Milton Friedman was right, but that doesn’t excuse a lack of ethics

In a New York Times article in 1970, Milton Friedman – second only to Keynes in the ranking of 20th century economists  – declared that the social responsibility of business is to increase its profits (article reproduced here). This was an extremely controversial position, although it made sense from the perspective of economic logic, and it is much less disturbing when one appreciates that Friedman was distinguishing clearly between a business and the people within it, who do have responsibilities.

Business guru Seth Godin has just posted a brilliant piece echoing Friedman’s argument (No such thing as business ethics):

It comes down to this: only people can have ethics. Ethics, as in, doing the right thing for the community even though it might not benefit you or your company financially. Pointing to the numbers (or to the boss) is an easy refuge for someone who would like to duck the issue, but the fork in the road is really clear. You either do work you are proud of, or you work to make the maximum amount of money. (It would be nice if those overlapped every time, but they rarely do).

“I just work here” is the worst sort of ethical excuse. I’d rather work with a company filled with ethical people than try to find a company that’s ethical. In fact, companies we think of as ethical got that way because ethical people made it so.

I worry that we absolve ourselves of responsibility when we talk about business ethics and corporate social responsibility. Corporations are collections of people, and we ought to insist that those people (that would be us) do the right thing. Business is too powerful for us to leave our humanity at the door of the office. It’s not business, it’s personal.

Mr Godin is absolutely right. We can’t leave our ethics at the door when we go to work. A lack of personal ethics is clearly behind the UK phone hacking scandal and was a feature of a number of dubious transactions in the lead up to the 2008 financial crisis. Many of us need to re-learn what it means to act and live ethically. One of my favourite quotes about ethics and character – which is reproduced in Stephen Covey’s exceptional book “The 7 Habits of Highly Effective People” – is from David Starr Jordan:

There is no real excellence in all this world which can be separated from right living.

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