The article, “The Social Responsibility of Business is to Increase Profits” initially seemed to describe exactly the ethical obligations of the people working for a business and I was confused as to why the author was distinguishing between a business and the people working within it. Isn’t what makes a business the people working for it, creating policies and working together to achieve an outlined goal? The last paragraph of the article describes a company’s duties as only “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game”. I would argue that an executive making a decision to alter the price of a good/service or to decrease employee wages is not different than fulfilling this one social responsibility.
I did find it extremely interesting that Friedman argued for different methods of selecting corporate executives (methods that resembled political elections, perhaps), given the power they have in altering the free-market. With that said, however, I was skeptical that any company has so much control over the free-market. Take Walmart, for example. Although it is effectively a monopoly in its industry, if Walmart raised its prices I am not convinced that this would cause inflation. I would assume that another company would approach Walmart’s niche with a lower priced product than Walmart now offers, and customers would in turn respond by shopping at the firm with the new lower prices. From an economics prospective, don’t consumers control the free market and therefore a company can only “take” money from them with their consent to purchase a particular priced good/service?
I would like to finally note that the end of this article confirmed what I attempted to put into words about my feelings regarding short-termism in class last Thursday. People are naturally quite selfish. A company executive may give a speech about following social responsibilities (which in itself may be inherently false) but in the end, he/she is merely covering up his/her company’s “wicked and immoral” “pursuit of profits”.