The doctrine that a corporation's single legitimate purpose is to maximize financial returns to its shareholders — an idea forged in the economics departments of the 1970s, institutionalized through stock-based pay and hostile takeovers in the 1980s, and now contested by a stakeholder movement arguing that a firm answerable only to its owners produces inequality, short-termism, and damage it was never designed to account for.
In 1970, the economist Milton Friedman wrote a short essay in the New York Times Magazine with a deceptively simple thesis: a company's only social responsibility is to increase its profits for shareholders. Everything else — paying workers well, cleaning up after yourself, giving to charity — is someone else's job. The essay ran to two pages. The world it helped build took four decades to construct, and the unbuilding, if it comes at all, will take longer still.