Western Washington University Western Washington University ------------------------------------------------------------------------- --------------------------------

Business and its Environment

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Discussion Questions for Friedman:

1) In addressing the concept of the social responsibility of business, Freidman claims that those who support the notion “In fact…are--or would be if they or anyone else took them seriously--preaching pure and unadulterated socialism.” In what ways is this claim true? In what ways is it false?

2) Friedman claims that “Only people 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.” Is it true that only people have responsibilities? If not moral responsibilities, what kind of responsibilities might corporations have?

3) Friedman argues that “In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers.” The implication is that corporate executives have no responsibilities beyond those to the shareholders. Is this true? What other responsibilities might executives have? What is the basis for these other responsibilities?

4) Friedman claims “The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal.” He further states “This justification disappears when the corporate executive…spends the proceeds for ‘social’ purposes.” How might an executive balance his duty to shareholders with the duty to respect a broader ‘social contract’?

5) Friedman suggests “Whether blameworthy or not, the use of the cloak of social responsibility, and the nonsense spoken in its name by influential and prestigious businessmen, does clearly harm the foundations of a free society.” True? If so, in what way does the notion of corporate social responsibility ‘harm the foundations of a free society’?

6) In his book Capitalism and Freedom, Friedman has called corporate social responsibility “a ‘fundamentally subversive doctrine’ in a free society,” and has furthermore said that in such a society, "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." Is this an accurate characterization of the social responsibility of business? Are there other ‘duties’ to which corporate executives must attend? If so, what is the ‘grounding’ for these other obligations?

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