In the immediate post World War II decades of the 1950s and 1960s some argued that the domination of the profit motive had rightly receded and that a form of capitalism had developed in business in the United Kingdom, much influenced by Scandinavian approaches. The idea behind this was that “profit” was a dirty word and for many in this country that became the driving force in their thinking. Others would say that this was a crude and over-simplistic view about how capitalism could and should work in a modern economy like the United Kingdom.
Most right minded people can distinguish between “profiteering” and making a reasonable profit. And, furthermore, they would also recognise the necessity for an enterprise to make a profit to sustain itself and its stakeholders with the returns necessary to enable it to invest and develop successfully.
Policymakers, the media and, indeed, people in the country as a whole need a balanced perspective on the need for profits to sustain the country’s economy. Such a perspective goes right to the heart of understanding the wealth creation process and an enterprise culture. It is private sector business that generates tax revenue and puts money in peoples’ pockets.
If one accepts at the macro level the basic proposition that profits are needed to sustain the nation’s businesses and the jobs and wealth created by them, it is not too much of a jump to say that healthy profitability goes hand in hand with responsible business. Here the debate needs to move beyond the clichés and the mindsets of the past.
Profiteering and exploitation have no place in carrying out business responsibly because they lack sustainability, they cannot be good business practice and, of course, they are seen to be morally wrong. Generating healthy profits, however, is not only desirable, but also an imperative for businesses taking their corporate responsibilities seriously, giving them the wherewithal to address matters such as training and development, apprenticeships, attracting and retaining a talented and diverse workforce, or investing in their wider communities. Profit and responsible business are inextricably linked.
Robert Elliott was elected as Linklaters’ Chairman and Senior Partner in 2011. He was previously Global Head of Banking and a specialist in Corporate Restructuring.