I don't buy "as bad as the law allows."

On page 85 of our book Robert Almeder says that Friedman proposes that business executives act without regard to morality (but still according to the law) in order to make as much profit as possible. The late CEO of Interface, Ray Anderson, seemed to agree with Almeder, saying that Friedman was encouraging business executives to make decisions that were (morally) “as bad as the law allows.” Presumably many other people have interpreted Friedman’s writings this way as well.

Now all I have read by Friedman is his short article “The Social Responsibility of Business Is to Increase Its Profits,” but I didn’t interpret him this way. In my opinion Friedman is simply stating that for a business executive to make decisions based on factors other than what his employers (i.e. shareholders) desire is wrong because the business executive is an agent of his employers, and the money that he spends not his, but theirs. Friedman, as I understand him, wants to assert this because of his deep belief in individual freedom (yeah, he’s a libertarian, remember?). If an employer/shareholder tells his employee/executive to do one thing and that employee does another, then the employer’s freedom to run his company (and spend his money) the way he wants has been violated. It scares Friedman that people support this.

And it’s true that, following this view, Friedman believes that if you’re a business executive and your stockholders want you to play as dirty as you can to maximize profits then it is wrong for you to spend your employers’ money by acting in way which is better morally but worse financially. Friedman does NOT, however, say that it is wrong for you to quit your job in order to avoid acting immorally. In fact on page 73 of our book he explains that a corporate executive may have his own moral code which prompts him to: “refuse to work for particular corporations, even to leave his job” if working for that corporation or keeping that job would cause him to violate his moral code.

So I don’t think Friedman actually supported dumping tons of waste into a river or refusing to recall a dangerous product in the pursuit of profit. I think he just wanted to point out that acting “morally” in a situation where your employers wanted you to do such things wouldn’t be as moral as you’d think, because you would actually be stealing from your employer.

Beyond this my mind is still a tangled web of ideas that I’m slowly unknotting as I attempt to figure out what I think about all of this.