THE INCENTIVE OF GAIN

Hokitika Guardian, 18 July 1924, Page 4

THE INCENTIVE OF GAIN

THE Ui:\VAIU> OK coon .SKRVICI:

< liy Sir Fi nest Lieiinl,

There is a very commonly-held idea dial {^iiin is tile basis ut cumincree niul 11 nl its, 11 y. We are constantly being mid that Society is lounueil upon acquisitiveness. .Ur Sidney Held), 1 lit*

president or tiie Hoard 01 Tiade. asserts that husiness is hlufkmnil, and it is widely and dangerously suspected hy people generally that the driving lurce in husiness is greed. We are olferod a new gospel ; we are told that wo must ",produce lor use and not lor profit I" Ideas of this kind, whether in violent or mild form, have permeated our minds to such an extent that v. e have almost, reached a stag ' when the husiness man is ashamed o! Ins profits-. There has been developed in this country a public opinion width tolerates the most oppressive taxation known in history, hecati.se it iocis somehow that it is a right and proper thing to punish that success which is represented by profits- W’e have reached such a pitch that even in the most conservative of political meetings one may raise a laugh at the expense o i the teii-thousand-n-year limn! .Vow I want to suggest that it is high time we retraced our steps a little and went over tilt' ground again and asked ourselves whether we tire really sure we have analysed the make-up of husiness finally and sufiieiently, or whether we may not unknowingly or unooiiseioiisly he doing ourselves an injustice hy accepting superficial views which will not hear examination. Til K QUESTION OF MOTIVE. The question ul motive or incentive is admittedly a very difficult one, hut we eiiutiot ali’ord in those enlightened times to shirk difficulties, nr to he put off with false answers or to be satisfied with half-way views. II we ask ourselves what is our motive in comieclioii with many of the things that we do day hy day we shall begin to see how complicated the <|itestiuii reallv is. For instance, why do we eat? Is it to please the appetite ; or is it to make hone, muscle and tissue;' Why do wo play a game!" Is it to win. or is it to pot the health and joy and satisfaction which come out of merely playing? Why do tve go to lied; Is it to enjoy restful sleep, or are we always conscious of its real purpose- -to make us feel the desire to renew the effort which we so willingly ahandojii'd the night before? Why do we pay oui debts!-’ Is it because we do not like owing, or because the other man wants to lie paid, or because wo know that only hy paying can we owe again." Similarly wiiy do wo work ? Is it to gain, or is i; to give satisfaction to others, or to get satisfaction ourselves, or merely been use there is nothing else to do? We need In give more thought and study to the complex ot tilings. in order that thought and action may he based upon ideas that are Iniidaim'iitnllv sound. There is the science which Professor Marshall has hinted at the ■science of the second move. He tells us that the ultimate effects of an ceonoinic cause are often greater than, and in the opposite direction to, those effects which lie upon the surface and which are easily observable. A very simple illustration of this motive diflicultv. this incentive difficulty, is to he found in the motor-car. What is it that pushes the ear along? I> it the piston, or the gas, or the spark. A motor cannot function without a magneto. and commerce, as l shall show, cannot exist without profit. COMMERCE CANNOT EXIST WITHOUT PROFIT.

Suppose we assume that a business is conducted without profit. It will he admitted that there must he either a profit, nr an exact balance or a low. Take the second ease, that oi the exact balance. The business man would he ■supplying some need of his fellows and getting from them just what he re - (piired to pay his way—no more and no less. Me would he making no profit and hi* lelloivs could not have tiny grievance against him. I hey could not call him a profiteer, thev could not accuse him of greed, ami they could not charge him with being obsessed with the idea of the incentive of gain. 'I lie most obvious results ot stteli an arrangement as that would he that nobody else would bo tempted into the business, that there would he no competition. that no others would '-tri'.v to do the business better, and to give greater satisfaction to the consumers. I inevitably, as a cosequeiico. there must he a failure to find that continuous .stream of new supply upon which the (oinlort of the consumer and the progress of humanity have so lar rened. I.et us look at the other case, that of the husiness conducted at a Insthe incentive being use and not profit. That husines., can go on just as long athere is some fund out ot which toe los.-cs can he met. As soon as that i'll ml is exhausted the workers—the suppliers who are the basis ot the business g.-i nothing fur their pains and cease to work or to supply. That, however, is not the whole of the story. In either of the cases jii-t cited there is a more serious troiih.e. 'flu, consumer is robbed nl the only mentis of expressing an opinion upon the service rendered to him. Profit may "he thought to he the incentive of the pradueer or ttie supplied, hut it lias a more important Imu linn as a measure ot the satisfaction given to the consumer, if a business man oilers satisfaction to his fellows they will reward him with good profile, and. strange as it may seem, so lull ul complexity is this problem, that those goad profits would probably he still greater if the prices to the consumer were less.

There is another incentive in i'nn-nec-tioo with commcrc-c* and industry which 1 believe to he far more important. |nr more active. Inr more powertit| than the incentive ol gain. It itlie incentive of power, the desire to control. A successful business man controls oil tile one hand those who work for him. and, on tin* other hand those 1 whom he supplies—his customer.-. Anil his milch misunderstood incentive of gain, so far from being a drawback or a danger, is really the snlegujtrd Which keens the successful business man in bis proper place, always given a free market. It lie does not give

satisfaction to those who work fur him the theory is that somebody else will. If. on the other hand, he fails to satisfy those for whom he works, ho. c-o--t'omers —it is positively certain that sc.aiehuciy else will take his place ami clo the business. This question of satisfactory service lies at tlm very root of the problem. Success in business :s dependant upon service. Profits ate the reward of good service and represent. as t suggested earlier, the measure of the satisfaction given to the consumer. The l business man may ho full to the brim with greed and grasp, hut lie is powerless to gain anything unless he can give satislaetiou to others. The moment he becomes in-

efficient his position disappears. IMPORTAXCK OK A KI!KK MAI’KKT Tin's point brings out the essential ditforente between private and public enterprise. It is conceivable that a

bureaucrat can be put into a position of control without any qualifications to hold it. anil the customer has to suffer from the inadequate service that such an arrangement entails. Hut the business maii in a free market can only hold .his place as long sir. he can do the job a- well as. or better than, somebody else.

1 have .spoken of free market, and hero, of course, arises a very groin' diflieulty. There is no doubt at all that the motive of greed, the incentive of gain and the desire to profiteer can be olfective in a restricted market —such a market as develops in a time l of war, or such a market as is to be founds on all hands due to lisc-al Isir-

riers, legsilativo restrictions. t ratio union limitations. nnd so on. It is an amusing rolloetioii to those who think deeply on these matters that the politieians tvlio talk most loudly about com-

bines, lincts and trusts, are generally those who, by the invention of restrictive arrangements of one sort or another. are themselves responsible for the conditions which promote the growth oi' these abuses. It is quite impossible, in the course of a short- article such as this, to deal -with a question upon which some hundreds of volumes have been written and published, but if T have done no more than to raise a few doubts, to indicate

iii ilio roughest way the complexity of the whole matter, and to suggest, that it is utterly and entirely wrong to take a single idea, such as the idea of gain, and look upon it as the beginning and end of the business problem, then I have achieved my purpose. When the business man takes a more acive part in the discussion of Ccolmniii problems, public opinion oil these matters will begin to take a new direction. .