It applies most of all to the US and Soviet governments. Flawed theories are a dime a dozen. What matters is the endorsement/enforcement by government officials (and, in the US case, corporate elites).

I will be with you here... the disciples did not distort Friedman as much as Darwin disciples distorted Darwin....

Friedman did embrace a propaganda structure besides his books on monetary policy.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

I think you're right, in which case out the window goes "fundamental analysis".

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

Companies' assets decrease when dividends are paid by the amount of the dividend. And there is always a hiccup in pricing for a couple of days when a share goes from being "cum dividend" to "ex dividend".

But in the short, medium and long term the price reflects  investors' expectations of net income=profits, and whether or not this is paid out in dividends is not generally more than a tax issue.

I think the difference is liquidity. If stock is not very liquid the only profit from it comes from dividends, not from selling the stock.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

The 1980's? Cue in Gecko's "greed is good".

And note how he extols the gilded age and the robber barons, and the social Darwinist narrative. Maybe in the 1980's the lid was lifted by the fact of the fading memory of the Crash of 1929 and the Great Depression. After all, in the introduction to his book The Great Crash 1929, J K Galbraith says that it is memory and not regulation that prevents speculative bubbles and crashes.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

In sum, economics is political.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

Last time I checked, Friedman and his ilk were of the opinion that any regulatory laws that hinder a private enterprise's ability to profit are detrimental, that the market can only be free if it was free of political interference.   Now, maybe YOU don't agree with that, but I am pretty sure, if any human being has embraced that theory, it was Friedman.  

Maybe my comment is clearly written by someone who has no background in economics.  But  your comment is clearly written by someone whose life has not been lived out in a country where Friedman's ideas have been given free reign.  Also, did you not read the Shock Doctrine, or did you conclude its argument was unfounded?

I am sure I speak for others when I say I read economists here talking about these matters on a level so entirely removed from reality and am dumbfounded.  Economics is a tool to serve society, not itself.  The purity or consistency of some economic theory means nothing if in the end, the majority of people are not benefiting from it.  It's navel gazing with lethal consequences.   How we can sit here and rue the infinite number of crises facing humanity and turn around and state "a company's sole responsibility is to lawfully increase profit for its stockholders" when these crises are legally YES! legally benefiting corporations or even sometimes caused by them - I simply do not know.  

Also, uhm, the laws are such around here that companies shape legislation more than citizens.  Which is why their actions are legal.  So we have to change the laws?  Tell me, how we can do so and respect that a company's sole responsibility is to lawfully increase profit for its stockholders?   We're in a catch 22 here and eventually if we do not accept that companies have a larger obligation to society, we have no argument on which to base, oh, a law that would require AIDS patients who cannot afford treatment have access to it anyway.

So easy to be a free-market proponent when your access to healthcare is guaranteed.

Or maybe you meant "primary" instead of "sole."

"This is nothing compared to how Putin rigged Eurovision."

Jerome a Paris:

You know, I profoundly disagree with you and the article about this, and agree with Milton Friedman: a company's sole responsibility is to increase profit for its stockholders.

That's not a disagreement: we are all - you, me, Friedman - saying that this is a Corporation's responsibility. Our disagreement, if any, lies in whether or not a Corporation is capable of being adequately regulated.

A Corporation exists to make a profit for its shareholders. I don't see anything sociopathic about creating value in interactions with other stakeholders.

The problem lies in the nature of these interactions.

It goes without saying that Corporations must act  lawfully. In the same way that laws are made to regulate what individual "legal persons" may do, so it is that laws may be made that regulate what these artificial "legal persons" may do.

No disagreement there either.

My problem with Corporations arises from the nature of their privilege of limitation of liability, nothing else. It is the effect of this privilege which leads to Corporate Social Responsibility being an oxymoron.

Investors in "Corporations"  do not compensate Society adequately IMHO in respect of the privilege of limitation of liability which they receive.

I believe that because of this  privilege of exclusion of liability the relationship between Corporations and other stakeholders -  suppliers, customers, staff, management and financiers/lenders all aka "Costs"- is "broken" in terms of the imperfect sharing of risk and reward.

This is why "costs" are "externalised" insofar as Corporations can achieve it within the law.

IMHO partnership-based corporate vehicles such as the UK LLP are emerging because they allow risks and rewards to be shared more equitably between stakeholders by "internalising" stakeholders as Members.

Within a partnership there is no profit, and no loss.

In short I believe that the UK government inadvertently made the Corporation obsolete on 6 April 2001 when they were blackmailed by the accounting and legal professions into legislating the LLP.

Porsche's disdainful capitalist

"Our business model is only financed by customers. So we have to pay a lot of attention to our customers. When the customer is happy then the worker is happy too and so are the suppliers. Then there should be enough money left for the shareholder. But that is the order of importance," he says.

All of this is part of Mr Wiedeking's insistence that he is not a slave to the capital markets: "The question is: how can society allow capital to make all the rules? I have never understood shareholder value as it leaves so many things out. Shareholders give their money just once, whereas the employees work every day."

Of course he can say that since Porsche is more or less owned by two families.

I would agree with your addition except that we are talking about Friedman.  Since Friedman argued for effectively zero regulation of business, effectively anything would be a lawful pursuit of profit, including the massive cost externalizations that regulations try to internalize.  Friedman's position was, in a very real sense, that any market action that produced profit was inherently good and not to be interfered with.

The economic-legal debate for most of the 20th Century was whether society should promote efficiency so long as it was not too unjust or justice so long as it was not too inefficient.  Friedman and his Neo-Austrians showed they were willing to throw efficiency and justice under the bus for the sake of profits while simultaneously claiming that the profits would create both efficiency and justice.

You know, you should do a "lazy quote diary" just on that opinion piece.

I have been thinking of doing something like that. However, I am new to ET and to the use of hyperlinks and HTML.  I have seen references to "lazy quotes" in the New User Guide, but may have failed to grasp something fundamental as to the meaning.  It still seems like work to me.

As it is, I often lurch around like a drunk on ET, posting comments on Diaries other than those intended, mistaking people's intent, etc. and I am fain to further annoy and test patience.  The Geezer part of my Tag IS NOT an affectation.  At present I am functioning on four hours sleep, something I no longer do so well, and suffering a sore back from yard work yesterday. The insomnia was partly due to yesterday's discovery of Post Autistic Economics, courtesy of Coleman's diary.  A flash of light in the darkness can do that to me. Well worth the insomnia.  Like Rocky Raccoon, "I'll be better just as soon as I am able."

Thanks for the encouragement.


If sanity be culturally normative, then by the norms of this culture I claim insanity.