Week 3 Stockholder Friedman - Week 3: Stockholder Theory...

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Week 3: Stockholder Theory SOSC 3040 Corporate Social Responsibility
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Milton Friedman 1912-2006 Econ Nobel 1976 Monetarist theorist [ A Monetary History of the United States (1963)] Libertarian (classical liberal, laissez-faire) theorist, advocate Capitalism & Freedom (1962), Free to Choose (TV series & book 1980) Major influence on neoliberalism
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“The SR of Business is to Increase Its Profits” Friedman’s famous 1970 magazine article Thesis: SR of business is (only) to maximize profit within law and fair competition (stockholder theory) Critique of CSR (as understood per stakeholder theory)
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Analytic issues : (a) what are MF’s arguments against (strong, stakeholder) CSR? (b) what’s bugging MF about CSR?
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What’s bugging Friedman? Problem: the article mostly consists of explicit arguments not really relevant to (b) To answer (b) we need to: i) attend to MF’s rhetoric in the article; and ii) use background knowledge about MF’s other views
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E.g. of MF’s worry about CSR: Claim: business people who say that business not concerned only with profit but also promoting desirable social ends think they are defending capitalism but are “unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades” Question: what “forces” is he referring to?
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Non-Consequentialist Explicit Argument I . principal-agent argument: CSR as spending other people’s money, violation of fiduciary duty on part of management
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Non-Consequentialist Explicit Argument II Democratic process arguments: A: taxation without representation
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This note was uploaded on 11/16/2010 for the course NATURAL SC NATS 1505 taught by Professor Isley during the Spring '10 term at Columbia State Community College.

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Week 3 Stockholder Friedman - Week 3: Stockholder Theory...

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