Famine and Capitalism: A Professor’s Email Exchange with A Student

Dr. Starling Hunter has posted a recent email exchange with an MBA student. Dr. Hunter comments:

We agree on the basic phenomenon- the developed countries have hundreds of cereals and the poorest barely have the basic necessities of life. Where we differ is on the cause of that problem. As I see it, the problem with poor countries is that they dont have enough people with the "misplaced emphasis on profits" as you put it. This is not just my opinion, there is substantial empirical evidence to support that conclusion.

Go read the whole thing. I hope the discussion continues, as the role of profit in business is one of my favorite topics.

Much of the confusion in this area comes from the inherent ambiguity of language. Some people would say "maximizing profits" is what gets you Enron, but I would say that "maximizing profits" doesn't include illegal actions, accounting manipulations, or anything else like that. I prefer to ask a question like "how does a business maximize it's value proposition to the customer in a way that unlocks the maximum percentage of that transfer for the business?" This is a debate I keep meaning to return to, but for now I'll follow Dr. Hunter's conversation.

  • Diego

    For more on the debate b/w profit and business you might be intersted in this WB blog that I read. The FDI and CSR topics might interest you the most.


  • The professor isn’t really listening to the student IMHO.

    The student writes “the emphasis on maximization is the problem.”

    The professor responds “it is nothing more, or less, than a recognition of the fact that people need incentives to produce, transport, distribute, retail, etc., they need prospect of making a return on their investment, even a very, very good return, as a potential reward for having undertaken a subtantial risk.”

    No professor the student is right. The fact is that every business needs to make it clear to investors, suppliers, employees, and customers what priority they attach to the goal of “maximizing profits.”

    Is it the “purpose” of their business? Is it a condition that sustains the business over the long run? Is it the outcome of achieving another purpose?

    And when push comes to shove (as it inevitably does) does profit get shoved or does it supercede every other promise made and principle expressed?

    We know what C. Montgomery Burns would say. What would you say?

  • sam

    the reason behind poverty in developing countries is not merely misdirected profit-oriented planning , but , also , poor political will and haphazard planning. to alleviate the lot of these countries , more needs to be done than merely focussing on one trope.