"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." - Adam Smith, 1776
I think Friedman's ideas are substantially different.
The quote from Smith is discussing tradesmen running a business in their own self interest.
In some ways, Friedman's point is the opposite. That the laborers perform in the self interest of the owner.
I don't know the full context of the Smith quote. I did a bit of digging for Smith's views on publicly traded companies, and came across this quote[0]:
>The directors of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.... Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.
Surely that’s exactly the same thing Friedmam was saying. According to Friedman managers spending company money on social causes are spending other people’s money, the same phrase Smith used, when they had no business doing so. In saying that the firms responsibility is to its owners, Friedman was addressing precisely the concern that Smith was worried about.
Of course in Smith’s time joint stock companies were a relative novelty. We have a lot more experience of them now and have developed standards, checks and balances to try to maintain discipline in managers in the intervening centuries. Friedman was simply attempting to bolster that effort, but Smith was writing about exactly the same concern.
As it happens while I’m a big fan of both men, on this issue I think Friedman is too much of a purist. Some social spending can just be good business. It promotes the brand, buys political friends and can even reap commercial benefits down the line. Donating or subsidising computers in schools for a company like Apple for example.
The butcher and baker a) have to understand what it takes to produce quality meats and breads and b) stand face to face with the customer, so they have both professional and reputational stakes in the game. Their stakeholder brothers and sisters may or may not have the same knowledge or reputational risk, and so their self-interested measures may correlate more with what puts money in their pockets in the short term than what makes the business viable over the long term.
Shareholders don’t care about the reputation or quality of service of the company? That seems a stretch.
As I’ve commented elsewhere I don’t entirely agree with Friedman because I think some social spending can make commercial sense for a company, but I think what he’s saying is just a pretty direct refinement of the exact same points Smith made.
Smith had very few good things to say of joint-stock (shareholder-owned) corporations. They were comparatively scarce at the time. Most businesses of his time, including the "baker and butcher" line you quite, were sole proprietorships or family-owned and operated.
The interests he writes of are those of the butcher and baker to themselves. Not to their shareholders.
"Shareholder value" is a recent error attributed to Milton Friedman.
This concept was popularized by Milton Friedman with his Shareholder Theory. OP is not wrong.
https://en.wikipedia.org/wiki/Friedman_doctrine