friedman doctrine
Friedman Doctrine is the idea that a business's main duty is to make profit for its owners, and that this alone is how it serves society best.
In plain English
A lot of small business owners in Nigeria calmly punish themselves for wanting to make good money. They feel that if the shop is doing well, they should be sponsoring every wedding aso ebi, every church harvest, every cousin's school fees, or else they are being greedy. So they underprice, overgive, and wonder ten years later why the business never grew past where it started.
Milton Friedman, an American economist, argued the opposite in a famous 1970 essay. He said the job of a business is to make profit for its shareholders, within the law and without fraud. Not to fix the roads, not to run charity on the side, not to carry the whole community on its back. Do that well, pay your taxes, pay your workers fairly, and you have already done your part for society.
Take a Lagos woman running a small logistics company. Under the Friedman view, her duty is not to give free deliveries to every struggling trader who asks. Her duty is to run an efficient, honest company that makes ₦3,000,000 profit a year, pays her riders properly, and pays her taxes. That profit, reinvested, creates more jobs and more value than scattered goodwill ever could.
In the United Kingdom, this thinking shaped decades of corporate law, where directors have a duty to shareholders first. It is why a British pension fund manager will ask harder questions about returns than about how warm and fuzzy a company feels.
The idea is not without critics, and Nigerians sending money home understand the tension well. You can believe in profit and still choose, on your own time and with your own money, to be generous. Friedman was not against kindness. He simply drew a hard line between what a business owes shareholders and what a person owes their community.
A Lagos bakery owner spends ₦200,000 a year on free bread for a nearby orphanage, out of guilt, while her business barely breaks even. Under the Friedman Doctrine, she should instead run the bakery for maximum honest profit, take home a proper salary, and then decide separately, as a private person, how much of her own money to give away.
Questions people ask
Did Friedman say businesses should never help society?
No. He said their primary duty is legal, honest profit for shareholders, and that owners are free to give personally from their own gains however they wish.
Is the Friedman Doctrine still followed today?
It shaped decades of business thinking, but many companies now blend it with ideas about workers, communities and the environment, so it is debated rather than followed exactly.
How does this apply to a small Nigerian business owner?
It suggests you should focus first on running the business efficiently and profitably, then decide separately, as an individual, how much personal generosity you can afford.
Last reviewed