Friedman and the Social Responsibility of Business - Essay Example

Milton’s assertion is supported by the diagram below that states a company’s profitability is achieved where Total Costs = Total Revenues.

(Boundless, n.d.)

                                                              (Makower, 2006)

The above diagram shows how a company should balance various aspects to attain Corporate Social Responsibility.        

In his article, Friedman sought to understand the statement that ‘corporate executives have a social responsibility as businesspersons’ (Makower, 2006). This statement meant that corporate executives were not to act in the best interest of their employers or stakeholders. He gave several examples that supported his argument. He questioned whether it is right for companies to avoid increasing the prices of goods to contribute to the social good of curbing inflation or that they employ the unemployed in a move to reduce poverty or that they set aside a huge amount of their profits to minimize pollution contrary to the business objectives. He argued that such measures would turn companies’ executives into civil servants.

Corporate Social Responsibility and ethical business practices are considered strategic business moves in the contemporary world. This is because they contribute positively to the company’s reputation and the public is willing to buy goods from a company that considers their needs. Ignoring social and environmental issues can be damaging to companies in the current times. Companies that pollute the environment risk poisoning the public who are discouraged from buying goods from them. Furthermore, companies that raise the prices of goods to increase their profits may end up losing their customers to their competitors. Finally, companies that exploit their workers experience high employee turnover rates and increased training costs. However, the current globalized markets allow companies to pollute the environment or adjust their prices as they wish (Makower, 2006). Exploitation-friendly tax schemes and unfettered markets benefit companies for acting in their own interest for increased competitiveness and economic growth.

Friedman puts emphasis on the values of duty, law, respect, and ethics contrary to popular belief that he stated that businesses do not have to comply with the law and have no social responsibilities. It is an ethical requirement for companies to respect the members of the society that they operate in since any negative externality that goes without compensation to the injured party is simply unethical (Cosans, 2009:395). Friedman’s framework, ethics are seen as arising from the type of the business.

This view is not shared mutually in the business community (Cosans, 2009:397). There are those that argue that this argument is demeaning to the role of business in society. Businesses are expected to act in accordance with the needs and rights of the society in which they operate in