Earlier this year, I took one of Milton Friedman’s best-known quotes to task. I received a lot of passionate email on both sides of the argument, but now that our economy is in a tailspin, I feel as if — sadly enough for all of us — my point is proven. Here’s the quote:

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.

Wrong. We could, of course, argue on and on about the definition of social responsibility, but many businesses and their managements that did, in fact, increase profits within the rules are now revealed to be guilty of antisocial irresponsibility .

Profit at all costs?

My January article Where Milton Friedman Was Wrong admittedly contained a bit of an inflammatory headline. Economically, politically, and philosophically, I agree with Friedman on many, many things.

My position was that I believe the quote has been widely hijacked and misinterpreted by legions of folks looking for an excuse to indulge in a race-to-the-bottom, profit-at-all-costs mentality and cloak it in terms of standard economics or the free market.

The filter of interpretation can be dangerous, and I believe many individuals and corporate players rationalized that particular quote to justify doing anything and everything to profit, regardless of whether the actions were sound for the long term — or even particularly ethical.

And there’s a whole lot that’s unsound now.

Paybacks are hell

Behold the dirge of disaster that has come to pass in an incredibly short period of time:

Bear Stearns was swallowed by JPMorgan Chase ( NYSE: JPM ) (with a government backstop); Fannie Mae and Freddie Mac are in conservatorship; Lehman Brothers has filed Chapter 11; Bank of America ( NYSE: BAC ) is buying Merrill Lynch. AIG ( NYSE: AIG ) has been rescued, with the rather mind-blowing twist that it’s now 79.9% owned by the government — in other words, nationalized. Say what ?

These great heroes of industry — people call them capitalists and free marketeers, but don’t be fooled — have let us down in a horrible sense. They took terrible risks and/or made stupid decisions. For many, those strategies appeared to be succeeding during a bubble period, and they profited, all right. Now that their bad decisions are coming home to roost, though, they’re whining and crying for help from all of us.

Something smacks almost of blackmail and bullying, too, given the too big to fail mantra. Doesn’t that sound like, You’ll be OK with saving us, or you and your entire family are going down ? That’s how they’ve dragged our entire society into their mess. Like I said — antisocial irresponsibility!

This wasn’t what Milton Friedman had in mind. The people who make up corporations must have the ethics, intelligence, and backbone to behave responsibly. It’s an idealism I share, what all of us free-market proponents want, including the strength to man up and pay the price if one fails.

After all, regulation most certainly seems logical and necessary when people can’t keep themselves in check.

So here we are. Thanks, guys.

It’s too bad our culture seems to have been channeling the fictional Gordon Gekko instead of acting in the prudent fashion that great economic thinkers like Milton Friedman would have been proud of.

For now, at least, we can search for truly good, solid companies with great corporate leaders to invest in, and make our displeasure known to the grasping, craven, self-serving ones who are, in my opinion, endangering everything that’s great about our society.

There is still hope

There are still extremely responsible companies run by extremely responsible individuals. They are what make us great, and they promise success for long-term shareholders. And I know David and Tom Gardner, Fool co-founders and co-advisors for Motley Fool Stock Advisor . have by no means given up looking for them.

Warren Buffett is a standout example. In a prescient 2006 memo, he warned his managers never to settle for the all-to-familiar excuse everyone else is doing it. When assessing the morality of a proposed action, managers should instead ask themselves two questions: (1) Is this legal? And (2) Would I feel comfortable with this printed on the front page of our local paper?

As Buffett has noted before, It takes 20 years to build a reputation and five minutes to ruin it.

In fact, one of the first questions the Stock Advisor team asks when considering a company is whether it’s built to last for the next 100 years or more. That sentiment is most certainly not chasing after short-term profits at the risk of long-term disasters.

Through their Motley Fool Stock Advisor service, the Gardners search for solid companies with bright futures and seek the ones with strong management teams. It’s no wonder that Berkshire Hathaway ( NYSE: BRK-A ) ( NYSE: BRK-B ). with its well-known and wise leader, Warren Buffett, is a Motley Fool Stock Advisor recommendation.

A few more examples for you

For years, Costco ( Nasdaq: COST ) ignored Wall Street’s criticisms of supposed profit drags like low prices and excellent pay and benefits for employees. Mutually beneficial initiatives like these built a loyal following that helped Costco become a nine-bagger since 1995.

Or consider Green Mountain Coffee Roasters ( Nasdaq: GMCR ). a socially responsible business that has often shown up at or near the top of the Business Ethics/CRO Best Corporate Citizens list over the years. Its partnerships with Mexican and Indonesian coffee growers not only improved their living conditions but also allowed them to improve quality and productivity. It’s no accident that the stock has risen 3,389% over the past 10 years.

If you’re looking for more excellent companies run by forward-thinking and responsible people, Stock Advisor is offering a special free 30-day free trial. Simply click here to learn more.

Once we raise our standards for corporate conduct and behavior and demand — and get — better, then we will be able to say Milton Friedman was right.

Alyce Lomax owns no shares of any of the companies mentioned, but the Fool owns shares of Berkshire Hathaway. Costco is a Motley Fool Stock Advisor selection. JPMorgan Chase and Bank of America are Income Investor recommendations. Berkshire Hathaway is both an Inside Value and Stock Advisor pick. The Motley Fool is investors writing for investors .