Markets and the Good   /   Fall 2023   /    Thematic: Markets and the Good

The Myth of the Friedman Doctrine

And the stubborn persistence of a powerful idea.

Kyle Edward Williams

Milton Friedman about 1980; Keystone Press/Alamy Stock Photo.

Americans were once deeply worried about the danger posed by powerful corporations. They may be useful, wrote James Madison to a friend in 1827, “but they are at best a necessary evil only.”11xJames Madison, The Writings of James Madison, 1819–1836, vol. 9, ed. Gaillard Hunt (New York, NY: G.P. Putnam’s Sons, 1910), 281. This was an old republican intuition: Concentrated power in whatever form threatened the body politic. In recent years, however, business leaders have come to believe that what Madison considered a “necessary evil” is actually the last great institution capable of making the world a better place. For Silicon Valley entrepreneurs no less than Fortune 500 CEOs, the bottom line is out, and amelioration is in. Call it conscious capitalism. Or corporate social responsibility or environmental, social, and corporate governance (ESG) investing. Many consumers, regulators, and activists expect big-business executives to act like responsible citizens and steer their firms accordingly—maybe more now than ever before. Even 92 percent of executives in a 2022 survey agreed that corporate leaders should take a stand on social issues.22x“State of Corporate Citizenship,” Boston College Center for Corporate Citizenship, 2022,

One imagines that Milton Friedman would be disappointed by all of this. Fifty-three years ago, the libertarian economist and eventual Nobel Prize winner wrote an article for the New York Times Magazine in which he took aim at the concept of corporate social responsibility.33xMilton Friedman, “A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits,” New York Times Magazine, September 13, 1970, His alternative to the social leadership of business executives became known as the Friedman Doctrine. Its core principle could not have been more emphatic: The sole responsibility of business is to maximize profits. Anything less, he argued, is a slippery slope toward the end of free enterprise and, after that, the collapse of democracy. Overstated and simplistic as it was, the doctrine had an undeniable elegance—attractive to its many adherents, crass and even insidious to its many critics.

Only having grown in notoriety since 1970, the Friedman Doctrine has served as a satisfying punching bag and a singular example of what not to think. At least that’s been the case for the hundreds of business school professors who regularly assign the article in classes on ethics and strategy. Generations of professional managers have been assured that Friedman’s ethical minimalism is out of step with the complicated world of modern business and the positive social role executives should play in it. And leading proponents of stakeholder capitalism in all its adjectival forms (conscious capitalism, just capitalism, sustainable capitalism, and caring capitalism, among others on a disconcertingly long list) continue to make the case for business reform with resolute renunciations of Friedman and all his works.

But if the Friedman Doctrine has apparently been booted from the realm of respectable opinion, the 1970 New York Times Magazine article itself has taken on an outsized role in the lapsarian stories we tell about the history of American economic life over the last half century. In this respect, it bears a resemblance to the so-called Powell Memo, written by jurist Lewis Powell in 1971 (a year before his appointment to the Supreme Court) for the US Chamber of Commerce, a confidential document that many scholars writing about the history of conservatism have identified as the smoking gun of a corporate plot, financed by dark money, to peddle ideas and influence whose effect would be to destroy democracy.44xLewis F. Powell Jr., Powell Memorandum: Attack on American Free Enterprise System, Washington and Lee School of Law Scholarly Commons, 1971, Historians and journalists tracing the rise of financialization and neoliberalism have conferred on the Friedman Doctrine a similar status: that it is a playbook for a Wall Street takeover of the economy and a manifesto for all of its financial vices.

The significance of Milton Friedman and his article is not so simple, and a true reckoning with this history is needed to clear up confusion not only about Friedman but about corporate capitalism. On the one hand, Friedman’s view of corporate responsibility was not nearly so radical or original as it is often made out to be. The notion that corporations are the property of shareholders and that management must act in their financial interest has been the default logic of US public policy going back at least to the New Deal era reforms of the stock market and the creation of the Securities and Exchange Commission. On the other hand, despite the almost ritualistic denunciation of the Friedman Doctrine, no comprehensive model for how to think about the large corporation has replaced the practical imperatives and tantalizing simplicity of the doctrine of shareholder value. Simultaneously entrenched and denied, the Friedman Doctrine has achieved the status of conventional wisdom. All of this suggests a question worth considering now, decades after the article’s publication: Can big business live without Friedman’s pronunciamento? The first step to answering that question requires a step back into the history of the article, the author, and the politics of corporate control.

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