Some articles we recently shared on social media about Milton Friedman's views and influence generated, shall we say, energetic responses. Friedman is certainly a towering figure in the history of capitalism. To understand where we are with capitalism and therefore understand how to move toward a better form of capitalism, Friedman must be dealt with. We do this in our book Better Capitalism, yet we recognize the need to further and enlarge those discussions. So, Friedman will be getting attention from us in a number of blog posts over time.
Friedman authored what may be the most influential business article in at least the last fifty years. His "The Social Responsibility of Business is to Increase Its Profits" ran in The New York Times Magazine on September 13, 1970. The title speaks volumes. If you haven't read the article, it is available here, and I suggest you do read it so you can see what has shaped so much of your lived experience in a world increasingly influenced by corporations.
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There is much to digest as well as dispute from that article, much less Friedman's books, but for now I will start with just a brief look at one aspect. Remember, this is just part 1!
In his article, Friedman contends, "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." In 2010, however, the Supreme Court, in Citizens United v. Federal Election Commission, ruled 5-4 that corporate entities have the same right to free speech under the First Amendment as individuals. Even Justice John Paul Stevens, author of the dissenting opinion in the case, acknowledged that "we have long since held that corporations are covered by the First Amendment."
Contrary to Friedman's emphasis on the artificial nature of corporate "personhood," Citizens United and other recent legal interpretation has afforded corporate "persons" rights that are not at all artificial but very real and expansive. And no one could seriously claim that corporations have only artificial impact. To grant corporations the rights of individuals and not-at-all artificial powers but relieve them of responsibilities is clearly inconsistent.
This legal precedent surely implies that certain responsibilities are incumbent upon the corporate members of our society. By acknowledging mutual responsibilities, we can better partner for mutual benefit as well. This is a step toward better capitalism based on Partnership Economics.
As we wrap up this brief opening salvo, remember the words of Churchill: "This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." This is just the end of our beginning of re-thinking Friedman. We look forward to continuing, in conversation with you.
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