One of the most influential ideas in the late 20th-Century became for many the final verdict on a centuries old debate about the purpose of business. Nobel Laureate Milton Friedman wrote in his 1962 book Capitalism and Freedom, and more popularly in a 1970 article in New York Times Magazine, “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits….” And with that, the purpose of business for most became clear: profit, profit, profit.
But this is a lie!
Lie #1- The Profit-as-Purpose Lie.
Now let's get something straight, a business MUST be profitable--this is a necessary condition. If your business isn’t profitable, we don’t need to spend too much time talking about your mission, because you won’t have one for long. But profit is not the PURPOSE of your business. How do we know businesses don't truly exist to make a profit? NO business has ever sold as their value proposition as "We take your money and make it our money." Only to have their competitor fire back, "We take even more of your money and make it our money." Further, when asked, “What does your business do?” no one responds, “We make a profit.” Instead we respond, “we make this” or “we provide that service.” Our businesses provide value, incredible products, services, workmanship and professionalism and make people's lives better. We make families better, bodies stronger and healthier, lives interesting, houses comfortable and safe, provide mom's and dad's more time with their families.
One consequence of this profit-as-purpose lie is our view of work. If a business exists only to extract profit from it’s customers, employees, and the earth, then for employees, the purpose of their work is similarly mercenary, to get paid as much as possible for as little work as possible. If we work in a dreadful work culture, hate our job, and see no value in the product or service we provide, none of that matters as long as we have a robust compensation package. Work becomes amoral because all that matters is profit, pay, and pension. In this view, if you have a desire to do good in the world, then go ahead...on your own time. (Friedman writes that corporation executives acting with social responsibility spend other people’s money and that the “employees could separately spend their own money on the particular action if they wished to do so." And so that’s what we do--work a meaning-free, value-free job to fund our vision of what the good life looks like.
Similarly, our work itself should do good in the world. Jeff Van Duzer defines the purpose of business:
“The purpose of business is still to serve. It is to serve the community by providing goods and services that will enable the community to flourish. And it is to serve its employees by providing them with opportunities to express at least a portion of their God-given identity through meaningful and creative work.”
And if it doesn't--QUIT. If your business creates no value but just takes advantage of information imbalances or manipulating the political climate (what economists call “rent seeking”), close your doors tomorrow. I have no qualms telling you that if you are selling drugs or pornography, your products destroy the lives of your customers, your employees, vendors, and suppliers. Right? Those are easy. Selling cigarettes, blood diamonds, chocolate from Liberia, weapons sold into warzones. Yet these businesses provide shareholders an incredible rate of return. These products are fabulously profitable. In the Great Recession, a mutual fund was started with the call letters-VICE, built on these very equities as they are notoriously recession proof. By the profit-as-purpose lie, these are successful businesses. And these obvious and more contentious examples demonstrate that in our cores we know business is supposed to be more than that. And likewise our work is more than exchanging our time and energy for money.