Should CEOs serve stockholders' interests or stakeholders' interests?

In 1970, Milton Friedman said stockholders interests. See A Friedman doctrine‐- The Social Responsibility Of Business Is to Increase Its Profits. In fact, he thought it would be harmful if CEOs worked for stakeholders interests, that is, tried tried make their companies act based on social responsibility. The quotes given below from his article imply that we should be using the democratic process to achieve social objectives. He is often criticized for these views which many saw as giving corporations license to harm society.

But another article, from 2022, seems to argue a similar point. See I Wouldn’t Bet on the Kind of Democracy Big Business Is Selling Us. It is by Kim Phillips-Fein. She is a historian at New York University.

Both articles are from The New York Times. Friedman and Phillips-Fein are much different ideologically. Friedman advocated free markets and it seems obvious from her article that Phillips-Fein favors a great deal of government intervention.

But here are some excerpts from her article. She clearly does not believe in stakeholder capitalism. She wants social change to come from the democratic process. But that seems to be what Friedman also said (excerpts from his article follow hers).

"stakeholder capitalism — the idea that companies should engage the interests of workers, the environment and local communities alongside shareholders"

"But, however seductive it may be, stakeholder capitalism does not offer a real alternative. The ideal of an easy symbiosis between public and private sectors would undermine the kinds of political mobilizations, however difficult to organize and enact, that are needed for reform that benefits most Americans."

"The social responsibility trend in general undermines the idea of citizenship and of a public sphere as the place where decisions and arguments over economic and social policy play out."

"The reality is that there is no way to bypass the arduous, contentious work of building a politics that can sustain a more democratic culture." 

Now quotes from Friedman's article:

"IN a free‐enterprise, private‐property system, a corporate executive is an employe of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society"

"The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal. This justification disappears when the corporate executive imposes taxes and spends the proceeds for “social” purposes."

"The difficulty of exercising “social responsibility” illustrates, of course, the great virtue of private competitive enterprise — it forces people to be responsible for their own actions and makes it difficult for them to “exploit” other people for either selfish or unselfish purposes. They can do good—but only at their own expense.

Many a reader who has followed the argument this far may be tempted to remonstrate that it is all well and good to speak of government's having the responsibility to impose taxes and determine expenditures for such “social” purposes as controlling pollution or training the hard‐core unemployed, but that the problems are too urgent to wait on the slow course of political processes, that the exercise of social responsibility by businessmen is a quicker and surer way to solve pressing current problems.

Aside from the question of fact—I share Adam Smith's skepticism about the benefits that can be expected from “those who affected to trade for the public good”—this argument must be rejected on grounds of principle. What it amounts to is an assertion that those who favor the taxes and expenditures in question have failed to persuade a majority of their fellow citizens to be of like mind and that they are seeking to attain by undemocratic procedures what they cannot attain by democratic procedures. In a free society, it is hard for “good” people to do “good,” but that is a small price to pay for making it hard for “evil” people to do “evil,” especially since one man's good is anther's evil.

I HAVE, for simplicity, concentrated on the special case of the corporate executive, except only for the brief digression on trade unions. But precisely the same argument applies to the newer phenomenon of calling upon stockholders to require corporations to exercise social responsibility (the recent G.M. crusade, for example). In most of these cases, what is in effect involved is some stockholders trying to get other stockholders (or customers or employes) to contribute against their will to “social” causes favored by the activists. Insofar as they succeed, they are again imposing taxes and spending the proceeds."

"in a free society . . . “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud.”"