Few thinkers are more
deserving of criticism than Milton Friedman. Not only was he the late
20th century’s leading proponent of unfettered capitalism, he served as
one of the intellectual fathers of the neoliberal ideology that has been so
dominant (and destructive) over the past 50 years. It is no exaggeration to say
that the Chicago School economist was one of the most—if not the most—influential
ideologists of the past half-century, shaping economic policy in Washington and
beyond while providing an effective intellectual apologia for capitalists, who
seldom fail to put profit over people.
All of this makes it hard to
defend Friedman in any way, and I have little desire to do so. The neoliberal
prophet’s ideas and theories played an essential role in the right-wing
economic project that took
off during the Reagan and Thatcher era of the 1980s; today’s
conservative and libertarian ideologues continue to cloak their pro-corporate
agenda (deregulation, tax cuts, and so forth.) in the Friedmanite language of
liberty. All this being said, however, it has been amusing in recent months to
see the dead economist become something of a scapegoat for the very type of
people who once used his work to defend their bad behavior from critics.
This phenomenon was evident
last week at the World Economic Forum summit in Davos, Switzerland, where the
world’s political and economic elite come together every year to pretend that
they care more about the world than they care about making money. The theme
of this year’s event was “stakeholder capitalism” and the role of
business in society—or, officially, “Stakeholders for a Cohesive and
Sustainable World.” Five months after the Business Roundtable released
a memo on the “purpose of a corporation,” in which the group of
America’s top CEOs advocated a form of stakeholder capitalism (as opposed to
shareholder capitalism), much of the world’s economic elite are now ostensibly
getting on board with this “new” model of capitalism.
“I feel that everyone is
conscious that the old idea of … maximizing profits, maximizing shareholder
value, the old Milton Friedman concept, is now part of the past,” declared
Maurice Levy, chair of ad agency conglomerate Publicis Groupe, at the
forum. During that discussion, other top capitalists likewise rejected old
Milton’s theory of shareholder primacy. “Capitalism as we have known it is
dead,” pronounced
Marc Benioff, billionaire founder of the Silicon Valley company Salesforce.
“This obsession that we have with maximizing profits for shareholders alone has
led to incredible inequality and a planetary emergency,” he continued,
insisting that stakeholder capitalism has finally hit a “tipping point.”
So, 50 years after writing his
article on the social responsibility (or lack thereof) of corporate
America, Milton Friedman has become the whipping boy for wealthy billionaires
and elite Davos regulars hoping to improve their image. It is certainly
entertaining to watch Friedman get some of the ridicule he so richly deserves,
of course, and it’s long overdue that his free-market fundamentalism be tossed
into the dustbin of history. Yet at the same time, it is a stretch to say that
the rise of “shareholder capitalism” over the past 50 years is the fault of
some dead economist, no matter how influential.
The fact is that Friedman’s
work—and that of other right-wing economists, such as F.A. Hayek—was a
great apologia for corporate America, providing a moral defense of its
unscrupulous and greedy behavior. Friedman’s justification of unfettered
capitalism was based on his narrow (and entirely negative) definition of
freedom, which was incredibly useful in the hands of such billionaire
businessmen as the Koch
brothers, who fought all forms of state economic intervention in the name
of freedom. For all his ideological writings, however, much of what Friedman
wrote was simply descriptive. For example, when he said that the role of the
corporation is to make money for its shareholders, he was simply describing
what capitalists have always done. Friedman’s essay on the corporate
executive’s function didn’t really posit anything new; he was merely describing
the logic of capitalism. The corporate executive, Friedman wrote, has
“direct responsibility to his employers,” and his or her responsibility is to
“conduct the business in accordance with their desires, which generally will be
to make as much money as possible while conforming to their basic rules of the
society.”
One of the attendees of this
year’s Davos conference, McKinsey & Company partner Kevin Sneader (who
was in
the news last year for falsely
denying the firm’s role in advising U.S. Immigrations and Customs
Enforcement on its inhumane immigration policies), maintained that
the founder of modern economics, Adam Smith,
“was very clear in saying that the responsibility of the businessperson was to
give to the community and enrich everyone.”
While it’s true that Smith
wasn’t a free-market fundamentalist, as portrayed by libertarian ideologues,
there’s a difference between saying how things ought to be and how
things are, and Smith was not naive about the businessperson’s
motivations. In his own words, the author of “The Wealth of Nations” said that
the “consideration of his own private profit is the sole motive which
determines the owner of any capital to employ it either in agriculture, in manufacturers,
or in some particular branch of the wholesale or retail trade.” The most useful
employment of capital, Smith wrote, is the one that yields the capitalist the
most profit, and this employment is “not always the most useful for society.”
We can find similar accounts
of the capitalist in the writings of Karl Marx, who pointed to what he called
the “coercive laws of competition,” which force capitalists to adopt the same
methods and tactics as their competitors (or cease to be capitalists and go out
of business). Profit is the single motivation for capitalists, and it is naive
to think that they will put the interests of the community, their employees,
their customers or the environment before their short-term profit (at least
without being forced to do so).
The latest public embrace of
“stakeholder capitalism” by America’s corporate elite is more of a PR stunt
than anything else, and the co-opting of “progressive values” by Wall Street
elites and corporate executives is little more than a desperate attempt to
placate the growing anger and opposition to capitalism and the billionaire
class (not just in the United States, but internationally). This cynical
strategy was on full display when the CEO of Goldman Sachs, David
Solomon, issued
a statement from his Davos resort Thursday stating that the Wall
Street firm—the biggest underwriter of initial public offerings in America—will
no longer take public any companies with all-white and all-male boards of
directors. “Starting on July 1st in the U.S. and Europe, we’re not going to
take a company public unless there’s at least one diverse board candidate, with
a focus on women,” he declared.
There is perhaps no better
example than the above of what the great political theorist Nancy Fraser has
termed “progressive neoliberalism”—which she defines as a strategic alliance
between such emancipatory social movements as feminism, anti-racism and LGBTQ
rights—with neoliberal forces that use “the charisma of their progressive
allies to spread a veneer of emancipation over their own regressive project of
massive upward redistribution.” The aim of progressive
neoliberalism, Fraser
remarks, is not to “abolish social hierarchy but to ‘diversify’ it,
‘empowering’ ‘talented’ women, people of color, and sexual minorities to rise
to the top.”
An inherently class-specific
ideal, this is designed to ensure that the so-called “deserving” individuals
from underrepresented groups can attain “positions and pay on a par with
straight White men of their own class.” This model of meritocratic
neoliberalism is the opposite of radical, as it ultimately helps sustain the
unjust system that keeps the great majority of people from all groups exploited
and powerless.
In the end, individual
capitalists may genuinely care about the environment, global poverty and
inequality, or any of the other noble causes discussed at Davos, but they
operate within an impersonal and amoral system that does not care about their
personal conscience. (Plus, to succeed in this type of environment, the less
empathy one has the better; a recent
study found that as many as one in five business leaders may have
psychopathic tendencies, compared with around 1% to 2% in the general
population).
Milton Friedman was at least
honest about the ruthless and cutthroat nature of capitalism, unlike Davos
elites and a growing number of corporate leaders who promote the contradictory
idea of a kind of compassionate capitalism. In truth, the only way to meet the
enormous challenges and threats we face today is to look critically at the very
system that engendered these problems in the first place. Not surprisingly,
those who benefit most from this system are not prepared to do this.
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BY CHRIS HEDGES
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