Private or Public: Does it Really Matter?
Many behaviors across the board are engendered by a desire or a need for profit. Some, beneficial. Others, harmful. Many parallels can be observed between government enterprises and private companies; the hope for profit still exists in both, just in different forms with different goals. Quoting Milton Friedman: “there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
This essay aims to illustrate a variety of practices, many that could be seen as borderline unethical, that are engendered by a hope for profit, and argue that these practices remain largely the same regardless of whether or not these enterprises are private or public, just that there exist minor changes in the magnitude of these behaviors.
In theory, profit motive exists to simplify processes and decision making within corporations (Kagan). Through the profit motive, individuals and corporations alike focus on actions or behaviors that tie into what can create the most profit. Within the free market, profit incentives push for more innovation, creating better and more efficient supply chains and products, but also for many more harmful causes.
This means that in cases where the profit motive lies in competition against other corporations, creating more accessibility, or improving customer satisfaction, profit motive pushes individuals and corporations to improve products and services, as well as to innovate. In other cases, innovation stems from market gaps. Companies like Zoom or Uber were created off of market gaps in an ever-changing society (Hackman), reflective of how profit motives can help create a better world for consumers. In other cases, companies like Apple and Samsung are constantly working around the clock to create better products, not just to sell more to consumers, but in an attempt to out-do the other. Furthermore, socially-minded change that is created by corporations like Apple, such as inclusivity initiatives and charity donations are all also created by profit motive. Through these donations and programs, companies improve public view of them and garner benefits such as tax cuts, helping increase profit. International accessibility is also increasingly benefited by the desire for profit. Companies like Riot Games were able to revolutionize markets in places like South America through better accessibility, whether this looks like language support or regional servers.
At the same time, profit motives also engender behaviors that would, under any other circumstances, be considered extremely unethical and borderline manipulative under the context of profit maximization. It’s important to understand that at its very core, profit motives often exist without considerations of ethics. Economic theories and papers talking about market interaction and profit motive largely end up shrinking the concept down to graphs about supply and demand, incentives, and numbers, neutralizing ethical aspects or ideas about human nature. When considering profit motives, there is no concept of profit that is ethical or unethical, only profit. The only thing that justifies profit is more profit. Therefore, corporations often resort to unethical and manipulative strategies, ones that have almost been normalized by economic strategizing.
Today, we often see companies in industries like tobacco heavily push narratives that make smoking seem “cool” in a sense. They push for ads that amplify societal expectations and make people feel like they are obligated to smoke. This is especially effective when used against minority groups in society like teenagers (World Health Organization), with trends such as fast fashion, vapes, or the “need” to own and use the products that the people around you own. Furthermore, manipulative pricing strategies such as market prices down to .99 instead of the full dollar, the decoy effect (Sun), and many others also contribute to driving rampant consumerism. Companies like Facebook “[have] employed a team of psychologists to help design the website so that it activates the pleasure centers in the brain and keeps people engaged.”(TUW)
Profit incentives also push companies to do things that are not only harmful towards their consumers, but also to many different people around the world. Take examples like the textiles industry in Bangladesh, or the ship-breaking industry across beaches across Asia (Human Rights Watch). The “profit first” philosophy from these companies pushes them to expand in ways that disregard human life and human rights, harming those that they exploit economically, socially, and politically. Looking at trends such as the race to the bottom (Gardner and Lavold 248), we see a general trend of exploitation for these private companies all over the world, a behavior that citizens in the western world have become accustomed to, a behavior that has been engendered by the hope for profit.
If we look at general structures for government-funded enterprises, profit motive remains an important part of the picture. At the very least, government agencies aim to break even. When government services are able to break even or make profit, it allows governments to allocate more budget into other aspects of the society that can make the government more popular. Furthermore, the hope for profit engenders cost minimisation behavior like any other firm. Companies in Canada run by the government, such as Canada Post, often aim for efficiency that allows them to break even. It’s extremely unpopular among the public when they are not only paying market price for a service, but also funding it with their taxpayer dollars, meaning that these companies must aim for a minimum of a break-even..
It’s important to recognize that even in public companies, manipulative behaviors still happen anyways. However, due to these companies being associated with governments, they often attempt to distance themselves from manipulative techniques and strategies that private companies use. Furthermore, government-run companies are often less able to take advantage of concepts like offshoring or outsourcing, as these are generally viewed negatively by the public due to human rights issues and labour rights issues. There is a general sentiment against outsourcing government work towards developing countries. Negativity directed against large private corporations can often be ignored, but when citizens are able to directly hold leaders and governments accountable, negativity against government companies must be addressed and resolved. Public companies are therefore more likely to generate profit in more honest and ethical ways, or at the very least, more rarely use manipulative strategies depending on their visibility and the awareness of the general public.
On the flip side, government companies also often have a lower burden on innovation. Ludwig von Mises argued in the early 1920s that market socialism, a new system then beginning to be envisioned, would fail to maintain the same level of efficiency as private ownership (Ács et al.). There is rarely a need to fill a market gap, and competitors are often non-existent. This is especially true if we look at many energy companies, such as EPCOR or ATCO in Alberta, or in sectors such as public transportation. These are government companies that inherently have no competitors due to the monumental start-up cost for private companies and government regulations that restrict their ability to provide these services for the public. Most of the time, people are content with what they are given, content with the services that they have access to. People are likely to trust government services due to them being government services. A low burden doesn’t mean that innovation doesn’t occur however. Parties within the government still compete to provide better services in order to increase their voter appeal. Insofar as the free market and profit is so integral to the political system, this hope for profit still exists, just in different forms. Furthermore, in sectors where government services do see competition in, such as mail or shipping, the incentive behind innovation still exists.
This creates an interesting tradeoff between private and public corporations. Both are, at the same time, motivated in part by profit and the need for profit. However, private companies are willing to go to greater lengths to obtain profit, as they need not fear the risk of large amounts of public damage from manipulative techniques.
Government run and privately owned corporations, at the end of the day, are still run by people who have profit incentives. Though it’s true that the government itself largely lacks as strong of a profit motive as private corporations, the people working in these government-owned enterprises still share the same unchanged profit motive. Whether or not businesses are government run or privately owned is not a large factor in deciding profit incentives for workers. Rather, profit incentive depends more heavily on how these businesses are run and how worker’s preferences differ with respect to their private information (Zhang). Furthermore, employees are still driven to work for promotions and for pay rises. Employees are paid a salary based on their performance, not based on company performance, meaning that employees are still incentivised to work towards these career advancements. Similarly, executives like CEOs within a government corporation share the same goals and responsibilities as their private-counterparts; to ensure smooth function and maximize company utility and profit. These executives are replaceable, and therefore following the wish to keep their jobs, they similarly work towards generating profit. At the very top, bureaucrats wish to be re-elected, and therefore, while not being motivated by money, are still motivated by the profit of status. Throughout the corporate hierarchy, profit motive remains largely the same as workers fight for better pay and better positions. When it comes down to behaviors that are engendered by profit incentives, many of them don’t change because the people behind these behaviors don’t change. However, despite this, some differences do exist. The difference then is in magnitude. Simply, government run companies often have multiple different priorities that must be run parallel to profit. They need to run in ways that are sustainable, accessible, popular, and transparent. There are expectations put on them for standards of human rights, and many other issues. From private
companies, society expects innovation, development, and value for the money that they put into these companies. In sectors where the government has a monopoly over goods and services, behaviors often look the same, just in lower magnitudes across the board.
The conclusion then, is that there inherently isn’t a large difference between the profit incentives between private and public corporations. Rather, the difference in structure and behavior stems from public expectations and what the companies need to achieve in order to make profit. Private and public corporations all aim for profit, but they each must find different ways to do so pertaining to the resources they have at their disposal and what is viewed as acceptable for their company. This means that most of the time, practices remain the same across both private and public companies, just at different magnitudes, leading to a minimal difference between the two.
References
Kagan, Julia. “Profit Motive: Definition, Economic Theory, and Characteristics.” Investopedia, Investopedia, www.investopedia.com/terms/p/profit-motive.asp. Accessed 29 June 2025.
Hackmann, Elmar. “How Zoom Conducted Market Analysis to Outpace Competitors in Video Conferencing.” Medium, Medium, 6 Dec. 2024, medium.com/%40elmarhackmann/how-zoom-conducted-market-analysis-to-outpace-competitor s-in-video-conferencing-2e63fb9fae93.
“The Tobacco Industry Is Targeting the Youth.” World Health Organization, World Health Organization, www.who.int/india/news-room/feature-stories/detail/the-tobacco-industry-is-targeting-the-youth. Accessed 29 June 2025.
Sun, Hongyang. “Behavioral Economics: The Decoy Effect.” Advances in Economics, Management and Political Sciences, Advances in Economics, Management and Political Sciences, 13 Sept. 2023, www.ewadirect.com/proceedings/aemps/article/view/3119.
TUW. “Psychology in Business: How Companies Are Employing Psychologists to Increase Customer Engagement.” Touro University Worldwide, 16 June 2023, www.tuw.edu/psychology/psychology-in-business-companies-are-employing-psychologists-to-in crease-engagement/.
“Bangladesh: Shipping Firms Profit from Labor Abuse.” Human Rights Watch, 28 Sept. 2023, www.hrw.org/news/2023/09/27/bangladesh-shipping-firms-profit-labor-abuse.
Gardner, Robert, and Wayne Lavold. Exploring Globalization. McGraw-Hill Ryerson, 2007.
Ács, Zoltán J., et al. Entrepreneurship, Growth, and Public Policy. Cambridge University Press, 2013.
Zhang, Fan. “Incentive Differences of Public and Private Firms” www.newyorkfed.org/medialibrary/media/research/conference/2004/governance_papers/Zhang- public-private.pdf. Accessed 30 June 2025.
