Question

What does Friedman believe is the sole social responsibility of business? Granted this view, what is the proper role of a corporate executive? How does Friedman understand the general claim that corporate officers should have “social responsibilities”? Friedman claims that an executive who considers social responsibilities that are not in the interest of the stockholders has become an unelected civil servant. What does Friedman mean by this claim, and why is this contrary to the good of a free market economy?

Answer 1

According to Friedman, the only social responsibility of business is to use its resources in activities to increase its profit by following all the rules and without involving and deceits and frauds. Friedman claims that the executives’ job is to work for the company in their respective roles but when the company decides to involve in social responsibilities in order to help the society when it is in need. Although some say this will increase the connection with the society and would bring more business, it’s done in the stockholders money which is not decided by the stockholders. Thus when the executives are asked by the company to decide on the social responsibility activities, they become unelected civil servants. Friedman further says that the social responsibility of the business should be decided by all the stockholders thus involving everyone in the process because it’s beyond the sole responsibility of the company, making profit.