TheSocialResponsibilityofBusinessistoIncreaseitsProfitsbyMiltonFriedmanTheNewYorkTimesMagazine,September13,1970.Copyright@1970byTheNewYorkTimesCompany.WhenIhearbusinessmenspeakeloquentlyaboutthesocialresponsibilitiesofbusinessinafree-enterprisesystem,IamremindedofthewonderfullineabouttheFrenchmanwhodiscoveredattheageof70thathehadbeenspeakingproseallhislife.Thebusinessmenbelievethattheyaredefendingfreeen!terprisewhentheydeclaimthatbusinessisnotconcernedmerelywithprofitbutalsowithpromotingdesirablesocialends;thatbusinesshasasocialconscienceandtakesseriouslyitsresponsibilitiesforprovidingemployment,eliminatingdiscrimination,avoidingpollutionandwhateverelsemaybethecatchwordsofthecontemporarycropofreformers.Infacttheyare–orwouldbeiftheyoranyoneelsetookthemseriously–preachingpureandunadulteratedsocialism.Businessmenwhotalkthiswayareunwittingpuppetsoftheintellectualforcesthathavebeenunderminingthebasisofafreesocietythesepastdecades.Thediscussionsofthesocialresponsibilitiesofbusinessarenotablefortheiranalyticalloosenessandlackofrigor.Whatdoesitmeantosaythatbusinesshasresponsibilities?Onlypeoplecanhaveresponsibilities.Acorporationisanartificialpersonandinthissensemayhaveartificialresponsibilities,butbusinessasawholecannotbesaidtohaveresponsibilities,eveninthisvaguesense.Thefirststeptowardclarityinexaminingthedoctrineofthesocialresponsibilityofbusinessistoaskpreciselywhatitimpliesforwhom.Presumably,theindividualswhoaretoberesponsiblearebusinessmen,whichmeansindividualproprietorsorcorporateexecutives.Mostofthediscussionofsocialresponsibilityisdirectedatcorporations,soinwhatfollowsIshallmostlyneglecttheindividualproprietorsandspeakofcorporateexecutives.Inafree-enterprise,private-propertysystem,acorporateexecutiveisanemployeeoftheownersofthebusiness.Hehasdirectresponsibilitytohisemployers.Thatresponsibilityistoconductthebusinessinaccordancewiththeirdesires,whichgenerallywillbetomakeasmuchmoneyaspossiblewhilecon!formingtothebasicrulesofthesociety,boththoseembodiedinlawandthoseembodiedinethicalcustom.Ofcourse,insomecaseshisemployersmayhaveadifferentobjective.Agroupofpersonsmightestablishacorporationforaneleemosynarypurpose–forexample,ahospitaloraschool.Themanagerofsuchacorporationwillnothavemoneyprofitashisobjectivebuttherenderingofcertainservices.Ineithercase,thekeypointisthat,inhiscapacityasacorporateexecutive,themanageristheagentoftheindividualswhoownthecorporationorestablishtheeleemosynaryinstitution,andhisprimaryresponsibilityistothem.Needlesstosay,thisdoesnotmeanthatitiseasytojudgehowwellheisperforminghistask.Butatleastthecriterionofperformanceisstraightforward,andthepersonsamongwhomavoluntarycontractualarrangementexistsareclearlydefined.Ofcourse,thecorporateexecutiveisalsoapersoninhisownright.Asaperson,hemayhavemanyotherresponsibilitiesthatherecognizesorassumesvoluntarily–tohisfamily,hisconscience,hisfeelingsofcharity,hischurch,hisclubs,hiscity,hiscountry.Hema}.feelimpelledbytheseresponsibilitiestodevotepartofhisincometocausesheregardsasworthy,torefusetoworkforparticularcorporations,eventoleavehisjob,forexample,tojoinhiscountry'sarmedforces.Ifwewish,wemayrefertosomeoftheseresponsibilitiesassocialresponsibilities.Butintheserespectsheisactingasaprincipal,notanagent;heisspendinghisownmoneyortimeorenergy,notthemoneyofhisemployersorthetimeorenergyhehascontractedtodevotetotheirpurposes.Ifthesearesocialresponsibilities,theyarethesocialresponsibilitiesofindividuals,notofbusiness.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.Onthelevelo