You wrote: "No refutation was given."
The passage you quoted from my article was intended to be my refutation. Hence, I did give one. You just did not find it compelling. I think this was because I tried to write a rather short introductory article on this issue, aimed at non-Objectivists. Thus, I chose to leave out many definitions and subtle distinctions that I would have put into a longer and more in-depth treatise on this subject.
You wrote: "The correct word is 'usually', not 'always.' Also, the pursuit of profits can bring harm to people, e.g. cigarette smokers."
When looking at my words, modify "harm" with the adjective "coercive," and my intended meaning will be communicated more clearly. I am sure you will not disagree on that point. But there is more.
It is true the smoker who buys a cigarette and smokes it is biologically harmed as a result, but the entrepreneur who sold him the cigarette bears no responsibility for this. The entrepreneur merely sells the product; he has no oversight and no sovereignty over how the buyer will use it afterward. Some buyers might remain non-smokers their entire lives but might like to collect cigarettes and put them on display. Some buyers might want to purchase cigarettes with the express purpose of destroying them so as to reduce the overall quantity of cigarettes in circulation. The entrepreneur does not know what the buyer will do with the product; he furthermore does not compel the buyer to use the product in any definite way. Thus, his pursuit of profit does not harm anyone-- even if he sells goods that have the ability to inflict harm if used in certain ways.
The same argument can be used to justify a gun salesman's profits-- even though some of the guns he sells might be used to commit murder. The gun salesman is certainly not responsible for his consumers' illegal and immoral uses of his product.
"What about fraud, false advertising, shoddy products and services? While free market trades are usually mutually beneficial and a free market is better than the alternatives, profit is not as morally pure as painted by this essay. It depends on how it is made. Were all of Enron's profits moral?"
Fraud and false advertising are varieties of coercion and are indeed immoral. Yet they are outside of the scope of profit as discussed and advocated in my article. In it, I clearly defend only "voluntary, non-coercive, individual profit-seeking activities." The types of deceptions you describe cannot be voluntary-- as the deceived individuals would not consent to participate in them had they known all the facts and had they not been lied to.
Furthermore, it is the task of a just government to make such fraudulent activities unprofitable by imposing severe punishments on their perpetrators. The laissez-faire system I advocate would have a government vigilant against such abuses-- thus creating an environment where only honest, truly voluntary agreements could bring real profit.
But even under today's quite imperfect system, look at what happened to Enron. The master deceivers at that firm did not profit in the end, in the long-term. The consequences of Ken Lay's scheme backfired to probably kill him. (He did die of a heart attack, but I speculate that it had been in part due to the severe stress that his company's predicament and upcoming trial caused him.)
The true seeker of profit will endeavor to benefit himself in the long term as well as in the short term; he will pursue activities where the two do not conflict. Dishonest behavior, as Rand pointed out, will always be unmasked eventually, to the perpetrator's great detriment.
"Far more profits are made by invention and improvements in efficiency."
These, too, are instances of eliminating arbitrage opportunities. A given good or service can be sold to consumers more efficiently than it is being sold now. The entrepreneur sees this when no one else does (or is in a position to implement the change). He is willing to stake his resources on the success of his proposed technological or structural improvement. If he succeeds, he receives profits as a reward for distributing resources more efficiently than they were distributed before the new technology or methods were available. You would, I think, agree that new improvements make it possible to more effectively meet consumer demand than would have otherwise been the case.
G. Stolyarov II