Milton Friedman, Corporate Responsibility, My Dad, and Me

One of the first--maybe the first--assignment I can recall completing in my first semester of college in the fall of 1970 was to write a response to a current opinion piece or editorial. The piece I selected was Milton Friedman's now famous essay in the September 13, 1970 New York Times Magazine, "The Social Responsibility of Business is to Increase Its Profits". I can no longer even imagine what I said in my essay; I know I disagreed with Friedman's thesis that the pursuit of socially responsible ends by corporate executives was either a breach of their duties to shareholders or a smokescreen to obscure the real purpose of profit-oriented activities, but that point of view may have been assigned to me and I have no idea what I said to support it. I do remember showing the essay to my Dad, who was then on the fast track to top management at a Fortune 100 company. He did not argue or even comment on the substance of whatever I said, but he did briefly remark that I ought to pursue a career in writing.

My Dad lived and died by the American corporation. He spent his whole adult life working for one corporation--as a child, I had the company confused with my extended family--and another corporation, The R.J. Reynolds Tobacco Company, killed him. My Dad's company suspended his rise to the top when he got lung cancer and waited five years to see if he would die before finally promoting him to corporate vp. By then, the company had become a target of corporate raiders due to its large land holdings, and my Dad took early retirement rather than "cut costs" and raise the stock price by tearing down the manufacturing operation he had spent his career building up. Shortly before he died, my Dad learned from the work of New Yorker reporter Paul Brodeur that people he had known and worked with in one division of his company had been involved in covering up the known danger of asbestos for decades while exposing workers to its effects without warnings or protection.

These days I don't think much about the social responsibilities of corporations, any more than I think about the social responsibilities of gangsters. Arguments about whether corporate executives should be permitted or required to work towards improvements in "environmental protection, employee health, . . . weather modification, community development, private enforcement of (not merely abiding by) government regulations and support of cultural, educational and medical facilities," to borrow Henry Manne's list from "Milton Friedman Was Right: Corporate Responsibility Is Bunk" (Wall Street Journal, November 24, 2006), are completely beside the point. The point should be whether the corporate perpetrators of massive damage to the environment, employee health, the weather, communities, culture, education and medicine should be immunized from responsibility for these crimes committed in pursuit of shareholder profits, not whether the business judgment rule protects corporate executives from liability for good works.

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Corporations, Navel Gazing