The Friedman doctrine further took hold as it was adopted by business schools training future leaders. “They did a great job of claiming business ethics is different from ethics,” the journalist Duff McDonald, the author of The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite, says of business schools like Harvard’s. “Like it’s such a complicated thing to be CEO of a company?” he says sarcastically. “Like some [CEO] decisions are harder than the rest of ours?”
If shareholder value is agreed to be the only priority, it’s easy to see how a broader ethical question can become a dilemma. Take McKesson. Establishing rigorous systems to prevent drug diversion and illicit sales is expensive. It requires employees, investment in technology, and a willingness to rat out customers—some of the most lucrative ones. Selling lots of pills adds to the bottom line; opioids now account for about $4 billion per year in sales for McKesson, about 2 percent of the company’s overall sales. (Earlier in the decade, the opioid pills accounted for even more, both in terms of percent and absolute value.) So, doing what it takes to create an effective clamp on opioid diversion could be destructive to shareholder value, despite being good for society.
Nelson, the McKesson spokesperson, insists the company feels no tension between its bottom line and social responsibility. Its very purpose, she says, is to deliver better health. She cited an acronymic corporate motto: “I CARE,” which stands for “Integrity,” “Customer first,” “Accountability,” “Respect,” and “Excellence”—the implication being that the company’s practices embody these values.
John Paul Rollert, who teaches ethics at the University of Chicago’s Booth School of Business (and who writes frequently for The Atlantic), agrees with McDonald that there isn’t—or shouldn’t be—any real difference in standards between “business ethics” and human ethics. “If you pass someone, and they are drowning in a shallow pool of water, and you will not be in danger from saving them, must you save them?” Rollert asks, posing a classic ethical hypothetical. He says the law’s answer is no, but morally, he argues, the answer is yes. And he says that’s as true of companies as it is of people, even if that cuts against the material interests of shareholders. “To me, that’s easy. It’s a shame we would see it as any more complex than that,” he says.
But shareholder-value reasoning has led many companies, and the people who run them, astray. Cases of corporate malfeasance and outright lawbreaking are numerous and ongoing. As McDonald notes in his book, citing research quoted in a 1989 article in Time, between 1975 and 1985, two-thirds of Fortune 500 companies were convicted of serious crimes. Time after time, corporate executives have proven that they’re willing to lie to protect revenues. In 1994, tobacco executives testified under oath before a congressional panel that nicotine in cigarettes was not addictive, though plenty of research showed it was. The turn of the century was plagued with scandals—most famously at Enron, WorldCom, and ImClone. More recently, Wells Fargo revealed that its employees had opened 1.4 million more unauthorized accounts than had been previously estimated(making the latest estimate roughly 3.5 million in total), and Volkswagen continues to reel from the emissions-cheating scandal first revealed in 2015.