MGSC14H3 Lecture Notes - Lecture 3: Kirov Plant

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10 Aug 2010
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Week 3
The social responsibility of business is to increase its profits
- the first step toward clarity in examining the doctrine of the social responsibility of business is
to ask precisely what it implies for whom
- the doctrine of social responsibility involves the acceptance of the socialists view that political
mechanism, not market mechanisms are the appropriate way to determine the allocation of
scarce resources to alternative uses
- the difficulty of exercising social responsibility illustrates that the great virtue of private
competitive enterprise , I forces ppl to be responsible for their own action and make it difficult
for them to exploit other ppl for their selfish or unselfish purposes . they can do good, but only
at their own expense
- in practice, the doctrine of social responsibility is frequently a cloak for actions that are
justified on other grounds rather than a reason for those actions
- the political principle that underlies the market mechanisms unanimity
- the political principle that underlies the political mechanism is conformity
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- friedman says that ppl responsible for decisions and actions in business shold not exercise
social responsibility in their capacity as company executives, they should concentrate on
increasing profits for their companies
His argument: corporate executives should not exercise social responsibility
1) unfair cuz it constitutes taxation without representation
2) undemocratic, cuz it invests governmental power in a person who hs no general mandate to
govern
3) unwise, cuz there are no checks and balances in the broad range of gov power thereby turns
over to his discretion
4) a violation of trust, cuz the executive is employed by the owners as an agent serving the
interests of his principal
5) futile, both cuz the executive is unlikely to be able to anticipate the social consequences of his
actions and cuz he imposes costs on his stockholders, customers, or employees, he is likely to
lose their support and thereby lose his power
His paragism
- depicts the corporate executive who performs such action as assort of Lone Ranger, he decides
what good deeds to do, when to act, how much to spend
A counter-paradigm
- if socially responsible action is on the corporate executives agenda, then it is there because the
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Document Summary

The social responsibility of business is to increase its profits. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom. The doctrine of social responsibility involves the acceptance of the socialists view that political mechanism, not market mechanisms are the appropriate way to determine the allocation of scarce resources to alternative uses. In practice, the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions. The political principle that underlies the market mechanisms unanimity. The political principle that underlies the political mechanism is conformity. Friedman says that ppl responsible for decisions and actions in business shold not exercise social responsibility in their capacity as company executives, they should concentrate on increasing profits for their companies.

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