Friedman Social Responsibility

1 In his article, The Social Responsibility of Business is to increase its Profits", Milton Friedman's conclusion is unequivocally stated in the last paragraph. Is, however, his conclusion as unequivocal as it first appears? Why or why not?

No, Milton Friedman’s conclusion is not as unequivocal in the last paragraph as it first appears. In the conclusion, he just focuses on organizations that are established for earning profit in terms of money, which is intrinsically valuable for the society. While in his article he also talks about eleemosynary organizations, for example hospitals or schools, where the managers would not have money profit as his objectives but the rendering of certain services. In nutshell, I think while concluding he ignores the fact that all businesses cannot have only one purpose.

2 In the "Reason" interview, Friedman states that "the differences between John Mackey and me regarding the social responsibility of business are for the most part rhetorical. Strip off the camouflage and it turns out we are in essential agreement." Do you agree? Why or why not?

I disagree with Prof. Friedman’s that his views on social responsibility of business are rhetorical to John Mackey’s views. There are following reasons-

• Both of them are thinking business in different ways. For Friedman, profit is the sole purpose of firm to exist but for Mackey, profit is necessary for survival but other goals are also important to the firm.

• Friedman emphasizes the fiduciary duties of business managers to run the company to maximize profits for shareholders, who in Friedman’s view are the only stakeholders. Mackey emphasizes the fiduciary duties of managers to many stakeholders, including customers, team members, shareholders, suppliers, communities, and environment.

3 Whose perspective….Friedman's or Mackey's…do you find more compelling?

I find Mackey’s perspective more compelling on social responsibility of business due to following reasons-

• Profit-centered business will make profit for its investors only and will only empower capitalistic society.

• Distribution of profit is limited and hence sharing profit with all stakeholders according to Mackey, will help in distribution of wealth.

• Being a good corporate citizen will eventually help the firm to increase revenue and profit by attracting more customers.

4 What factors do you think affect different companies' views on the purpose of their firm?

Following is a list of factors that have an impact on different companies’ views on the purpose of the firm-

• Political