Episode #534: Milton’s Mandate — The Market, Morality, and Money

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In this episode, Ron and Ed dive into one of the most influential and debated essays in business and economic thought: Milton Friedman’s The Social Responsibility of Business Is to Increase Its Profits. Published in The New York Times in 1970, Friedman’s argument that businesses should focus solely on maximizing shareholder value while operating within the law sparked decades of debate about corporate ethics, stakeholder capitalism, and the role of business in society.

Ron and Ed will unpack Friedman’s perspective, discuss its implications for modern businesses, and explore how it contrasts with contemporary views on corporate social responsibility (CSR) and ESG (Environmental, Social, and Governance) initiatives. Is Friedman’s argument still valid in today’s world, or has the definition of corporate responsibility evolved? Tune in for an insightful discussion on one of the most enduring ideas in free-market economics.

📖 Read Friedman’s original essay: The New York Times

SHOW NOTES

Segment one

Segment two

Segment three

  • Segment three of the show today starts with a lengthy section from Friedman’s Doctrine beginning with, “ON the grounds of consequences, can the corporate executive in fact discharge his alleged ‘social responsibilities’? On the one hand, suppose he could get away with spending the stockholders’ or customers’ or employes’ money. How is he to know how to spend it?” https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html?unlocked_article_code=1.9E4.8Fy6.8Z-P1t4lzAfk&smid=url-share 

  • 🤣 🤣 🤣 “We thus have the ironic phenomenon that union leaders—at least in the U.S. —have objected to Government interference with the market far more consistently and courageously than have business leaders.” —Milton Friedman

  • “In a free society, it is hard for ‘good’ people to do ‘good,’ but that is a small price to pay for making it hard for ‘evil’ people to do ‘evil,’ especially since one man's good is anther's evil.” —Milton Friedman in 1970

  • “So in a way, it’s a marketing expense, which we’ve always accused CSR of being.” —Ron Baker and Ed Kless on corporate social responsibility 

Segment four

  • “[Businessmen] are capable of being extremely far‐sighted and clear‐headed in matters that are internal to their businesses. They are incredibly short sighted and muddle‐headed in matters that are outside their businesses but affect the possible survival of business in general.” —Milton Friedman https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html?unlocked_article_code=1.9E4.8Fy6.8Z-P1t4lzAfk&smid=url-share 

  • Here is the conclusion to Friedman’s Doctrine from 1970: But the doctrine of “social responsibility” taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book “Capitalism and Freedom,” I have called it a “fundamentally subversive doctrine” in a free society, and have said that in such a society, “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

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