Question

In the field of economics, there are few men who cast a bigger shadow than Milton Friedman. One of his (among many) central ideas is the Friedman Doctrine which states that corporations have no social responsibility (as long as they play by the rules) beyond profit maximization. This approach is often criticized by those that believe corporations should be good "corporate citizens".  

You will research the life and career of Milton Friedman providing an overview of his life and main economic theories paying particular close attention to the finer points of the Friedman doctrine. The paper should focus on these main ideas and use at least 3 outside resources:

1. What was Friedman's educational background?

2. What school of thought is he associated with?

3. What are some concepts attributed to him (Friedman doctrine must be explained in detail)?

4. What is your personal position on the responsibility of corporations to society?

5. Can a company be socially responsible and maximize profits (give examples!)?

Answer 1

1.Friedman was one year old when his family moved from Brooklyn, New York, to Rahway, New Jersey, where he grew up. He won a scholarship to Rutgers University, studied mathematics and economics, and earned a bachelor's degree there in 1932.

2.Milton Friedman was an American economist and statistician best known for his strong belief in free-market capitalism. During his time as a professor at the University of Chicago, Friedman developed numerous free-market theories that opposed the views of traditional Keynesian economists.

3.Friedman believed in the free market system, where the prices people pay for things are agreed upon by the buyers and sellers with little or no control by the government.

Stockholder Theory

One of Milton Friedman's more controversial theories, known as the Stockholder Theory or the Friedman Doctrine, is that a company's only social responsibility is to increase profits for the owners (stockholders), as long as it doesn't engage in deception or fraud.

Theory of Consumption

According to this theory people will make decisions on spending based on what we think our income will be over time, what Friedman called our 'permanent income,' and not just our current income, which may be higher.

4. Corporations have immense responsibility towards society. The purpose of corporate social responsibility is to give back to the community, take part in philanthropic causes, and provide positive social value. Businesses are increasingly turning to CSR to make a difference and build a positive brand around their company.They should contribute to reducing pollution, helping poor and needy, removing poverty and inequality, helping the economy at times of pandemic, natural disasters and other such clamities.