Fifty Years of Shareholder Primacy

by | Oct 2, 2020 | Blog, Business

A Free Market Manifesto That Changed the World, Reconsidered - New York Times

On September 13, 1970, the New York Times Magazine published an influential essay by highly regarded economist Milton Friedman entitled, “The Social Responsibility of Business Is to Increase Its Profits”. 

In the article, Friedman described a philosophy that has become known as “shareholder primacy”, which claimed that the sole purpose of a business is to produce profit for shareowners, without consideration for the interests of other stakeholders. 

Corporate leaders were quick to embrace this theory which essentially gave them a license to pursue profit-at-any-cost strategies and helped usher in the “greed is good” era that has continued for decades. 

To mark the 50th anniversary, DealBook and the New York Times gathered the inputs of over 20 experts for A Free Market Manifesto That Changed the World, Reconsidered, a retrospective of mixed opinions on the long-term effect Friedman’s work has had, not only on the business world, but on society at large. 

To be blunt, from my perspective as a dedicated member of the Conscious Capitalism community, Friedman and his concept of “shareholder primacy” has failed us over the last half century. 

The relentless focus on shareholder returns, exacerbated by the growth of stock-based executive compensation and the expansion of corporate lobbying to influence lawmaking, has resulted in debacles like the subprime mortgage crisis and Great Recession of 2008, as well as the more recent Volkswagen emissions and Wells Fargo fraudulent account scandals, to name a few. 

The time is right to swing the pendulum and make a significant shift toward a philosophy of “stakeholder capitalism” where businesses are held accountable and rewarded for creating long-term value that balances the interests of all stakeholders, including shareowners. 

Agree? Disagree? Want to discuss or learn more about Conscious Capitalism? Contact me at

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