Answer to Question #226467 in Political Science for Hackman

Question

1. what is milton friedman’s position on the social responsibility of a business? Discuss 2 assumptions and 4 problem with his position

Answer 1

A company's social responsibility, according to Milton Friedman, is to increase profits. Friedman's divisive concept ushered in a new era in American economic life, one in which "Greed is Good" and profit is the sole legitimate goal of business. On the other hand, many others saw it as a timely capitalist manifesto highlighting the proper role of executives in our free market economy. Friedman's core assumption is that all stockholders are only interested in making money. In actuality, this is not the case. Stockholders exhibit sympathy for others because they are human. He fails to demonstrate that corporate social responsibility is fundamentally unequal and socialist. If these are critical, and regulating them is a fundamental social purpose, the ideal locations to “establish a legal framework” are the political process and the legal system. Companies internalize expenses as a result of property rights and liability restrictions that make them liable for pollution. The firm's profits are still maximized, but environmental costs are factored in as part of the cost of doing business.

If businessmen's social obligation isn't to maximize profits for stockholders, how can they know what it is? Is it conceivable for private individuals to decide what is in the public interest?” It is neither effective nor dependable to impose vague social responsibilities that can be interpreted arbitrarily by company executives. It is far preferable to have a regulatory framework that promotes companies to internalize costs in a clear and transparent manner. Friedman's argument was more concerned with the tactics than with the goal. He was arguing that, despite the apparent contradictions, single-minded profit maximization (together with an appropriate legal framework) is more likely to produce social good than exhortations for firms to be socially responsible.