Business is the best NGO.

THE RECENT PASSING of Nobel economist Milton Friedman reminds us of a great insight he had about the "schizophrenic" tendencies of business leaders. "When it comes to their own businesses, [CEOs] look a long time ahead, thinking of what the business is going to be like five to 10 years from now. But when they get into the public sphere and start going into the problems of politics, they tend to be very shortsighted."

As we approach the new year, perhaps it's time to consider what the sage of Chicago said about the link between capitalism and liberty. Business naturally focuses on financial returns, but profits are only possible if a good or service that someone desires is rendered. As Friedman put it, profit is the result of fulfilling a social need or responsibility. This is why business should be more explicit in making the connection between its activity and our well-being.

In addition to providing the financial numbers, companies should show the social returns made possible by the enterprise where the value to people's lives is made clear. For example, Wal-Mart, the new poster child for all things sinister in the U.S. economy, might point out that best estimates show that the company saved American consumers $30 billion a year. That's disposable income that people can save or spend on other things, allowing a better standard of living. The folks in Bentonville can also claim that it brings prices down and has contributed mightily to the nation's productivity, not to mention controlling price inflation.

Merck, Pfizer or Lilly might calculate the value of their products in terms of the number of lives saved or extended through the use of new drug therapies. That life spans of most citizens have now extended well beyond the norms of previous generations is no accident. Energy utilities might call attention to the fact that residents on the whole are paying less for electricity in real terms than their parents or grandparents did. Construction companies should show how lives have been improved through better housing and new schools.

More than half of the global 250 public corporations issue corporate social responsibility (CSR) reports as a way to generate brand equity and burnish their images. But these are often defensive attempts to deflect the media and NGOs. CSR advocates maintain that businesses should assume a major role in "making the world a better place." But as Friedman reminded us in Capitalism and Freedom, business couldn't operate, i.e. make a profit, if it didn't improve people's lives and therefore improve the world. In other words, the for-profit enterprise is the best NGO civilization has yet devised.