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What does a 50-year-old op-ed have to do with the way corporations operate today? Quite a lot, if the op-ed in question is Milton Friedman’s landmark essay, “The Social Responsibility of Business Is to Increase Its Profits,” which was published in the New York Times Magazine on September 13, 1970. It ignited a passionate exchange of ideas that still burns bright.

“The appropriate role of a corporation is still one of the most debated issues around the world today,” said Randall S Kroszner, deputy dean for executive programs and the Norman R. Bobins Professor of Economics at Chicago Booth. “That’s an amazing intellectual legacy, and that’s very much what we try to do at Booth—ask the right questions that are going to have staying power.”

To mark the anniversary, Booth hosted Corporate Social Responsibility Revisited, a global, virtual conference that reexamined Friedman’s thesis on shareholder primacy in the context of today’s world. Held in partnership with the Financial Times, the conference gathered 1,500 attendees and followed the sun with virtual sessions hosted by all three of Booth’s campuses: in Chicago, London, and Hong Kong.

Kroszner, a former governor of the Federal Reserve, sat down with Booth Stories from his office at Booth’s London campus to reflect on the business school’s role in advancing a diversity of perspectives as the debates over CSR continue.

Booth: What do you think it is about Friedman’s viewpoint, or perhaps about Friedman himself, that still has people talking five decades later? Few op-eds have had that long of a legacy.

Kroszner: What’s amazing is that it’s been 50 years, and the issues he raises are still at the core of the debate right now. It shows the importance of deep thinking about important issues, and that really illustrates The Chicago Approach™. You may agree or disagree with Friedman, but the question that he asked around the role of business in society is still relevant.

Booth: How have you seen the discussion around CSR resurfacing, especially recently?

Kroszner: Last August, you saw the Business Roundtable in the United States move away from Friedman’s approach. BlackRock, one of the largest global asset managers, has also been challenging Friedman’s approach over the last two years.

There’s a debate right now in the United States, as well as in Europe, about how pensions should be invested. In the United States, the Department of Labor is proposing rules that will strongly discourage pension funds from investing in anything other than something that maximizes the risk-adjusted rate of return, which is exactly the kind of approach Friedman had. But in Europe, they’re going in the opposite direction and allowing pension funds to direct investment toward environmental, social, and governance (ESG) funds.

In Asia, the Hong Kong Stock Exchange just last December required that every listed company hold a board-level discussion on ESG and put out a report to the public each year about the corporation’s ESG impact. It’s just amazing that it’s exactly these issues that have seen an increased focus roughly around the 50th anniversary of Friedman’s seminal piece.

“What’s amazing is that it’s been 50 years, and the issues he raises are still at the core of the debate right now. It shows the importance of deep thinking about important issues, and that really illustrates The Chicago Approach.”

— Randall S. Kroszner

Booth: Given the urgent conversations surrounding the COVID-19 crisis and racial justice movements happening around the globe, companies are having to be responsive and accountable to employees and customers in entirely new ways. When we look back, do you think 2020 is going to be a watershed year for CSR?

Kroszner: I think that’s right. There’s been so much more debate over the past couple of years on whether to follow the traditional interpretation of Friedman or not, and current events have intensified that debate even further. This is also part of the discussion of building back better: Do you build back as you were before, or do you build back in a different way?

Booth: What were some highlights from the daylong conference?

Kroszner: In the portion tied to Booth’s Asia campus, participants from across the region were particularly interested in the role of ethics and morality, and the importance of building trust in private-sector institutions.

In Europe, professor Raghuram G Rajan discussed whether shareholder maximization is evil (his words!), and Marianne Bertrand discussed her research and other work on using data to improve diversity and inclusion efforts. I also moderated a fireside chat with Mark Carney, former governor of the Bank of England, about how to make the tough choices when the interests of shareholders and other stakeholders clash.

And wrapping up at the North American campus, the Financial Times’ Gillian Tett led a lively debate between Booth professor Steven Neil Kaplan, long-time corporate board member Mary Bush, ’71, and Vanderbilt University’s Margaret Blair on what “the business of business” should be. We concluded with a presentation by Nobel laureate Oliver Hart on a radically new approach to socially responsible investing and engagement, based on his research with Booth’s Luigi Zingales and Eleonora Broccardo of the University of Trento.

“Many attendees were associated with the University of Chicago, but they responded two-to-one as not favoring Friedman’s approach. That underscores the diversity of thought among our graduates and among our faculty.”

— Randall S. Kroszner

Booth: Have attitudes toward Friedman even within the Chicago Booth community shifted in the decades since his op-ed?

Kroszner: Yes, and that’s been interesting to me. During each leg of the conference, I started with a poll asking attendees whether they agreed or disagreed with Friedman, and the responses were similar around the world: roughly 30% agreed with Friedman, between 55% and 60% disagreed, and 10 to 15% were uncertain.

That was notable to me for a few reasons. First, I was surprised that so few people were uncertain; this is a very challenging and difficult topic, and people’s views have been changing over the last few years. Second, I was very surprised at how consistent the poll results were around the globe. And third, many attendees were associated with the University of Chicago, but they responded two-to-one as not favoring Friedman’s approach.

That underscores the diversity of thought among our graduates and among our faculty. Certainly, if you looked at the makeup of the panel sessions, you saw speakers with very different points of view. I’m here in the United Kingdom, and people often say, “Oh, Chicago. That’s the three M’s: Milton Friedman, Margaret Thatcher, and monetarism.” And I say that is an element of what we are, but we truly do have great diversity of thought. The debates at this conference prove that to me.

Booth: Speaking of the UK, this was the first event connected to Booth’s brand-new campus in the City of London. How has Booth committed to fostering discussions like this throughout the EMEA region?

Kroszner: We have been in Europe for 25 years and here in London for 15. Our new location is a much larger space with more classrooms and meeting spaces, allowing for more engagement with our alumni, with the business community, the tech community, the entrepreneurial community, and government policymakers.

We really think of it as a hub for all of our activities in Europe, the Middle East, and Africa. We hope this increased presence will help us maximize the impact of the ideas our faculty generate—and Chicago Booth’s commitment to data and open debate—on business practice and government policy.

Booth: How is Booth preparing its students as future leaders to think about CSR topics as they enter the business world?

Kroszner: You see a great example of that in our graduate Tandean Rustandy, ’07 (AXP-6), who kicked off the entire conference with a very moving and powerful reflection on how faith has been so important for him. As a successful entrepreneur, he feels called to give back, and he has been very generous in supporting Booth’s Rustandy Center for Social Sector Innovation.

It’s been amazing to see the number of students and alumni who are engaged with the Rustandy Center’s events and programming. We are providing an increasing number of classes related to social impact—from Impact Investing, to New Social Ventures, to practicums and hands-on lab courses. I’ve been at the University of Chicago for 30 years, and I think that represents an important change among our students, and I think also in our faculty, who are now more interested and engaged in these issues—much like in the rest of the world. There’s been an evolution to have more diverse viewpoints among our students and our faculty than there was five decades ago when Friedman was writing.


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