The paper “ The Social Responsibility of Business Is to Increase Its Profits, as to Milton Friedman“ is a breathtaking variant of book review on business. The main activity of businesses is generally attributed to the buying and selling of goods and services. Businesses are generally known to operate with the primary purpose of maximizing a profit. Other goals, such as providing a service is secondary in nature, thus, firms are known to be profit-maximizers. This profit-maximizing behaviour of a firm relates to its curtailing of its costs in various activities, such as purchasing, production or packaging, for example.
It also means that a business tries to maximize its revenue, which can be done by either, for instance, setting a particular high selling price or by having a good marketing strategy. The profit that is earned is rarely ploughed back into the business; in fact, it is generated to benefit the owner who is also probably the risk-taker or the entrepreneur. There are different views as to in which sectors businesses should belong. This is because of the fact that privately-owned businesses often exceed in their want of earning profits and it is possible that they may compromise quality or produce harmful things to do that.
In an economy where all the businesses are privately owned, the government can not intervene and therefore there is no check on the operations of the business. In economies, where businesses are run by the government, they have a primary motive of serving the people even it costs them more. However, government-run businesses have always been blamed for being corrupt, inefficient and troublesome to common people.
Then, there is a mixed economy, which allows for some privately-owned business to exist and some government-run business to operate so that a balance is maintained and consumers can benefit more. Today, almost every country is in favour of a mixed economy, even if not in the same degree. The question that arises is on the moral responsibility of business. Is it morally responsible behaviour on the business’ part to provide maximum profit to its shareholders or owners, or should it have other social aims? This debate over this question has been going on for some years now and even today, mixed feelings and opinions exist.
Many people like to think that a business is started with the aim of benefiting the owners and if it fulfils the aims and objectives thought of by the owners, the functioning of the business is justifiable. Others feel that a business should have some social aims, like that of protecting the environment or producing environmentally friendly goods even if it costs them more. A business, as felt by people, should not exploit its employees, the environment, consumers or any other stakeholder.
It is claimed that businesses generally pay more attention to shareholders than their stakeholders, who include those people who have a direct interest in the activity of the business. It also includes non-living things such as the environment, ecology and the community as a whole. Firstly, in modernized economies, many economists and thinkers believe that it is morally responsible for a business to earn profits for their shareholders. They are of the view that it is unjust for people to declare a business immoral on the basis of their perception rather than on reality.
A business which is working to earn a profit is not only generating profits for the owners but also allowing the business to expand. A high profit of a business is usually accompanied by higher salaries for the managers and employees who are motivated to work better. Moreover, it is quite a known fact that the aim of making a profit is a good way of keeping any organization efficient. Wastages of resources occur very rarely and the employees are forced to behave uprightly and efficiently because of the fear of losing their job if they do not do so.
ReferencesFriedman Milton, (1985), The Social Responsibility of Business is to Increase its Profits, in Des Jardins J & McCall J Contemporary Issues in Business Ethics, Wadsworth, Belmont, pp. 21-25.