By Michelle Meaghe, Financial Times
Fifty years ago on Sunday, Milton Friedman published the article that would guarantee his lasting influence.
“The Social Responsibility of Business is to Increase its Profits” became the canonical statement on shareholder value, with Friedman giving conflicted chief executives a simple guiding principle: when in doubt, maximise profits.
Friedman’s argument was considered outrageous in 1970, and is again being criticised today. The influential US Business Roundtable group of executives publicly rejected the primacy of shareholder value last year and many companies and investors tout their focus on stakeholders and sustainability.
Yet we remain captured by Friedman’s legacy. Business may talk the talk of corporate responsibility, but it is walking a different walk. Working as a competition lawyer in the City of London, I saw first hand as executives competed to dominate markets and push share prices ever higher.
