How Liberals Opened the Door to Libertarian Economics | New York Times Magazine - Kurt Andersen:
September 13, 2020 - "On September 13th, 1970, the New York Times Magazine published an essay by Milton Friedman entitled “The Social Responsibility of Business Is to Increase Its Profits,” which turned out to be one of the most influential economic arguments of the century. To mark its 50th anniversary, DealBook and the Times Magazine assembled experts including chief executives, Nobel Laureate economists and top think-tank leaders to debate and dissect the legacy of Friedman’s ideas."
Read more: https://www.nytimes.com/2020/09/11/business/dealbook/milton-friedman-free-markets.html
A Friedman doctrine - The Social Responsibility Of Business Is to Increase Its Profits | New York Times Magazine - Milton Friedman:
September 13, 1970 - "The discussions of the 'social responsibilities of business' are notable for their analytical looseness and lack of rigor. What does it mean to say that 'business' has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but 'business' as a whole cannot be said to have responsibilities, even in this vague sense. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom.
"Presumably, the individuals who are to be responsible are businessmen, which means individual proprietors or corporate executives. Most of the discussion of social responsibility is directed at corporations, so in what follows I shall mostly neglect the individual proprietor and speak of corporate executives.
"In a free‐enterprise, private‐property system, a corporate executive is an employe of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose — for example, a hospital or school. The manager of such a corporation will not have money profit as his objective but the rendering of certain services. In either case, the key point is that ... the manager is the agent of the individuals who own the corporation or establish the eleemosynary institution, and his primary responsibility is to them....
"What does it mean to say that the corporate executive has a 'social responsibility' in his capacity as businessman? If this statement is not pure rhetoric, it must mean that he is to act in some way that is not in the interest of his employers. For example, that he is to refrain from increasing the price of the product in order to contribute to the social objective of preventing inflation.... Or that he is to make expenditures on reducing pollution beyond the amount that is in the best interests of the corporation or that is required by law.... Or that, at the expense of corporate profits, he is to hire 'hard core' unemployed ... to contribute to the social objective of reducing poverty.
"In each of these cases, the corporate executive would be spending someone else's money for a general social interest. Insofar as his actions in accord with his 'social responsibility reduce returns to stock holders, he is spending their money. Insofar as his actions raise the price to customers, he is spending the customers’ money. Insofar as his actions lower the wages of some employes, he is spending their money....
"[I]t may well be in the long‐run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That may make it easier to attract desirable employees, it may reduce the wage bill or ... have other worthwhile effects. Or it may be that, given the laws about the deductibility of corporate charitable contributions, the stockholders can contribute more to charities they favor by having the corporation make the gift than by doing it themselves, since they can in that way contribute an amount that would otherwise have been paid as corporate taxes. In each of these — and many similar — cases, there is a strong temptation to rationalize these actions as an exercise of 'social responsibility.' In the present climate of opinion ... this is one way for a corporation to generate goodwill as a by‐product of expenditures that are entirely justified in its own self‐interest....
"[But] blameworthy or not, the use of the cloak of social responsibility, and the nonsense spoken in its name by influential and prestigious businessmen, does clearly harm the foundations of a free society. I have been impressed time and again by the schizophrenic character of many businessmen. They 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.... This short sightedness is ... exemplified in speeches by businessmen on social responsibility. This may gain them kudos in the short run. But it helps to strengthen the already too prevalent view that the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces. Once this view is adopted, the external forces that curb the market will not be the social consciences, however highly developed, of the pontificating executives; it will be the iron fist of Government bureaucrats. Here, as with price and wage controls, business men seem to me to reveal a suicidal impulse.
"The political principle that under lies the market mechanism is unanimity. In an ideal free market resting on private property, no individual can coerce any other, all cooperation is voluntary, all parties to such cooperation benefit or they need not participate. There are no 'social' values, no 'social' responsibilities in any sense other than the shared values and responsibilities of individuals. Society is a collection of individuals and of the various groups they voluntarily form.
"The political principle that underlies the political mechanism is conformity. The individual must serve more general social interest — whether that be determined by church or a dictator or a majority. The individual may have a vote and a say in what is to be done, but if he is overruled, he must conform. It is appropriate for some to require others to contribute to a general social purpose whether they wish to or not.
"Unfortunately, unanimity is not always feasible. There are some respects in which conformity appears unavoidable, so I do not see how one can avoid the use of the political mechanism altogether. 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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