The slides were part of an in-class discussion around two articles from Milton Friedman and Thomas Mulligan. This is only for the purpose of the in-class discussion and not to be used for anything beyond that.

1. Social Responsibility of Business is to Increase its Profits
Girish Chandra Ananthanarayana

2. •“Businessmen … are unwitting puppets of the intellectual forces that have been undermining the basis of free society these past decades”
•Corporation, an “artificial person”, may have artificial responsibilities, but Business cannot be said to have responsibilities even in vague sense
•Are Business and Corporation really different?
•“Corporate executive is an employee of the owners of the business”
•“Eleemosynary Purpose”

3. •el·ee·mos·y·nar·y(/ˌeləˈmäsəˌnerē,ˌelēə-/)
•of, relating to, or dependent on charity; charitable
•“AGENT” Vs “PRINCIPAL”
•For a corporate executive to be “socially responsible” is to act in a way that is not in the interest of his employers
•Its like spending someone else’ money for a general social interest
•Being “socially responsible” is akin to “imposing taxes”; Its Govt’sjob to tax and do “social good”!

4. •Raises political questions at Principle and Consequence level
•Principle:
•“taxation without representation”, what does that mean?
•government imposing taxes without citizens’ consent, or without an actual representative to express views on taxation decision.
•Businessman as a simultaneous legislator, executive and a jurist
•Consequence
•How is the executive to know what action will contribute to the social good?
•Will not the stockholders, customers and employees desert him for others?

5. •“Social responsibility” of organization as undemocratic
•“stockholders trying to get other stockholders to contribute against their will to “social” causes…”
•“hypocritical window-dressing” and “nonsense spoken in its [cloak of social responsibility’s] name by influential and prestigious businessmen” clearly harm the foundations of a free society.
•How does Friedman describe the socially responsible approach
•“schizophrenic character of many businessmen”
•“incredibly short-sighted and muddle headed”
•“suicidal impulse”

6. •Principle
•Profit pursuit is the primary motive (and all that matters) for corporation and its stockholders
•With the focus entirely on profits, businesses infactmake more profit
•Market, Brand Image, Customer Loyalty and Profit
•Social Responsibility will NOT result in profit
•Customers do not care for the CSR activities of a corporation in making decisions on its products
•Customers are self-centered, and customer choices do not evolve

7. •Decision Making, Stockholders and Policy Making
•Decision on CSR is taken solely by an executive without consultation (“representation”)
•Stockholders do not know that CSR is included in their corporate communication of values and strategies (could be as part of a long term strategy)
•Stockholders are not interested in the firm’s CSR involvement
•There are no benefits (Govt. tax reliefs etc) for corporation’s CSR activities
•Govt. works for the people and corporation is an agent (corporations have little or no influence on how policies are made and regulations implemented)
•Politics or politicians or Government are capable of (and interested in) creating frameworks for the welfare of the society and environment at large

8. •Friedman’s argument has following arguments against CSR: that it is unfair, undemocratic, unwise, violation of trust and futile
•these conclusion are related / interconnected
•“taxation without representation” is the foundation argument, and if it is false then other conclusions collapse
•How strong is this argument?

9. •Friedman’s paradigm: “corporate executive does not act with the counsel and participation of the stakeholders in the business”
•Does Friedman’s paradigm accurately depict the socially responsible executive? Does it depict the essential nature of socially responsible action?
•Mulligan’s Counter-Paradigm
•What if the executive and the employer both understand the mutual interest to include proactive social role and cooperate in undertaking that role
•Founders, board members, stockholders, senior executives may all participate in defining a mission and in setting objectives based on consensus; in that case, these people serve as legislators for the company
•Board members and stockholders become “jurists”; as a powerful force, employees can also provide “grass-roots judgements”

10. •With the collaborative model, Lone Ranger executives are no more necessary and no more welcome in a socially responsible business than in one devoted exclusively to the maximization of profit
•In this model, executive does not impose “taxes” unfairly
•One more objection of Friedman: socially responsible action is futile because future social consequences of today’s actions are very difficult to know
•Is not Friedman’s thought on CSR subject to this logic? i.e. his thought on CSR and its role, the mindset of stockholders, Govt. policies etc, be outdated ?

11. •Friedman’s conclusion is unsound:
•It rests on an arbitrary and suspect paradigm
•Certain of his premises do not imply their stated conclusion
•His criterion of what constitutes socialism is not true

12. •The Big Questions
•Do Businesses really owe society something?
•What is a Corporation?
•Are Corporation and Businesses different?

13. •Milton Friedman -Morality & Capitalism: https://www.youtube.com/watch?v=- _gU50mfehI

14. •Social Responsibility of Business is to Increase its profits“, Milton Friedman
•A critique of Milton Friedman’s essay “The Social Responsibility of Business Is to Increase Its Profits”, Thomas Mulligan