"When did Walmart grow a conscience?" asked a Boston Globe headline last year, which would have made Milton Friedman turn in his grave. On the 50th anniversary of his landmark New York Times Magazine essay, the Nobel-prizewinning economist tore apart the notion that businesses should have social responsibilities from the very first paragraph. Employment, discrimination, pollution? He dismissed these as mere "catchwords." For him, businessmen could have responsibilities, but their sole responsibility as managers was to the firm's owners—to make as much money as possible within society's rules. His essay stands as a strikingly direct set of paragraphs in the annals of business writing.

Walmart, which listed on the stock market the year Friedman's article was published, grew from Sam Walton's local grocery store into the "beast of Bentonville," known for low prices, as well as for tough tactics with suppliers and staff. Its shareholders profited enormously; since the early 1970s, its share price has surged over 2,000 times, compared with 31 for the S&P 500 index of large firms. However, in recent years, Walmart has softened its stance, advocating for green energy and gay rights. This change came into the spotlight after Doug McMillon, Walmart's CEO, responded to shootings in Walmart stores by halting the sale of some ammunition and advocating for stricter gun control. This year, he became chairman of the Business Roundtable, a group of American business leaders who aim to move away from Friedman’s shareholder-centric doctrine to a focus on customers, employees, and other stakeholders.

In America, now deeply divided by gender, race, and income inequality, this "stakeholderism" has become popular. Yet, there's resistance. The University of Chicago commemorated Friedman's essay with a forum at its Booth School of Business, where proponents of his philosophy argued that giving executives too much freedom could actually harm stakeholders. They highlighted the difficulty of balancing various stakeholder interests without granting near-omnipotent power to executives.

Consider Walmart's decision to ban certain ammunition sales, a move that plunged into a deeply contentious national debate. The retailer framed this as a safety measure, but the NRA criticized it as a concession to "anti-gun elites," prompting some customers to boycott Walmart. Marcus Painter of Saint Louis University used smartphone data to analyze foot traffic at Walmart stores and found a decrease in visits in heavily Republican districts, with a continued trend for months, while visits increased slightly in Democratic areas.

These actions might attract new customers, perhaps even benefitting Walmart’s bottom line, but they also illustrate how polarized politics can make what benefits one group of stakeholders displeasing to another. This tension is mirrored across companies like Hobby Lobby and Nike, where decisions made for one group inevitably upset another.

Some executives claim they can balance these complex interests, seeking public approval and political favor. Yet, the analysis of constituency statutes by Harvard Law School’s Lucian Bebchuk, Kobi Kastiel, and Roberto Tallarita shows a different picture. In 95% of public firm sales to private-equity groups, there were no negotiations to protect employees from being fired—highlighting a focus on shareholder and executive interests over those of other stakeholders.

A study by Aneesh Raghunandan and Shiva Rajgopal revealed that many companies that pledged to corporate social responsibility had, in fact, higher environmental and labor violations and spent more on lobbying compared to their peers. Such inconsistencies suggest that the promise of stakeholderism might impede effective policies like tax reform, antitrust regulations, and carbon taxes if it allows companies too much self-regulation.

Although shareholder capitalism also involves trade-offs, stakeholders are more numerous and have more diverse interests. However, shareholders can still influence corporate values and push for societal welfare beyond just profit maximization. They retain their primacy but can advocate for different priorities if they so choose.