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The Social Responsibility of
Business is to Increase its Profits
-- Milton Friedman
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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.
In fact they are preaching pure and
unadulterated socialism
What about instrumental justice?
What about altering lifestyles and cultures?
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What does it mean to say that business has
responsibilities? Only people have responsibilities
Business is an artificial person
Moral responsibility for amoral enterprise??? Morality : set of rules governing how people
treat one another, Social Contract,
Psychological contract Decision making ability
Corpns: social face, civic identity, functional
identity
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A corporate executive is an agent, his duty is to fulfill
shareholder desires (profits)
Do the shareholders desire only profit, or profit at
any cost?
Do the shareholders actually know/ are in a position
to assess the executives behaviour/decision
Is shareholder preference clear and unmanipulated? Is agency a valid premise for abdicating reason?
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How can the agent tax the owner?
Execute welfare on behalf of the owner?
The owner should be given the surplus to decide its
deployment Executive initiative is accompanied by problem of evaluation
and problem of usurping choice
How different are CSR investments from other strategic
business investments? If the later is not taxation or denial of choice, how can the
former be?
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Economic returns and social returns are inherently at odds with each
other
Executive not aware of the wishes of the principal
The stockholders or the customers or the employees could separately
spend their own money on the particular action if they wished to do so.The executive is exercising a distinct social responsibility rather than
serving as an agent of the stockholders or the customers or the
employees, only if he spent the money in a different way than they would
have spent it.
Are they really at odds? Sustainability or question of business horizon?
What about scale of impact of big business vs. individual?
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Social responsibility comes at the cost of business profits
Social responsibility is govt. role, corporations are not govts.
Corpns. Outside political mechanism so should not practice SR- evaluation
of choices not possible
But are corpns. Actually apolitical?
Are they not acting like govt?
Rule making
Issue resolution, lobbying
Is govt. not withdrawing freeing up space for corporate action?
Subsidies cut down, public-pvt. Partnership
Are they not quasi govts.?
In failed states Lack of law in LDCs
new technologies
When citizenship is beyond reach of sovereign govts?
Global FDI mkts.
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What is the base of corporate power?
Wealth
Patronage Access
Influence in media
All of these impinge on a public role
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Can you think of a public domain/issue with
corporate presence?
Citizenship, autonomy and choice are beingdirectly structured by corporations because of
their role in designing and delivering
entitlements
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Corporate executives are not better informed
about social good?
Do not know individual choices Are unaware of large scale systemic
interactions
Is this not true for business decisions as well? Can this justify doing harm knowingly?
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CSR will bring in govt. into market working
Bring in state control and conformity
Will distort market mechanism
Is the mechanism not already distorted?
Will it bring in govt. or keep govt. at bay?
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Citizenship has three components
Status: defining characteristic, inclusionary and
exclusionary
Entitlement: civil, political and social rights
Process: processes of political participation
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Meaning
Individual responsibility vs. Business
responsibility.
Acorporation is an artificial person and in this
sense may have artificial responsibilities.
Includes businessmen, which means individual
proprietors or corporate executives.
Employer responsibility vs. Employee
responsibility.
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EMPLOYEES RESPONSIBILTIES
Conduct the business in accordance withemployers desires.
Within the law and those embodied in ethical
customs.
Depends on nature of business-Profit vs. NonProfit or social Work.
Other responsibilities -to his family, hisconscience, his feelings of charity, his church,his clubs, his city, his country.
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Social Responsibility
May come in way of responsibility towards
business.
Conflict of intrest.( Corporate vs. Social) How to earn and how to spend?
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Roles of businessman
Here the businessman--self-selected or appointeddirectly or indirectly by stockholders--is to besimultaneously legislator, executive and jurist.
To restrain inflation, improve the environment,fight poverty and so on and on.
Doctrine of "social responsibility" involves theacceptance of the socialist view that politicalmechanisms, not market mechanisms, are theappropriate way to determine the allocation ofscarce resources to alternative uses.
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Contd.
Public Sector vs. Private Sector
Self run business Vs. Stockholders run
business-different roles. Rationalization of actions(balanced).
Short-sightedness may lead to not fit to
survival in the long run.
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POLITICAL MECHANISM Principle of unanimity. Ideal free market.
Voluntary participation for social benefits.
Shared values and responsibilities ofindividuals.
Society is a collection of individuals and of the
various groups they voluntarily form.
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CONCLUSION
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 or fraud."