My Correspondence with Milton Friedman about the Social Responsibilities of Business

• Date: 01 June 2018
• DOI: http://doi.org/10.1111/basr.12140
• Published date: 01 June 2018
• Author: Thomas L. Carson

My Correspondence with

Milton Friedman about the

Social Responsibilities of

Business

THOMAS L. CARSON

ABSTRACT

In 1992, I sent Milton Friedman a draft of my 1993 paper

“Friedman’s Theory of Corporate Social Responsibility.” He

and I corresponded at length. My 1993 paper argues that

Friedman’s published formulations of his theory are not

equivalent and that they prescribe different courses of action

in many possible cases. In our correspondence, Friedman

conceded that his two formulations of his theory are incon-

sistent and, at my suggestion, he endorsed a modified ver-

sion of the view he presented in Capitalism and Freedom as

the preferred version of his theory. This modified theory isan

important formulation of his position. In one of his letters to

me, Friedman writes: “I agree that corporate executives

might have duties to the general public which sometimes

outweigh their duties to the sharehold ers.” I argue that this

creates major problems for his theory. I also answer Fried-

man’s published response to one of my criticisms.

Thomas L. Carson is Professor of Philosophy at Loyola University Chicago, Chicago, IL. E-mail:

tcarson@luc.edu.

V

C2018 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by

Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

Road, Oxford OX4 2DQ, UK. DOI: 10.1111/basr.12140

Business and Society Review 123:2 217–242

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Milton Friedman is the most influential and important

defender of the view that corporate executives should aim

solely at promoting the interests of shareholders (rather

than try to serve the interests of all “stakeholders”). His views have

a central place in the literature on business ethics; many people in

the field define their views by reference to Friedman’s.

1

Friedman

presents his theory in two different publications: Capitalism and

Freedom and his New York Times Magazine article entitled “Social

Responsibility of Business.” In Capitalism and Freedom, Friedman

claims that “the one and only obligation of business is to maximize

its profits while engaging in open and free competition without

deception or fraud.”

2

In “Social Responsibility of Business,” he

states that the “responsibility [of a corporate executive] is to con-

duct the business in accordance with their [stockholders’] desires,

which will generally be to make as much money as possible while

conforming to the basic rules of the society, both those embodied

in law and in ethical custom.”

3

My 1993 article “Friedman’s Theory of Corporate Social

Responsibility”

4

argues that Friedman’s two formulations of his

theory are not equivalent and that they prescribe different courses

of action in many possible cases. I also argue that we should not

assume that Friedman’s later statement of his theory (in “Social

Responsibility of Business”) is the definitive statement of his view

because Friedman concludes “Social Responsibility of Business” by

quoting and endorsing the passage from Capitalism and Freedom

in which he first formulates his theory. Speaking with reference to

what he calls the “doctrine of ‘social responsibility,’” Friedman

writes:

It does not differ in philosophy from the most explicitly collec-

tivist doctrine. It differs only by professing to believe that col-

lectivist ends can be attained without collectivist means. That

is why in my book Capitalism and Freedom, I have called it a

“fundamentally subversive doctrine” in a free society, and

have said that in such a society, “there is one and only one

social responsibility of business - to use its resources and

engage in activities designed to increase its profits so long as

it stays within the rules of the game, which is to say, engages

in open and free competition without deception or fraud.”

5

218 BUSINESS AND SOCIETY REVIEW