Corporate social responsibility from friedman to porter. Originally published in the new york times magazine. On this basis, milton friedman 1 wrote the famous article entitled the social responsibility of business is to increase its profits, where he held that those executives who imposed social expenses to the corporations they managed should be regarded as disloyal agents to their principals, the shareholders. Milton friedman pioneered the intellectual fight against csr. Milton friedman on corporate social responsibility the. The social responsibility of business is to increase its profits. Conversely, friedman, according to the otherwise conservative motley fool stock advisor, had it dead wrong with his quote on profit being the only social responsibility of. Milton friedmans shareholder theory of management says that the purpose of a business is to make money for the owner or the stockholders of the business.
In a freeenterprise, privateproperty system, a corporate. Milton friedman and the social responsibility of business. Milton friedman and csr in my book capitalism and freedom, i have called csr a fundamentally subversive doctrine in a free society, and have said that in such a society, there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in. But you cant deny that it sounds simple and straightforward. The social responsibility of business is to increase its profits by milton friedman, reprinted from critical thinking, revised edition, eds. A critique of milton friedmans essay the social responsibility of business is to increase its profits. Apr 18, 2012 you might disagree with milton friedmans famous claim that the sole social responsibility of business is to increase its profits. The friedman doctrine first appeared in the new york times in 1970 as an essay by milton friedman. A firm aspiring to maximise profit will still be constrained by the market structure, best demonstrated in the contrast between perfect competition and pure. From the social responsibility of business is to increase its profits by milton friedman, new york times magazine, sept. Milton friedman, and the total discredit of corporate. In 1970, milton friedman famously argued that the only social responsibility of business was to maximize profits. The business roundtable renewed interest in economist milton friedman.
The other, from ed freeman, argues that businesses have a responsibility to many parties stakeholders in society, and so they cannot focus only on increasing profits. Corporate social responsibility from friedman to porter and. In his highly influential 1962 collection of essays, capitalism and freedom, friedman proclaimed that in a free economy, there is one and only one social responsibility of business to use. Milton friedman is wrong about social responsibility. There is one and only one social responsibility of business to increase its. The case against milton friedmans capitalism pacific standard. This approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. There is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without. A companys responsibility is to use its resources to engage in activities to increase the companys profits so long as it does not participate in unethical or illegal. Milton friedman on selfinterest and the profit motive. Milton friedman on corporate social responsibility the lucid. Corporate social responsibility and milton friedman. Friedman vs carroll milton friedman vs archie carroll.
Milton friedman s 1970 article the social responsibility of business is to increase its profits is likely one of the most assigned, and most debated, papers in social issues pedagogy. In 1976 he was awarded the nobel prize in economics. It remains the basis for many companies contention today that corporate social responsibility, sustainable business, and other such monikers are a distraction from their core obligation. Corporate social responsibility csr, milton friedman. The case against milton friedmans capitalism pacific. A critique of milton friedman s essay the social responsibility of business is to increase its profits. There is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition. Friedman doctrine overview, what it says, influence. A critique of milton friedmans essay the social responsibility of business is to increase its profits thomas mulligan abstract. The wall street journal challenged us to read his 1970 essay on the social responsibility of business.
Milton friedman friedman, an advocate of free markets, was against corporate social responsibility csr unless the social responsibility is directed at the company itself. Milton friedmans 1970 article the social responsibility of business is to increase its profits is likely one of the most assigned, and most debated, papers in social issues pedagogy. The social responsibility of business is to increase. Several scholars have argued that friedman asserts that businesses. In 1970, in his famous essay, the social responsibility of business is to increase its profits, milton friedman railed against any corporate attempt to promote desirable social ends which he. Milton friedman the social responsibility of business is to increase. Jan 31, 2010 by milton friedman the social responsibility of business the social responsibility of business professor hector r rodriguez school of business mount ida colle slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Milton friedman the social responsibility of business is to increase its profits the new york times magazine, september, 1970 craig p. The friedman doctrine, or shareholder theory, is a normative theory of business ethics advanced by economist milton friedman which holds that a firms main responsibility is to its shareholders. In it, he argues that a company has no social responsibility to the public or society.
Mar 16, 2018 there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. This paper explores the level of obligation called for by milton friedmans classic essay the social responsibility of business is to increase profits. Milton friedman was wrong about corporate social responsibility. Rethinking the social responsibility of business from reason october 2005 putting customers ahead of investors john mackey chairman and ceo, whole foods market in 1970 milton friedman wrote that there is one and only one social responsibility of businessto use its resources and engage in activities designed to increase its profits so.
This minimalist view is workable only if governments are not subjugated to corporations and if they assume ownership of the common good and responsibility for its protection. The main arguments of milton friedmans famous and influential essay are unsuccessful. You might disagree with milton friedmans famous claim that the sole social responsibility of business is to increase its profits. Aug 27, 2019 the business roundtable renewed interest in economist milton friedman. The free market is a theoretical fiction, with enormous social costs.
Milton the social responsibility of business is to increase. The most provocative statement of the past halfcentury on the role of business in society came in an essay in the new york times, written by a fellow named friedman. Dec 02, 2007 it would be unjust to impose that responsibility on individuals who are running an honest business of providing electricity. Friedmans theory was wildly popular because it seemed to absolve. The social responsibility of business is to increase its pro. Adam smith, milton friedman and the social responsibility. Milton friedman and corporate social responsibility. The social responsibility of business is to increase its profits milton friedman the new york times magazine september, 1970 when i hear businessmen speak eloquently about the social responsibilities of business in a freeenterprise system, i am reminded of the wonderful line about the frenchman who. Milton friedman, corporate social responsibility and milton friedman. Aug 12, 20 there is one and only one social responsibility of business to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. Pdf milton friedmans 1970 article the social responsibility of business is to increase its profits is likely one of the most assigned, and.
Pdf a critique of milton friedmans essay the social. Milton the social responsibility of business is to. Milton snoeyenbos, robert almeder, and james humber, 1992, prometheus books. The social responsibility of business organisations is getting increased attention in recent years, and a strong perception has developed among the business managers worldwide and that. Milton friedman on selfinterest and the profit motive 1of2. One view, that of milton friedman, argues that businesses have only one social obligation. Friedman suggests that the true responsibility lies on the mans.
As such, the goal of the firm is to maximize returns to. The social responsibility of business is to increase its. These profits, if only returned to the firms owners the shareholders, on whose behalf the management should rightfully act, could be put to charitable purposes as shareholders saw fit. Friedman argued for a direct form of capitalism and against any activity that distorts economic freedom. Milton friedman and csr in my book capitalism and freedom, i have called csr a fundamentally subversive doctrine in a free society, and have said that in such a society, there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say. He fails to prove that the exercise of social responsibility in business is by nature an unfair and socialist practice. Does milton friedman support a vigorous business ethics.
Gabriel ng gabriel ng is a firstyear dual degree mbampa student at new york university. Dunn embedded commentaryinset in italics when i hear businessmen speak eloquently about the social responsibilities of business in a freeenterprise system, i am reminded of the wonderful line about the. Nov 24, 2006 the occasion of friedman s recent passing offers an opportunity to revisit that argument. It would be unjust to impose that responsibility on individuals who are running an honest business of providing electricity. Friedman himself said the first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom. Milton friedman, and the total discredit of corporate social. Instead, he stated that the only responsibility that an entity should abide by is its shareholders. Friedman argued that social welfare is the business pdf of governments, which safeguard the commons by enacting laws and regulations. Rethinking the social responsibility of business from reason october 2005 putting customers ahead of investors john mackey chairman and ceo, whole foods market in 1970 milton friedman wrote that there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so. Milton friedman is a senior research fellow at the hoover institution, stanford university, and the paul snowden distinguished service professor emeritus of economics at the university of chicago. The social responsibility of business is to increase what. In the essay, the economist explained that an entity does not have any social responsibility to the society around it whatsoever.
There is one and only one social responsibility of business to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. He has written a number of books, including two with his wife, rose d. The friedman doctrine, or shareholder theory, is a normative theory of business ethics advanced by economist milton friedman which holds that a firms main responsibility is to. Pdf friedmans the social responsibility of business is. The inadequacy of corporate socialresponsibility programs. As milton friedman put it in his 1970 article, there is one and only one social responsibility of business to use its resources in activities designed to increase its profits2. No one should consider what is, or why corporate social responsibility should be done, without first reading and understanding his article. There is one and only one social responsibility of business to use its resources and engage in activities. In a 1970 times magazine article, the economist milton friedman argued that businesses sole purpose is to generate profit for shareholders. The discussions of the social responsibilities of business are notable for their analytical looseness and lack of rigor. So, milton friedman gives us what has become the dominant view of business social responsibility.