Risk Latte - Obama Victory - Let's finally bury the Friedman Doctrine

Obama Victory - Let's finally bury the Friedman Doctrine

Rahul Bhattacharya
November 5, 2008

One man has finally had the courage and determination to talk about the abolition of the "ownership society" in the United States. Ownership society, formalized by George W Bush, and perfected by millions of investment bankers, fortune 500 CEOs and affluent business owners across America for the past two and a half decades, is a concept that owes its existence to the theories and beliefs of the American economist and Nobel laureate Milton Friedman.

I got introduced to Milton Friedman, ironically, through a Business Ethics class in the second semester of my MBA course in India, almost twenty years back. The professor, a very erudite and well traveled man, told us that Friedman was one of the greatest economists that America has produced and his ideas were shaping the capitalist world in the west.

I had never heard of Milton Friedman before; and anyway coming from a physics background I found economics as a subject quite confusing. The arguments were so complex and yet the math behind those arguments was so simple. And on that winter afternoon in 1987, sitting in the ethics class, I wondered who is this guy, Friedman and what is he doing in a business ethics curriculum?

Indeed, outside the walls of our classroom and outside the fair shores of my country, a wave was sweeping the modern capitalist world. This was 1987, the height of Regan-Thatcher reactionary movement; a movement that had supposedly solved the economic problem of Great Britain and the United States. The stock market crash of 1987 notwithstanding, this was the decade when stupendous wealth was being accumulated in the United States and the better part of Western Europe. This was the time that was redefining business and corporate landscape in America. It was an era of unprecedented money making on Wall Street. Ronald Regan and Margaret Thatcher may have been the public face of this reactionary, affluent society. But the decade and the era belonged to Milton Friedman.

I am not going to talk about the economics of Milton Friedman, at least not in this article. Let Ben Bernanke of the Federal Reserve champion that cause. What I am alluding to is Milton Friedman's theory about a corporation's role in the society and social advancement of the masses.

That afternoon, my professor brought up the famous quote of Milton Friedman during the lecture. He said, at the end of the day every chieftain of business, small and large, should live and work by the code that "business of business is business." This, according to Milton Friedman, was the fundamental tenet of laissez faire capitalism. Only the business, the pursuit of making money, should matter to a corporation. Everything else - corporate social responsibility, improving the lives of employees and the broader members of the society, taking care of our environment, uplifting the plight of the masses who are directly or indirectly the stakeholders of every corporation, providing education to the underprivileged - everything, should at best be a distraction and at worst a sin.

It was a bizarre argument; and a deeply disturbing one too. I looked out of the window of my classroom and saw a poor and a destitute family of four sitting in front of the institute gate begging for alms. And beyond the gates of my institute I saw a city where the rich were living a life of extreme luxury and comfort, ensconced in their mansions oblivious to the teeming populace around them who would go to bed without having dinner that night. And even beyond that I saw a country, where a handful of factory owners and conglomerates were accumulating vast private wealth and hundreds of millions of others around them dying of hunger. I saw a land where a handful of tycoons were being born and millions were dying of disease and starvation.

The fortunate sons of the business tycoons were going to Harvard and Wharton while my other brothers and sisters couldn't afford even primary schools and were locked away on factory floors as child laborers. An inefficient, corrupt system was robbing us of our dreams and big businesses of India were, at best, apathetic to our plight. So much wealth was being made by so few and nothing was trickling down.

Sitting there in the classroom that afternoon, listening to my professor talk about the Friedman doctrine and business ethics something changed inside me. I didn't know then. For a start, I wanted to know more about Milton Friedman. He became my entry point to the discipline of economics. That afternoon, I embarked on a very private, intellectual journey to understand why all over the world human beings are all prisoners of, what I now know as, an "ownership society".

After completing my MBA I left India to seek promise in other worlds. I traveled to the four corners of earth and ransacked the libraries to find economic texts. And everywhere I went I saw that corporations, big and small businesses existed only to make money for a handful few who ran them by exploiting their surroundings and the society to the core. And the governments were mere puppets in the hands of these business owners. And I wondered is it all there is to discipline of economics. I saw all this and I despaired.

I believe Barack Obama will change that.

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