The Functions of Profit

Profit is, first of all, a test of performance. It is the result of the performance of the company in marketing, innovation and productivity. It is an example of feedback, a self-regulation of a process by its own results.
Profit has a second function - equally important. It is the premium for the risk of uncertainty. Profit and profit alone, can supply the capital required for tomorrow's jobs - more jobs and better jobs.
Finally profit pays for the economic satisfactions and services of a society. From health care to defenses, from education to the opera.

Businessmen these days tend to be apologetic about profit. This is a measure of the dismal job they have done explaining profit - above all to themselves. For there is no justification and no rationale for profit so long as one talks the nonsense of profit motive and profit maximization.

Profit, to be sure, is not the whole of business responsibility. But it is the first responsibility. The business that fails to produce a profit imperils both the resources entrusted in its care and the economy's capacity to grow.

At the very least, business enterprise needs a minimum of profit, the profit required to cover its own future risks, the profit required to enable it to stay in business and maintain intact the wealth producing capacity of its resources. Management, in order to manage, needs a profit objective at least equal to the required minimum profit.