In 1962, economist Milton Friedman’s book Capitalism and Freedom popularized today’s dominant narrative that the sole responsibility of business is to maximize profits and shareholder returns.
This idea stands in the way of important work that benefits people and the planet. We found that most people don’t agree with this narrative—but few could express a different idea.
A new narrative that says businesses have responsibilities to employees, customers and communities received overwhelming support.
“The sole responsibility of business is to maximize profits and shareholder returns.”
That’s the dominant narrative about the role of business in American society, according to many economists, politicians and financiers. This narrative took off in 1962, with economist Milton Friedman’s book Capitalism and Freedom, and has been reinforced in the culture through iconic moments like Gordon Gekko’s “Greed is good” monologue in the movie Wall Street, as well as the 2013 film, The Wolf of Wall Street.
In conversations with people from all walks of life, the American Aspirations team heard people from across the political spectrum express a version of this “bottom-line only” narrative.
In Portland, Oregon, a middle-aged conservative man named Michael expressed skepticism about business having any responsibilities to society: “Do they have to help the homeless or help improve roads? That’s not what a business is all about.”
In Tampa, Florida, a 28-year-old Democrat named Fernando offered a similar take: “Being in business doesn’t mean you have to be nice to people or care for the betterment of everybody.”
This idea sets up a profound obstacle to advancing public policies and business practices that benefit society. If you believe the only responsibility of business is to maximize profits, you’re much more likely to oppose measures such as paying living wages to employees, protecting consumers from harmful products, or preventing pollution.
However, when we explored the dominant narrative further, we found that many people didn’t believe it. Most felt that businesses do, in fact, have responsibilities beyond their bottom line. But few could find the language to express that notion.
We see this time and again in narrative research: People can easily repeat ideas they often hear in mainstream cultural, social and political debates. But they struggle to express ideas that don’t show up regularly in these conversations about America in news, entertainment and social media. (See our post on the lack of language about social responsibility.)
The good news? A simple message about the responsibility of the private sector turned the dominant narrative on its head. In a national survey of 850 people, we tested two competing ideas: “The only responsibility of business is to maximize profits and shareholder returns.” Versus: “Businesses have a responsibility to their employees, customers and society, not just their bottom lines.”
The results were surprising:
This is common sense that does not show up often in the national conversation. There’s room for a new narrative about the role business can play in making our country a better place to live. The first step is offering people words that express their true values.
The next step is storytelling that brings the idea to life—and keeps it in the public eye. If people hear more stories of businesses doing right and making money, more people will expect that behavior. This story about a manufacturing company in Baltimore is a great example. Marlin Steel has grown rapidly not by cutting costs, but by providing tools and training to improve the quality of its products, enhance the productivity of its factory, and enable its employees to earn a decent living.
In the article, owner Drew Greenblatt reflects on his strategy for success: “They do well, we do well; we do well, they do well. That’s the deal.”
Our simple message about the responsibility of business is simply common sense. And it reflects a growing trend in American society. Many of us see our own spending on products and services as a positive force for change. Hattaway Communications research has found that 7 out of 10 American consumers want their own purchases to “make a difference in the world,” “send a message on issues they care about,” and “make their voices heard on issues they care about.”
In addition to telling stories about businesses doing well by doing right, social change organizations have an opportunity to reframe the role of business as a force for positive change in the world. Show how businesses can benefit from supporting your causes.
For example, if your organization addresses diversity, show how businesses with inclusive and diverse workforces perform better than those without. If you want businesses to adopt responsible practices, show businesses that are good role models by upholding their responsibility to their employees, customers and society. And if you want to mobilize people for a short-term push around a specific issue, create calls to action that elicit moral outrage by showing businesses abdicating their responsibility.
Equipped with the right words and strategic stories, you can drive a new narrative that challenges the bottom line mentality.