The Social Responsibility of Business

The Social Responsibility of Business Is to Increase its Profits.”1 According to Friedman, corporate officers have no obligation to support such social causes as hiring the hard-core unemployed to reduce poverty, or reducing pollution beyond that mandated by law. Their sole task is to maximize profit for the company, within the “rules of the game” that ensure “open and free competition without cheating or fraud.” Friedman advances two main arguments for this position.

First, corporate executives and directors are not qualified to do anything other than maximize profit. Business people are expert at making money, not at making social policy. They lack the perspective and training to address complex social problems, which should be left to governments and social service agencies. If they invest company funds to train the always unemployed or reduce emissions below legal limits, they in result tax on the company’s owners, employees and customers in order to achieve a social purpose. But they have no right to spend other people’s money on social welfare projects.

At best, only elected representatives of the people have such authority. Sole proprietors can spend the company’s money any way they want, because it is their money, but fiduciaries and hired managers have no such privilege. If they

contribute corporate money to arts or community development, it must be with an eye to increasing profit, perhaps by attracting better employees or improving the company’s image. If they want to contribute to other social causes, they are free to join public organizations and donate as much of their own money as they please.

The lack of Friedman’s philosophy is particularly evident in international

Business, where there are fewer legal restrictions. A famous case study describes how the Nestlé Corporation marketed its baby formula in parts of Africa by hiring nurses in local clinics to recommend formula over breast feeding. The nurses convinced mothers that using formula...