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The Only Duty of a Firm "Is to Produce Profits"

(p. B1) On Tuesday [January 16, 2018], the chief executives of the world's largest public companies will be receiving a letter from one of the most influential investors in the world. And what it says is likely to cause a firestorm in the corner offices of companies everywhere and a debate over social responsibility that stretches from Wall Street to Washington.

Laurence D. Fink, founder and chief executive of the investment firm BlackRock, is going to inform business leaders that their companies need to do more than make profits -- they need to contribute to society as well if they want to receive the support of BlackRock.

. . .

(p. B3) Companies often talk about contributing to society -- sometimes breathlessly -- but it is typically written off as a marketing gimmick aimed at raising profits or appeasing regulators.

Mr. Fink's declaration is different because his constituency in this case is the business community itself. It pits him, to some degree, against many of the companies that he's invested in, which hold the view that their only duty is to produce profits for their shareholders, an argument long espoused by economists like Milton Friedman.

"What does it mean to say that 'business' has responsibilities? Only people can have responsibilities," Friedman wrote, almost rhetorically, back in 1970 in this very newspaper. "Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades."

For the full commentary, see:

Sorkin, Andrew Ross. ''DEALBOOK; A Demand For Change Backed Up By $6 Trillion." The New York Times (Tues., JAN. 16, 2018): B1 & B3.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the commentary has the date JAN. 15, 2018, and has the title ''DEALBOOK; BlackRock's Message: Contribute to Society, or Risk Losing Our Support.")

The Milton Friedman classic article mentioned above by Sorkin, is:

Friedman, Milton. "The Social Responsibility of Business Is to Increase Its Profits." The New York Times Magazine (Sun., Sept. 13, 1970): 32-33, 122, 124 & 126.

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