Chaning the Social Contract

Ð'* In the following two essays we will consider the social responsibility of corporations. So putting aside the questions of whether corporations are persons or not or what rights and obligations corporations may have, we now consider whether corporations or CEOs owe anything to the public good? Whether corporations can/ought to engage in social action and philanthropy? Does a corporation have nay responsibility beyond the service to its stockholders?

Ð'* Friedman is a Nobel Prize-winning economist (which doesn't necessarily mean he is right). He rejects the notion that corporations owe anything toward the public good. Corporate officials' and labor leaders' moral responsibility is to serve the interests of their stockholders or their membersÐ'--to make them money. For Friedman anything outside of service to stockholders is not only unnecessary but is morally wrong because it represents a misuse of funds. At bottom, Friedman, for many reasons, thinks it is dangerous for corporations to engage in philanthropy.

Corporate social responsibility

Ð'* So long as a business does not commit fraud, conducting business in a society is an exercise of our natural right to liberty.

Ð'* "Natural rights are generally understood to be those entitlements that are held to obtain independent of any sort of voluntary agreement on the part of others"(Intro. 345). Any obligation placed on the businessperson, therefore, is an infringement of his/her right to liberty. Corporations should not engage in changing the world but exist as an expression of freedom within its existing parameters.

Ð'* Corporations acting out of self-interest is in the best interest of everyone.

Ð'* Making as much money possible for shareholders leads to a good social environment. Here Friedman is making the point that when the corporations are left to make money the society benefits from that. So it is not merely that we leaving business people alone to make money, but in doing so we are positively effecting the social environmentÐ'--this is a third-party effect of the freedom to make money. This is only true in so far as we protect the right of freedom, and so social goods can not be legislated from the outside upon business.

Corporate Social Responsibility as a Threat to Freedom

Ð'* Another problem with holding corporations socially responsible is how can Ð''self-selected' private individuals (key and important business persons) determine what is in the best interests of society? Isn't this a kind of hubris and paternalism?

Ð'* "If businessmen are civil servants rather than the employees of their stockholders then in a democracy they will, sooner or later, be chosen by the public techniques of election and appointment."(349-350) Friedman is saying that if business persons show promise for leading in a public role, in a democracy, they will soon find themselves elected to positions of political power outside the business world.

Ð'* If corporations are obligated to contribute to the public good (beyond making money) then eventually all decision making will be done by the governmentÐ'--and this for Friedman equals socialism, which will be the diminution of the public good. For instance, if in