Not the late
But Friedman in his better-known guise as conservative polemicist, free-market fundamentalist, author of the bestseller "Free to Choose" and star of the
Now the powerful Roundtable has done an about-face. It issued a statement that corporations also have responsibilities to customers, employees, communities and suppliers.
The Statement on the Purpose of a Corporation was signed by 181 of the group's 188 chief executive members. They include heavyweights of Northwest-headquartered or locally important companies:
Microsoft is not a member, but President
If the statement is actually implemented and becomes influential, it would mark a revolutionary and healthy change in how companies are operated. But the aspirations face numerous obstacles.
Friedman helped seed a revolution himself with a 1970 article titled "The Social Responsibility of Business is to Increase its Profits."
He wrote, "The businessmen believe that they are defending free enterprise when they declaim that business is not concerned 'merely' with profit but also with promoting desirable 'social' ends ..." such as providing jobs, ending discrimination and cutting pollution.
"In fact," Friedman continued, "they are -- or would be if they or anyone else took them seriously -- preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades."
Never mind that "pure and unadulterated socialism" would have meant that government owned the "commanding heights" of the economy, hence the corporations that these alleged puppets ran -- which was not the case. Friedman preached a powerful and elegant opposition to American liberalism at high tide.
He wasn't alone in paving the freeway to the Reagan Revolution. For example, in 1971 the
Wealthy conservatives, through foundations and directly, funded think tanks, academics, lawyers and politicians to "take back America" from the perceived wrong turn of the 1930s through the 1970s. And they found a willing base of voters tired of what they saw as liberal overreach.
But Friedman was especially influential in kicking off the "shareholder value" movement. This manic pursuit of profits and ever-rising stock prices gave us the model of public companies that we have today. It also was a cause of the merger mania that strip-mined hundreds of independent companies from cities and towns that depended on them, as well as holding down wages and sending jobs and entire industries offshore.
Is the worm on the verge of turning?
A boost for change also comes from criticism of unfettered capitalism by Democratic presidential candidates, especially
Alas, it will take more than words, even by the influential Business Roundtable.
Earlier in my career, I spent some time at the headquarters of a large and respected newspaper chain (no names, please). It had a chance to buy a tech outfit that might have helped it soften the collapse of the old business model and innovate a future. When I asked the chief executive why he passed, he said, "Because
This was in the late 1990s, when newspapers were still money machines, and public chains were expected to deliver the unsustainable profit margins of Gannett -- even though Gannett was a very different kind of company (and now faces its comeuppance in a merger). That tech acquisition wouldn't have shown an immediate return, hence investors would punish the shares.
That CEO was dancing to
To alter that dynamic, it will take not declarations but deeds that change quick-buck incentives on
This would require a return to progressive taxation, taxes on transactions to slow
Such outcomes would be even more difficult given the rise of "vulture capitalism" private equity as a major player in reinforcing the short-term pressure on companies.
Not surprising then that the
Maybe the Business Roundtable can lead by example.
One constructive start would be rolling back the astronomical rise in executive compensation. For example, Dimon, already worth
Words are easy. A long look in the mirror is much harder.
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