Your assertion that attainment to maximum profit does not translate into maximization of social welfare is true.

Financial Economics theory can go one step further, however, which is, declare that maximization of profit can violate arrival at best attainable equilibriums in society. Given equilibrium is an important concept for well functioning of markets (Grossman and Stiglitz 1980, Naik 1997), an hedonistic approach to profit maximization can, per financial economics theory, be less than fully rational.

For a discussion, see my post titled, “Does Value Maximization Theory Justify Non-Livable Wages for Lowest Paid Full Time Workers?” posted here on the Medium platform.

Written by

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store