Milton Friedman, Nobel prize-winning economist wrote those fierce words back in 1970 in his article "The Social Responsibility of Business Is to Increase its Profits."
Mr. Friedman is fairly narrow minded in this aspect. A business that wants to improve the lives and community within which it operates is a good citizen. A business that looks to increase profits at the peril of a community is irresponsible and simply unAmerican.
Unfortunately many CEOs have embraced Mr. Friedman's business model. That is also the reason why we have a manufacturing sector that has been decimated and middle class that is working harder to achieve a minimal standard of living.
Thirty years ago, a middle class family could have been supported on one salary, where to day it requires two. A responsible business, or as conservative economist Milton Friedman would call it a "socialist" business would make a modest profit while paying the employees a living wage.
Today, the business model doesn't encourage paying labor a living wage. It requires businesses to increase their profit margins at the peril of the communities in order to satisfy the appetite for increased dividend checks for their shareholders.
In this current business model nobody is looking out for the stakeholders. The stakeholders include customers, employees and the entire community. By focusing exclusively on the shareholders, it causes increase velocity in the stockmarket.
In the past 25 years, institutions and people holding onto their stocks have fallen from eight years to six months. CEOs are focusing more on short term gains rather than long term growth. We saw this at the cataclysmic 2008 financial meltdown, where financial institutions over leveraged themselves trying to satisfy shareholders' demands without so much of a concern for the stakeholders, which is all American citizens.
In a sharp rebuttal to the conservative economic Darwinian philosophy, Michael Porter, and his co-author Mark Kramer have written an article in the Harvard Business Review: "The Big Idea: Creating Shared Value."
They advocate that creating shared responsibility between companies and society and how it "holds the key to unlocking the next wave of business innovation and growth [and] reconnecting company success and community success."
Once we can break through the Darwinian conservative economic policies that have plagued our Country for 30 years. We can start focusing on "shared responsibility" as a new business model. This worked in the past and it can work now.
This is one step toward economic stability and growth, and away from economic bubbles and busts that have only aided the very wealthy.
johnd says
christopher says
Also, we need seriously reconsider the whole concept of a corporation. Personally I’d been inclined to abolish the stock market and require that only people directly invested in a company own it. Reinstitute tax and regulatory structures of the post-WWII era.
dhammer says
christopher says
…direct involvement in terms of actual labor, reputation, etc. In other words, I’m talking about a small business I set up in my home town to make widgets. Let’s call it “Christopher’s Widget Supply”. I started it; I manage it; I am the face the company; I may even pull shifts along with any employees I might hire. This is in contrast to simply buying shares in Wal-Mart where I’d only be in it to watch my investments make money with less thought to treatment of workers or effect on community.
centralmassdad says
Where do you raise the 250 million dollars you need?
christopher says
…as opposed to a public offering. Besides you don’t just decide to build a factory. You start small making widgets from your house and after some success invest in premises, etc.
centralmassdad says
And while you slowly build, someone will build a widget factory that can equal your daily widget production every 20 minutes, and very shortly your widget business is no more because it was starved of capital.
johnd says
are just as naive.
christopher says
As far as I know businesses generally don’t start as public offerings. Maybe it’s more transparency is in order, so that people know who are making the decisions. I also like the idea of employee-owned companies. One way or another it is immoral IMO to have a corporation with no responsibility except to fatten shareholder wallets social consequences be damned.
lasthorseman says
Who put Milton the sociopath on top of the food chain as economic pontif.
<
p>Who put American business into that certain burn out mode?
<
p>Who directed the decision to deliberately export America’s heavy industry?
<
p>On to becoming like Egypt!
http://www.globalresearch.ca/i…