This is the Kator Daily Podcast for Thursday, October 1st, 2020. I'm Caleb Brown.

50 years ago, Milton Friedman penned an essay entitled, The Social Responsibility of Business

is to increase its profits.

Recently, the New York Times examined the essay

with a variety of responses to see how Well Friedman's claim held up. Quito's Diego Zulawaga discusses their conclusions.

So Friedman wrote an essay for the New York Times magazine, actually, in 1970,

the title of which was The Social Responsibility of Business is to increase its profits.

And the subtitle was A Friedman Doctrine.

So this was very much an attempt by Friedman, which at the time many regarded as very successful,

to argue that far from having vague notions of corporate social responsibility or a responsibility to people other than the people who

own your business, if you were a corporate executive at a large firm in America, you should

care about delivering returns to shareholders as high returns as you can within the law and within ethical constraints as we would regard them in Western society and so on.

It wasn't really all that controversial an argument.

I think at the time what he was essentially saying and this has been then taken as sort of having shaped the way

that corporate executives think forever more I think it is it has been

less influential of that in which it was difficult to measure performance other than by looking at the bottom line,

by looking at the income statement and see what the returns were on a business.

And if you as a corporate executive weren't subjected to the discipline of having to deliver good returns

compared to other firms, then you would be able to take advantage of your position and spend on projects

that maybe were helpful to you or did cater to your own

charitable impulses and charitable tastes at the expense of shareholders and workers and customers.

And in that way extract rent in a way that that was undesirable for everyone else.

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