Rationality and Profit: Balancing Private and Public Goods

Chapter 4: Profit, Rationality, Private and Public

4.1 Economic Activity on a Desert Island

In solitude, there is also an economy because "any activity has a cost." Although time for Crusoe was limited, as he was alone, he had plenty of time to conduct business. Economic productivity is demonstrated through organization when resources are scarce, with the aim of ensuring that goods do not perish.

A solitary human being has the benefit that no one has power over him, yet there are still laws and fears. "The market is a social institution, reflecting the social nature of man." The market serves the common good; thus, the public and private spheres are linked.

4.2 The Social Function of the Free Market

This section stresses that the social function of the free market is not to absolutize economic activity. 5. The relationship between the common good and the individual good is not contentious. Certainly, one must sometimes take precedence over the other, but that does not prevent the search for private property, which also implies progress in achieving the good of society. This is because there are only individual wills.

Highlighting aspects of the market economy with social relevance—such as the free formation of prices, the protection of property and enterprise, and equal opportunity—is not equivalent to saying that all human activities are essentially economic. We are often faced with realities that do not constitute a process of value assignments.

The synthesis between the individual good and the common good that the free market promotes is found in the nature of institutions. To ensure the specificity of the common good does not imply that the state must perform all activities which benefit from the consideration of necessary public services.

4.3 Cooperation and Free Competition

This section addresses improved cooperation for the common good through free competition. 5. A monopolistic situation is reached not only because of excessive government intervention in the market. In fact, there are practices such as price cartels and dumping that can threaten free price formation. Even some business partnerships can give the impression of merely changing the hands of a monopoly.

Cooperation between firms is a practice they need to stay within the activities they can play effectively and to maintain flexibility. It is a reality that reflects an essential feature of human freedom: the desire for integration and dependency. But that inclination does not preclude the other side of freedom: independence.

Human freedom is neither pure dependence nor pure aggressiveness; competition and cooperation are complementary. A "Virtual Enterprise" is an alliance with other companies formed when a business begins to grow in the market...