6 - Class#6 Modern Conceptions of The Free Market Allowing...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Class #6 Modern Conceptions of The Free Market: Allowing Firms to Act in Their Own Self Interest Adam Smith Antigovernment? Probusiness? Today: A more modern View: Free Market & Firms acting in their own Interest Milton Fiedman Milton Friedman 1912 2006 1976 Nobel Prize Economics "There are very few people over the generations who have ideas that are sufficiently original to materially alter the direction of civilization. Milton is one of those very few people." Alan Greenspan Milton Friedman What is the essence of the free market? What are its values? The role of government "Social Responsibility?" Milton Friedman The Free Market Voluntary Exchange Information Exchange Relations The possibility of coordination through Friedman, Capitalism and Freedom (2002 Edition), p.13. voluntary cooperation rests on the elementary yet frequently denied proposition that both parties to an economic transaction benefit from it, provided the transaction is bilaterally voluntary and informed. Milton Friedman The widespread use of the market reduces the strain on the social fabric by rendering conformity unnecessary with respect to any activity it encompasses. The wider the range of activities covered by the market, the fewer are the issues on which explicit political decisions are required and hence on which it is necessary to achieve agreement. In turn, the fewer the issues on which getting agreement is necessary, the greater the likelihood of getting agreement while maintaining a free society. Milton Friedman, Capitalism and Freedom (1962, 2002): p. 24. Milton Friedman What is the essence of the free market? What are its values? The role of government "Social Responsibility?" Friedman on CSR The view has been gaining widespread acceptance that corporate officials... have a "social responsibility" that extends beyond serving the interests of their stockholders.... This view shows a fundamental misconception of the character and nature of a free economy. In such an economy, there is one and only one social responsibility of business--to use its resources ad 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 and fraud. Milton Friedman, Capitalism and Freedom (1962, 2002): pp. 1334. Friedman on CSR Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine. If businessmen do have a social responsibility other than making maximum profits for stockholders, how are they to know what it is? Can self selected private individuals decide what the social interest is? Can they decide how great a burden they are justified in placing on themselves or their stockholders to serve that social interest? Milton Friedman, Capitalism and Freedom (1962, 2002): pp. 1334. ...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online