Friedman at 50: Is It Still the Social Responsibility of Business to Increase Profits?

2020 marks the fiftieth anniversary of Milton Friedman’s influential clarion call to American business – that their “social responsibility” is to increase profits. In the period since, even as corporations internalized this message to a degree perhaps Friedman himself did not conceive, our public institutions have retreated in scope and scale. Today, many corporations, plush with the power accumulated through unfettered profit seeking, and worried about deteriorating state capacity, are offering to step in and address pressing social problems such as climate change. Witness the Business Roundtable’s remarkable about-face last year on its longstanding shareholders-first policy. Tempting as this may seem, beware the cure worse than the disease – corporate colonization of the public sphere is a threat to liberal democracy. Corporations, now ever more so, are designed to turn a profit, and in an increasingly cutthroat globalized economy this is a good and useful thing. But corporations should not be expected to solve society’s non-market problems – encouraging them to do so will further depreciate public institutions and, moreover, the evidence suggests corporations will simply use such political engagement as an opportunity to extract more profit.