David Von Drehle briefly chronicles the recent corporate migration from maximizing profits to being what we might call corporate moral entities:
Gone are the days of the Friedman Doctrine, enunciated in 1970 by the influential laissez-faire economist Milton Friedman. The social responsibility of a corporation, Friedman declared, is exclusively to maximize the satisfaction of shareholders — measured by rising revenue and stock prices (unless the shareholders themselves decide otherwise). Executives are to think only of the bottom line. …
In truth, there was always some pushback against Friedman’s fiat as companies tried to demonstrate that doing good could coexist with doing well. Coca-Cola promoted global harmony in a memorable 1971 TV ad campaign. The Benetton fashion house put diversity and inclusion front and center in its magazine campaigns of the 1990s. But the doctrine remained in favor until the gap between flat wages and steeply escalating super-wealth grew so great that the folks in the penthouses began worrying about folks with pitchforks.
In 2019, the Business Roundtable, a public policy organization of major American chief executives, called an end to the Friedman Doctrine. Its “Statement on the Purpose of a Corporation” replaced the exclusive focus on shareholders with a broader obligation to all “stakeholders.” As if to test the sincerity of the brass, there immediately followed a succession of crises — the covid-19 pandemic, the murder of George Floyd, the Jan. 6 insurrection — in which corporations were urged to take various steps and positions that served aims other than the immediate balance sheet. [WaPo]
I think it helps to remember that morality is a mechanism of social evolution. That is, accepting that the simultaneous points of social evolution is survival and propagation, we can then explain that morality is not an arbitrary collection of rules and regulations, promulgated from on high, but a collection of practical observations, debated extensively even into the present, abstracted, and codified, all as a shortcut, if you will, for guidance of one’s own behavior, and more importantly the evaluation of the behavior and character of others.
When Friedman proclaimed corporations’ responsibilities lay in satisfying shareholders’ desires, and no more, he took a very mechanistic and static view of society, a mistaken view in which the negative consequences, once removed, of corporate actions do not and can not exist simultaneously with positive consequences.
That is, if your quarterly profits set a new record, then good for you. Never mind you’ve just enabled a national adversary to, say, defeat your own country’s armed forces, swarm over the border, and execute all corporate officers in the country. Can’t happen. You just set a new record.
And if that seems a trifle overstated on my part, don’t be entirely doubtful. Just reading or listening to Rep Cawthorn (R-NC) rant about the ‘evil’ of President Zelensky(y) is enough to question the general rationality of a lot of people.
Returning to the point, morality provides a shortcut for identifying actions as threatening to our own well-being; if a person, a corporation, or a government persists in actions which are in conflict with moral dictates, this is not merely a doubtful condemnation of a possibly existent soul, individual or corporate, but, in fact, a threat, potentially existential, to the actors in the drama in which all are embedded.
That is, enabling and, through successful ventures, encouraging the genocidal institution may result in that genocide being inflicted on you, and most observers would then consider the genocided venture a failure. Not only is this a condemnation of Friedman’s deeply disconnected from reality Doctrine, but also the concentration on quarterly profits as a meaningful measure of corporate success.
And quite possibly the entire stock market and its scanting of the premise that stockholder behavior should enhance corporate morality. But that’s a thought for another time.
