Usurious Profits

 I know. It's a quaint little notion, usurious profits. How does one get from excessive rates of interest with an ancient history of regulation to excessive profits, generally prosecuted as profiteering in time of war, as subject to the concept of usury and eligible for regulation in peacetime?

How are profits reported in reports? As Return On Investment. That's the whole argument. An investment implies an opportunity cost of alternative placement of a sum of money. The ROI is a calculation of the interest earned on the actual placement of that capital as a calculus of maximizing return or interest among competing opportunities. Profit, then, is simply interest earned on an investment of land, labor, and capital as compared to alternate employments of potential ROI, interest.

As interest, profit is subject to the concept of moral rates of interest, usury, and completely eligible for capping regulations.

Why make this profound policy shift? Since Keynes identified aggregate demand as the driving variable in a political economy, we have lived in and expanded and intensified a consumerist system. The consumerism dynamic is simple, the more one spends, the more one gets due to an ever expanding aggregate demand and increasing CapEx driving increasing productivity.

There are two critical failure possibilities in this construct:

Excessive CapEx without corresponding productivity increases produces bubbles which infect the entire economy and, second, excessive profits, profits increasing at a rate greater than that of wages and participation, strangle the economy.

As AI driven robots take productivity to effectively infinity, robots producing robots producing products, we need to find a better benchmark than productivity and its efficiencies to measure economic success, a more humane measure of social efficiency. Capping profits would do this. It would increase the difficulty of CapEx and prevent bubbles and it would prevent profit-taking strangulation, making the economy run smoother.

It would, as a moral edict should, operate to the end that Labor should have. Moral, humane, and effective, it is then an idea whose time has come in this evolving AI environment.

Be Well and Do Well.