I recently assigned Milton Friedman’s classic article “The Social Responsibility of Business is to Increase its Profits” to one of my more advanced classes, which got me thinking about Friedman’s argument for the first time in a while. Then, just the other day, Matt Yglesias wrote this:

[Friedman’s argument] implies that a business executive has not only the right as a citizen of a democratic country but a moral obligation to dedicate his energy and that of the firm he manages toward erecting regulatory barriers to competition and to begging for bailouts and subsidies…. [A]n entrepreneur who’s obsessed with creating great products is… guilty of some kind of ethical failing… my point is basically that for the system to work you need some kind of thicker ethics than “greed is good.”

From the very same article that Yglesias links to, Friedman makes it clear that he recognizes this. He concludes with this quote from his book Capitalism and Freedom: “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”.

Friedman may be partially to blame for the initial appearance of a disagreement on this point, since he chose to advance his position (in terms of what he emphasizes in this article and in interviews on the subject) by basically saying “businesses should try to be greedy and increase profits” without necessarily following up with the obvious caveat that this is only a tenable position if businesses are conforming to certain basic rules.