On Business: Milton Friedman Is Wrong About Social Responsibility
The Business Roundtable statement brought economist Milton Friedman to the front pages again. The Wall Street Journal challenged us to read his 1970 essay on the social responsibility of business. I did, and it is wrong for today.
When the Business Roundtable announced a shift from shareholder to stakeholder value, some cheers rose with a strong mix of skepticism. Milton Friedman became headline news again, and The Wall Street Journal challenged business leaders to read his complete 1970 essay entitled “The Social Responsibility of Business is to Increase its Profits” (PDF). A 2019 300-word statement signed by 181 U.S. CEOs stirred joys and concerns. Take The Wall Street Journal challenge and read the Friedman essay. I did.
Setting the Stage: The Business Roundtable and Milton Friedman
Before diving in, a few definitions are necessary. First, the Business Roundtable is an association of America’s leading corporate CEOs, focusing on policy to keep a thriving economy. Through the 1980s and until 1997, the Business Roundtable espoused the principle of weighing the interests of all stakeholders. In 1997, this shifted to a primacy of shareholders, leaving the other stakeholder subordinate to them. Now, in 2019, the Business Roundtable returned to…
