The idea of universal profitability can seem contradictory, especially in a competitive market. Does one entity’s profit inherently mean a loss for someone else? Or can all participants in the economy simultaneously thrive? To answer this, we must consider the fundamentals of profit and its relationship to consumption and production.
Profit, in simple terms, is the surplus left after deducting costs from revenue. Many people might assume that profits are part of a zero-sum game, that for one business to gain, another must lose. However, this is not necessarily the case. Markets are not zero-sum because they operate on value creation.
Take a simplified example: A farmer grows KES 500.0 worth of maize and sells it to a miller for KES 1,000.0 The farmer profits by KES 500.0 The miller processes the maize into flour and sells it to consumers for KES 1,500.0, earning a profit of KES 500.0. In this chain, both the farmer and the miller make a profit, while consumers receive flour worth KES 1,500.0 that satisfies their needs.
The key here is that consumption drives the system. Consumers are willing to pay because they derive utility, happiness or satisfaction, from the goods and services they purchase. This utility is non-monetary but crucial, as it ensures that everyone along the production chain benefits without necessarily implying losses for others.
Moreover, natural resources and innovation can expand the economy’s productive capacity, allowing profits to grow without taking away from others. For example, in Kenya, a new irrigation technology could enable farmers to grow more crops, increasing their profits while reducing food costs for consumers. This kind of value creation benefits multiple stakeholders simultaneously.
However, while it’s theoretically possible for everyone to make a profit, real-world conditions such as unequal access to resources, market inefficiencies, and external shocks often limit this outcome. Additionally, in some situations, profits for one entity, such as monopolistic corporations, may come at the expense of smaller competitors or consumers.
Profitability is not inherently zero-sum. Markets can enable mutual gains through value creation, utility derived from consumption, and the efficient use of resources. Yet, achieving universal profitability requires addressing systemic inequalities and ensuring that the benefits of growth are broadly shared.
