Milton Friedman, “the Social Responsibility of Business Is to Increase Profits”
Milton Friedman, “The Social Responsibility of Business is to Increase Profits”
In the article, “The Social Responsibility of Business Is to Increase Profits,” Friedman states that “businessmen believe that they are defending free enterprise when they proclaim that business is not concerned merely with profit but also with promoting desirable social ends.” This social responsibility is defined as Corporate Social Responsibility (CSR), which is the belief that “corporations owe a greater duty to their communities and stakeholders” by having a “social conscience.” This, among other things, includes being environmentally responsible, contributing to non-profit organizations, and eliminating discrimination.
Friedman argues that "only people can have responsibilities" but that "businesses as a whole” cannot, as they are not persons. Since the corporate executive is an employee of the shareholders, and therefore only “responsible to his employers.” The corporate executive has primary responsibility to his employers to conduct business as they see fit, and manage the business to create the most profit while following the “basic rules of the society”. It is then seen that the corporate executive is acting as a “public employee,” while serving shareholders and should be directed by those shareholders how to spend their money.
However, Friedman acknowledges that managers of corporations, while serving shareholders, are also people in their own right and may have their own social responsibilities that do not always follow those of the owners of the corporation. In that case, if the manager chooses to act based on his own beliefs instead of the direction of the shareholders, he is not performing in the best interests of the shareholders and is "spending the customers ' money." This has a direct financial impact to both customer and employees. This can lead to the managers’ termination as he has not performed as directed by the shareholders by not making as much
In the article, “The Social Responsibility of Business Is to Increase Profits,” Friedman states that “businessmen believe that they are defending free enterprise when they proclaim that business is not concerned merely with profit but also with promoting desirable social ends.” This social responsibility is defined as Corporate Social Responsibility (CSR), which is the belief that “corporations owe a greater duty to their communities and stakeholders” by having a “social conscience.” This, among other things, includes being environmentally responsible, contributing to non-profit organizations, and eliminating discrimination.
Friedman argues that "only people can have responsibilities" but that "businesses as a whole” cannot, as they are not persons. Since the corporate executive is an employee of the shareholders, and therefore only “responsible to his employers.” The corporate executive has primary responsibility to his employers to conduct business as they see fit, and manage the business to create the most profit while following the “basic rules of the society”. It is then seen that the corporate executive is acting as a “public employee,” while serving shareholders and should be directed by those shareholders how to spend their money.
However, Friedman acknowledges that managers of corporations, while serving shareholders, are also people in their own right and may have their own social responsibilities that do not always follow those of the owners of the corporation. In that case, if the manager chooses to act based on his own beliefs instead of the direction of the shareholders, he is not performing in the best interests of the shareholders and is "spending the customers ' money." This has a direct financial impact to both customer and employees. This can lead to the managers’ termination as he has not performed as directed by the shareholders by not making as much