Editing Capitalism (section)

=== Profit motive ===
{{Main|Profit motive}}
The [[profit motive]], in the theory of capitalism, is the desire to earn income in the form of profit. Stated differently, the reason for a business's existence is to turn a profit.<ref>
Compare:
{{cite book
 | last1 = Duska
 | first1 = Ronald F.
 | year = 1997
 | chapter = The Why's of Business Revisited
 | title = Contemporary Reflections on Business Ethics
 | url = https://books.google.com/books?id=dANmdJHsqu0C
 | series = Issues in Business Ethics
 | volume = 23
 | location = Dordrecht
 | publisher = Springer Science & Business Media
 | publication-date = 2007
 | page = 41
 | isbn = 978-1-4020-4984-2
 | access-date = 8 July 2019
| quote = In microeconomics courses, profit maximization is frequently given as the goal of the firm. ... In microeconomics, profit maximization functions largely as a theoretical goal, with economists using it to prove how firms behave rationally to increase profit. Unfortunately, it ignores many real-world complexities.
}}
</ref> The profit motive functions according to [[rational choice theory]], or the theory that individuals tend to pursue what is in their own best interests. Accordingly, businesses seek to benefit themselves and/or their shareholders by maximizing profit.

In capitalist theoretics, the profit motive is said to ensure that resources are being allocated efficiently. For instance, [[Austrian economist]] [[Henry Hazlitt]] explains: "If there is no profit in making an article, it is a sign that the labor and capital devoted to its production are misdirected: the value of the resources that must be used up in making the article is greater than the value of the article itself".<ref>Hazlitt, Henry. "The Function of Profits". ''Economics in One Lesson''. Ludwig Von Mises Institute. Web. 22 April 2013.</ref>

Socialist theorists note that, unlike mercantilists, capitalists accumulate their profits while expecting their profit rates to remain the same.  This causes problems as earnings in the rest of society do not increase in the same proportion.<ref>"What is capitalism" ''Australian Socialist'' https://search.informit.org/doi/10.3316/informit.818838886883514</ref>