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Corporations, Profit Maximization And The Personal Sphere

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  • Hussain, Waheed

Abstract

The efficiency argument for profit maximization says that corporations and their managers should maximize profits because this is the course of action that will lead to an ‘economically efficient’ or ‘welfare maximizing’ outcome (see e.g. Jensen 2001, 2002). In this paper, I argue that the fundamental problem with this argument is not that markets in the real world are less than perfect, but rather that the argument does not properly acknowledge the personal sphere. Morality allows each of us a sphere in which we are free to pursue our personal interests, even if these are not optimal from the social point of view. But the efficiency argument does not come to terms with this feature of social life.

Suggested Citation

  • Hussain, Waheed, 2012. "Corporations, Profit Maximization And The Personal Sphere," Economics and Philosophy, Cambridge University Press, vol. 28(3), pages 311-331, November.
    • Handle: RePEc:cup:ecnphi:v:28:y:2012:i:03:p:311-331_00
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    Cited by:

    1. Jeffery Smith, 2018. "Efficiency and Ethically Responsible Management," Journal of Business Ethics, Springer, vol. 150(3), pages 603-618, July.
    2. Mohajan, Devagit & Mohajan, Haradhan, 2022. "Profit Maximization Strategy in an Industry: A Sustainable Procedure," MPRA Paper 114675, University Library of Munich, Germany, revised 21 Jun 2022.
    3. Gregory Robson, 2024. "The profit system: how (and why) to deflect the radical critique," Constitutional Political Economy, Springer, vol. 35(1), pages 109-122, March.
    4. Mohajan, Devajit & Mohajan, Haradhan, 2023. "Economic Aspects of Profit Maximization if Cost of Principal Raw Material Increases," MPRA Paper 117453, University Library of Munich, Germany, revised 22 Mar 2023.
    5. Mohajan, Devajit & Mohajan, Haradhan, 2023. "Mathematical Model for Nonlinear Budget Constraint: Economic Activities on Increased Budget," MPRA Paper 117299, University Library of Munich, Germany, revised 17 Mar 2023.
    6. Matthew Caulfield, 2023. "Between Markets, Politics, and Ethics: On Vendor Conscience and Impersonal Markets," Journal of Business Ethics, Springer, vol. 188(2), pages 307-326, November.
    7. Baruk Agnieszka Izabela & Goliszek Anna, 2018. "Typology of Young Potential Employees According to Reasons for their Aversion Towards the University as an Employer," Marketing of Scientific and Research Organizations, Sciendo, vol. 29(3), pages 111-132, September.

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