The Contrasting Views of Milton Friedman and Ralph Nader on Corporate Social Responsibility

Milton Friedman’s shareholder theory of management says that the purpose of a business is to make money for the owner or the stockholders of the business. Friedman says that there is only one social responsibility for the business: to use its resources in order to increase

First thing let us start with a little overview of what Milton Friedman exposed in his article. It seems that the whole point of his essay revolves around one basic statement which clearly says that the only social responsibility of business is to use its resources and engage in activities designed to increase its profits so long it stays within the rules of the game (Milton Friedman, the social responsibility of business is to increase profit).

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 determined 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 expected 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.”

Firstly, I would like to explain what Corporate Social Responsibility is. “It is a company’s sense of responsibility towards the community and environment (both ecological and

The ethical issues presented in this case are the different views that each individual has on how the idea of corporate social responsibility (CSR). This dispute is between Mr. Milton Friedman, John Mackey, and T.J. Rodgers; all of which has a different outlook on CSR. The definition of CSR refers to the responsibilities that business has to the society in which it operates and to those actions that a business can be held accountable. Most philosophers have come up with three different types of responsibilities that corporations can be held accountable for. The first and most important of the three is a corporation’s duty to not cause harm. If a corporation can

The first source is a quote by Milton Friedman that criticizes the view of corporate officials needing to abide to a “social responsibility”. He claims that, in a free market economy, corporate officials only have one goal, to increase profits for their business. So long as it's done without deception, fraud and engages an open and free competition. It is obvious that Martian Friedman is a supporter of capitalism. Capitalism is an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state or province. It is a right-wing ideology built on the foundation of individualism. It encourages freedom of action for individuals over government control. The source presents Milton is a supporter of individualism and classical liberalism. He favors an economy focused on making profits for the individual with little to no government intervention. Ideologies that

Chapter 5 in the text, Business, Government, and Society by John F. Steiner and George A. Steiner, corporate social responsibility is defined as the corporate duty to create wealth by using means that avoid harm to, protect, or enhance social assets. General Electric in the Jack Welch Era fulfilled its corporate social responsibility but by marginal measures.

Corporate Social Responsibility are actions taken by a corporation that have positive and lasting impact for all stakeholders associated with the organization, seeking to strike a balance between profits and helping to establish lasting investment in the community (Carrol, 2015). In the 1980’s, then President Reagan challenged the business community to take on more responsibility to address social problems (Carrol, 2015). Socially responsible actions can benefit local communities as well as the greater societal good.

a. Milton Friedman’s philosophy of corporate responsibility is that “social matters are not the concern of business people and that these problems should be resolved by the unfettered workings of the free market system”. As harsh as it may sound, what he mean course to say was that a business has “to make as much money as possible while conforming to basic rules of society”. Meanwhile, Archie Carroll’s philosophy states that a business has “four kinds of social responsibilities” that a firm must address in their corporate social responsibility, which are economic, legal, ethical and philanthropic duties. Clearly they have two very different views. Friedman sees that a business’s ultimate goal is to generate profits, then comes the legal and ethical responsibilities it must fulfill. To Friedman, there is no need to be philanthropic because the firm’s job is only to make money for the economy, and it is the economy’s obligation to be philanthropic with the profits. Carroll agrees with Friedman that a company must be profitable, then be legal by obeying the law, and be ethical to avoid harm. However, Carroll believes it is also desired and in the best interests of the company to be philanthropic because it will “create a good corporate citizen”. Friedman has an economic view whereas Carroll has a social view. In my opinion, Archie Carroll’s philosophy on corporate social responsibility is more accurate. The social pyramid model he made to go with his views makes

Nevertheless, Friedman pointed out that the profits has taken the firms in to the hand of business intellectuals by which Friedman recommend that the financial system by which the organisation run its business is in the restricted responsibility protection which makes the organisations to privatise their profits (Friedman 1970 pp. 177-184). Friedman also suggested that according to him the shareholder theory in terms of socially responsible can only increase the profit. But on the other hand shareholder theory of Edward Freeman completely support the theory of shareholder towards its role to be socially responsible in the society and maximising the profits for the benefits of shareholders within the firms and society as well (Freeman 2008 pp. 162-165).

Milton Friedman wrote in his famous 1970’s article in The New York Times Magazine, that “the one and only social responsibility of business, is to increase profits for shareholders.” Milton Friedman's view on business responsibility accentuates the importance of maximizing firm's value. He pointed that the “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, engaged in open and free completion without deception or fraud’’ and by taking on the burden of social cost, the business becomes less efficient (Milton Friedman, 1962).

Milton Friedman was an American economist, statistician and writer, who had a massive impact on the research agenda of the economics profession. His famous words “the only responsibility of business is to increase its profits” (Friedman, Milton. 1970) led to many controversial debates on whether businesses should have ethics or if profit should be their main goal. Corporate social responsibility has many definitions, as its interpretation is quite loose, so I have chosen one that relates the most to this essay, given by the World Business Council for Sustainable Development, in 2000: “Corporate social

Corporate social responsibility emphasizes the participation of the organization in a larger society and its responsibility to support good causes. It emphasizes corporate citizenship, philanthropy, and community support and recognizes community-based obligations and responsibilities.

Some would argue that the only reason to take on social projects is for utilitarian reasons, such as currying favor with the public or with government, or to improve market standing. Others, such as the philosopher Michael E. Berumen, suggest that a business is property belonging to the owners, not stakeholders, and that a business is not equivalent to a mini-state for the purpose of creating social justice or carrying out social planning, and that the owners have the right to dispose of their property as they see fit within the limits of morality, including for profit, social good, or both.

For a long time now, there has been much debate over the social responsibility of a business. Friedman is one of the most influential