The Friedman Doctrine and Business’ Debt to Society

Fifty years ago, Milton Friedman challenged the argument that businesses have obligations separate from their responsibility to make as much money as possible for shareholders. At the virtual Corporate Social Responsibility Revisited conference on Sept. 10, Chicago Booth faculty, alumni, and guests reevaluated the concepts of social responsibility for the modern era. Some emphasized the nuance often lost when discussing Friedman’s argument, noting that long-term strategic thinking can benefit both shareholders and society. Others advocated moving away from Friedman’s viewpoint toward a more expansive sense of social responsibility. Attendants acknowledged that social purpose can create and expand markets, while also expanding and improving the workforce. Mary Bush, the founder of consulting firm Bush International, noted that training new workers in communities where businesses operate can be an investment that increases profitability over the long term. From the opposite perspective, ignoring social issues can harm businesses. When companies discriminate against applicants and some of their own employees, they may not be recruiting or retaining the best the labor force has to offer and, as a result, may be underperforming. There may be economic value to businesses in increasing the racial and gender diversity of corporate management, but data sets are relatively new, and it may take time to understand the financial benefits of increased diversity, equity and inclusion. Some presenters argued that business leaders who demonstrate a social conscience help protect the capitalist principles that have allowed their companies to thrive. Businesses need to mitigate the problems that capitalism creates and rebuild their reputations to promote growth. They must define business goals beyond profitability and recognize that other stakeholders, including employees, have equity.

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