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The Social Responsibility of

Business is to Increase its Profits

-- Milton Friedman

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The businessmen believe that they are

defending free enterprise when they declaim

that business is not concerned merely with

profit but also with promoting desirable

social ends.

In fact they are preaching pure and

unadulterated socialism

What about instrumental justice?

What about altering lifestyles and cultures?

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What does it mean to say that business has

responsibilities? Only people have responsibilities

Business is an artificial person

Moral responsibility for amoral enterprise??? Morality : set of rules governing how people

treat one another, Social Contract,

Psychological contract Decision making ability

Corpns: social face, civic identity, functional

identity

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A corporate executive is an agent, his duty is to fulfill

shareholder desires (profits)

Do the shareholders desire only profit, or profit at

any cost?

Do the shareholders actually know/ are in a position

to assess the executives behaviour/decision

Is shareholder preference clear and unmanipulated? Is agency a valid premise for abdicating reason?

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How can the agent tax the owner?

Execute welfare on behalf of the owner?

The owner should be given the surplus to decide its

deployment Executive initiative is accompanied by problem of evaluation

and problem of usurping choice

How different are CSR investments from other strategic

business investments? If the later is not taxation or denial of choice, how can the

former be?

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Economic returns and social returns are inherently at odds with each

other

Executive not aware of the wishes of the principal

The stockholders or the customers or the employees could separately

spend their own money on the particular action if they wished to do so.The executive is exercising a distinct social responsibility rather than

serving as an agent of the stockholders or the customers or the

employees, only if he spent the money in a different way than they would

have spent it.

Are they really at odds? Sustainability or question of business horizon?

What about scale of impact of big business vs. individual?

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Social responsibility comes at the cost of business profits

Social responsibility is govt. role, corporations are not govts.

Corpns. Outside political mechanism so should not practice SR- evaluation

of choices not possible

But are corpns. Actually apolitical?

Are they not acting like govt?

Rule making

Issue resolution, lobbying

Is govt. not withdrawing freeing up space for corporate action?

Subsidies cut down, public-pvt. Partnership

Are they not quasi govts.?

In failed states Lack of law in LDCs

new technologies

When citizenship is beyond reach of sovereign govts?

Global FDI mkts.

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What is the base of corporate power?

Wealth

Patronage Access

Influence in media

All of these impinge on a public role

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Can you think of a public domain/issue with

corporate presence?

Citizenship, autonomy and choice are beingdirectly structured by corporations because of

their role in designing and delivering

entitlements

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Corporate executives are not better informed

about social good?

Do not know individual choices Are unaware of large scale systemic

interactions

Is this not true for business decisions as well? Can this justify doing harm knowingly?

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CSR will bring in govt. into market working

Bring in state control and conformity

Will distort market mechanism

Is the mechanism not already distorted?

Will it bring in govt. or keep govt. at bay?

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Citizenship has three components

Status: defining characteristic, inclusionary and

exclusionary

Entitlement: civil, political and social rights

Process: processes of political participation

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Meaning

Individual responsibility vs. Business

responsibility.

Acorporation is an artificial person and in this

sense may have artificial responsibilities.

Includes businessmen, which means individual

proprietors or corporate executives.

Employer responsibility vs. Employee

responsibility.

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EMPLOYEES RESPONSIBILTIES

Conduct the business in accordance withemployers desires.

Within the law and those embodied in ethical

customs.

Depends on nature of business-Profit vs. NonProfit or social Work.

Other responsibilities -to his family, hisconscience, his feelings of charity, his church,his clubs, his city, his country.

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Social Responsibility

May come in way of responsibility towards

business.

Conflict of intrest.( Corporate vs. Social) How to earn and how to spend?

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Roles of businessman

Here the businessman--self-selected or appointeddirectly or indirectly by stockholders--is to besimultaneously legislator, executive and jurist.

To restrain inflation, improve the environment,fight poverty and so on and on.

Doctrine of "social responsibility" involves theacceptance of the socialist view that politicalmechanisms, not market mechanisms, are theappropriate way to determine the allocation ofscarce resources to alternative uses.

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Contd.

Public Sector vs. Private Sector

Self run business Vs. Stockholders run

business-different roles. Rationalization of actions(balanced).

Short-sightedness may lead to not fit to

survival in the long run.

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POLITICAL MECHANISM Principle of unanimity. Ideal free market.

Voluntary participation for social benefits.

Shared values and responsibilities ofindividuals.

Society is a collection of individuals and of the

various groups they voluntarily form.

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CONCLUSION

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."