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Friedman Vs Drucker - Book Report/Review Example

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Friedman vs Drucker The 1970 article by Milton Friedman titled "The Social Responsibility of Business is to Increase its Profits" argues that businesses were to engage in socially responsible activities it would be equivalent to practicing socialism. Peter Drucker, in his 1981 article, objects to the term "business ethics" and calls it "Casuistry" because it requires different ethical behavior for businesses than it does for individuals…
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Friedman Vs Drucker
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Download file to see previous pages Friedman argues that the only responsibility of a business is to make profit for its various stakeholders. According to him, if a business diverts money from profits and uses the money for some social good, the business or the executives running the business are in essence imposing a tax on the stakeholders and deciding for themselves how spend the tax proceeds. He calls this undemocratic because there are no checks and balances as those imposed on democratically elected governments. He argues that the job of imposing tax is that of the government and if the government interferes in the way that the businesses spend their profit, it will slowly lead to socialism. Drucker on the other hand objects to the term "business ethics" which he contends is the new "in" subject replacing "social responsibility". Drucker's argument is that different scholars have approached ethics in different ways and that there is no one definition of what is ethical. Under the circumstance, business ethics becomes a very ambiguous term that is difficult to define. Drucker goes on look at business ethics from various approaches. He explains that the western religious traditions of ethics for individuals do not work in the business environment and so concludes that the definition of what is ethical is different for an individual and different for corporations. However, he argues, that having such different standards for individuals and corporations in not really ethics but "Casuistry". Casuistry is a 17th century concept according to which what is ethical for a ruler is different from what is ethical for the individual since the ruler is "someone whose actions have impact on other". As such, a ruler must put social responsibility ahead of individual conscience. Drucker denounces casuistry because it "considers social responsibility to be an ethical absolute" and because it makes ethics a political objective of businesses and business executives. Drucker further gives examples to demonstrate how casuistry is not compatible with what is considered ethical. Next Drucker looks at business ethics as Ethics of Prudence. According to this approach, every person in a corporation has some degree of leadership and a leader must never act in a way that his actions need to be explained to others. Although Drucker feels that Ethics of Prudence has the potential of becoming practice in public relations, he feels that it is appropriate in a "society of organizations". Drucker defines a "society of organization" as one in which a large number of individuals are in important positions of power. However, this power is not conferred by birth but is result of their position and so they have a responsibility to take right actions. According to him, Ethics of Prudence is not business ethics because it lays down the same ethical principle for everyone and is based on authority while business ethics rejects any authority. Finally, Drucker approaches ethics as the Confucian ethics of interdependence. According to this approach, every individual is interdependent on another individual and his or her actions should be such that they lead to mutual benefits for both ...Download file to see next pagesRead More
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