Reflection on "The Social Responsibility of Business is to Increase its Profits"

Original Article: http://colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

      In his article, Milton Friedman concludes that in a free market, the only social responsibility of business is to use its resources and engage in free and fair competition that increase its profits. To illustrate his major theme, Friedman approaches his conclusion from the points that:
      - Corporate executive serves as an agent for owners of corporation. When he reduces returns for a corporation to fulfill a social responsibility, he is in effect imposing taxes and deciding on how to spend the proceeds, which raises political questions on principle and consequence.
     - Exercising social responsibility is a justification for actions that are in fact in a corporation's own interest.
     - By exercising social responsibilities, businessmen are calling for government control and are strengthening the already-too-prevalent view that the pursuit of profit is evil, which will do them no good in the long run.

      For Friedman, the most important cultural value is Individualism, which states that people's decisions are independent and are made out of self-interest. He believes when a business makes a decision based on the needs and well-being of the group, it is in fact reducing rather than enhancing the interest of the whole society eventually.

      In the first place, I share Adam Smith's famous statement on "the invisible hand" that by promoting an individual's own interest, he frequently promotes that of society more effectually. However, there should not be a conflict between business and social responsibility. Most rational corporate executives made business decisions out of incentive to promote interest. This would not, and should not, exclude the case of exercising social responsibility. Therefore, it can be reasonably expected that business will assume the social responsibilities that will enhance its own interest in the first place. This will lead to an effective function of the invisible hand. Eventually, business should be able to exercise social responsibility along with truly benefitting the society.