The US economist Milton Friedman (2002) argued in 1970 that people who claim a social conscience for business are “unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades ” (Friedman, 1970, p. 1).

He insisted that in a free enterprise, private property system, corporate executives are directly responsible to their employers—the owners of the organization, that is, the shareholders—to make as much money as possible ethically and within the law. Any social responsibilities to which these executives subscribe should be as private individuals, not as business managers. Otherwise, they may act against the interests of their employers (presumably, e.g., should they risk a loss of productivity by supporting workforce diversity and hiring women or members of disadvantaged minorities instead of better qualified candidates). In such cases, Friedman would argue they would be spending stockholders’ money without consent in pursuit of wider social aims and would become, in effect, civil servants, which would imply that political—not market—mechanisms determine the allocation of company resources.

Friedman went on to claim the great virtues of private competitive enterprise are that it forces people to be responsible for their own actions and makes it difficult for them to exploit others for selfish or unselfish purposes. They can do good but only at their own expense. In an ideal free market, resting on private property, no individual can be coerced because all parties can choose whether to participate or not. Society is a collection of individuals and of the various groups they voluntarily form; there are no social values or responsibilities other than those shared by individuals. Friedman admitted that some government regulation will be always necessary but maintained the concept of corporate social responsibility to be fundamentally subversive in a free society.

He concluded that the only social responsibility of business is to engage in open and free competition without deception or fraud. Levitt (1958) paraphrased this sentiment as “the business of business is profits”. It was Denning’s (2013) opinion that though no popular notion has a single origin, the idea that the sole purpose of a firm is to make money for its shareholders gained international popularity with Friedman’s article in the New York Times on September 13, 1970. Friedman was the leader of the Chicago School of Economics and the winner of the Nobel Prize in Economics in 1976. He was described by The Economist (2006) as “the most influential economist of the second half of the 20th century…possibly of all of it”.

The success of Friedman’s article was not because his arguments were sound but because people desperately wanted to believe them. Businesses are run by those who must reconcile company profitability with personal values (Kearns, 2007), including executives whose shareholders’ demands may weigh heavily against any inclination towards social responsibility. At the time of Friedman’s writing, private sector firms were starting to feel the first pressures of global competition and executives sought ways to increase their returns. The idea of focusing totally on making money and forgetting any concerns for employees, customers or society, seemed worth exploring, regardless of logic.

Kearns (2007) noted, moreover, that Friedman’s views were attractive to conservative political leaders because they were expressed in an era when communism and socialism were still economic and political realities in many parts of the world. Ronald Reagan was elected in the USA in 1980 with his message that “government is the problem”, and in the UK, Margaret Thatcher, who became prime minister in 1979, preached economic freedom in common with Reagan and urged a focus on making money for the good not only of individual firms but also for the country.

Not everyone agreed with the shareholder value theory, even in those early years. For example, in 1973, Drucker (2012) argued that organizations can— and should— strengthen society, but the argument was so seductive that six years post-Friedman it was defended in terms of dubious mathematics by Jensen and Meckling (1976). Their article was widely cited, but it rested on the same false assumption as made by Friedman , that an organization is a legal fiction and its money is owned by the stockholders.

Jensen and Meckling proposed that to ensure firms would focus solely on making money, they should turn their executives into major shareholders by affording them generous compensation in the form of stock—thus any tendency to feather their own nests would act in the interests of the shareholders. The notion that “greed is good” (“Wall Street”, 1987) became the conventional wisdom and the management dynamic was to make money by whatever means available (Denning, 2013). Self-interest reigned supreme and in time executives came to view their portfolios as an entitlement, independent of performance.

Stalk and Lachenauer (2004) went even further down the path of corporate self-interest. They recommended that firms should be “willing to hurt their rivals”, to “enjoy watching their competitors squirm” and to be “ruthless” in the marketplace in pursuit of shareholder value. They argued that firms should go the very edge of illegality or—if they should go over the line—to pay civil penalties that might appear large in absolute terms but meagre in relation to their illicit gains. In this moral environment, corporate senior executives were free to make up their own rules with the tacit approval of governments, legislators and regulators.

It seemed the magic of shareholder value was working, but when its financial sleights-of-hand were exposed, the decline that Friedman himself had sensed in 1970 turned out to be real and persistent. Martin (2011) wrote that it was hardly surprising that the corporate world should be plagued by continuing scandals, for instance, the options backdating scandals of 2005–2006 and the subprime meltdown of 2007–2008.

On the other hand, there were many signs that companies were becoming more conscious of their social responsibilities. Vidal (2006) reported a Conference Board survey that found two-thirds of the surveyed firms regarded corporate citizenship and sustainability as issues of growing importance. Community and stakeholder involvement, corporate giving, environmental sustainability and dealing with climate change were high on the list of such activities; enhancing corporate reputation was found to be the main internal driver for sustainability programmes, and measuring results the top challenge.

Oldani, Kirton, and Savona (2013) edited a collection of articles in a debate over policy responses to the 2008 global financial crisis and the implications for international cooperation, coordination and institutional change in global economic governance. It included suggestions for reforming and even replacing the corporate architecture created in the mid-twentieth century to meet the global challenges of the twenty-first century. There was clear support for the idea that companies could operate in a way that would strengthen all their various stakeholders , yet still provide solid, sustainable returns for shareholders.

Nevertheless, thanks to globalization, companies are still free to exploit or pollute whole communities and then move on. Unregulated markets and exploitation-friendly tax schemes reward them for acting in their own interests in the name of economic growth and competitiveness. Kearns (2007) wrote hopefully in 2007 that if anything had changed since Friedman’s time, it was recognition that profit is a very poor proxy for societal value—only to report regretfully ten years later (Kearns, 2017) such poor examples as the UK government’s report on the possibility of expanding London’s Heathrow Airport. It recommended a third runway on primarily economic grounds, as though other factors (environmental damage, demolishing homes, etc.) hardly mattered (Topham, Mason, & Elgot, 2016).

Kearns (2017) makes a distinction between “profit” and “value”. The former is focused on the company itself, the latter on satisfying societal needs. He argues that Friedman’s failure to use “value” as his criterion undoes not only his argument but also that of any CEO today who hides behind profit but says nothing about value, that is, maximization of the business’s potential. He cites the lesson of Enron (Bauer, 2009) that profit performance often hides underlying underperformance and, more importantly, the hidden symptoms of corruption in corporate governance.

The debate today still seems to hinge around a conflict between two, apparently opposing, constructs: social responsibility versus profit; however, increasing awareness of the social cost of consumer goods, coupled with governmenta...