Thread by @felixsalmon

Here’s @andrewrsorkin on Friedman and stakeholder capitalism. His choice of words here — “making” stedda “growing” — is an important sleight of hand that often undergirds my debates with @Three_Guineas on this subject. nytimes.com/2020/09/11/bus…

Hotels are some of the longest-running businesses in the world. So let’s consider a hotel that has been run by the same family for 250 years. Its owners need to *make* money, sure. They’re rich capitalists. But they don’t need to *increase* their profits every year.

Since 1972, the idea of “shareholder capitalism” has morphed from “companies need to make enough money to be able to pay their dividend every quarter” into “companies need profit *growth* that will cause their share price to rise indefinitely.”

So when shareholder capitalists start telling you that a company needs to *make* profits, watch closely: They’re very likely to start moving the goalposts. It won’t be long before they start talking about increasing or maximizing profits. Which is much less defensible.

(And before you start talking about inflation, consider “profits” here to mean real profits, after inflation.)