Thursday, August 30, 2012
Profit is Charity
July 2011 (ed Aug 30, 2012)
Profit – legally and ethically generated - is one of the best measures of social value-add.
Clients buy services and products only when they can extract value from them. Example, if a company sells a soap for Rs 10 (when it costs it Rs 8 say), the customer buys it only because s/he can extract more than Rs 10 of value from it (say Rs 12). Hence while the company generates profit in the transaction, the customer also gains. A company’s profits therefore are a measure of the cumulative value it injects into the society. If the soap making company is earning crores of rupees in profits, it is doing so by adding value to millions of people.
Please watch the following video interview by Nobel Laureate Prof. F. A. Hayek’s for more on these lines: http://vimeo.com/4063439
Ref: discussion here - http://satyameva-jayate.org/2011/08/23/profit-charity
 Example, refer to this seminal paper - Reinikka, R., & Svensson, J. (2004). Local Capture: Evidence from a Central Government transfer Program in Uganda. The Quarterly Journal of Economics , 119 (2), 679-705.
 There are some interesting attempts though. Check this out: http://www.ted.com/talks/shaffi_mather_a_new_way_to_fight_corruption.html