Milton Friedman takedown; case closed
An associate of mine is taking an SRJC critical thinking class, and from a class assignment I am vicariously engaging Milton Friedman’s assertion that corporations and businesses have no social responsibility, and that a free market is in no way beholden to notions of social good.
The argument
The crux of Friedman’s argument is that while individuals are bound to act with societal ethics and morals in mind, businesses and corporations are not individuals, and are therefore they are unbound from such considerations.
Friedman invokes the slogan of taxation without representation and says that if executives use company money to serve a social good, that represents the will of the executive and not of the shareholders. This then amounts to a tax on that company. To Friedman, an executive’s only role is to increase profit, to do as bosses, the investors, tell him.
To Friedman, government (a collective, uber-controlling unit for all in the same society) is responsible for the regulation of proper behavior of companies, through the government’s legal system. Therefore, it is not the concern of a company employee, to consider, address, or enact social responsibility. (Company shareholders can voluntarily decide to be socially responsible, for example, Ben and Jerry’s, Puma shoe, and Interface carpet.)
Corporations, says Friedman, are held to social responsibility through government oversight through the legal system, they can’t just do whatever they want in service of seeking profits. Government is the entity that sets the baseline of what business can or can’t do.
For citizens who don’t agree with a business’ ethics, Friedman cites liberty and free will, that an employee can quit and serve a social good-serving company if he or she wants to. A citizen can work at the Center for Biological Diversity and not at Goldman and Sachs.
It comes down to individual choice says Friedman. You don’t have to work for people you don’t want to, if they make Round Up, two-stroke engines, assault rifles, or produce Internet surveillance technology, or unethical industrially-produced meat, don’t work for them. It is up to government and the legal system to decide what is right and proper, not people in business.
Business’ only goal is profit. If an activity is lawful (mortgage bundling), then you are free to do it with no moral considerations or consequence, and to make profits therein. Harm to business, when it is regulated too much, is “socialism”, i.e. a restriction on liberty, an unfair harm on a legal activity, and to be avoided.
Fred’s counter argument
Freidman makes a leap of faith by asserting that while an individual is ensconced in society, and thereby subject to society’s morals and ethics, a person in a corporation or business is not bound by these constraints because the only object of business is to make profit.
The core misrepresentation, the false assumption here is that somehow, by joining a business or corporation, people who are normally beholden to social ethics and morals are all of a sudden freed from the norms of human social behavior. Friedman stakes out and justifies a ground where people in society are free to be amoral.
In his postulated amoral safe-sphere, Friedman basically asserts that corporate executives are just following shareholder orders, and the orders are to make as much money as possible regardless of effects on other people. Following shareholder orders to make as much money as possible becomes the top priority. Whether or not such activities are ethical or moral, is left up to government and the legal system to decide.
Government does regulate business activity, for example with the Clean Air and Clean Water Acts, but what happens when government becomes a tacit and active business advocate? Where is the check on excesses then? If government check on business are taken away, this undermines a critical part of Friedman’s argument about social responsibility.
If corporations are not people, as Friedman asserts, how can the Citizen’s United decision then say they are? And if corporations are people with free speech rights, why are they not then subject to ethics and social responsibility?
Friedman’s arguments are really about what is proper for the regulation of human behavior and why, as well as about what power and control mechanisms are in place to regulate the excesses of human behavior. His arguments free business interests from moral and ethical considerations, and thereby justify socially irresponsible, harmful activities that only benefit a relatively few shareholders and investors.
Friedman’s truth is rhetorical rather than actual. He just asserts it, and then quickly moves on to use his considerable rational capacity to justify his first and primary faith leap, that people are no longer beholden to act as people in society after they have joined a business. The whole profit-worship house of cards stands on this one unfounded assumption. He establishes these rules, and then set up his argument to conform.
Friedman’s primary assumption is false, citizens cannot just be freed from moral and social responsibility in their own society.
The law
If the legal system regulates and governs human behavior, then control of this system becomes a top priority. There is no neutral backdrop of law and constitutional principle. If there was, there wouldn’t be so much conflict over laws that favor this interest group or that. This is exactly why control of Supreme Court is such a hot issue. The law, as a general back stop for business excess and for enforcing social responsibility becomes a political power and control issue based on interests.
If business interests get control of government and the Supreme Court, the end result is to enshrine the amorality of profit seeking and to leave the rest of society fundamentally unprotected from business excesses. This is exactly what we are seeing today with business advocates in control of, for example, the Dept. Interior, the EPA, and HUD. Amoral, predatory corporatism has taken over; it is called vulture capitalism, and its cronies are running the government today in 2018.
What this adds up is that justice, and law and order are not solid, immutable principles, but rather essentially malleable, and can be made to conform to political and ideological preferences, such as that people in business are automatically allowed to have no morals and that even government is not beholden to enforce social responsibility. Something can be legal, mortgage bundling for example, but also be fundamentally unethical. We know this, but since the Friedman trajectory is to rationalize an amoral lack of ethics for business, that lack of social responsibility train just keeps rolling down the tracks.
Friedman’s arguments, widely bought into by business interests, have now resulted in excesses that destroy the very regulatory backstop that would enforce social responsibly.
Unlimited legislative lobbying by fantastically wealthy corporations is not democracy, nor is it an expression of the will of the people to be protected from predatory business interests. The majority has not chosen to be governed by corporate-crony-Iron Triangle back room deals. But this form of influence peddling has been made into a law by Citizen’s United, and, the current administration has installed pro-business ideologues to run agencies that are in charge of socially responsible edicts, like the Clean Air Act and the Fair Housing Act.
If the law and if government are not allowing enough profits, the object in 2018 has become to change the law if it is seen as having as too many regulations. The combined effect of this Friedman, free market world view plus having pro-business ideologues in the Supreme Court and in government, is an increasing lack of ethics in government, which we clearly see coming to fruition with Trumpublicans, and an incredible number of egregious and unpunished ethics violations.
The critical Friedman cohort code word here is liberty. And unfortunately for social responsibly, liberty here means you don’t have to worry about it because all that matters is your economic bottom line.
An aggregate loss of social responsibly has come about as a result of Freidman’s free market thesis. In the modern era, this started with Ronald Reagan’s vilification of government and has led to the evolution of a calculated conservative “starve the beast” strategy, to gut the very programs and regulations, like Medicare, Social Security, Clean Air Act etc. that stand as Friedman’s benchmarks for social responsibility.
Society and history
Like many free marketers, Friedman plays up “liberty” and ignores and minimizes structural considerations. What if Wal-Mart is only job available in town? What if there is no public transportation to the voting booth? A citizen is then forced to work for an unethical company, or is disenfranchised by aristocratic elements. With Wal-Mart, the prevailing wage is so low, a person can’t save enough to be able to move and then work for an ethical company. With the franchise, a false straw man of voter fraud, with no evidence, rationalizes multiple efforts to prevent the poor and disadvantaged from voting, and attempts to balance government control in favor of business interests. Where is the social responsibly in that? There’s none, it’s naked Machiavellianism with no pretense of social good.
Structural inequities, of race and class, are exactly the kind that government focuses on to address social responsibly, and that are supposed to be managed and regulated by government, with programs like the Fair Housing Act. But what if the HUD secretary himself acts to favor discriminatory business actors? What then of Friedman’s assertion that government will enforce social responsibility?
When the pursuit of profit is sanctioned by the government itself as the highest value, foxes have taken over the hen house, and social responsibility as a value is lost to all. If Friedman were alive today, he would see that his postulated government backstop has been undercut by business interests, and that his system of checks and balances is no longer operative. The system does not work as he assumed it would.
Maybe Friedman had thought that through a political endgame, business interests could take over the law and government, and thus take over completely. Was social responsibly then just an inconvenient truth that needed to be explained away?
Corporate globalization
50 years ago, Friedman’s ideas kicked off the process of economic globalization, of corporations searching the world for the cheapest wages. This is what gutted US manufacturing and the union-based middle class. It started between the Carter and Reagan presidencies. Now in 2018, corporations have more power than governments, Citizen’s United billionaires buy elections. Big money business actors in Sonoma, now named in the I-T, seek to buy the process and bully citizens who seek social responsibility for local government. The political process is out of whack with corporate lobbying and private unattributed money having replaced representative democracy. Why? Because Friedman’s main postulated check on business excesses, government has been co-opted and gutted by business interests itself, and by Friedman’s own definition, that business is inherently amoral and unethical, and that business is not beholden to worry about such considerations.
Liberty and free will are a race and class fiction
In a free society, everybody is supposed to have liberty and free will. There are systemic, structural problems with this assertion. Why? The US constitution and law was unfair from the start; harm and fairness contradictions have remained part of the American experience from the start. Slavery and current segregation are prime examples here. The American Revolution was a merchant’s revolution, not a people’s revolution, and the law was written to favor those in power, the merchants, i.e. “business.”
The US was never, and has never been a free society with equal access to liberty and justice for all. Whenever equal access starts to become more likely, and greater numbers of average citizens get power to decide policy in their favor, there is major pushback from vested, business interests, and the stoking of culture wars to camouflage and obfuscate the real issues, that free market business’ main goal, profit, has no heart and lacks any notion of social responsibility.
The playing field is stacked to the advantage of some and not others, as noted above with efforts to manipulate the Supreme Court, the Voting Rights Act, and the Fair Housing Act. The merchant class has become the new aristocracy, with a new 1% royalty class over them. The formerly oppressed merchants, the bourgeoisie, have become the new oppressors. Life in the US is not as free as implied, and real estate redlining against blacks is the perfect case in point; you can trace a straight line all the way back to slavery. Where is free will when structurally, about all of suburban America is unequal and a protected white enclave? A black person can’t buy a house in 2018. Free will? Liberty?
Government hasn’t just started to fail in providing for social responsibility. US government has failed from the start by allowing unequal rights and fundamental social contradictions to exist as part of our collective history and social heritage. In all his talk of freedom and liberty, Friedman fails to discuss to sordid underbelly of modern capitalism. Modern shareholder wealth is based on immoral, slave-trading ground to start.
Basically, Friedman has set up a philosophy that justifies unethical discrimination, and gives permission to business to exploit people, and to not feel bad about it, as a normal ethical person would. Business is not a person, and therefore does not have to be ethical? Is not business run by people? What society are these people in? Are we really on the same team, or is that just talk?
Friedman’s free market philosophy is basically one big artful dodge of normal human social relations.
Lack of science
As well, Friedman’s arguments are undergirded by assumptions from a scientifically and academically outdated worldview about man’s place in nature. Free market philosophy postulates a natural liberty that is ignorant of human evolution, population biology, anthropology, and primatology. As obligate social primates, humanity’s greatest adaptation is cooperation, not the survival of isolated individuals in a war of all against all.
The idealization and fetishization of individual competition as the primary factor in human evolution, is a falsity.
The unrestricted use of resources, and ideas of an unlimited frontier contradict the Second Law of thermodynamics, that there are known and calculable limits to energy and resource use. If you’re going to dance, you have to pay the fiddler; Friedman’s free market is all dancing and no paying.
Basically, Friedman’s ideas, that make for socially and scientifically unfettered business activity, make business into a cancer among us all, destroying society from within under the guise of what? Profit for the shareholders? What happens when resources run out and people demand social responsibility? Are less profits them gracefully accepted? Or do shareholders and investors somehow feel they have a right to profit, at all costs? That any regulation or limit on profit-seeking, to be socially and environmentally responsible, is too much to bear?
Social Darwinism race to the bottom
Friedman’s initial assumption puts the commons (the environment) and public good at the mercy of the profit motive. It’s undemocratic, and a tax, Friedman asserts, for business to waste money on any social good. This is a self-justifying rationalization, an artful dodge. What this sets up, with Trump and Co., is an equally undemocratic outcome, a Machiavellian race to the bottom, and the enshrinement of vulture capitalism as the highest value. There is no longer a government last stop on the train for social responsibility. An individualistic, fantasy war of all against all has come to be the norm, and this justifies the lack of responsibility.
When government is seen as the problem and not the solution, a critical part of Freidman’s argument and philosophy has been lost and ignored.
Game theory
In game theory, scenarios are set up to measure how people choose to behave and how they look out for their own and other’s interests. People do look for their own advantage but also consider benefits to others. People don’t take it lightly when they consciously must choose to inflict harm and suffering on others. And, when people cheat, that makes more incentive for others to cheat, until no one benefits in the end. Widespread cheating busts down the whole system of social and behavioral checks and balances.
Civilization and labor
As we see from a pragmatic view of history, civilization has been one big class struggle, with upper classes seeking to consolidate power at the top of the social pyramid. The lower classes are the laborers and functionaries, and the upper classes, “management”, gain their power from controlling labor and sequestering the material benefits generated by labor to themselves. Occasionally the lower classes make some gains, and over 6,500 years, gradually a body of universal human rights has unfolded. In the modern era, and incrementally, lower classes have made some gains.
Structurally, these tensions of inequality can all be seen as a function of the hierarchical social relations inherent in civilization itself. Civilization itself is a large-scale group cooperation, evolving out of bands, tribes, chiefdoms etc. The trajectory moves from egalitarian bands, the form of social organization for most of human evolution, to progressively more unequal at higher and more modern levels.
Human nature
Any philosophy or scheme that has social responsibility as a core issue has to have a way to frame and contextualize human evolution and the human nature it produced. Since Freidman does not disclose his foundational assumptions here, a critical piece of his argument is missing.
However, it is easy enough to see that Friedman’s baseline rests on assumptions of a Hobbesian war of all against all, where there is no morality or social responsibility because chaos rules and individual survival is the only imperative. This is a critical point in analyzing Freidman’s arguments. Is it reasonable and accurate to posit a human nature and human society as a primarily individual endeavor? To excise all social, cultural, and structural antecedents?
By any measure, people are among the most if not the most highly social animals on earth, and thus, a concept like social responsibility is integral to our very being, not something to be rationalized away. Egalitarian bands had to work together, no way an animal with no fangs and claws can compete as an individual. This is the overwhelming ground of human evolution: 2 million years of egalitarian bands, vs. 6,500 years of civilization.
A more reasonable view on describing and explaining human nature is to place human behavioral foundations in an actual scientific, evolutionary context and to use modern evolutionary theory and associated humanities academic disciplines to provide the evidence. 18th century musings are not the right baseline to examine the contexts from which social adaptations, and thereby, social responsibility spring.
Human nature
One compelling view of human nature comes from sociobiology, evolutionary psychology, and moral foundations theory. E.O. Wilson and Jonathan Haidt, make a combined case to explain the human expression of morals and ethics. In a nutshell, human behavior is based on clear evolutionary antecedents stemming from highly social, cooperative group living. For people, the group unit is critical. No one is descended from an individual who was able to fight bears and lions all alone, and survive, and procure food all by themselves.
Human ancestors would not have been able to make it without a high degree of group cooperation. Chimps society is a rough analogue. The band has an internal, cooperative coherence, even as members compete with each other in the band’s social hierarchy. In a band, everyone is an in-group member, with some more capable than others, but all on the same team.
If we are going to examine primary causative factors about human nature, why not go to one the top modern thinkers? E.O Wilson has a critical insight: people do compete individually within groups, this represents individual selection in evolution. People also cooperate with other in-group members to one, procure resources for the benefit of the in-group, and two, to compete against out-groups; this is group selection in evolution.
It is not surprising that a species with a strong emphasis on cooperation would have group-level natural selection. As a highly social species, people have the capacity, and imperative, for socially responsible behavior to the in-group.
Morals as checks on behavior
A deep grammar of moral capacity is the evolved expression of our highly social primate ancestry. Moral processes reflect our behavioral adaptations as social primates. Cultural content, fills human moral capacity, and has now taken the place of pure instinct. This is why the Golden Rule is a universal principle in human religions. Religion is a serious, in-group functional adaptation to sew social threads tougher and establish in-group adaptive social coherence. In this evolutionary context, people apply certain morals (social responsibility) to their in-groups and other more antagonistic impulses to outgroups. Cooperation, tolerance, and the benefit of the doubt are more likely to go to in-groupers.
The morals adapted to fight out-groups are loyalty, respect for authority and purity. Harm and fairness considerations are morals more centered on individual selection, within groups. Fir how people are behaviorally adapted in evolution, social responsibility is reserved for in-group members only.
Evolutionary psychology applied to Friedman
The point of all this, is that a reasonable and rational examination of human nature, based on the merits of current science, has to conclude that human behavior is governed by equivalent doses of cooperation and competition, and that an amoral war of all against all does not properly account for in-group social dynamics, and is not an accurate framing of who we are.
What Friedman does is to take an in-group, a group of investors, or shareholders, and makes them into a competitive survival unit that is unbound from the society of which they are members. “Profit” for this shareholder group, stands as a proxy for its survival imperative. But people can’t be out-groupers from their own in-group, that violates a basic tenet of our nature.
Friedman treats business and corporate behavior as a matter of group selection, where it is moral to take advantage of the others guys as much as possible, inasmuch as morals are part-ways an adaptation to group survival.
Yet if US society and American culture is an in-group of people with shared values, and a national identity, then it is not right nor moral to take advantage of people on our own team. It’s not right to use other human beings as props to enrich certain shareholders and investors, especially if those human props suffer and are caused harm though structural poverty and political discrimination.
Only if individual competition is elevated to the top value in all social cases and morality focused on in-group tolerance and cooperation is ignored, can Freidman’s theories be justified. With the most social creature on earth, it is fundamentally unreasonable to posit individualism as the prime behavioral value.
Social responsibility to the US societal in-group, is something that can’t be rationalized away in service of profit alone.
Conclusion
I heartily disagree with Friedman. What I see to today is the deterioration of societal ethics and morals as result of the Friedman worldview. As business advocates take more power to influence government, the only real pragmatic check on business excesses becomes less and less effective. When business interests take over government and the Supreme Court, when foxes guard the hen house, the end results are no ethics and no social responsibility, and profit for the few rules as the highest value.
This is why a budget-busting tax cut for the wealthy can be used as an excuse to cut critical social programs. There are no ethics when business interests are in charge. It is Milton Friedman who has justified this.
Current trends regarding social responsibility and the role of government trend are fundamentally undemocratic and antithetical to the in-group values we collectively hold. What we have today is not government by the people, taking care of our own, but tyranny by the few. With Friedman’s myopic business values ascendant, the people are left unable to choose what socially responsive polices they want. Policy decisions that impact social responsibility are left to the caprice of Friedman-admitted unethical and unchecked business advocates in government.
Freidman’s argument is strong and internally cohesive, for an argument’s sake alone, but that does not mean the argument is true. The argument is based in an incomplete and inaccurate view of human behavior, evolution and history. With Friedman, the core premise is wrong; an individual cannot be a non-member of the society of which they are a part. Friedman idealizes a system that doesn’t work like he says it does. What Friedman ultimately does is to justify ruling class hegemony with an interest-based argument that falsely stacks the merits of the case to his favored group.
The best antidote to Friedman is to make an augment why business does
have social responsibility. In this essay, I have made that argument.
In-group members can unilaterally decide they are no longer part
of society, but by doing so they also declare they are no longer
beholden to any social responsibility in that society as a whole. As
former in-group members who have forsaken a pledge of allegiance to the
in-group, non-socially responsible business interests become the enemy
and not the servant of the in-group of American people.
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