The World's Dumbest Idea By Milton Friedman

The Business Mindset

“The Social Responsibility of Business is to Increase its Profits”

- Milton Friedman. Milton Friedman, an American economist and statistician, is revered as one of the greatest business minds. Friedman has been described as "the most influential economist of the second half of the 20th century ... possibly of all of it. (Economist, The legacy of Milton Friedman, a giant among economists, 2006) The infamous quote, which appeared in a 1970 New York Times Magazine, is the centerpiece of many business class debates. Whether you are for or against Friedman’s ideology, one thing is for sure his quote has crossed the minds of business students around the global.

Conventional economic wisdom has been that shareholders value

The dreams and aspirations of becoming powerful and having more money than one can spend is on the minds of many of our smartest and brightest. Without a doubt, Friedman’s quote sparked a business movement that embraces the idea of enhancing profits without any regard of social causes.

According to Steve Denning in an article titled, “The Origin Of 'The World's Dumbest Idea: Milton Friedman.” Denning stated that maximizing shareholder value has turned out to be the disease of which it purported to be the cure. He references a book by Roger Martin, Fixing the Game where Martin noted that, “between 1960 and 1980, CEO compensation per dollar of net income earned for the 365 biggest publicly traded American companies fell by 33%. CEOs earned more for their shareholders for steadily less and less relative compensation. By contrast, in the decade from 1980 to 1990, CEO compensation per dollar of net earnings produced doubled. From 1990 to 2000 it quadrupled.” (Steve,

The novel glorifies the right of individuals to live entirely for their own interest. (Rubin, 2007) Even though the book was published 57 years ago, it has attracted a new fan base. A New York Times article “Ayn Rand’s Literature of Capitalism” discuss how some corporate executives in their private lives express how the book has inspired them to make business decisions. The article suggested that the book gave the executives a form of substance to their inchoate thoughts, and showing that there is no conflict between private ambition and public benefit. (Rubin,