Milton Friedman's 'The Social Responsibility of Business Is to Increase Its Profits' Establishes Shareholder Primacy Doctrine

Economist Milton Friedman publishes his landmark essay ‘A Friedman Doctrine: The Social Responsibility of Business is to Increase Its Profits’ in The New York Times Magazine, establishing the intellectual foundation for shareholder primacy and profit maximization as the sole corporate responsibility. Friedman argues that corporate spending on social matters constitutes spending shareholders’ money without their consent, and that businesses have no responsibility beyond maximizing returns to shareholders within legal bounds. Building on ideas from his 1962 book ‘Capitalism and Freedom,’ this doctrine becomes enormously influential in reshaping corporate governance from the 1980s onward, providing ideological justification for prioritizing shareholder value over workers, communities, and long-term investment. The Friedman doctrine fundamentally reframes corporate purpose, enabling subsequent wealth extraction mechanisms including mass layoffs, union-busting, wage suppression, stock buybacks, and short-term profit maximization strategies that transfer wealth from workers and productive investment to shareholders and executives. This ideological shift establishes the intellectual framework that justifies treating workers as costs to minimize rather than stakeholders deserving fair compensation, ultimately facilitating four decades of rising inequality as corporate profits soar while real wages stagnate.