Friedman the Social Responsibility of Business Is to Increase Its Profits

Milton Friedman, "Social Responsibility"

Milton Friedman is absolutely blunt and direct in his 1970 critique of the notion that businesses have "social responsiblities" which require them to look beyond their balance-sheets at the real-world effects of their activity. The title of his article states his thesis outright: "The Social Responsibility of Business is to Increase its Profits." Anyone who states otherwise, says Friedman, is "preaching pure and unadulterated socialism" and leans on ideas "that have been undermining the basis of a free society these past decades."

Yet I think that Friedman's argument hinges on his selective and highly tendentious definition of terms here. Friedman switches between political and ethical definitions of the various concepts, so "pure and unadulterated socialism" is used purely as a scare tactic in his opening: in reality, socialism (whether in diluted or concentrated form) has nothing to do with the public calls for businesses to increase their social responsibility which prompted Friedman to write. Socialism wants government to regulate and tax businesses more, so that the regulation and the tax revenue can be directed towards purposes that the government deems "socially responsible." The notion that asking businesses to do so voluntarily -- or publicly calling upon CEOs to make socially responsible choices -- is hardly any reduction in "freedom." What Friedman means is that the logic underlying these calls is ethically socialistic -- from a political standpoint, it has nothing to do with socialism whatsoever. He returns to these issues in his conclusion, when he defines the insistence on social responsibility as a "fundamentally subversive doctrine" which "differs" from socialism "only by professing to believe that collectivist ends can be attained without collectivist means." Let us note the slippery slope from socialism to collectivism that Friedman constructs here -- certainly nobody confuses the Canadian health-care system with a Stalinist five-year plan, unless they have read too much Milton Friedman. But more to the point, the "collectivist means" Friedman invokes are the very definition of socialism, whereas "collectivist ends" is just Friedman's scare word for mere ethics, independent of any political system. Presumably if Friedman were confronted with the various statements -- regarding God and Mammon, or the camel and the eye of the needle -- made on economic matters by Christ in the Gospels, he would denounce them Ayn-Rand-style as the worst kind of collectivist propaganda.