In today’s world, Milton Friedman’s words that the social responsibility of business is to increase profits sound too radical. Fifty years ago, however, the world at large and the way the economy was structured were completely different. Back then, corporate social responsibility was mostly limited to charitable donations. In this context, Friedman counted on the fact that the CEO of a company was an employee hired by the owners of that company (Posner, 2019). Friedman believed that a director’s only goal could be to improve the company’s results and increase profits, naturally within the limits of the law and moral principles (Posner, 2019). It is no longer possible to agree with the view that companies exist solely for the benefit of company owners.
Changes in the way the market works in today’s world can be seen everywhere. The younger generation rejects traditional capitalism and chooses brands with higher principles than old-style shareholders. The climate crisis, pollution, and lack of respect for human rights are problems businesses can no longer ignore. Achieving maximum profits will become impossible if the company neglects the principles of ecology and ethics in production. Consumers will respond by boycotting the firm, forcing it to adapt to the new market realities. Friedman might have said that shareholders’ desire to invest in firms that adhere to sustainability principles is also dictated by the desire to make a profit. However, this is still not the case since dramatic changes in the strategies of companies and investors can be motivated solely by good intentions, too. There is also the question of why increasing profits and supporting green industries should be considered mutually exclusive concepts. Ultimately, it must be concluded that companies exist to a much greater extent for the benefit of the stakeholders.
Reference
Posner, E. (2019). Milton Friedman was wrong. The Atlantic. Web.