In a story for the New York Times front page Tuesday, “Shareholders Rule No More, C.E.O.s Pledge,” business reporters David Gelles and David Yaffe-Bellany conceded all the left-wing arguments about the evils of big business and roasted Nobel laureate free-market economist Milton Friedman as an avatar of greed.
Nearly 200 chief executives, including the leaders of Apple, Pepsi and Walmart, tried on Monday to redefine the role of business in society -- and how companies are perceived by an increasingly skeptical public.
Breaking with decades of long-held corporate orthodoxy, the Business Roundtable issued a statement on “the purpose of a corporation,” arguing that companies should no longer advance only the interests of shareholders. Instead, the group said, they must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers.
The shift comes at a moment of increasing distress in corporate America, as big companies face mounting global discontent over income inequality, harmful products and poor working conditions.
On the Democratic presidential campaign trail, Senators Bernie Sanders and Elizabeth Warren have been vocal about the role of big business in perpetuating problems with economic mobility and climate change....
There was no mention at the Roundtable of curbing executive compensation, a lightning-rod topic when the highest-paid 100 chief executives make 254 times the salary of an employee receiving the median pay at their company. And hardly a week goes by without a major company getting drawn into a contentious political debate. As consumers and employees hold companies to higher ethical standards, big brands increasingly have to defend their positions on worker pay, guns, immigration, President Trump and more.
Yet the New York Times Co.'s hypocritical history of generous corporate compensation doesn’t really inspire confidence for their new populist role. A decade ago, Times Co. corporate executives got rich while the (relatively) poor employees lost ground or were laid off.
It was an explicit rebuke of the notion that the role of the corporation is to maximize profits at all costs -- the philosophy that has held sway on Wall Street and in the boardroom for 50 years. Milton Friedman, the University of Chicago economist who is the doctrine’s most revered figure, famously wrote in The New York Times in 1970 that “the social responsibility of business is to increase its profits.”
This mind-set informed the corporate raiders of the 1980s and contributed to an unswerving focus on quarterly earnings reports. It found its way into pop culture, when in the 1987 movie “Wall Street,” Gordon Gekko declared, “Greed is good.” More recently, it inspired a new generation of activist investors who pushed companies to slash jobs as a way to enrich themselves.
“The ideology of shareholder primacy has contributed to the economic inequality we see today in America,” Darren Walker, the president of the Ford Foundation and a Pepsi board member, said in an interview. “The Chicago school of economics is so embedded in the psyche of investors and legal theory and the C.E.O. mind-set. Overcoming that won’t be easy.”
The Times has a side business in bizarre bashing of “Uncle Milty,” in a way it would never attack a famous left-wing economist (it employs them as vicious Republican-loathing columnists like Paul Krugman instead).
The reporters stated as fact liberal wishful thinking.
But by last year, the Business Roundtable’s language was out of step with the times....
They hauled out the media’s anti-Trump greatest hits, including the racist march in Charlottesville and the El Paso massacre:
For companies to truly make good on their lofty promises, they will need Wall Street to embrace their idealism, too. Until investors start measuring companies by their social impact instead of their quarterly returns, systemic change may prove elusive.
Nowhere has the new scrutiny on corporations been more pronounced than on the presidential campaign trail. On Monday, Mr. Sanders said in an interview that the Business Roundtable was “feeling the pressure from working families all over the country.”
But corporations weren’t off the hook just yet:
But the statement’s lack of specific proposals also drew skepticism.
“If the Business Roundtable is serious, it should tomorrow throw its weight behind legislative proposals that would put the teeth of the law into these boardroom platitudes,” said Anand Giridharadas, the author of “Winners Take All: The Elite Charade of Changing the World.” “Corporate magnanimity and voluntary virtue are not going to solve these problems.”
For the left, anything less than full surrender is insufficient.