Adam Smith on High Profits

“… besides all the bad effects to
the country in general, which have already
been mentioned as necessarily resulting from a
higher rate of profit, there is one more fatal,
perhaps, than all these put together, but
which, if we may judge from experience, is
inseparably connected with it. The high rate of
profit seems everywhere to destroy that
parsimony which, in other circumstances, is
natural to the character of the merchant. When
profits are high, that sober virtue seems to be
superfluous, and expensive luxury to suit
better the affluence of his situation. But the
owners of the great mercantile capitals are
necessarily the leaders and conductors of the
whole industry of every nation; and their
example has a much greater influence upon
the manners of the whole industrious part of it
than that of any other order of men. If his
employer is attentive and parsimonious, the
workman is very likely to be so too; but if the
master is dissolute and disorderly, the servant,
who shapes his work according to the pattern
which his master prescribes to him, will shape
his life, too, according to the example which he
sets him. Accumulation is thus prevented in
the hands of all those who are naturally the
most disposed to accumulate; and the funds
destined for the maintenance of productive
labour, receive no augmentation from the
revenue of those who ought naturally to
augment them the most. The capital of the
country, instead of increasing, gradually
dwindles away, and the quantity of productive
labour maintained in it grows every day less
and less.”
Adam Smith, The Wealth of Nations.

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