Who Do Economic Profit Belongs To?

Who Do Economic Profit Belongs To? by Sandy Ikeda, Foundation For Economic Education

The Answer Lies in Our Ignorance

Do we deserve to keep the profits that result from our actions?

Most libertarians would maintain that any economic profit — the residual of revenue over cost — that you earn from voluntary exchange is indeed moral and rightly belongs to you. The puzzling thing is that standard microeconomic theory, which libertarians as well-known as Milton Friedman have used to defend their free-market beliefs, is completely irrelevant in justifying that belief.

I attended a talk recently given by Professor Israel Kirzner in which he addressed the question of whether economics can tell us who does and doesn’t deserve profit. I...