Milton Friedman And The Social Responsibility Of Business Essay

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Step 1: Summarize the major arguments of Friedman and Freeman et al. on CSR
A. “The Social Responsibility of Business is to Increase its Profits”, written by Milton Freeman (1970).
Milton Friedman took a “Shareholder Approach” to social responsibility. This approach asserts that shareholders advance capital to a company’s managers, who are supposed to spend corporate funds only in ways that have been authorized by the shareholders. Friedman wrote: "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."
Milton Friedman’s major arguments:
1. A corporation is an artificial person and therefore cannot be socially responsible. The goal of the corporation is to maximize profits and returns as rewards to its shareholders for their risk taking while conforming to the basic rules of the society, such as law and ethical customer, except those organizations established for eleemosynary purpose.
2. Managers (or Corporate Executives) are the agents of the owners of business. Their primary responsibilities were to the owners. Spending corporation’s money for a general social interest is not acting in owners’ best interests (conflict of interests between owners and the beneficiaries for the social interests). Managers who spend corporation’s money on social responsibility
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