Comment by legitster
13 hours ago
It's worth pointing out that Milton Friedman's words are regularly taken out of context. His full quote:
> "In each of these cases, the corporate executive would be spending someone else's money for a general social interest. Insofar as his actions in accord with his 'social responsibility' reduce returns to stockholders, he is spending their money. Insofar as his actions raise the price to customers, he is spending customers' money. Insofar as his actions lower the wages of some employees, he is spending their money.
> The stockholders or the customers or the employees could separately spend their own money on the particular action if they wished to do so. The executive is exercising a distinct 'social responsibility,' rather than serving as an agent of the stockholders or the customers or the employees, only if he spends the money in a different way than they would have spent it.
> But if he does this, he is in effect imposing taxes, on the one hand, and deciding how the tax proceeds shall be spent, on the other."
His point wasn't that businesses can't act ethically or with responsibility, it's that they shouldn't act to become welfare centers and corporate philanthropies (which was a trend at the time). And I think even the most anti-capitalist person would agree that corporation acting "charitably" should be treated with a huge eye of skepticism.
Funny how "taken out of context" is so often used when the context doesn't make it any better.
That whole "he is in effect imposing taxes" thing is ridiculous. Taxes are forcibly collected by the government, not voluntarily spent by a business. Businesses are not the military, executives are not obligated to follow orders. If the stockholders don't like what an executive does, they can fire the executive and hire someone else. An executive who wants to keep their job therefore might be wise to stick to what the stockholders will like. But they aren't doing anything wrong if they don't, any more than an employee is doing something wrong if they disobey their manager.
It also misses the idea that a lot of misbehavior by companies is stuff that's bad for the company, but they do it anyway because of stupidity, shortsightedness, coordination problems, or the incentives of decisionmakers not lining up with the consequences for the company they work for. Or rather, it doesn't miss the idea but explicitly dismisses it; anything that is actually good for the company is defined by Friedman as not being "social responsibility."