Article by Richard Feloni at JUSTCapital
Image by The Friedman Foundation for Educational Choice
When the New York Times Magazine published Milton Friedman’s essay, “The Social Responsibility of Business Is to Increase Its Profits,” 50 years ago, Friedman was six years shy of his Nobel Prize win and not quite yet on the path to becoming one of the world’s most influential economists of the 20th century. And while his various ideas had growing clout in libertarian circles, his “Friedman Doctrine,” as the Times dubbed his theory about the role of corporations, still had an air of being radical for its time.
Friedman had been an advisor to Republican presidential candidate Barry Goldwater, whose conservative ideology resulted in massive defeat in 1964 but two terms for Ronald Reagan in the ’80s; Friedman’s book “Capitalism and Freedom” (one of its chapters is the basis for the Times essay) was a flop when it was first published in ’62, but was a bestseller by the time he was advising Reagan here in the US and Prime Minister Margaret Thatcher in the UK.
There are many reasons for this transition, but as for the idea of shareholder primacy laid out plainly in the Friedman Doctrine, it grew in appeal in the ’70s as corporate profits declined and America’s trade deficit grew. Put simply, the role of a corporation that Friedman had been pushing for years was about to have its time. It’s a time that we’ve been living in for the past four decades, and one that we at JUST Capital think has lasted long enough.