Is accounting profit any different from destruction of societal value ?

Last week, we have been able to participate in a conference on Spirituality and Organisational leadership in Pondicherry, India. A very interesting gathering of management scholars and managers, that share the care for meaning in what they do. Of course the region is intriguing, since it is the land of Sri Aurobindo, and there is at least the Sri Aurobindo Ashram and Auroville that are very peacefull places, inviting for contemplation, and worth more than a visit.

The conference closed on a debate around the theme: Can profit and ethics shake hands. I had the pleasure to be invited to take part in the panel and learned that profit is probably understood differently in different managerial cultures.  Referring to Ghandi, one of the panellists suggested that the purpose of business is to make as much profit as possible, in order to return it afterwards to society. We were clearly on two different concepts of profit, but fortunately on the same concepts of ethics and responsibility.

Our liberal capitalist concept of profit is nothing more than an accounting figure, based on which we pay taxes.All necessities for the company are taken out already before (as for depreciation, reserves, and the like). Companies feel the need to limit profit for tax purposes, but at the same time they need profit to honor their fetish: the shareholder.

I leave aside a fair and just return on investment for the shareholder, that nobody will discuss. Let us put it before taxes, why not. When Total announces a profit of 14 billions of euros a few days ago, with a barril that went catastrophically down, no reasonable person can accept this without asking some serious questions.

My question is whether the amount of accounting profit (excluding a reasonable return for the investor) is anything else than an indication of the amount of destruction of societal value that Total (or any other) has caused ?

Comments

[Mathias Adler]

Is there a way I could join this wonderful India connection? I love what you´re telling!

[Daniel]

I would tend to thin that we should first recalculate the profit in its REAL TERMS, this is taking into account all the expenses incurred for its formation. I think the truth would come out clear after that. Profits ar many of the cases a direct refelcion of the social damage they create.