The Friedman doctrine was a precursor to, and became a doctrinal foundation for an era of short-termism, hostile takeovers, extortion by corporate raiders, junk bond financing and the erosion of protections for employees, the environment and society generally, all in support of increasing corporate profits and maximizing value for shareholders. This concept of capitalism took hold in the business schools and the boardrooms, became ascendant in the eighties and continued as Wall Street gospel until , when the perils of short-termism were vividly illuminated by the financial crisis, and the long-term economic and societal harms of shareholder primacy became increasingly urgent and impossible to ignore. Since then, acceptance of and reliance on the Friedman doctrine has been widely eroded, as a growing consensus of business leaders, economists, investors, lawyers, policymakers and important parts of the academic community have embraced stakeholder capitalism as the key to sustainable, broad-based, long-term American prosperity. So too, has corporate purpose and stakeholder and ESG governance been embraced by index fund managers BlackRock, State Street, Vanguard and other major investors. It should be noted that some well-known business people, economists and lawyers reject stakeholder governance and adhere to the Friedman doctrine. Also in commemoration of the 50 th anniversary of the essay, four prominent senior fellows of the Hoover Institute, George P.
Milton Friedman on Corporate Social Responsibility
Profit Vs. Ethics: The Benefits Of Business Ethics In Business | Cram
Worried about plagiarism? Read this. Help Login Sign Up. I completely disagree with this accusation. No matter if you are in a private or public atmosphere, society's views are the leading functions of their continuation. Without society keeping universal rules in its life, society would end up as being another on of Darwin's Islands.
Greed Is Good. Except When It’s Bad.
Although ethical standards are not easy to define with such different cultural standards, it is vital to a company to figure out a way to handle it in a socially acceptable way. Good ethical behavior creates better employees and an overall better company. With that, we can continue to have successful businesses…. After that, the employee must follow the steps when the manager leading the organization in an ethical manner. Employees need to make good decisions in short time with business ethics as guiding principle.
Yet the fact that they make that argument is precisely why Friedman has won the day for going on half a century, a spectacular success for a social sciences argument. Friedman has won the way a great debater wins — by cleverly framing the terms of the debate, not by brilliantly arguing the logic of the debate once it has been framed. As a result Friedman is innocent until proven guilty and the opposition guilty until proven innocent. That is why we are exactly where we are nearly a half century later. Had the opposition been cleverer, it would have attacked the premise from the very beginning by asking: what is the proof that there is a trade-off at all?