Fit for purpose? Clarifying the critical role of profit for sustainability

Abstract

This conceptual article contributes to the post-growth strand of political ecology literature, which seeks to find sustainable ways of organizing the economy that do not require economic growth. It explores the idea that transitioning to post-growth societies requires a transition in the relationship-to-profit of business. I first conceptualize relationship-to-profit as the intersection of purpose, investment, and ownership of firms. Specifically, for-profit business structures entail a financial gain purpose, private ownership, and unlimited returns on investment; whereas not-for-profit business structures have a social benefit purpose, collective ownership, and limited returns on investment. I then outline ideal types of for-profit and not-for-profit economies, based on the differences between these two kinds of relationship-to-profit. The first ideal type shows how the for-profit business structure drives consumerism, economic growth, and ecological harm, as well as inequality and political capture, preventing post-growth transitions. These dynamics might be slowed down by businesses that seek to balance private financial gain with social benefit (known as dual-purpose businesses). The second ideal type describes the dynamics that might be expected in an economy consisting of not-for-profit businesses, which have a legal mandate to pursue only social benefit. This analysis explains how transitioning from for-profit to not-for-profit forms of business might change some of the most problematic dynamics of the economy, allowing for post-growth transformations. A brief discussion of the possible shortcomings of a not-for-profit economy is also offered.

Keywords: Not-for-profit business, nonprofit enterprise, for-profit business, relationship-to-profit, post-growth, degrowth, economic growth, sustainability, sustainable econom