Milton Friedman`s article seeks to further a free-market view that the cardinal responsibility of business and corporations is to ensure that they realize maximum profits. This is the main obligation upon which stakeholders of a business place upon executive employees. Friedman argues that despite the fact that corporations have nowadays adopted the social responsibility argument. Businesses cannot be said to have social responsibility since they are established for the principal purpose of realizing profits, unless the owners intended to operate eleemosynary organizations such as schools or hospitals. Further, Friedman argues that the tendency by corporations to claim that they have to meet social ends, develop a social conscience, provide employment, or eliminate discrimination in the society cannot be founded. This is because social responsibility is carried out by executive employees whose terms of reference do not include ploughing back profits from the business contrary to the interests of stakeholders. They have to conduct their business according to the desires of the owners. Mostly, this desire is to realize as much profits as possible. After realizing abnormal profits, firms can then conform to the needs of the society and the requirements of the law.
Therefore, the argument that corporates have a social responsibility is purely rhetoric. Stakeholders, customers and employees could use their money as they like, but not profits from the business. Friedman posits that there is no justification for a corporation executive using someone’s money. He raises valid concerns and questions that pose a financial conundrum on who has to bear the burden considering the cardinal function of businesses is to make profits. He concludes by alleging that politically, the doctrine would include all human activity.
Reference
Friedman, M. (1970). The Social Responsibility of Business Is to Increase Its Profits. New York: The New York Times Company.
