Is a profit motive necessary?
The best answer to this question is that most people work without the incentive of profit—right now—in capitalist society. Ask the worker in a steel plant, or a textile mill, or a coal mine, how much profit he receives for his labor, and he’ll tell you, quite correctly, that he gets no profit at all—that profit goes to the owner of the plant, mill, or mine. Why, then, does the worker work? If profit is not his incentive, what is? Most people, in capitalist society, work because they have to. If they didn’t work, they couldn’t eat. It’s that simple. They work, not for profits, but for wages, in order to get the wherewithal to feed, clothe, and shelter themselves and their families. There would be the same compulsion under socialism—people would work in order to earn a living.
Socialism offers additional incentives to work which capitalism cannot offer. For whose sake are the workers asked to exert themselves to increase output? Under socialism the appeal to work hard and well is based on the justifiable ground that it is society as a whole which benefits. Not so under capitalism. There the result of extra effort is not public benefit but private profit. One makes sense and the other doesn’t; one inspires the worker to give as much of himself as possible, the other to give as little as he can get away with; one is a purpose that satisfies the soul and excites the imagination; the other is a purpose that entices only the simple-minded. The objection is raised that while this may be true of the average worker for whom the incentive of profit has been largely illusory anyway, it does not hold for the man of genius, the inventor, or the capitalist entrepreneur for whom the incentive of profit has been real.
Is it true that it is the dream of riches which prompts scientists and inventors to work day and night to carry their experiments to a successful conclusion? There is little evidence to support that thesis. On the other hand there is ample evidence to support the argument that inventive genius seeks no other reward than the joy of discovery or the happiness that results from the full and free use of its creative powers.
Look at these names: Remington, Underwood, Corona, Sholes. You recognize three of them immediately as successful typewriter manufacturers. Who was the fourth, Mr. Christopher Sholes? He was the inventor of the typewriter. Did his brain child bring him the fortune it brought to Remington, Underwood, or Corona? It did not. He sold his rights to the Remingtons for $12,000.
Was profit Sholes’ incentive? Not according to his biographer: "He seldom thought of money, and, in fact, said he did not like to make it because it was too much bother. For this reason he paid little attention to business matters."
Sholes was only one of thousands of inventors and scientists who are always so absorbed in their creative work that they "seldom thought of money." This is not to say that there aren’t some for whom profit is the only incentive. That is to be expected in a gold-hungry society. But even in such a society, the roll of great names for whom service to mankind was the incentive is long enough prove that scientific genius will work without the incentive of profit.
If ever there was any doubt about that, there can be none today. For the day of the individual scientist working on his own has long since gone. Increasingly, men of ability in the scientific world are being hired by the big corporations to work in their laboratories, at regular salaries. Security, a dream laboratory, the gratification that comes froni absorbing work—with these they are content, and these they frequently have—but not profits.
Suppose they invent some new process. Do they get the profits that may result? No, they do not. Additional prestige, promotion, and a higher salary, maybe—but not profits.
A socialist society will know how to encourage and honor its inventors and scientists. It will give them both the monetary rewards and the veneration which is their due. And it will give them the one thing they treasure more than anything else—the opportunity to carry on their creative activity to the fullest extent.
Profit was indeed the incentive for the capitalist entrepreneur of long ago—but he has faded from the industrial scene. He has been supplanted by the new type of executive more suited to the change from competitive to monopoly industry. The recklessness, daring, and aggressiveness which characterized the old-style entrepreneur are not wanted in monopoly industry today. The big corporations have cut risk-taking to a minimum; their business is mechanized and planned; their decisions are no longer based on intuition but on statistical research.
These corporations are not run by the owner-entrepreneur of yesterday. They are not run by the owners at all—in the main they are managed by hired executives who work, not for profits, but for salaries.
Their salaries may be large or small, they may include a big bonus or no bonus. In addition there may be other rewards—praise, prestige, power, pleasure at doing a job well. But for most of the men who manage American business the incentive of profit has long since wilted away. Will people work for other incentives than profit? No need to guess. We know that people do.
Huberman and Sweezy, "Introduction to Socialism," Monthly Review