In 1970, the New York Times published a Milton Friedman op-ed by the name of A Friedman dotrine– The Social Responsibility Of Business Is to Increase Its Profits [[NYT article][friedman-doctrine]]. It begins with this paragraph.
When I hear businessmen speak eloquently about the “social responsibilities of business in a free‐enterprise system,” I am reminded of the wonderful line about the Frenchman who discovered at, the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are—or would be if they or any one else took them seriously— preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.
Friedman’s motivating observations are:
- Businessmen admit that corporations have social responsibilities, which must be met in order to defend free enterprise/
- The burdening of business with social responsibility is “unadulterated socialism,” which has been undermining the basis for a free society.
Though the introduction draws on Friedman’s view that socialism undermines the basis for a free society, he does not argue that in the article. His thesis has three components:
- For-profit businesses do not have a responsibility to do social good.
- For-profit businesses do have a responsibility to make profit i.e. “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud.”
- The endorsement of social responsibility for businesses amounts to socialism i.e. “the doctrine of ‘social responsibility’ involves the acceptance of the socialist view that political mechanisms, not market mechanisms, are the appropriate way to determine the allocation of scarce resources to alternative uses.”
I am disposed to sympathize with many of Friedman’s conclusions, however, there are many points in his arguments which I find confusing, difficult, and/or just wrong. Given my takes, and the context of A Friedman Doctrine’s being a popular reference for describing “soulless capitalism,” I write this article in order to:
- clarify Friedman’s point of view – his formalizations and arguments
- dispell common misinterpretations
- give my own judgements
- propose some extensions and other modifications of Friedman’s that address my criticisms
A Friedman Doctrine
In this section I present an outline of Friedman’s arguments, along with my own elaborations on his formalizations.
Socialism and “The Cloak of Social Responsibility”
No Collective Responsibility
I like his point of view on this, because I think collectivization of responsibility is a huge flaw in many popular arguments about economics, social justice (and even economic justice? lol).
“There are no ‘social’ values, no ‘social’ responsibilities in any sense other than the shared values and responsibilities of individuals. Society is a collection of individuals and of the various groups they voluntarily form.”
- Ok, then why is it a problem if businesspeople voluntarily take on social responsibilities?
A Special Social Responsibility?
- So does the argument come down to that corporate exec’s have a special social responsibility, beyond being normal humans? This doesn’t quite make sense, but Friedman does not address this fact because he does boil down the “social responsibility of business” to be the social responsibility of the businessmen.
Principles of Effectiveness
- Though Friedman is most loud about the moral principles behind a his defense
of what he calls altogether “a basis for a free society,” he also claims many
times that a free-market system is the most effective at producing social
goods as well.
- Then there is easily the counterfactual point that: if there is a case when it would be more effective to impose a social responsibility on a business, or just give control to the government entirely, why would we not do it? It does not an unprincipled contention, because it relies on another principle that Friedman admits – efficiency.
- Friedman claim “There is nothing that could do more in a brief period to destroy a market system and replace it by a centrally controlled system than effective governmental control of prices and wages” and I agree. But surely there are particular submarkets that might be better to be replaced by centrally controlled systems? Almost all libertarians, such as Friedman, agree that certain privelages should be handed off to the government for a variety of reasons e.g. police, military, democratic rule. Why could there not be any submarket that also meets similar criteria?
Accounting for Non-Profits
“The Robe of Social Responsibility”
- how to do more good by making money at the same time
- TODO: more examples
The Social Responsibility of Business in “A Friedman Doctrine” [[Metagnosis podcast episode][mg-friedman]]
A Friedman dotrine– The Social Responsibility Of Business Is to Increase Its Profits [[NYT article][friedman-doctrine]]
[friedman-doctrine]: https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html [mg-friedman]: https://metagnosis.simplecast.com/episodes/the-social-responsibility-of-business-in-the-friedman-doctrine