This semester I have a mandatory module on sustainability and corporate social responsibility in which more progressive business models are discussed. Certainly plenty of businesses exist that are based on the view postulated by Milton Friedman in 1970 (that businesses have no responsibility except to maximise profits) but this is no longer true of all companies. Sure, if you’re a publicly traded company chances are that’s going to be the case as you’ve got shareholders to answer to and quarterly reports to issue to them showing your short term profits, but if you’re a privately owned company that isn’t necessarily the case.
The argument fell into two levels, the first being that all business schools teach profit maximisation, and the second being that the only kind of business that exists for anything other than to maximise profits is a non-profit organisation.
Well, given that my business school has a mandatory module stressing that Friedman is full of shit, I’d say the first one was rather categorically refuted. I very much doubt my counterpart in the argument agrees with me, but given that he insulted me and was unwilling to accept this basic fact I think I shall disregard his feelings on the matter.
As for the second issue, that is also not the case. I know several businesses that were not founded on the principle of maximising profits. Making enough money to thrive and continue to exist, certainly, but it wasn’t about getting as wealthy as possible. I don’t name examples because there’s the whole privacy thing. It’s not my place to divulge the names and purposes behind these businesses, but I know for a fact they exist.
Similarly, I’ve considered business plans in the past that were created in order to ensure sufficient cash-flow to finance things I enjoy doing. For example I would love to be able to film and present video podcast for a living, at least for a while. I’d establish a business to do it and wish to make some profit, but the goal wouldn’t be how to get the most profit long term or short term. The fact that such a business could exist seems to be beyond the imagination of people fixated on Friedman’s view.
The world is changing just as it always has been and over time businesses and the theories behind them grow more complex. Perhaps in a hundred years they’ll be deserving of true academia. Maybe. In the meantime they seem to be mainly a set of different basic ideas and ideals tarted up with obfuscating language and the odd graph.
So, to those of you who feel the need to insult me, patronise me, and put words in my mouth when I disagree with you, bear in mind I am no fool and would not disagree with you sincerely if I didn’t have good reason to.
But you know, just for kicks, you know how companies are only ever interested in profit and that is their motive behind everything?
How do you think things like this get done?
Pro-tip: A certain company, led by a certain person, got together a load of other like minded people worldwide to do something good. Said company are already at the top, they do not stand to gain anything substantial and are not directly attributed to this work, but if they had been geared just for profit this would never have happened.
Friedman’s work is from 1970, at the moment it’s 2011.
If things hadn’t changed at all in over forty years wouldn’t you be worried?