Fifty years ago, The New York Times reminds us, there occurred “a seminal moment in the world of business: the publication of Milton Friedman’s essay in The New York Times Magazine entitled ‘The Social Responsibility of Business Is to Increase Its Profits.’” As a newspaper read by liberals, The Times has never dared to appear overly fond of Friedman’s neoliberal worldview that elevated the profit motive to the position of arbiter of public morality.
In 2013, the newspaper’s star economics columnist, Paul Krugman, defended Friedman as a “realist,” in contrast with the rigid theorist Friedrich Hayek. Near the end of his column, Krugman offered this tepid disclaimer: “I don’t want to put Friedman on a pedestal.” The idea of realism defines the brand of liberalism The Times represents. Defending their own perception of what goes on in the real world as “reality” and calling it realism is the most convenient way of defending the status quo.
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In its homage to Friedman, The Times offers no judgment of the influential economist or his philosophy. Instead, it “assembled 22 experts — including C.E.O.s, Nobel laureate economists and top think-tank leaders” to put Friedman’s contribution not just to economic theory but to the dominant practices of the late 20th century into perspective. This may look like an exercise in objectivity, but every commentator is a bona fide member of some part of the oligarchic elite.
The first commentator cited is Martin Lipton, a senior partner at Wachtell, Lipton, Rosen & Katz, a law firm. He sets the tone The Times favors: “Since [the essay’s publication], the Friedman doctrine has been widely eroded, as a growing consensus of business leaders, investors, policymakers and leading members of the academic community have embraced stakeholder capitalism as the key to sustainable, broad-based, long-term American prosperity. … Stakeholder governance is the bedrock of American capitalism now and in the future.”
Here is today’s 3D definition:
An imaginary economic system invented by marketing minds in the late 20th century as a means of altering the public’s perception of capitalism as a brand to associate with it the ideals of cooperation, collaboration and working for the common good, all of which are by definition anathema to the functioning of the real economic system that recognizes only one guiding principle: competitive advantage and monopolistic aspirations
To prove his point about stakeholder capitalism being a bedrock rather than a chimera, Lipton claims it “is illustrated by the World Economic Forum’s adoption in 2016 of The New Paradigm and, in 2020, the Davos Manifesto embracing stakeholder and E.S.G. (environment, social and governance) principles.” When the world’s wealthiest people decide something is true, it must be true. Now that stakeholder capitalism has become a bed as well as the rock on which the majority of humanity has stumbled, the tens of millions of unemployed and the younger generations looking increasingly to suicide as a way out should be able to sleep in comfort in their rocky bed.
Lipton’s message clearly reflects the ideals The Times embraces. It has always made a point of adhering to “liberal” values. This theoretically puts it in opposition to the orthodox neoliberal values Friedman expressed in his 1970 essay. Neoliberalism has come to mean exactly what Friedman theorized: an economic system in which the unrestrained profit motive drives every aspect of economic relationships. It claims that profit constitutes the necessary mechanism that encourages virtuous growth from which everyone can benefit. Without that accelerated growth, society would be poorer, if not simply backward.
In contrast, the word “liberal” has no stable meaning. For the past century in the US, it has tended to designate the attitude of people who believe in the institutions of political democracy coupled with free markets that must nevertheless be reined in thanks to an adamant commitment to social justice as a shared collective responsibility.
On the other side are “conservatives” who entertain what often amounts to a romantic ideal of rugged individualism unencumbered by any collective restraint other than basic laws and traditional moral strictures. Social justice should not be imposed by governments but emanate from the natural initiatives of individuals adhering to the virtues of decency and respect. Multiple variations on these archetypes exist, but in the mind of most Americans, Democrats are liberals and Republicans are conservatives.
The NY Times has always accepted to be classified as a liberal news outlet, nevertheless emphasizing the connotation of openness to multiple opinions. It has consistently welcomed into its columns both Democrats and Republicans. This allows it to claim to be non-partisan, eschewing the idea of its loyalty to the Democratic Party, even while its editorial policy has consistently correlated with the policies of the party.
But how open is The New York Times? A Pew survey from late 2019 revealed that 91% of The New York Times readership identified as Democrat or leaning Democrat. By comparison, 93% of the audience of Fox News identified as Republican. This would appear to reveal a certain hypocrisy on the part of The Times since Fox News at least has never pretended to be non-partisan.
Most of the comments by the 22 experts follow what could be called the rosy liberal version of neoliberalism. This is a view that never questions the foundations of Friedman’s theory but seeks to provide it with a more human face by acknowledging the needs of real people alongside the drive for profit. For example, Starbucks founder Howard Schultz uses the occasion for self-celebration based on a clever marketing policy that seeks to flatter its customers: “We wish to be an economic, intellectual and social asset in communities where we operate.” Note that he says “we wish to be,” which is a way of admitting that, in reality, it is something else.
One contributor, Marianne Bertrand, a professor of economics at the University of Chicago Booth School of Business, dares to step beyond optimistic abstraction and speak with some lucidity, possibly because she is not a capitalist. She thinks the bedrock needs a bit of softening as she observes that “too many lawmakers have themselves become the employees of the shareholders — their electoral success tied to campaign contributions and other forms of deep-pocketed support.”
There are even those who reject stakeholder capitalism, not because it’s a chimera but because it violates the first axiom of Friedman’s theory. Hedge fund manager and philanthropist Daniel Loeb, the chief executive of Third Point, has no qualms about contradicting himself. He begins by defending Friedman’s position: “Stakeholder capitalism distorts the incentive that prompts investors to risk their capital: the promise of a profit on their investment.” In the next paragraph, he retrieves his moral credentials thanks to this assertion: “Most of the top chief executives we invest in and interact with are driven by a mission to deliver great products or services for their customers — making money is a byproduct of that desire.”
Which one is it, profit on investment or the “mission to deliver great products or services,” whatever that may mean? It most likely means ones with the highest profit margin.
Paul Krugman was right. Unlike commentators such as Alex Gorsky, the chief executive of Johnson & Johnson who seek to justify greed by invoking the existence of “shareholders who have valued this balancing of interests,” Milton Friedman described the actual mechanics of capitalism: “In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That 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 the basic rules of the society,”
Today’s oligarchic proponents of stakeholder capitalism want us to believe that history is undergoing a paradigm shift that will reform capitalism and preserve its principles of growth while adding some features of more equitable distribution of created wealth. No one points to other possible scenarios, such as the transformation of today’s oligarchic democracy into totalitarian rule by the owners of capital intent on maintaining control or the brutal collapse of a system as a consequence of both its contradictions and its deleterious effect on the human habitat. Those are themes that neither Friedman during his lifetime nor the NY Times today seem overly concerned about.
*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.