The Nature and Moral Dimension of Capitalist Profit
In a competitive environment, wealth often comes from luck, replacing others, and the strength of capital. Does this mean that moral considerations are unnecessary, and therefore that wealth and profit are unrelated to morality?
Author: GUDORDI | 2025-04-08
資本主義社會在本質上是不道德的。
The capitalist system is unethical.──奈特（Frank Knight），1982年諾貝爾奬經濟學得主佐治史德拉（George Stigler）引述
In this article, the author continues discussing the concept of “animal spirits” proposed by John Maynard Keynes and the importance of this concept to economic development.
A Giant in the Field of Economics
George Stigler, winner of the 1982 Nobel Prize in Economics, once wrote that his teacher Frank Knight had made the above statement. Strictly speaking, whether the quote truly originated from Knight is not 100% certain, since he does not appear to have said it directly in any published literature. If the quote is genuine, however, its broader context should not be ignored, because sentences taken out of context are often somewhat misleading.
Moreover, the recollection by Stigler included an even more provocative second half: “it will only lead to cumulative growth in wealth concentration and social inequality.” At first glance, this statement may seem rather arbitrary, but upon deeper reflection, it is not necessarily unreasonable. As John Maynard Keynes once said, “Words ought to be a little wild, for they are the assault of thoughts on the unthinking.”
Knight was a giant in the field of economics. Although he did not publish many works, he is widely regarded as one of the founding figures of the Chicago School of Economics, and countless of his students later won the Nobel Prize in Economics, with Stigler being just one example.
Stigler cited the above remarks to illustrate Knight’s distinctive intellectual style: he was not merely concerned with strict logical deduction, but rather with generating ideas that were deeply thought-provoking and that encouraged students to examine issues from different perspectives. The fact that so many of his students later became Nobel laureates was probably no coincidence.
It is even said that the inspiration for Ronald Coase’s two groundbreaking papers — The Nature of the Firm and The Problem of Social Cost — came from attending Knight’s lectures while passing through the University of Chicago as a young man.
Frank Knight: Capitalists’ Profit Has Nothing to Do with Morality
Although there is no direct record in published literature of Frank Knight making such a statement, it is entirely possible that he expressed similar views in informal discussions. Despite living in an era that often displayed near-fervent admiration for the market system, Knight consistently maintained a cautious and reserved attitude toward it.
In his writings, he argued that in a competitive environment, wealth frequently arises from luck, the displacement of others, and the power of capital. From this perspective, the accumulation of wealth may occur without any necessary moral consideration, and therefore can be regarded as morally neutral.
However, despite Knight’s reservations about the market system and the moral content of profit, he may also be regarded as one of the earliest — and perhaps still one of the greatest — defenders of the legitimacy of capitalists’ profit.
In his 1921 work Risk, Uncertainty and Profit, Knight argued that the process of economic development inevitably involves deep uncertainty. Such uncertainty often cannot be properly analyzed, insured against, or transferred to others through conventional means. Capitalists, therefore, are the ones who bear these uncertainties and risks directly. Without people willing to shoulder such burdens, economic progress and breakthroughs would not even be possible.
For this reason, Knight believed that allowing capitalists to earn profits was both reasonable and justified.
The Main Factors Behind Shenzhen’s Success
This leads to a further question: under what conditions will there emerge a sufficient number of capitalists willing to bear enough risk to push an economy onto a higher level of development?
Perhaps because this issue is difficult to quantify or express mathematically, there has been relatively little discussion of it within mainstream economics literature. The concept of “animal spirits” introduced by John Maynard Keynes in The General Theory of Employment, Interest and Money may have been one of the earliest serious attempts to address this issue, and perhaps one of Keynes’s most original contributions to economic theory.
More importantly, could this concept help explain why Shenzhen’s economic performance over the past three decades has differed so dramatically from that of Eastern European countries?
To ignite the market’s “animal spirits,” there must be a sufficient number of capitalists and entrepreneurs who hold reasonably optimistic expectations about the future. And such expectations often possess a tendency toward “self-fulfilling.”
Could Shenzhen’s success have stemmed largely from the emergence of enough people who genuinely believed that hard work could create a better future? And could the lack of sufficient “animal spirits” be the underlying cause of the economic difficulties currently facing Hong Kong?
The author will discuss this further in the next article.
