Milton Friedman on Corporate Social Responsibility
Added on 2021-04-19
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Running head: CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSRCritical Review of Friedman’s essay on CSRName of the Student:Name of the University:Author Note:
1CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSRCorporate Social Responsibilities, also known as CSR is the integration of corporateregulations in the business model to perform activities in proper compliance with the social,legal, ethical, national and international norms. Corporate social responsibilities help thebusinesses to increase their profits in the long-term by establishing positive relations with thecustomers and the stakeholders that ultimately enables them to reduce business risks and raisethe ethical standards (Blowfield and Murray 2014). The CSR also helps the companies tofunction without causing any negative impact on the society as well as the environment thatultimately indicates a healthy economy. The essay critically analyzes the views expressed byFriedman that deviates from the common notion of the CSR. It evaluates the idea with varyingperspectives and highlights the different aspects that serve to be the loopholes for Friedman’sconcept. The study on the alternative perspectives denotes the importance of CSR and connotethat companies today engage themselves in performing the CSR to proceed with their businessrenderings in an effective way. Milton Friedman’s essay on Corporate Social Responsibility is a very famous one thatcompletely deviates from the generally considered notion of every organization who has someresponsibilities to perform for the society. It argues that an organization, unlike a person cannothave responsibility for the society. The essay is very simple and straightforward in its portrayal,expressed in Friedman’s book Capitalism and Freedom, publishes in the year 1962. The essayreached the larger population when it came as an article in the New York Times Magazine in1970 (Orlitzky 2015). The onset of the essay clearly highlights the chief idea of the entire article,which shows the utmost use of resources and aim of profit making to be the sole concerns of anyindustry. Thus, according to Friedman, the only social responsibility of the operating industries isto incur and increase profits in the businesses.
2CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSRThrough his essay, Friedman wants to persuade every reader that socialism is necessarilyunethical and evil in all its forms. It is not something to be performed and justified for profit-making companies (Bosch-Badia, Montllor-Serrats and Tarrazon 2013). Friedman wantseveryone to accept that responsibilities are something that the people have, be it legal, social,moral, or ethical. He establishes that the only responsibility surfacing in the industries is the oneof the executive or managerial head towards the employees and shareholders. He strongly claimsin the essay that any industry is operational for getting economic returns that stands in sharpcontrast to the social returns. Friedman stresses that any company needs to deviate fromdeception and focus more on the competition prevailing in the free market system that makes itmore profit-oriented. He views the concept of corporate social responsibilities to be irrelevantconsidering the market structure of the various economies. He elevates the responsible attitude ofthe businesses to adhere by the rules of the market in which it is operating and adopt newtechnologies for greater production. Friedman claims that a corporation can have responsibilities since it is viewed as anartificial person. That automatically makes the responsibilities artificial. However, he calls it avague idea to consider businesses to have any responsibility. He says that it can be the businessoperator and corporate head who can have certain responsibilities, which necessarily does notimpose that the entire business ahs any social responsibilities to perform. The corporate headhave responsibilities towards his employers since all his actions at work are in accordance totheir desires. He imbibes the connotation of making more profits as the only desire that anybusiness owner can have (Orlitzky 2015). He however, also hints at the other motives that can bea driving force of many entrepreneurs as to serve the society through their business, as in thecase of schools and hospitals. In these cases too, the managers are only responsible to the
3CRITICAL REVIEW OF FRIEDMAN’S ESSAY ON CSRentrepreneurs who function according to their direction and orders, without performing anyresponsibility towards the society. He in his analysis of the corporation head or the managerclaims that all the responsibilities that he performs towards his family or his will to chooseindustry for working fall under his individual responsibilities that has nothing related to CSR.Friedman argues that any business would make huge recruitment to eliminate unemployment,decrease emissions from business to make a pollution free environment or decrease the prices oftheir products with no profits in order to be socially responsible. He claims that the executivewould be engaging in performing such responsibilities with someone else’s money by loweringwages of the present employees, reducing returns to stockholders, which together indicate a totalcollapse of the business. He also addresses the taxation system of businesses and portrays thecorporate head to be the legislator, executive and jurist of his/her own business who can levy taxaccording to will. He draws a parallel situation of the corporate executives with the politicalmachinery in order to distinguish the responsibilities that they both perform in respect to thesociety. Friedman persuades the readers by bringing in the example of the unions in U.S whohave restricted the Government to interfere in the market scenario. He also says the Governmentimposes rules on pollution control measures or use of resources that the businesses are bound tofollow. However, this does not coincide with the social responsibility of the companies. Hefinally asserts that incorporating CSR seriously in businesses would lead to a greater integrationof political mechanisms in the business processes. Such connotation to the doctrine ofcollectivism would harm the business in the long term with negligible or no profits. Thus,Friedman identifies the CSR to be the garments that justify the actions of the businesses withoutincurring anything that is productive for the industries.
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