The definition of profit
Is profit meaningful for work done in isolation?
There are so many definitions of the word profit, that I am not yet sure what we are talking about.
In the pure accounting sense of business, I think of profit as the difference between the price paid by the consumers and the costs paid by the owners.
From that perspective, if the owner of a fruit tree works to make sure the tree is productive, but eats all the fruit (does not sell any), is any profit created?
I used socioprofitable in another post but I am sure someone can think of a better word.
Beneficial is too light meaning.
I think we need a new made up word which does not have financial connotations.
Profit is only an accounting category. It can be seen as an indicator of the success of activities to achieve certain conventional goals, or as a basis for taxation, and can be calculated in various ways.
For example, the question "if the owner of a fruit tree works to make sure the tree is productive, but eats all the fruit (does not sell any), is any profit created?" is clearly meaningless.
Pelnas yra tik apskaitos kategorija. Gali būt vertinamas kaip veiklos siekiant tam tikrų konvencinių tikslų sėkmingumo rodiklis, arba kaip pagrindas apmokestinimui, ir gali būt įvairiai skaičiuojamas.
Pavyzdžiui klausimas "if the owner of a fruit tree works to make sure the tree is productive, but eats all the fruit (does not sell any), is any profit created?" yra akivaizdžiai beprasmis.
It seems profit is the worst metric for what we want to achieve as it results in short term thinking
We want the optimisation of happiness and equity. Theres a lot of work that people do that isn't directly monetisable but if people stopped a lot of people would become unhappy. We need to track this work too.
We get more of what we measure. This is why I posted the happiness index.
Profit as the difference between the amount earned and the amount spent, seems okay as a definition, however, not okay as the rational ultimate target of activity. Perhaps the ideal capitalist economy would be the one where everyone gets their reasonable profit margin, so they can sustain themselves, while providing something valuable to others.
However, the rational ultimate target of an activity can only be defined in more specific KPIs, because profit margins are transient -- one period's profit is another period's loss, and it may be planned loss, like saving fruits for the winter. So, ultimately, the success of activity mustn't be measured by profits, but in goals.
The achievement of goals can only be measured by metrics that measure distance to a goal. For example, if we want to become a space-faring civilization, we need to increase the number of people in space, so, a KPI like the number of people in space, and its long term growth (rather than periodic fluctuation), is what would be a meaningful definition of "profit" (if the economy would like to redefine profit as credit, and then reward "creditability" rather than "profitability").
Btw., profit in standard definition does not lose meaning, if one is working solo, even living alone makes sense to save at times, so profitability as measure of the amount saved (obtained, but not spent) in a finite period can be a useful metric, but never the ultimate goal, which is an long-term multi-KPI target.