The Social Responsibility Of Business Is To Increase Its Profits Milton Friedman Analysis

In his article, The Social Responsibility of Business is to Increase its Profits, Milton Friedman argues that the only duty of a company towards society, referred to as a social responsibility, is to work towards the best interest of its owners; usually to maximize profits within the confines of the law . As a company is not an intelligent being, Friedman uses corporate executives as the primary subject of most of his arguments. As an employee of a firm’s owners, an executive is under legal obligation to serve them as a custodian of their private property and serve this role within the rules of the free market, engaging in legal, open and free competition. If they feel that they have some other higher responsibility as an individual than they …show more content…
By using the company’s resources for the benefit society, such increasing employee wages or lowering product prices beyond a level that would be beneficial to the company, they are effectively taking money away from the firm’s owners in order to benefit the common good. This is the very definition of tax, and not only is an executive creating this tax, he is also deciding how it is to be spent. In doing this a person can no longer be called business executive, they are now acting as a civil servant and an unjustly empowered one at that. As a result, he is likely to be fired from his position due to his interests now clearly conflicting with those of his employers. This illustrates how it is quite difficult for an executive to fulfill or hold a responsibility to one other than their employers due to the nature of markets. As a result, it is impractical and unreasonable for any corporate executive to hold a responsibility to a cause other than their …show more content…
This casts serious doubt onto the morality of an executive’s social responsibility, the whole concept seems more like an excuse to act with impunity rather than a moral obligation. Additionally, there is nothing to say that a corporate executive knows what is best for society, they may know very little about how their actions will affect society as a whole. Friedman also extends this line of reasoning towards the shareholders that own a company. If some of them attempt to hold a social responsibility other than to the mutual benefit of the shareholders, they are effectively imposing an unjust tax on the other shareholders and stealing their property. However, Friedman does concede that if a corporation has a sole proprietor then they are free to use their company’s resources as they see fit, as it is their personal property to do with as they see fit; however in most corporation’s (especially larger ones) this is rarely the actual situation. He further argues that many of the supposedly selfless actions that a company takes under the guise of social responsibility are often for their own benefit in the future, for example; raising wages could be a means for a company to attract more productive and skilled workers or increase public opinion. However,