I'm watching another episode of Discovery Channel's Curiosity and, this time, they show how cavemen or Stone Age hunter-gatherers lived, by gathering ten volunteer city-dwellers accustomed to the rat-race and have them don elk-skins, use stone and wood tools to survive as our ancestors of old, hunting or gathering food, making water drinkable, you name it - much like an experiment with test subjects.
This particular episode fascinates me because the hapless test subjects receive a very hard lesson on what Stone Age humans of meager resources had to endure in order to survive. For some of the participants, the whole situation became more than what they bargained for. This group is integrated by people of very diverse backgrounds and strengths: from a dainty female designer all the way to a burly hunter. Through their differences, abilities, strengths or weaknesses, they either add to the tasks at hand or hinder them. It all depends on who is willing to do what, when and in how much time.
For a person like me who is interested in economics, the show presents a series of good examples of basic economic concepts, from division of labor to opportunity costs, profit-motive, risk taking and profit-making.
The most evident concept is, of course, division of labor, as you have 10 individuals with different strengths and skills cooperating by involving themselves in different tasks, instead of having just very few individuals doing each many energy-sapping tasks. The possibility of shared work means the "tribe" will be able to better cope with chores such as making the shelter, building a fire, gathering what food is available, etc., without being forced to expend as much energy as if a single person had to do these things by him or herself - much like a camping trip, where only the father and the mother set up the tent while the kids experience the whole thing by watching. But I digress...
There's also the not-so-evident concept of profit showing itself in a more subtle way - in the form of cost vs. reward. I say that it is not so evident since it is clear the people do not say the word "profit," but they are certainly aware of it by their conversation and actions, especially when it came to moving their camp to better hunting grounds.
The Capitalist Caveman
Any undertaking by each individual has costs for the individual and the tribe, in terms of time and spent energy. The harder the task, the more time and energy spent to achieve the end, which means that the reward for the task has to be greater than the time and energy spent, otherwise the person will pretty much die. This reward in energy is what we would call profit.
For the tribe, the first order of business after making a fire was to gather food. However, the resources available around the area they chose for the experiment was not precisely a grocery store: Most food was either not obvious, or had legs to run faster than the 'cavemen.' The tribe was only able to obtain a few roots, a couple of fish and a bunch of snails, all while spending a great deal of time and energy on the endeavor. This was hardly a greater reward for the cost! The fact that gathering that food was such a time-consuming and energy-depleting effort meant that they were slowly starving, as the energy obtained was not enough to compensate for the energy they consumed. If it weren't for a couple of the participants leaving the experiment and a successful elk hunting - and only after an anthropologist appeared with a few "atlats," or throwing slings, and darts - they would have all become fertilizer.
It was clear that the amount of calories of food they had to gather each day had to be at least the same as the calories they were spending, otherwise they would suffer starvation. You can see how this zero-sum game can become frustrating and tedious after a time: There's no surplus of energy to cope with the unexpected and, clearly, no leisure time. Bummer!
After what remains of the tribe spends some time familiarizing themselves with their new super-weapons (the slings and darts), and after more futile attempts of pursuing food that outruns them with glee, the camp-dwellers decide to lift their camp and move where the elk are located. Some of the members complain, rightly, that the expense in calories for the new endeavor does not seem worth the potential return, as it was clear the tribe had not had any success hunting anything besides a few fish and snails. The other tribe members decide to give it a shot and overrule their tribe members concerns. Obviously, you can see here the concept of RISK AVERSION.
Once the tribe relocates, the hunters try again with a herd of elk and, this time, are finally rewarded with a kill that brings substantial returns in meat for the whole tribe, besides a good amount of meat as surplus. They bring their prize back home where everybody (except a principled vegan) gets to enjoy in the feast. After this, the experiment, and the episode, ends.
Being able to find as many calories of food as one spends finding it would be all fine if it was possible to gather that much food every single day in perpetuity. Unless such resources can unnaturally replenish themselves faster than the cavemen gathers them, then hunter-gatherers have to pack their belongings and move to new places, which means spending more calories; not only that, it means spending more calories while moving with tents and skins and tools on their backs instead of gathering food! The tribe clearly needs a surplus of calories in order to compensate for the time not spent hunting or gathering food. You need to spend time and effort on an effort that will bring surplus calories to the tribe which can be prepared and preserved for any journey or unpredictable event (like a heavy rain that makes hunting more difficult.) In other words, the tribe has to look for more profitable endeavors: a higher return for the investment in time and calories than simply obtaining enough calories for simple subsistence. Their achievement of bringing down an elk that provided the substantial return for their efforts is a clear example of how profit-motive and risk taking helped the tribe achieve their ends with a far greater reward.
Profit Against Starving
I could use the above as analogy for comparing a non-profit organization against a for-profit organization. A non-profit organization, by definition, would obtain just enough revenue (calories) for subsistence, just like the cavemen in the experiment spend the same amount of calories as the food they gathered with those calories. Instead, a for-profit organization would pursue endeavors that deliver a much higher revenue for the efforts expended. The non-profit organization would thus perfectly survive as long as revenue remained constant, but would not be able to compensate for unforeseeable events that sap their resources - let's say, a snowstorm damaging the roof of the building. By definition, they would starve as they would have to expend more calories than what they took in. Instead, a for-profit organization would have enough calories to compensate for these calorie-sapping events.
The importance of profit for our lives becomes thus evident. Profit means obtaining a bigger reward for the energy and time spend. Without profit, one's efforts would be destined to only achieve an equilibrium that cannot compensate for unforeseeable events. Profit allows for savings (the equivalent of the surplus food being preserved.) Savings are the basis for all capital, as it serves to compensate for efforts that are not designed to bring in revenue (hunting or gathering) but that bring a greater reward in the form of higher productivity (like changing hunting grounds.)
If we as libertarians explained profit in these terms to people that disdain the concept too readily, I bet we would make a few understand just how important this economic concept is for human welfare. The cavemen certainly understood the concept even if they didn't realize it - why not modern people?