdownthemountainandsaidtotheother99,Ifyouwillgivemewhatittakesyou10minutestoproduce,Iwillletyougetyourwaterfrommybasin,theyhadturnedonhimandsaid,Weare99andyouareonlyone.Wewilltakewhatwaterwewant.Youcannotpreventusandwewillgiveyounothing.Whatwouldhavehappenedthen?Theincentiveofthemostcuriousmindtobuilduponhisenterprisingthoughtswouldhavebeentakenaway.Hewouldhaveseenthathecouldgainnothingbysolvingproblemsifhestillhadtouseeverymakinghourtoprovidehisliving.Therecouldhavebeennoadvancementinthecommunity.Thesamestupiditythatfirstexistedwouldhaveremained.Lifewouldhavecontinuedtobeadrudgetoeveryone,withopportunitytodonomorethanworkalldaylongjustforabareliving.Butwewillsaythe99didnotpreventthe100thmanfromgoingonwithhisthinking,andthecommunityprospered.Andwewillsupposethatthereweresoon100families.Asthechildrengrewup,itwasrealizedthattheyshouldbetaughtthewaysoflife.Therewasnowsufficientproductionsothatitwaspossibletotakeothersawayfromtheworkofprovidingforthemselves,paythem,andsetthemtoteachingtheyoung.Similarly,asintelligencegrewthebeautiesofnaturebecameapparent.Mentrytofixsceneryandanimalsindrawings-andartwasborn.Fromthesoundsheardinnature'sstudioandinthevoicesofthepeople,musicwasdeveloped.Anditbecamepossibleforthosewhowereproficientindrawingandmusictospendalltheirtimeattheirart,givingtheircreationstoothersinreturnforaportionofthecommunity'sproduction.Asthesedevelopmentscontinued,eachmemberofthecommunity,whilegivingsomethingfromhisownaccomplishments,becamemoreandmoredependentupontheeffortsofothers.And,unlessenvyjealousyandunfairlawsintervenedtorestricthonestenterpris