Even though I disagree with the thesis of this article I find it quite interesting.
I think that the last sentence of the article is very telling:
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 fraud
I think that there lies the issue with the point being made. Companies regularly employ deception to get more profit. If companies were honest, consumers, politicians and “the market” would be much more efficient to punish harmful behaviours from companies and make them pay for their externalities, via taxes or other means.
This documentary (available only in french and german sorry) describes really well how companies spread doubt in the scientific process to keep their business models and profit growing. The first historical example was the cigarette industry and the health issues caused by smoking, but it is now widespread in many industries (unhealthy foods, climate change, pesticides etc…). The way they generally do this is by funding a ton of studies on other causes for the harm they cause to make it as if the science hasn’t settled yet, even though all independent studies agree.
I also think that companies, except when they’re small are way too large to really be as unified as they present themselves. A company with tens of thousands of employee will always have many different opinions, and even if a company claims to be working “for the common good”, the only thing that unifies its workers is the desire to get paid at the end of the month.
[The] responsibility [of corporate executives] is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.
One of the classic flaws in this argument is that it establishes a very low bar for ethics and legality. Put bluntly: “If we ran things any worse we’d go to jail and if the public found out how things are run they’d be mortified” could describe the same conditions as saying “our business is compliant with all its legal obligations and meets industry standards.”
the corporate executive is also a person in his own right. As a person, he may have many other responsibilities that he recognizes or assumes voluntarily—to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country… social responsibilities… are the social responsibilities of individuals, not of business.
A foundation of this argument is the expectation that no human will betray one responsibility for another. I believe this is false, a mother stealing bread to feed her child forsakes her responsibility to her community to fulfill her responsibility to her family. Friedman then states that social responsibilities are mostly voluntary, or optional. He is right, and it is important to add that an individual’s responsibilities to the business have far more serious consequences for neglect. If an individual does not fulfill their responsibilities to the the business they will lose their job which the wage-worker needs to survive. Therefore employees as individuals are forced to uphold their responsibilities to the business at a higher priority than most of their social responsibilities, and when too many people neglect their social responsibilities entire social structures wither and collapse.
The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal. This justification disappears when the corporate executive imposes taxes and spends the proceeds for “social” purposes. He becomes in effect a public employe, a civil servant, even though he remains in name an employe of private enterprise.
Friedman argues that social responsibilities should ultimately be met by stock holders, I believe this is a ridiculous expectation. A stock holder is likely several steps removed from any social interaction with the many diverse communities in which their company might operate, it is absurd to expect individual stockholders to travel to every local community and meet the community’s social needs for it. Instead, what actually happens is the social needs of communities are perpetually left unmet. Friedman’s doctrine absolves corporate executives of social responsibility by pushing social responsibility onto investors who are, in practice, the least capable of fulfilling social responsibilities.
In a traditional hierarchical business, employees further from an executive position have less power over the company’s actions: the workers, who are the group best able to balance corporate interests and social responsibility, are powerless to halt or counteract the business’ harmful effects in their local communities. Within a hierarchical structure I believe it is the responsibility of the corporate executives to fulfill social responsibilities to all the communities in which they operate; I am not decided whether this is even possible, but if it is it requires radical structural change such as reorienting a company around a doughnut economic model. I am a proponent of cooperative ownership structures where corporate power is distributed among employees: this enables the company’s workers to balance their own social responsibilities instead of passing those responsibilities onto investors who have no hope of properly meeting them.
Friedman has been widely criticized as financially wrong, economically wrong, legally wrong, socially wrong, and morally wrong. Despite the criticism, his views have guided business practices in the US for the last 50 years, so it is no wonder why the US faces so many critical social problems today. I am optimistic that a critical mass of people are giving up on neoliberalism, social responsibility is being redistributed, and work is beginning on solving our complex social problems, but the work will take generations.
Majority of businesses don’t use deception though. There will in any system be inviduals and groups who try to cheat their way through the system and you can try to regulate or use force against them.
But in a regulated economy with unions you will get pretty decent, positive and good businesses where trash busniesses and jobs are put in the bin.
