(L7) Friedman: The Social Responsibility of Business Is to Increase Its Profits

Question 1

What is Friedman’s primary argument about business and social responsibility?

Answer 1

Friedman argues that businesses should focus on increasing profits rather than engaging in social responsibilities.

Question 2

What is the role of corporate executives according to Friedman?

Answer 2

Corporate executives should primarily focus on maximizing profits for their employers (the shareholders), while adhering to societal rules and ethical norms.

Question 3

What is Friedman’s critique of Corporate Social Responsibility (CSR)?

Answer 3

Friedman criticizes CSR as a form of socialism and argues that it undermines the basis of a free society.

Question 4

What concern does Friedman raise about business actions and social causes?

Answer 4

Friedman raises the concern that when executives engage in social causes, they are spending someone else’s money (shareholders, customers, employees) for general social interests.

Question 5

What are the consequences of engaging in CSR according to Friedman?

Answer 5

Engaging in CSR can divert resources from core business activities, potentially harming profitability and economic efficiency.

Question 6

Why does Friedman question the effectiveness of business executives in addressing social issues?

Answer 6

Friedman questions their effectiveness because their primary expertise lies in business management, not social welfare.

Question 7

According to Friedman, whose role is it to address social issues?

Answer 7

Friedman argues that addressing social issues should be the role of the government, not businesses.

Question 8

How can socially responsible business actions be justified?

Answer 8

Such actions can be justified if they align with the company’s long-term interests, such as community development for employee welfare.

Question 9

What is Friedman’s view on businessmen and political processes?

Answer 9

He criticizes the involvement of businessmen in political processes through CSR activities, arguing that this could erode free-market principles.

Question 10

How does Friedman contrast market mechanisms and political mechanisms?

Answer 10

He highlights the contrast between market mechanisms based on voluntary cooperation and political mechanisms based on conformity and coercion.

Question 11

What is Friedman’s fundamental view on the social responsibility of business?

Answer 11

Friedman’s view is that the only social responsibility of business is to increase its profits within the framework of legal and ethical norms.