Friedman’s Take on Corporate Social Responsibility is Brilliant and Elegant—But Obsolete

Milton Friedman’s argument that corporations refrain from engaging in social and political issues is compelling. But his argument likely doesn’t apply in today’s world, a world where “social consciousness” actually drives business.

Writing for The New York Times in 1970, Milton Friedman famously argued that businesses, or more precisely business executives, should avoid the temptation to go out of their way to be “socially responsible.” Instead, they ought to focus on maximizing profits within the legal and ethical framework erected by government and society. To act otherwise, he reasons, is to spend other people’s money—that of shareholders, employees, or customers—in ways they have not signed up for. Thus, by sacrificing profitability, the “socially responsible company” robs their affiliates of agency.

Though nearing fifty years of age, Milton Friedman’s windily and aptly titled essay The Social Responsibility of Business Is to Increase Its Profits feels like it could have been written today. Many of the hypotheticals he cites of corporate social responsibility—“providing employment, eliminating discrimination, avoiding pollution”—are charmingly relevant in the era of automation anxiety, Boycott, Divestment and Sanctions (BDS), and fossil fuel divestment campaigns. His solution is that businesses sidestep the whole mess and focus on what they do best: increase the bottom line. All the while, they play by the rules set forth by the public. The idea is elegant and simple, but it’s increasingly untenable in today’s political climate.

One reason for this is that business and government, the institution Friedman believes will rein business in, have grown much closer, even as the latter has grown comparatively weaker. In sharp contrast to the get-government-out-of-business attitude that prevailed in the boardrooms of the 1970s, modern industry groups collectively spend hundreds of millions to get the ears of lawmakers, hoping to obtain favorable legislation or stave off laws that would hurt them. Corporate (and other) lobbyists are known to write and edit bills, sometimes word for word.