The Social responsibility to

increase profits in Business by

Milton Friedman

by Amir, Yifan, Silvia and

Antonio
Principal versus
Agent

★ The corporate executive is selected by the

stockholders for the executive to be an agent
serving the interests of the principal
(stockholders)
★ Management is spending Stockholders money
not his own
★ Responsibility to his employers
Does a corporate
executive have a
social responsibility?

★ Social responsibility is the Government's job to

impose taxes and determine expenditure for
¨social¨purposes
★ Attributing the social responsibility to executives
they are saying that undemocratic (not voted)
procedures are faster than democratic
Masked Socialism

★ Businessmen boycott themselves in the long run

★ Advocating social responsibility supports the view
that the ¨pursuit of profits is wicked and immoral
and must be curbed and controlled by external
forces¨
★ The Iron fist of Government bureaucrats
Unanimity vs
Conformity

★ Political principle in the market mechanism is unanimity

○ ¨ In an ideal free market resting on private property, no
individual can coerce any other, cooperation is voluntary…¨
★ Underlying the political principle is conformity
○ you must conform when a social general interest or majority
overrules you.
★ Unanimity is not as unavoidable as is conformity
★ Free society, business get profits while following the rules, open
and free competition without fraud
Opinions

★ The successes or failures of a corporates

○ The bottom line results ?
★ Shareholders Vs. Stakeholders
★ Social responsibility=Enemy of Capitalism?
★ A fiduciary duty for a firm?
★ Various capacities as members of society (consumers, suppliers,
investors,employees)
○ Good citizenship
Thank you for listening