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Social Responsibility and Economics



In Capitalism and Freedom, Nobel Prize winning economist Milton Friedman addressed the issue of social responsibility as it relates to economics. He said that:

The view has been gaining widespread acceptance that corporate officials . . . have a 'social responsibility' that goes beyond the interest 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 businessto use its resources and to engage in activities designed to increase its profits so long as it stays within the rules of the game . . . Few trends could so thoroughly undermine the very foundation 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 (Friedman, 1982, p. 133).

As his statement indicates, Friedman views the concept of social responsibility in the narrow confines of profit and loss. In the early1960s, concepts of economic and social justice, as well as concepts related to environmental protection, began a metamorphosis and expansion. One of the notions being incorporated into the expanded concepts was that all institutions and organizationsincluding business, which derived benefit from being a part of a society, and which separately or collectively affected the direction of a society, had responsibilities to that society which extended beyond "self" interests. Friedman rejected this notion.

Although Friedman's intent was quite clear on the question of the social responsibility of business, his assessment contained one of the notorious "loopholes," which provide a basis for much political discussion (and some profit) in the United States. This loophole in Friedman's (1982, p. 133) assessment is the phrase "so long as ...

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Social Responsibility and Economics. (1969, December 31). In Retrieved 23:59, August 07, 2020, from