Interesting idea, but (based on about 20 seconds thought) I’m not convinced it holds in equilibrium. If for-profit firms under-invest by 50x, and charities adapt to this by ramping up their investment massively, aren’t they then taking resources (e.g. labour) away from the for-profit sector and thus making for-profit under-investment even worse? (Assuming the total consumption/investment tradeoff is unchanged).
Yeah, I think you also have to assume that charities want something other than to create surplus value in the way for-profit companies do. Suppose not—say there are altruistic and for-profit firms, and altruistic and selfish labor, and the altruists want to maximize total surplus created. Not an economist, but I think the equilibrium looks like:
altruistic firms are better buyers of selfish labor; therefore the price of labor goes up
altruistic employees work for the most altruistically efficient firms, whether they’re altruistic or for-profit. For-profit firms are less altruistically efficient because they’re optimizing their profit, not total surplus. So they shift to partially optimizing for altruistic value to attract better talent in the face of higher labor prices.
Interesting idea, but (based on about 20 seconds thought) I’m not convinced it holds in equilibrium. If for-profit firms under-invest by 50x, and charities adapt to this by ramping up their investment massively, aren’t they then taking resources (e.g. labour) away from the for-profit sector and thus making for-profit under-investment even worse? (Assuming the total consumption/investment tradeoff is unchanged).
Yeah, I think you also have to assume that charities want something other than to create surplus value in the way for-profit companies do. Suppose not—say there are altruistic and for-profit firms, and altruistic and selfish labor, and the altruists want to maximize total surplus created. Not an economist, but I think the equilibrium looks like:
altruistic firms are better buyers of selfish labor; therefore the price of labor goes up
altruistic employees work for the most altruistically efficient firms, whether they’re altruistic or for-profit. For-profit firms are less altruistically efficient because they’re optimizing their profit, not total surplus. So they shift to partially optimizing for altruistic value to attract better talent in the face of higher labor prices.