Corporate Social Responsibility

Abstract

‘The business of business is business,’ Milton Friedman, a leading figure of the Chicago School of economic thought, famously declaimed. In his 1970 article, ‘The Social Responsibility of Business Is to Increase Its Profits’, he argued that corporate managers who factor social and environmental considerations into their decision-making are, in effect, ‘imposing taxes . . . and deciding how the tax proceeds shall be spent’. By deviating from their organizational duties—maximizing profits for the companies that employ them—they are appropriating money owed to shareholders and allocating it to broader social causes, a function that resembles government. Friedman objects to this behavior not on economic or legal but on political grounds: managers have not been elected and there are no principled procedures for determining which causes to support beyond ‘general exhortations from on high’ (Friedman 1970: 17). He also expresses scepticism about ‘hypocritical window-dressing’, concluding: ‘our institutions, and the attitudes of the public make it in their self-interest to cloak their actions in this way’ (Friedman 1970: 17).

Rich man, poor man, middleman, thing: Distributing power

“…Similarly, Archer and Elliott’s sustainability consultants cannot single-handedly transform the private governance system that employs them into a system based in hard law, with rules, regulations and sanctions capable of counteracting ‘the market’. However, they can acknowledge what they have excluded from their network and admit to their reasons for working hard to do so: private governance serves the interest of transnational corporations far more clearly than do state-based rules and regulations (Hertz, 2020).…”