Social Responsibility of a Business by Milton Friedman

The Main point of Milton Friedman’s article lies in his..

Social Responsibility of a Business by Milton Friedman

The Main point of Milton Friedman’s article lies in his total negation of the idea that business has “social conscience” and that business is not all about profit but it plays a vital role towards people it serves. The writer believes that businessman only mindlessly repeat the oft repeated words of reformers like “providing employment, eliminating discrimination and avoiding pollution”. A free enterprise system or the basis of the free society does not involve dependence either on government or on business man. In this way businessman are preaching “pure and unadulterated socialism”. In a nutshell business has no responsibility towards society; a corporate executive has responsibility towards the business owners, which is to earn as much money as possible remaining within the legislative and ethical boundaries. If the objectives of a business owner are utilitarian the money is his personal property and spending it in any fashion is his personal affair. But a business executive cannot spend any money even for the betterment of the society because he is answerable to his employers. The judgment of his efficiency as an executive is not judged by his philanthropy but his sincerity towards his corporate. Social responsibilities are only connected with individuals, people doing good in their own time with their own money. But it is not advisable as long as one is an agent of some institution or corporation. He must work towards the benefit and profit of his owners and refrain from taking steps that might hinder their progress. From declining to raise the cost of a medicine to spending on pollution control or preferring “hardcore” unemployed, no matter how sincere the motive may be, an executive cannot spend the money earned from business. Thus the writer makes a point to support his thesis.

Resting his argument on business executives, the writer raises another point. If an executive spends owner’s money he is imposing and deciding the spending of taxes. On a political level it is government job to implement taxes. For that purpose a parliamentary, judicial and constitutional system is devised.

The stockholders select the executive on the basis of him serving the interest of his principle. But if an executive imposes taxes and spends for social benefits, he starts to behave like a civil servants or a public servant instead of being a private employee. The writer dislikes the idea as civil servants should be selected by the appropriate political procedure. The writer considers market mechanics not capable enough to decide usage of resources. The executive might be an expert on his field or earning money but apart from that he might not be the best judge of things. Apart from that there will be other consequences as he might be sacked by his employers for showing more devotion to social reforms rather than his company. His employees and customers can abandon him too for someone who is willing to work for their benefit

The Phenomenon of “Social Responsibility” is totally against the “virtue of private competitive enterprise”. People are totally on their own and exploitation is difficult. If a person needs to be charitable he can only do it with his own money. There is no concept of imposition like some stock holders coercing others to put money for social reforms. An individual proprietor who wants to spend his own money according to his own will is acceptable.

The writer believes that at times the sermon of social reform by prestigious businessmen is just an eye wash, or a selfish attempt to produce good will as a “By product of expenditures that are entirely justified in its own self interest”. These cloaked intentions are blamed by the author and he lauds those businessmen who refrain from such tactics

Milton Friedman considers businessmen to be very short sighted in matters other than business and this short sightedness is shown in their ideas about income policies and speeches made about social benefits .These speeches enforce the idea that the “ External force” that are supposed to be vital to curb the wicked and immoral pursuit of profit should not be the businessmen but the “Iron fist of government bureaucrat ” The difference between the political principal regarding market mechanism and political mechanism is “ Unanimity” and “ conformity”. No one can force in a corporate to spend money for any social reform but in a political mechanism all individual must conform to the dictates of a governing authority, though they do have some rights.

The conclusive point of the writer is that the only responsibility of business is to increase its profits and compete within the limits avoiding fraud or deception. The writer is very clear about his point and keeps focused on it. The strength of his article lies in his single mindedness to prove his point. I do agree with him that business and businessmen have no set rules or responsibilities towards the society. If they want to pitch in they must do it individually and personally.



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