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The Social Responsibility of a Business Is to Increase Its Profits - Milton Friedman

Autor:   •  February 28, 2011  •  Essay  •  701 Words (3 Pages)  •  1,975 Views

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The author in his article has stated that only people can have responsibilities and that there is no such thing as "social responsibility" of a business. A corporation is considered as an artificial person and therefore shall have artificial responsibilities. The individuals who are responsible are the businessmen, who can be individual proprietors or corporate executives. A corporate executive is employed by the owners of the business and his responsibility is to conduct the business in such a way that maximizes profits while conforming to the basic rules of the society. He, as a person, may have many other responsibilities that he recognizes or assumes voluntarily, which can be referred to as social responsibilities. These responsibilities correspond to individuals, not to businesses otherwise he would be spending someone else's money, and not serving the interest of the employers. On the other hand, the situation of the individual proprietor differs because if he reduces the return of his company for "social responsibility", he is in fact using his own money, not other's money. The author concludes that in a free society, there is only one "social responsibility" of a business and that is to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, engages in open and free competition without deception or fraud.

Companies are created to make money and to be profitable over time. An ideal venture would require low initial investment with high profit returns in a short period of time. However, in real life, enterprises face the opposition of many factors that determine their future performance in the business world. Because of the rising competition, the company must remain competitive by focusing on its strengths and eliminating or reducing its weaknesses. While complying to the rules of the society, the investors expect profit maximization with the available resources, but they do not necessarily wish that the proceeds are invested in social activities because then they would have to use their own money and hence would receive a lower return for

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