Capitalists Rethink Capitalism — Maybe

When the Business Roundtable announced its revised statement of a corporation’s purpose recently, it got big media play. And why not: When 181 heads of America’s very biggest businesses — including Amazon, Apple, General Motors, and Walmart — gather together and, as a body, state that they have been practicing capitalism all wrong, this is news that is new.

For 50 years now, corporations have adhered to the orthodoxy that maximizing profit for the investing shareholder is their sole raison d’etre. Economist Milton Friedman, father of this orthodoxy, declared in 1970 that “the social responsibility of business is to increase its profits” — in other words, any negative impact of corporate activity on society was to be discounted. Conservatives took to this theory like catnip.

But now, in a major U-turn for American capitalism, the other components in the equation — the employee, the customer, the supplier, the community, and the environment — are to be deemed equal in value to the shareholder in the operation of a corporation. So vows the Business Roundtable’s “Commitment” statement.

The part about the employee got special emphasis in the media. While continuing to salute “America’s economic model,” the Roundtable acknowledges that “many Americans are struggling” — “Too often hard work is not rewarded.” Thus its new commitment to “investing in our employees”: “This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and…