This essay is free, but with Premium Membership you get MORE. Join today.
by James Lindsay
August 25, 2026
So much support for socialism is rooted in flat-out economic ignorance. I find it fun to think through examples of this kind of thing sometimes.
Socialists are pretty diametrically opposed to profit. They see profit as proof of exploitation, that the “owning class” is extracting the surplus value of production for themselves and robbing, if not enslaving, the workers.
There are actually about a million good, common-sense, basic-economics arguments against this stupidity: for example, that the owners deserve a (large) share of that surplus because they’re shouldering all the risk and responsibility for the company, including providing the investment to create it. This is sound. Most socialists are terrified to become owners, at the end of the day, because they know if the company fails, it’s all on them.
The profit motive, however, is literally the magic sauce that unlocks abundance and a high standard of living.
Hillsdale College’s wonderful “The Story of America” series is now FREE for you to watch! Learn about the most important episodes in America’s Founding.
Click here for the full series!
To walk through just one simple, real-life example, the profit motive strongly encourages cost-saving innovation (in addition to much else) while also solving the core socioeconomic question at the heart of every civilization: “how do you get people who don’t care about each other to act like they care about each other’s problems?” Answer: the profit motive, which makes coming up with solutions to other people’s problems, which you can sell, a matter of self-interest!
Anyway, I got a notification on my phone from a huge corporation called Amazon earlier after my wife placed an order. It said I have until whatever time to add any items I want to the order so they’ll arrive in the same shipment.
This is actually new. It is an innovation that greatly increases efficiency. Let’s think it through together.
The simplest way to solve the order-to-shipment problem is to tie a shipment, which is ultimately a box or envelope, to an order number. Someone orders stuff on the app, an order number tied to those product choices is made, and a shipping container is later filled with those items and shipped.
This happens millions of times a day, an unfathomable number of times, actually, and it’s very complicated. There’s a huge inefficiency happening here, though, with this simple-minded, but complicated, order fulfillment scheme that any bonehead would think up and implement.
Sometimes, a customer will order stuff, and then later that same day, they will think of more stuff to order, at which point they will place another order. This might happen more than once in a day, in fact. It matches how people shop and think, especially when families share accounts. Each order is a new order number, and each order number is a new logistical train plus shipping materials and costs.
Amazon doesn’t want to waste money shipping stuff, and their model (at least on Prime) is that shipping is virtually always included, which means it is wrapped up into the product costs across all products. If the same delivery location is ordering three times (or more) in the same day, it’s something like one-third the incurred shipping costs to put it all in one box and ship it only once.
The customer will also be happy with this, and probably makes fun of the fact that Amazon doesn’t automatically do it. He imagines there’s some guy happily filling orders in a logical, sensible way, rather than a huge system fulfilling millions of orders a day in a very complex system, where automation beats out “sensible” organization that an individual running a small operation might do.
That means there’s an incentive to innovate on Amazon’s end. They can innovate their logistics algorithm to identify multiple orders going to the same delivery address under the same account in a short period of time and consolidate them. I’m sure this wasn’t a monumental programming challenge, but it was indeed a programming challenge. I can tell because this feature is so new.
What makes this worth doing on Amazon’s end is that they save money by doing it if it’s cheaper to implement this consolidation algorithm and logistical chain than to ship according to a naive implementation. By reducing costs at the same revenue, they generate profit, and the profit motive encourages them to do this in an economic way, not just a vague “right thing to do” way.
Notice that this situation is an improvement in all regards, if and only if it actually works. Amazon saves on shipping and delivery costs as well as materials; the customer gets fewer packages; there’s less waste. The profit motive encourages AND REWARDS Amazon’s executives to make decisions that remove a blatant inefficiency that doesn’t actually benefit anyone, but that is somewhat difficult to eliminate.
Do you understand this, young socialist idiot? It’s actually really simple, and it doesn’t depend on anyone having morals you think they ought to have in a situation you don’t even understand.
But it gets a lot better.
I don’t know how much Amazon saves in shipping and shipping materials, plus other overhead, by consolidating orders like this. But it’s absolutely reasonable to guess it might be around a dollar per consolidation. It’s actually probably more.
Amazon’s executives could just pocket that whole saved dollar-per, but they probably won’t. It’s their right to do so, but profit-driven economics tell them there’s an even smarter way that’s filled not just with winning, but win-winning, and even win-win-winning, or even win-win-win-winning.
Let’s take a look.
First, of course, no one is necessarily motivated to help other people win, and indeed they might just not care. The problem at the heart of every society, free or unfree, is that people aren’t required to care about other people’s problems and, beyond a certain line, can’t be forced to. You cannot make them even with the most invasive socialist “ideological remolding” that’s supposed to make them care about things they don’t have any truly good reason to care about.
If it’s a matter of self-interest, though, they’re CERTAIN to care about it, voluntarily and freely. No one has to force them to do so, or send them to a standing-room-only prison under Tiananmen Square because they did it wrong.
It is actually self-beneficial for Amazon’s executives to spread that dollar (plus) in savings across at least two or three domains, or maybe four.
Some of it goes in their pocket as more profit (win).
Some of it goes to the company itself to keep innovating in these same ways, which eliminates unnecessary inefficiencies to everyone’s benefit (win).
Some of it goes to lowering product costs so that everyone can obtain the same goods more cheaply because the product costs are absorbing shipping costs, which went down as a result of this innovation (win). This will give the company further market advantage and attract more customers, which includes making more products more accessible to more people with lower income (win).
Some of it can also go to employees who have their working morale increased because lower overhead allows the company to pay employees more (not less) while making MORE PROFIT at the same time (win). This allows them to attract and keep a better workforce that works better, and harder, willingly (win).
Notice how everything a young socialist ignoramus might care about gets checked off here by this profit-motive-driven innovation process.
Lower costs
Greater accessibility for lower-income people
Greater efficiency and less waste
More capacity to pay employees more
The only thing our young socialist ignoramus doesn’t like about it, in fact, is the part that makes it work: the profit for the owners. Generally this is for one of two reasons. Maybe she doesn’t like it because the owner is taking profit at all, as though owners shouldn’t be rewarded (and thus motivated) to make their enterprises better. A more reasonable socialist wouldn’t like it because the executives (owners) would take proportionally more of the profit than other sectors, if they can, which is “unfair” if you don’t understand anything.
That is, our young socialist ignoramus might think that it’s wrong that the executives (who are few in number) split millions of dollars in freed-up profit while the other sectors (customers, employees, etc.) only get an almost negligible pittance that works out to mere cents. How unfair!
It’s not unfair, though, because the executives are, in fact, few in number. If that dollar saved, times say a million instances per day, is split up, let’s say, 10 percent to executives (and shareholders...), 20 percent to reinvestment, 20 percent to employees, and 50 percent to price reduction, almost no one would think that’s unfair, unreasonable, or greedy. But because there are a few execs, a hundred thousand employees or something, and tens of millions of products, the division will look exaggerated and “unfair” for the owners/execs in a naive analysis (which is what socialists always do).
And that’s where the risks and rewards of ownership come into the picture again to address this. If you’re still stuck on the idea that it’s somehow unfair that they’ve eliminated waste, increased efficiency, decreased costs, lowered prices, invested in further improvements, and paid people a little more to work for them, but (horrors!) they took a bit of concentrated profit for themselves and their families for their trouble, something they didn’t really have to do: Do you even listen to yourself?
And speaking of that, why would they bother in the first place if the system they had was working well enough, despite the inefficiencies and related limitations?
Because they get to take home that little bit of extra profit that, when concentrated, is actually a lot of money and therefore a huge incentive for them to come up with and force implementation of challenging improvements they could have otherwise ignored.
The story of an advanced society is that the thing we take for granted as an advanced society, the thing that makes life comfortable enough for socialists to have time to whine and demand socialism in their first-world entitlement, is only built because the profit motive is strong enough to motivate ambitious people to take the risks of building systems that deliver the first world to us.
Imagine starting an airline. Your first plane is going to cost you about a hundred million dollars, and if it doesn’t work, you’re stuck with a hundred-million-dollar outlay that you have to get rid of after all your other losses. We have airlines because people took those risks, and continue to take those risks every day. Most of them fail, but some succeed, not because of some deep unfairness but because what they built solved problems for real people, well enough such that people were willing to pay a price that they consider a win-win for themselves.
This is the ONLY REASON we have nice things.
So, my dear young socialist. Calm down. Learn a little. You’ll realize not only that the profit motive is correct but good. You might even see ways you can capitalize on it and become successful yourself, without panhandling-by-proxy through the state apparatus and its guns and prison cells (you know, those things you say you’re against).
— My brilliant friend James A. Lindsay is a mathematician and best-selling author whose books include Cynical Theories and Race Marxism. You can find him on X and at NewDiscourses.com.
A terrific and comprehensive article by the esteemed James Lindsay! The profit motive is beneficial to everyone involved in a business. Whether it be the CEO, executives, shareholders, employees, or consumers!
Lindsay didn't mention one similar Amazon feature, that lets them consolidate not packaging but trucking: the offer to let Amazon deliver the product a day or two later in exchange for a dollar or two in digital credit for something like a Kindle book or a Prime broadcast.