“Social Responsibility”

In every instance where Milton Friedman used the term “social responsibility,” it was in quotations.  This is to stress that the understood definition of the term as to benefit the society at large, may not always be the case.  In his article, The Social Responsibility of Business is to Increase It’s Profits,” Friedman explained the trouble of requiring all businesses to perform with social responsibility.

The corporate executives are presumably responsible for the actions of their company and therefore should be in charge of seeing the consequences to society at large.  The long-term effects of this however, may come full circle to than effect their company and it’s employees.  Friedman draws a connection between the actions of a corporate executive, being paid by the stockholders, customers, and in turn the employees.  This confuses me because I don’t see how it is relevant to the business. Perhaps it proves that I would not make a great businessman for being short-sighted, but I don’t believe that every action of social responsibility that the company partakes in will affect the customers in a grand way.

The author stressed the power of the corporate executive to be a civil servant in respect to  his actions affecting the society a large.  The examples provided included methods to protect the environment and general well-being of the public, but shouldn’t it be the government’s job to control this?  The Fed should have the best understandings of how to eliminate inflation and place pricing guidelines on these items in order to do so.  Similarly, the government environmental agencies should understand the limits of pollution and environmental issues, therefore creating guidelines for the businesses and therefore the corporate executives.

I agree with the concluding paragraph and title of this article that businesses should strive to increase profits as a “social responsibility” and not try to play the role of the government, but instead do the best they can within the set guidelines.

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3 Responses to “Social Responsibility”

  1. aml028 says:

    I agree with you that the government should do a better job at regulating these companies and making sure their financial reports are accurate. But unfortunately alot of government officials originally worked for these companies. The big financial companies have such a strong influence on the government that they were able to get away with so much. In the recent years, the government has passed new regulations that are supposed to make the financial records of companies more open. I guess we will see in years to come if they actually work.

  2. tesoman says:

    The long term cycle that you mentioned above that stated that there are the “corporate executive, being paid by the stockholders, customers, and in turn the employees” needs to add one more piece to the cycle and that’s the government. The corporation pays the employees and the government (in taxes and its contribution to the country’s GDP). The reason why the government does not necessarily want to regulate too much of these “social responsibilities” is because if they start burdening corporations with rules that force them to spend more than they can afford, then we start seeing people getting laid-off, stockholders (many of whom have government ties) losing dividends, and the GDP being affected greatly because the corporations have less purchasing power.
    By letting the corporations take the “social responsibility” for themselves, governments can be more assured that these corporations will only take on the measures that fit within their budgets. This way, the corporations (to some extent) look like they are being more “socially responsible” and the dividends are still being paid out, jobs saved (even added), and purchasing power might be stronger than it would have with government interference. Now, I am not defending the government because I do think that it should be up to them and all the EPA (etc) organizations under it to regulate social responsibility. But when you look at the future of the country, government regulations to the degree most of us would like might not be the most feasible move for the “greater good” of the country. I’m thinking of all the things I have (clothes, a PC, a TV, etc) and how each has produced some kind of waste which might have been disposed of in the wrong manor by corporations in order to make the product more affordable for me which resulted in me spending more (because of the cheaper prices) and helping the government run. It’s a catch 22 of sorts because we want cheap products, but in order for companies to provided that with rising costs in raw materials they need to take short-cuts which are counter-intuitive. I would dare say that people as whole would rather have some company pollution and cheap products than great social responsible companies and a huge increase in prices.

  3. awhigbee says:

    Everybody keeps saying government, which I understand but why should the government either regulate more or get more involved in private business? Also there is a HUGE part of lawmaking that is not necessarily government but instead lobbying. Grover Norquist was the single reason the Republicans signed a document to not raise taxes at all during the debacle that was the raising of the debt ceiling. There must be someone who is exactly like Grover Norquist in the banking industry to get important legislation passed which benefits large corporations. There is not just the common interest that the government looks out for but when the lobbyists get involved (and the corporations they represent) it is extremely challenging getting the right legislation so that the government can effectively be involved.

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