Courtesy of Mish.
The title of this post stems from an article on Forbes by Steve Denning who writes about “radical management, leadership, and innovation”
Denning says Milton Friedman is the The Origin Of ‘The World’s Dumbest Idea’.
No popular idea ever has a single origin. But the idea that the sole purpose of a firm is to make money for its shareholders got going in a major way with an article by Milton Friedman in the New York Times on September 13, 1970.
emphasis mine
For starters, the actual title of Friedman’s article is “The Social Responsibility of Business is to Increase its Profits“.
Denning substituted the word “sole” for “social”. I did a search of the article and the word “sole” was not to be found.
Regardless if it is the “social” or “sole” responsibility, it is preposterous to propose anything other than “The primary goal of a for-profit corporation is to make money for shareholders”.
To state otherwise may not be the “world’s dumbest idea” but it sure is inane.
Via email exchange, my friend Pater Tenebrarum at the Acting Man Blog stated “I don’t often agree with Friedmann, but on this point I do agree with him. A company’s profits are the outward sign that it has successfully served consumers. If not the profit/loss system, by what system should it be determined?”
“These screeds all want to replace the plans of consumers and producers with THEIR plan. In the end it always comes down to even more government control over our lives. We know how that has worked out so far.”
Precisely.
Ironies Abound
The first irony in Denning’s ramblings is precisely the fact that corporations frequently do not put shareholders’ interests first, but they should….
