The-Social-Responsibility-of-Business-is-to-Increa

TheSocialResponsibilityofBusinessistoIncreaseitsProfitsMiltonFriedmanTheNewYorkTimesMagazineSeptember13,1970WhenIhearbusinessmenspeakeloquentlyaboutthesocialresponsibilitiesofbusinessinafree-enterprisesystem,IamremindedofthewonderfullineabouttheFrenchmanwhodiscoveredattheageof70thathehadbeenspeakingproseallhislife.Thebusinessmenbelievethattheyaredefendingfreeenterprisewhentheydeclaimthatbusinessisnotconcernedmerelywithprofitbutalsowithpromotingdesirablesocialends;thatbusinesshasasocialconscienceandtakesseriouslyitsresponsibilitiesforprovidingemployment,eliminatingdiscrimination,avoidingpollutionandwhateverelsemaybethecatchwordsofthecontemporarycropofreformers.Infacttheyare--orwouldbeiftheyoranyoneelsetookthemseriously--preachingpureandunadulteratedsocialism.Businessmenwhotalkthiswayareunwittingpuppetsoftheintellectualforcesthathavebeenunderminingthebasisofafreesocietythesepastdecades.Thediscussionsofthesocialresponsibilitiesofbusinessarenotablefortheiranalyticalloosenessandlackofrigor.Whatdoesitmeantosaythatbusinesshasresponsibilities?Onlypeoplehaveresponsibilities.Acorporationisanartificialpersonandinthissensemayhaveartificialresponsibilities,butbusinessasawholecannotbesaidtohaveresponsibilities,eveninthisvaguesense.Thefirststeptowardclarityinexaminingthedoctrineofthesocialresponsibilityofbusinessistoaskpreciselywhatitimpliesforwhom.Presumably,theindividualswhoaretoberesponsiblearebusinessmen,whichmeansindividualproprietorsorcorporateexecutives.Mostofthediscussionofsocialresponsibilityisdirectedatcorporations,soinwhatfollowsIshallmostlyneglecttheindividualproprietorsandspeakofcorporateexecutives.Inafree-enterprise,private-propertysystem,acorporateexecutiveisanemployeeoftheownersofthebusiness.Hehasdirectresponsibilitytohisemployers.Thatresponsibilityistoconductthebusinessinaccordancewiththeirdesires,whichgenerallywillbetomakeasmuchmoneyaspossiblewhileconformingtotheirbasicrulesofthesociety,boththoseembodiedinlawandthoseembodiedinethicalcustom.Ofcourse,insomecaseshisemployersmayhaveadifferentobjective.Agroupofpersonsmightestablishacorporationforaneleemosynarypurpose--forexample,ahospitaloraschool.Themanagerofsuchacorporationwillnothavemoneyprofitashisobjectivesbuttherenderingofcertainservices.Ineithercase,thekeypointisthat,inhiscapacityasacorporateexecutive,themanageristheagentoftheindividualswhoownthecorporationorestablishtheeleemosynaryinstitution,andhisprimaryresponsibilityistothem.Needlesstosay,thisdoesnotmeanthatitiseasytojudgehowwellheisperforminghistask.Butatleastthecriterionofperformanceisstraight-forward,andthepersonsamongwhomavoluntarycontractualarrangementexistsareclearlydefined.Ofcourse,thecorporateexecutiveisalsoapersoninhisownright.Asaperson,hemayhavemanyotherresponsibilitiesthatherecognizesorassumesvoluntarily--tohisfamily,hisconscience,hisfeelingsofcharity,hischurch,hisclubs,hiscity,hiscountry.Hemayfeelimpelledbytheseresponsibilitiestodevotepartofhisincometocausesheregardsasworthy,torefusetoworkforparticularcorporations,eventoleavehisjob,forexample,tojoinhiscountry'sarmedforces.Ifwewish,wemayrefertosomeoftheseresponsibilitiesassocialresponsibilities.Butintheserespectsheisactingasaprincipal,notanagent;heisspendinghisownmoneyortimeorenergy,notthemoneyofhisemployersorthetimeorenergyhehascontractedtodevotetotheirpurposes.Ifthesearesocialresponsibilities,theyarethesocialresponsibilitiesofindividuals,notbusiness.Whatdoesitmeantosaythatthecorporateexecutivehasasocialresponsibilityinhiscapacityasbusinessman?Ifthisstatementisnotpurerhetoric,itmustmeanthatheistoactinsomewaythatisnotintheinterestofhisemployers.Forexample,thatheistorefrainfromincreasingthepriceoftheproductinordertocontributetothesocialobjectiveofpreventinginflation,eventhoughapriceincreasewouldbeinthebestinterestsofthecorporation.Orthatheistomakeexpendituresonreducingpollutionbeyondtheamountthatisinthebestinterestsofthecorporationorthatisrequiredbylawinordertocontributetothesocialobjectiveofimprovingtheenvironment.Orthat,attheexpenseofcorporateprofits,heistohirehardcoreunemployedinsteadofbetterqualifiedavailableworkmentocontributetothesocialobjectiveofreducingpoverty.Ineachofthesecases,thecorporateexecutivewouldbespendingsomeoneelse'smoneyforageneralsocialinterest.Insofarashisactionsinaccordwithhissocialresponsibilityreducereturnstostockholders,heisspendingtheirmoney.Insofarashisactionsraisethepricetocustomers,heisspendingthecustomers'money.Insofarashisactionslowerthewagesofsomeemployees,heisspendingtheirmoney.Thestockholdersorthecustomersortheemployeescouldseparatelyspendtheirownmoneyontheparticularactioniftheywishedtodoso.Theexecutiveisexercisingadistinctsocialresponsibility,ratherthanservingasanagentofthestockholdersorthecustomersortheemployees,onlyifhespendsthemoneyinadifferentwaythantheywouldhavespentit.Butifhedoesthis,heisineffectimposingtaxes,ontheonehand,anddecidinghowthetaxproceedsshallbespent,ontheother.Thisprocessraisespoliticalquestionsontwolevels:principleandconsequences.Onthelevelofpoliticalprinciple,theimpositionoftaxesand