For many years, economic thinking has been dominated by a single principle, seemingly simple yet dangerous in its consequences: that a successful company maximizes shareholder profits. This principle, while seemingly logical in management and finance textbooks, has contributed to the creation of economies based on financial profit without any productive progress. It has also led to the accumulation of wealth in these economies without expanding the base of prosperity among their citizens. Therefore, according to the works of economist Mariana Mazzucato from which this article draws, a fundamental question must be asked: Are we actually creating value, or are we merely extracting it?

 

The problem in some economies, including Jordan, is not the existence of profits, but rather that the system rewards the extraction of value more than its creation. Profit itself is not the problem; its source is. Surely, we cannot be against the creation of profit, the market system, or the private sector; it is the source of profit that is of concern here.

 

Let's examine the source of profit, which can be divided into two main sources. The first source is value creation through innovation, long-term investment, increased productivity levels, and technological development. The second source is value extraction through speculation, monopolies, rent-seeking (income or profit is derived from owning or controlling an asset or privilege; not from production, innovation, or adding real value to the economy), and the redistribution of existing wealth without any real addition.

 

When short-term profits become an end in themselves under the dominance of the principle of maximizing shareholder value, corporate decisions focus on raising share prices, distributing quick dividends, and buying back shares at the expense of investment in research and development, employee training, and genuine productive expansion. The result is an economy that is rife with paper profits but impoverished in productivity and innovation.

 

The recent surge in bank profits and the significant recovery of the financial market, despite low economic growth rates and high unemployment, may be evidence that Jordan is focusing on extracting value rather than creating it.

 

The state is not a neutral bystander but a key player in value creation. The state often (and in Jordan's case, it should) fund scientific research, bear the risks of early innovation, and invest in infrastructure and technology. However, when projects succeed, profits are privatized, while the state and society bear the cost of failure. This is an unjust and unsustainable equation. The alternative is to maximize added value, meaning shifting from the question of how much profit we made to a deeper question of what value we added to the economy and society. Maximizing added value means higher productivity, genuine innovation, quality jobs, environmental sustainability, and a fairer distribution of returns.

 

Instead of letting the market dictate the direction, we must move towards a mission-driven economy where the state sets clear national objectives, such as green transformation, food and health security, advanced manufacturing, and digital transformation. To achieve this, the state must realign its fiscal, financial, and regulatory policies to serve these objectives, not to accumulate profits detached from reality.

 

As for subsidies, what is required is linking subsidies and financing to conditions of value creation. This means that if a company receives subsidized financing, exemptions, or government guarantees, it must commit to investing in production, innovation, and training and refrain from using the subsidies for speculation or share buybacks. The developmental principle here is that public support, according to this logic, is not an acquired right, but a social contract. In this model, a company's success is measured not only by profits but also by its contribution to innovation, the quality of jobs it creates, its environmental impact, and its role in local value chains. A strong economy is not simply a collection of profitable companies, but a system that creates shared value.

 

Why is this important today? In a world suffering from slowing growth, widening social inequality, and climate crises, the insistence on maximizing shareholder profits alone is a recipe for long-term failure. What I propose here is not a revolution against the market, but a correction of its course—a market that serves society, not one that drains it.

 

The real question is no longer how much companies profited, but how they profited, at whose expense, and what they added. Maximizing added value is the path to a more productive, equitable, and sustainable economy. We are not against profit itself, but against profit divorced from the creation of real value. Maximizing profits alone has proven to be a short-sighted path… and its end is costly for everyone. Finance is available in Jordan, but its allocation is weak, and innovation is suffering. It is essential to shift from safe financing that seeks to extract limited and lazy value to financing directed toward creating high added value.

 

The writer is a former Minister of State for Economic Affairs in Jordan.