I’m not saying running a company is easy and I know that many gray areas exist in the decision making. I do think companies can exist, profit, and be a net good for the world. However, we need to remove the notion that the duty to shareholder profits is a moral duty. It’s a cowards way out of having to make actual difficult choices. It’s one of those things that sounds great exactly because it allows you do horrible things with no responsibility. It creates a system where you offload the effort and weight of your decisions. As long as you’re are acting in the interest of shareholders, you are in the clear. That’s a dangerous concept and the opposite of morality.
In a working system it should be the governments responsibility to limit what a company can do
In the first line of GP's reference in Wikipedia:
"The Friedman doctrine, also called shareholder theory, is a normative theory of business ethics advanced by economist Milton Friedman that holds that the social responsibility of business is to increase its profits."
That's a strange way to put it. As though it is the Right and Good way to run a company — and also as though the Board's/CEO's hands are somehow tied.
There's fiduciary "duty", but not law. Judge's apparently give wide berth to management to decide what, perhaps long term, is going to be profitable.
Disagree. Shareholders are not the all and everything of a company. Neither they, neither the company exist in a void.
> Of course, there's no reason that capitalism must to work this way, but
How is that not a contradiction with the above?
I agree with you. But what you or I think doesn't matter.
> This is how the whole system is supposed to work.
My point is that our current form of capitalism is designed to work this way, but there's no requirement that capitalism must work this way. This is just the toxic form of market economy that we ended up with.
1/ It does (because, it's false to say that "a CEO must do this or that" - or that's not a chief, a CEO, just an algorithm).
2/ it's less a matter of opinion than a matter of observing facts: shareholders are not the all and everything of a company. But my perspective may be that, being French, we have a history of having demonstrated the reality of this in actual actions, that USAmericans haven't yet.
There kinda is. Capital is allocated to where it makes most profits, and most profits go to companies maximizing shareholder value. In aggregate this makes the profit maximizing companies more likely to survive.
Sure this can be perhaps mitigated by e.g. legislating other duties to companies, but I'd say it's very hard even in theory, let alone in practice, to have capitalism without lopsided profit maximization.
What _is_ good for the people? Canada?
Other Y=0 things are people giving their lives for the greater good and basic rights. Geneva convention. Rights for black people, rights for women.
Infact the world runs on Y=0 stuff.
We have worked ourselves into this frenzy over the past several hundred years, but especially over the past 25. We even describe it like you did, as an axiom or a law. But human action is people doing things, and modern economics masks unbridled greed as rules of 'science'.
It is enough to make a good living doing something worthwhile. There is no need to constantly seek highest returns. Nobility in action is possible. Capital does nothing, people do things with capital. Better choices are possible. All is not lost.
And of course, roughly 30% of all modern work-related activity is government. That part of our societal activity should be focused on creating guide rails to make sure that people do not pursue modern economic theory in the real world, but actually work to do good things.
OP doesn’t even claim this is the one true doctrine or anything of the sort.
But in fact, in USA there's even a SCOTUS ruling that says it is a bogus idea