Market freedom

Re: The murky rise of stakeholder capitalism, Terence Corcoran, Jan. 23

As usual, Terence Corcoran’s column was so on point that one hesitates to comment lest that be taken as criticism. But let me make the point that the function of the capital markets in our political economy is to facilitate the efficient allocation of capital. And when governments (or NGOS or others) interfere with this process, capital is misallocated to the detriment of the economy and society.

It is unfortunate that everyone fixates on Friedman’s quotation about the job of corporate management being to make profits, since these days profit is seen as evil and simply greed. What is lost (since it is not taught in our schools) is that profit — meaning return on investment — is how the system keeps score, so that those with the best returns on capital (profits) receive more capital to invest to do more of what they are doing. That makes sense because profit is achieved only by virtue of giving consumers what they want in terms of goods and services. That is the other part of Friedman — “Free to Choose.” Every day consumers vote with their dollars when they purchase something. That is the essence of free markets.

Once government and other parties of “influence” begin to interfere in our free market system, capital gets misallocated and the economy suffers. Alas, so does freedom.

Terry Fisher, Niagara-on-thelake, Ont.