Gaining Wealth and Prestige Through Meanness

Michael EdesessSociety cannot organize itself by laws alone. Beneath the social contract that is defined by laws – which cannot cover everything – lies a larger sub-surface that is defined by norms. Norms can be thought of in simple terms as “common decency.” With laws and without norms, the social contract breaks down.

Decent Americans, to get along in society, need to observe many norms as well as laws. They line up in queues and wait their turns. They don’t constantly test the boundaries of law by yelling fire in crowded movie theaters for fun or profit.

But in 1970, in an opinion column published in The New York Times, the Nobel Prize-winning economist Milton Friedman argued that businesses need only observe laws, not norms.

No one would have been more in agreement that laws cannot cover all wrongdoing. Yet Friedman argued that the guardrails that constrain businesses should be only those dictated by laws. In fact, he argued that businesses should give no care at all to norms that are not laws, and they would be wrong to do so. It is their job only to make as much money for shareholders as possible.

Giving no care at all to norms that require common decency, but only to laws, would imply that it is entirely justified for a business to manipulate the legal system in order to bend or exploit the laws in its favor; or to take advantage of details of the law to vanquish an opponent, for example by saddling it with unbearable legal fees or delays; or, without breaking any laws, to use the business’s or its owners influence and money to cause laws to be written or altered in a way that is beneficial to the business and its owners.