Milton Friedman wrote in the NYT Magazine of how businessmen who spoke of social responsibilities in a free market system reminded him of a Frenchman who discovered at the age of 70 that he could speak prose. He says that the social responsibility of business is to increase profits.
Fortunately, ambiguity is not reasonable when it comes to conducting business. There can only be a single purpose driving the increasingly capitalist-friendly world and being “in the black” is it. This not only increases the benefit for the owner but also increases the trickledown effect to the common man.
It is this very process of profit-seeking that has made the world more wealthy now than ever and accusing companies of being perfidious for being economically viable is simply not acceptable.
The fall of the great socialist regimes is just another reminder of Darwin’s adage “survival of the fittest”. These were regimes founded on the nineteenth century concepts of exploitation. So we should spare a thought for the economically backward. But the startling fact remains that the majority of the world is not. It’s a fanciful construct that leftists cling to seeing as how the reality is more optimistic.
Keeping the business of business as business does enough for society by generating growth and employment. So should this be enough or should the capitalists contribute more? If so, then where does the government fit in? Where do taxes go? Who implements social policy?
Governments need to do what they do best – represent the people. This includes all the strata from the princes to the paupers. Governments enforce laws, decide what good for society and ensure that businesses do not hide behind the facade of social consciousness while irreversibly harming society. They have to implement the policies through regulation and taxation, not the businesses. Friedman put it best when he said, “The business of the government is governance and the business of business will remain business”.
Corporate philanthropy also raises the issue of accountability – shareholders wealth being distributed by management. Do they follow their fiduciary duty or do they yield to the societal expectations? The short answer is an emphatic “Yes, follow your duty”. The long answer is much more complicated due to the nature of the question itself. Yes the company has a responsibility to society; just don’t do it with my money. The current financial scenario has made the question even more pertinent. Even traditionally philanthropic companies will have to review their policies and examine their fundamental strategies.
This snake and mongoose game between the businesses and the ethics brigade will continue till the fundamental difference between the business and individual is not understood. An individual can and should be socially responsible. Businesses however, should not. Their primary goal should and will always remain the pursuit of wealth creation. Businesses hold no duty towards society other than the welfare of its members, who are stakeholders in the business itself.
Governments should govern well. Businesses should run profitably.