If we look at
profits from socialists point of view, we find that they believe in the
abolition of profits. According to socialists, the value of the commodity
is determined by the quantity of labor expended during its
production. As all value is due to labor, so it must go to him and not to the
entrepreneur. If the entrepreneur takes away something from the share, of the
labor, that is legalized robbery.
In our opinion, if the entrepreneur is earning normal or abnormal profits by
superfluous means, then they must be checked.
For instance, if an entrepreneur
is paying less to the labor than their marginal net product or is bribing the
legislature for passing tariff legislation, or is selling the goods in black
market in order to maximize the difference between the total receipts and the
total costs of production, then every sane person will condemn this behavior of
the entrepreneur and will regard these profits as unjustified.
Similarly, if an entrepreneur due to
his monopolistic position charges too high price for his products and thus
fleeces the customers, then that kind of profits can also not be defended and so
they should be controlled.
But if a businessman is earning just normal profits by honest means, then
they can be justified in every respect. Profits are an incentive to the