Edward Quince's Wisdom Bites: Friedman Conversations Pt. 1

Conversation 1: The Core Purpose of Enterprise — What Is Value?

Topic: Defining the fundamental responsibility and intrinsic worth of a business entity.

Friedman Doctrine (Friedman):
The mandate is unequivocal: “The social responsibility of business is to increase its profits.” The corporate executive is an employee of the owners, and his direct responsibility is to them—to make as much money as possible. Any diversion of resources toward non-profit “social goals” is an irresponsible allocation of capital, an unauthorized tax on shareholders or customers. This clarity, Friedman argues, is essential for a functioning free economy.

Calculus of Value (CV):
In practice, Friedman’s logic demands financial discipline. Price is concrete, but value flows from earning power. Assets—plant, intellectual property, management—only matter insofar as they generate sustainable cash flow. Success, then, requires clear-headed focus on what is internal to the business: costs, productivity, and profitability. Yet, in this reduction, value risks becoming only what can be measured, leaving no room for what might matter but can’t be priced.

Rerum Novarum (Pope Leo XIII):
This relentless pursuit of profit reduces human endeavor to mere inputs on a spreadsheet. Work is not just an exchange; it is a vocation. The purpose of commerce cannot be solely the unchecked accumulation of capital. The worker’s dignity is intrinsic, not conditional on profit. A system that forgets this truth trades its soul for efficiency.

Centesimus Annus (Pope John Paul II):
The collapse of socialism did not vindicate capitalism without virtue. When democracy and markets lack moral grounding, they risk becoming a “thinly disguised totalitarianism” themselves. Without an objective sense of good and evil, economics forgets the human person at its center. True development must be both material and moral—it must be fully human.

Reflection:
If Friedman gave us clarity and Leo XIII gave us conscience, John Paul II reminds us that freedom without virtue devours itself. The question remains: can we define value in a way that honors both profit and purpose—or must we always choose?