The Friedman Doctrine And Social Responsibility

Novel Ideas’ silent partners have numerous concerns with public officials calling off layoffs including the hindrance of economic performance, an increase in insolvency, and an inability to maximize company profits.. We realize that the principal motive is to maximize profits. As investors in our company, we understand why the silent partners tend to agree with the social responsibility model of Milton Friedman. The silent partners, like Mr. Friedman, feel as if we need to utilize our resources and engage in activities that diminish the economic volatility our company is facing (Crawford, 9/20). A primary concern is to do whatever it takes to maintain the company’s solvency, while adhering and staying within any legal boundaries. Another concern the silent partners may have is the social responsiveness strategy that the officials from the local chamber of commerce and local economic development group want us to utilize. The local organizations want us to avoid layoffs, so the community can maintain economic stability. However, we know that the silent partners are concerned that if we do not fire one of the full-time employees, we will not be maximizing our profits, and again increasing the economic volatility of our business. As the silent partners have mentioned, firing one of the full-time employees would not be of concern as we would save money, increase profits, and still maintain a satisfactory level of customer service. However, many would categorize our strategy as

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

Relativism is the philosophical idea that the views and beliefs of a person are valid and relative to them. It can include many positions, whether it be religious, moral, cultural or even political. Over the course of this quarter I have been introduced to many different theories like Utilitarianism, Deontological and Teleological theories, but none of them got my attention like Normative Cultural Relativism. What’s great about philosophy is that there are no right or wrong answers, yet I cannot help but realize that many philosophers nowadays are biased about Normative Cultural Relativism. Many don’t agree and rather attack the theory which is why I intend to defend it.

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).

Each person has their own beliefs but they still respect the idea that other people’s views can differ from theirs. Cultures are better preserved with this principle of moral relativism and the root of each culture is everlasting. Since there are no wrong beliefs, each culture can have practices without being criticized for how they act. Moral relativism allows individuals to be diverse in their beliefs and to further express what they believe to be right and wrong.

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.”

Cultural relativism is the idea that human behavior, ideas, and emotions must be understood in the context of the whole culture in which they occur.

Cultural relativism is the view that all beliefs are equally valid and that truth itself is relative, depending on the situation, environment, and individual. Those who hold to cultural relativism hold that all religious, ethical, aesthetic, and political beliefs are completely relative to the individual within a cultural identity. Cultural relativism (CR) says that good and bad are relative to culture. What is "good" is what is "socially approved" in a given culture. Our moral principles describe social conventions and must be based on the norms of our society.

Cultural relativism is the way society separates right from wrong within a culture. What we describe as “good” and “bad” is based off of our cultural beliefs. Cultural relativism argues that no culture is better than any other and all their beliefs are equally valid. The way that modern society is has made it possible for almost everything to be justified.

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).

Cultural relativism means the exact opposite of ethnocentrism. It can be summed up as believing that “all religious, ethical, aesthetic, and political beliefs are completely relative to the individual within a cultural identity” (www.cultural-relativism.com). This means that there is no definite “right” or “wrong”, but rather an ever-changing set of values for each separate culture.

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

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