Profit: for who’s sake?

You can’t escape the news.  It’s all doom and gloom as the stock-market and companies fail; and many people  had invested money in shares as a sure way to make money.   But this is making money from… err…  money.  Which doesn’t really sound right – does it?  Surely money was really meant to be a way of valuing your real goods & services so that they could be traded for other goods & services, or it was in the beginning.

But say you have some money, and it’s reasonable to assume that you want to grow that money so you take some advice and you invest it in a particular company or group of companies on the stock market (advice probably circa a couple of years ago anyway, now I think people would be more careful about shares).  Now really what is happening is that you are becoming a shareholder in the company and therefore are technically in control of a part of that company.  What do you actually want from this relationship?  I’d say in a lot of cases you probably weren’t really that bothered about the company itself, but just in it’s bottom line.  More money for you is the company making more money.  So you end up with this company’s controlling interest (i.e. it’s shareholders) are really only interested in the company making money.  Does this sound screwy to you like it does to me?

It’s a perfectly reasonable business model for companies, it allows their founders to realise their investment much more easily, it allows an amount of capital to be generated for the business to grow and in some cases it adds weight to the business so other businesses are more willing to trade with them.  But to get to a situation where people more interested in profit than anything else are controlling a business just doesn’t sound right to me. 

I think it’s an advantage to the Co-operative system that there are rules to prevent this kind of behaviour.  It means that in a Co-operative like ours then shares can only go to workers within the company, and for a consumer Co-operative, like Midcounties which runs a huge number of supermarkets & other stores in the UK, shares can only go to the people that buy their goods & services.  This I think then guarantees that it’s not only profit that is being thought about…  But also the best way to retain jobs, services, skills in the local area and other things that maybe aren’t quite as profitable but are very necessary such as development of ethics, other models business or new but risky products. 

We still have to make money, and we still do, but there are other motives behind it and when the profit isn’t as high as maybe it could be then rather than a load of shareholders pulling money out of a company in it’s time of need there are a group of members to rally round and support the business the best they can.  It almost sounds like a strategy for making it through a recession…

Picture courtesy of borman818