Corporate Social Responsibility Essay

Evaluate Milton Friedman’s statement

In his discussion article publish on The New York Times Magazine (1970), Friedman Milton, a Nobel Laureate economist, stated: “The one and only social responsibility of business is to increase its profits.” This famous statement is considered a remarkable argument in regard to the debate on Corporate Social Responsibility (CSR) of a business, which has been on-going for at least the past six decades. In response to such controversial, this essay is going to discuss and evaluate the value and appropriateness of Milton’s statement in particular, and review the recent disputes on CSR in general.

Definition of social responsibility and CSR

The issue of social responsibility of a business has been held on discoursed since the 1930s, observing from the publication of Chester Barnard’s (1928) The Functions of the Executive, J. M. Clark’s (1939) Social Control of Business, and Theodore Kreps’ (1940) Measurement of the Social Performance of Business, and a poll on social responsibilities by Fortune magazine (1946)^[1]. However, it was not until 1953 that the first definition of CSR was initiated, in Howard R. Bowen’s publication (1953), stating: “It (CSR) refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.”^[2] From then on, there have been various extensions, alterations and developments in defining the term CSR. Keith Davis argues that social responsibility refers to “businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economics or technical interest.”^[3] While such studies observe social responsibility as measures of a firm for the sake of the society only, Carroll’s pyramid model (1979) suggests a broader, more in-depth definition for this issue. The model, which is considered one of the most notable works on establishing the theoretical analysis for CSR, indicates that there are four levels of a business’ social responsibility, including: economic, legal, ethical and discretionary acts in favor of the society.^[4] 

The debate on Milton Friedman’s statement

The definition of social responsibility, as well as its elaborate clarification, set forth by Carroll (1979), may serve as a good rationale for Milton Friedman’s statement. Carroll indicates that a business institution is a basic economic unit, hence, its responsibility is to produce, sell and make profit, while all other roles are not obligatory and may be fulfilled by the voluntariness of that institution. This indication well conforms to Friedman’s argument, in the sense that a business solely focuses on making profits from production and sales. That is the essential purpose and also fundamental requirement for the establishment and existence of a business in the society.