Is greed no longer good?

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This is the editor's letter in the current issue of The Week magazine.

Pure heresy. Treason! How else can one describe this week's revolutionary revision of "the purpose of a corporation" by the Business Roundtable, a group of 188 CEOs of America's most powerful companies. For 40 years, the corporate world has reverently knelt before libertarian economist Milton Friedman and his famed doctrine: "There is one and only one social responsibility of business," Friedman said, and that is to "engage in activities designed to increase its profits." CEOs worked for stockholders, and no one else. But in a fractious political climate in which populists from Fox News' Tucker Carlson to presidential candidate Elizabeth Warren are questioning how well capitalism is serving Americans, nervous CEOs are having second thoughts. Corporate leaders, they say, should manage their businesses to benefit "all stakeholders" — employees, customers, and society itself. In his heyday, the highly influential Friedman dismissed such do-good sentiments as "pure and unadulterated socialism."

Whether or not the CEOs follow through on their pre-emptive nod to social responsibility, capitalism is clearly headed for a reckoning. Indisputably, free markets can be wondrous generators of wealth and progress, and have dramatically raised the living standards of billions of human beings. But real-world experience has undermined free marketeers' near-theological belief that the unfettered pursuit of self-interest invariably produces the best outcomes for society itself. Banks' reckless pursuit of profits triggered the landslide of the 2008 financial crisis. Big Pharma made billions by creating an opioid epidemic that has ruined millions of lives. Fossil-fuel consumption is altering the planet's climate. The tech industry has seduced us all into surrendering terabytes of information that it sells at enormous profit. Executives cut themselves an ever-growing slice of the economic pie, while middle-class workers get crumbs. As they say on Wall Street, a correction may be coming.

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William Falk is editor-in-chief of The Week, and has held that role since the magazine's first issue in 2001. He has previously been a reporter, columnist, and editor at the Gannett Westchester Newspapers and at Newsday, where he was part of two reporting teams that won Pulitzer Prizes.