By DAVID MOON, Moon Capital
November 3, 2002
Has capitalism seen its better days? Are the recent scandal revelations
evidence that capitalism is ailing, if not fundamentally flawed?
Capitalist ideologues argue that the profit motive is the panacea of all
collective and individual ills, but how does that explain Enron and Arthur
Andersen? Aren't these examples proof that some better, more just ethic
should drive our economic society?
Joseph Schumpeter once said that all of the features and achievements of
modern civilization are, directly or indirectly, the products of the capital
process. Critics call this sort of thinking destructive, selfish and
Martha Stewart is capitalist, but she is also a woman. I am no more
willing to declare females a failure than I am to declare capitalism a
Profit is the energy of life. Not money, but profit.
In their short-sightedness, Ken Lay, Sam Waksal and folks like them confused
money with profit. The term "profit" originates from the Latin word
"proficere," which means "to make progress." At its very root meaning, to
profit is to make better.
It is easy to see how Bill Gates and Thomas Edison served mankind and
financially enriched themselves in the process. But why did they do what
they did? Why is Warren Buffett a billionaire? Why does any great
achiever achieve great things?
Great men and women achieve great and useful things when in the pursuit of
their passion. Money is not their motivator. It may be how they keep
score, but they are able to maintain the tenacity necessary to achieve when they
are consumed with an unquenchable thirst for their endeavors.
Even Mother Teresa or the unknown hero at your church "make progress" (or
"profit") in a societal sense. And they often do so at great financial
costs to themselves. But even they act in their own self-interests,
because they do what they are called to do. They do what they are driven
to do, no differently than does Bill Gates. That some people do so in
poverty only proves the point that more clearly: how could a person as talented
and tenacious as Mahatma Gandhi or Martin Luther King not be motivated by an
intense personal drive? How else could they withstand the hardships cast
upon them because of their actions? How about Galileo or Columbus?
The only way they could have maintained their persistence, in the face of
daunting obstacles, was to be personally driven to their ends. They did
what was in their self-interests, and in so doing, they served society.
" For what shall it profit a man, if he shall gain the whole world, and lose
his own soul?"
When John Rigas looted Adelphia Communications and used it as his own private
piggy bank, he was motivated by money or greed - not profit. It was not in
his self-interest to pilfer his shareholders' assets, even though he may have
convinced himself otherwise. After the arrest of Rigas and his two sons
(each of them facing 100 years in prison) it is difficult to argue that he acted
in his own self-interests. Nor was he rational. He was stupid or
sick or evil - but he wasn't representative of capitalism.
New Testament writers suggests that profit is a good thing - an outcome so
valuable that it shouldn't be tossed away in the pursuit of "the whole
world." Profit, not money or riches or fame. That is the mistake of
capitalism's critics; they fall prey to the same allure that traps people like
John Rigas - they mistakenly define "money" as self-interest.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).