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Taylor Tomasini

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What if profit maximization is not only wrong, but dangerous?

Profit maximization implies hierarchy, standardization, and efficiency (how else do you maximize?) but these activities limit diversity and create bureaucracy.

Genetic diversity is what helped people survive the Bubonic plague. Terrorist organization survive because they have no leader (hierarchy). Your body creates redundancies (think two kidneys). And your psychological frame (profit maximization) can help you act in highly unethical ways.

What if profit maximization is contributing to unethical behavior, economic fragility, boom and bust cycles, and the degradation of society?

What if instead of placing profit at the center of our aims and desires we sought to maximize something else and simply made profits a constraint -- your business must be profitable in order to continue to exist?

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    Feb 1 2013: I am affraid you are mixing up a couple of things here. It seems like you are trying to heal the imperfections of human soul with economics, whereas it is not the proper tool.

    If you want people to be more human then appeal to their souls (like the churches are doing) but do not try to redefine economics as such.

    The field of economics is concerned with the human action, and it could not care less for people's motivations or beliefs.

    Profit maximization is neither good nor bad. Everything depends on how people understand 'profit and what are their intentions'. Economics can later help realize it.
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      Feb 1 2013: I disagree. In Friedrich von Hayek's 1974 Nobel address titled The Pretense of Knowledge he talks about the uniqueness of the social sciences. Economics, as it exists today, is founded on mimicking the great success of the physical sciences -- here are the laws and they never change. But the social sciences are different because human intentionality changes the nature of what's being studied. People's motivations and beliefs are at the heart of the social sciences.

      Rory Sutherland also speaks to this point. He talks about the power of perceived value, which has everything to do with people's motivations and beliefs.

      Yes, you are right. Economics, as it exists today, is not concerned with people's motivations or beliefs; but this is because of our push to make it logical and rational and deductive. By separating Economics from people's motivations and belief's you, as von Hayek puts it, make the assumption that that which can be measured is all that matters.

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