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SOCB58H3 Study Guide - Price Fixing, Epicurus

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Milton Friedman:
“Social ends” is “socialism”
Person has responsibilities, because corporations are treated like people;
Owners ignored, executives produced; executives are serving owners, but execs still
make decisions, but when owners disagree owners can overturn decisions
The executive can always choose to leave if he doesn’t like where the company is going;
how practical is that? Most people would not leave a high paying executive job; even if
you leave you will probably end up going to another similar corporate structure
Principal vs. Agent: people tend to ignore their conscious when they are at work and just
agree with what the company is doing; agent means working for someone else, principal
means your first, with no responsibility and have workers working for you
Rhetoric vs. Logic; rhetoric is the effectiveness of your language to persuade an audience
about anything, might not even be morally correct; using emotions, metaphors and
Logic is what you accept as morally acceptable
Shareholders; people who have bought ownerships of the company, the actions the
company is to make as much profit as possible for shareholders
Stakeholders; don’t own the company but are influenced and affected by the actions and
activities of the company
Friedman says if people have a problem with corporations, stakeholders can do
something about it; this is too simple of a solution as you stakeholders have little power
compared to stakeholders
Executives are causing more taxes without representation; they are willing to take less
profits and posing a potentially lost revenue on their shareholders, which is bad for the
population because tax is not fairly created with the consent with everyone
Working class gets much of their income taxed; US is in major debt because they were
printing too much money and did not have the gold standard to back it up
He says market systems are free (no price fixing, no client stealing) and not regulated and
Friedman thinks this is fair; it is not fair because corporations can do the illegal act and if
the fine is less than the money they will earn from it, then they will happily pay the fine
Stone: Why Shouldn’t Corporations be socially responsible?
There are 4 arguments to answer this question by Stone
Stone says Friedman is wrong and says there is a built in obligation for corporations to be
socially responsible
1. Promissory argument: Investors only care about themselves, and actions taken in the
financial market are sometimes not for the good of the company but the good of
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