The recent passing of renowned economist Milton Friedman recalls the argument about social responsibility and business. Friedman famously debunked the idea of corporate social responsibility when he rhetorically asked, “What does it mean to say that ‘business’ has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities, even in this vague sense.”
Ever the advocate of free markets, he went on to say "there is one and only one social responsibility of business–to use its resources and 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 or fraud." Source: The New York Times Magazine, September 13, 1970. Click here for the full text of the article.
Milton Friedman believed that the primary responsibility of the corporate executive is to serve the interests of the corporate shareholders. A broader view is that the interests of shareholders and other stakeholders are connected, therefore, by serving the interests of all stakeholders the corporation is serving the best interests of its shareholders as well.
The debate continues but companies increasingly see the imperative to serve all stakeholders. While Friedman’s view on corporate responsibility may be falling out of favor today, his legacy of free market philosophy lives on.