Do Market Libertarians Believe Their Own Hype?
This is always great fodder for a passionate conversation… bc
For several years now, two very smart people—Nobel Prize-winning economist Gary Becker and polymath jurist Richard Posner—have written a blog together in which they debate the economic and legal issues of the day. Now their essays from that blog have been collected into a book, Uncommon Sense, which includes insights on everything from polygamy to organ sales to taxes on fattening foods. But there’s one idea that the book pushes that’s worth focusing on, because it’s one of the worst in the history of thinking about business or morality, and a truly striking example of how smart people can come up with dumb ideas: the “shareholder value” theory of corporate ethics.
You can read Becker’s take on corporate social responsibility here if you want to get his side of this in his own words. But in summary, Becker’s view of corporate morality is that the only ethical responsibilities of business executives are to obey the law, adhere to contracts (really just a subset of the first rule), and, most critically, to maximize the price of their companies’ shares. The first coherent statement of this moral view came from the economist Milton Friedman in a full-throated defense of capitalism with the brilliantly blunt title, “The Social Responsibility of Business Is To Increase Its Profits.” Now the bogeyman of creeping socialism that Milton worried about 40 years ago is long gone, as is Friedman himself, who died in 2006, but his contentious and now ossified principles live on in the writings of Becker, his most faithful student.
via Do Market Libertarians Believe Their Own Hype? – Companies * US * News * Story – CNBC.com.