The Social Responsibility of Business Is to Increase Profits

Milton Friedman, The Social function of Business is to Increase winnings In the article, The Social Responsibility of Business Is to Increase Profits, Friedman states that businessmen look at that they are defending free enterprise when they proclaim that business is not concerned merely with arrive at merely also with promoting desirable complaisant ends. This friendly responsibility is defined as Corporate Social Responsibility (CSR), which is the belief that mints owe a greater duty to their communities and stakeholders by having a social conscience. This, among other things, includes creation environmentally obligated, contri excepting to non- gather organizations, and eliminating discrimination. Friedman argues that only peck bum have responsibilities but that businesses as a whole cannot, as they are not persons. Since the corporate executive is an employee of the shareholders, and therefore only responsible to his employers. The corporate executive has primary responsibility to his employers to conduct business as they see fit, and manage the business to create the most profit piece of music following the basic rules of the fellowship.It is then seen that the corporate executive is makeing as a public employee, while serving shareholders and should be say by those shareholders how to spend their m wizardy. However, Friedman recognizes that managers of corporations, while serving shareholders, are also people in their own right and may have their own social responsibilities that do not always follow those of the owners of the corporation. In that case, if the manager chooses to act based on his own beliefs instead of the direction of the shareholders, he is not performing in the best interests of the shareholders and is spending the customers money. This has a direct financial impact to both customer and employees. This can lead to the managers termination as he has not performed as directed by the shareholders by not making as much money as possible. It is also discussed that because society is a collection of individuals, there are individuals that can coerce others to conform to certain social norms and while others may not agree, they can be overruled and then must conform. This then leads to a political mechanism which can regulate how corporations operate and dictate their social responsibility, which, in theory, would extend the parcel out of the political mechanism. Friedman believes that a political mechanism is not necessary to light upon social responsibility because in a free society, there is one and only one social responsibility of businessto use its resources and direct in activities designed to increase its kale so long as it stays within the rules of the game, which is to say, engage in open and free aspiration without deception or fraud. One question that can be make up from Friedmans article is whether shareholders should prioritize the responsibilities that managers have as their a gents. eon we can acknowledge that shareholders invest in a corporation to make a profit and that managers are hired to maximize those moolah, it is the responsibility of the shareholders to provide guidelines to those managers and prioritize his/her responsibilities. While we can assume that the first priority of the shareholders would be to maximize profits for the corporation, subsequent priorities could fall within the guidelines of community outreach, exceeding legal obligations or being environmentally sensitive.If we presume that corporations elect to be socially responsible, we should postulate shareholders to provide policies and procedures to their managers. Without these, what responsibility does the manager have outside of maximize profits? As Friedman suggests, the manager could be compelled to act on his own beliefs and righteous obligations to his community, church or charitable organization. But, since these would be at his discretion, what check and balances wou ld he have with the shareholders? Would he be using money otherwise returned affirm to the shareholders and supporting organizations that are opposed by the shareholders?Because corporations are established to profit and shareholders invest money with expectations of a greater return, managers cannot be given a directive to be socially responsible without providing specific criteria of checks and balances to which needs to adhere. Therefore, it is coercive to the success of a corporation for managers to not act solely but quite to act within the policies of the shareholders. What Friedman implies is that shareholders should only be concerned with maximizing profits and not be obligated to be socially responsible. In that case, the manager would only have one priority, to maximize profits. However, what if that manager decided that social endeavors is the best option to maximize profits? This would make the corporation socially responsible while still maintaining maximum profits. The argument presented by Friedman in this case is that while the manager is performing as anticipate by maximizing profits, this type of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions. This cloak refers to corporations acting socially responsible but for the sole purpose of making profits rather than performing much(prenominal) endeavors for the sole purpose of benefiting society. An example would be a solar confederation providing free electricity to a campus in exchange for use wreak to promote their environmentally aware product. However, what they dont tell you is that the electricity is being sold back to the power company for a profit. The wisdom is that the company has a social conscience when in reality it is being done for profits.While I agree with Friedmans assessment that managers, as employees of shareholders, are responsible for maximizing profits, I disagree that corporations s hould only comply with political policies and should not adopt policies to be socially responsible. At the time Friedman wrote this article, western sandwich democracies and communist countries of Europe were in the middle of the Cold War and the musical theme of a global economy was not as prevalent in society as it is today.Consumers in those countries leaned towards purchase locally over buying foreign products. Since the end of the Cold War, consumers have changed purchased habits to buy products from companies, regardless of their untaught of origin if it were the best product. However, this led to the matter of public opinion towards corporations vie a larger role in how well they integrate themselves into a community or help preserve the environment is a ingredient in how consumers choose to purchase products.For instance, if a company is considered green, it is determined to the environmentally friendly. This would lead consumers who support environmental protection t o lead towards purchasing products from that company. Therefore, I believe that corporations take into account public opinion when deciding on whether to enact social responsible measures and that these measures are above and beyond the negligible requirements established by governing agencies.I am also convinced that shareholders, more today than ever, budget funds to contribute to socially acceptable contributions and directional managers how to spend these. It is my opinion that due to public opinion and a global influence on corporations, that a successful free market cannot be judged solely by the financial gain of a corporation, but in conjunction with how these corporations influence positive changes in society.