However, whereas Suber is a professional academic, I am not. Before reading any further, read my disclaimer and warning on my My Writings page.
Glenn
Mason-Riseborough (11/04/2003)
Milton Friedman[1] argues that within business the only social responsibility individuals have is to maximise the profits of the owners or shareholders of that business. This is the Narrow View of the social responsibility of business, and it is contrasted with the Broad View. The Broad View states that there are additional social responsibilities (such as to the environment, to socially disadvantaged members of the community, or to employees). Friedman gives a number of arguments against the Broad View—some clearer than others. I’ll focus on just one of Friedman’s arguments—that of freedom. I’ll give a brief exposition of this argument, and critically discuss whether the argument works to convince us that we ought to adopt the Narrow View in preference to the Broad View.
Friedman introduces his paper with some informal conceptual analysis. He identifies as his opponents businessmen who, while claiming to defend free enterprise, also hold to some form of social responsibility of businesses such as that of “providing employment, eliminating discrimination [or] avoiding pollution”.[2] Friedman says that such businessmen are “preaching pure and unadulterated socialism”,[3] and are really opponents of free society and free enterprise, contrary to their own beliefs.
It is clear that Friedman is attempting to make a number of conceptual distinctions. He is contrasting free enterprise and free society with socialism. He apparently thinks[4] that any granting of social ends that are not profit motivated is socialist and is incompatible with both free enterprise and free society. As J. DesJardins and J. McCall point out, Friedman is identifying free society with a society in which the markets are totally free and “government’s role is restricted to the prevention of coercion and fraud and where business is free to operate on a principle of self-interested pursuit of profit.”[5] Any further governmental intervention is socialism. If we accept these analytic distinctions, then Friedman is correct that any society is not free (in Friedman’s sense of the word) if it adopts these further social responsibilities of businesses.
We still haven’t introduced any normative claims as yet, but before doing so it is useful to make one further analytic observation. The observation is that Friedman’s distinctions are at odds with common language. We typically think that Western countries are paradigmatically free societies. Yet Friedman seems committed to saying that no Western countries are free societies, and all are socialist, since all Western countries adopt at least some social regulations with respect to businesses. This alone might give us reason to pause with regards to whether Friedman’s distinctions are appropriate and accurate.
I turn now to the normative component of the argument. Friedman’s normative claims are not stated explicitly when he discusses freedom. But we might surmise that he thinks that being free is of great value. On this assumption we can formalise the argument:
1. Being free is of great value [normative claim].
2. A free society is necessary for being free [assumption].
3. Any society in which businesses promote social ends in addition to profit driven ends is not a free society [definition, as above].
4. Therefore, businesses ought not promote social ends (i.e., we should adopt the Narrow View in preference to the Broad View) [from 1-3].
Does this argument succeed? The answer is clearly no. This is because there is equivocation over the word “free” and the term “free society”. We have already seen how Friedman uses “free society” in 3, in the discussion above. But other meanings of the term come out when we consider that Friedman’s understanding of the free society is clearly not necessary for the type of freedom that we would plausibly value (1 and 2). That is, we can imagine societies in which the members of that society have the type of freedoms we value, and yet in that society businesses promote social ends as well as profit driven ends.
DesJardins and McCall develop a parallel thought to this when they use “free society” to refer to “democratic political structures where the ultimate authority for making political decisions rests in the hands of the voting population.”[6] This understanding better fits with what we typically mean by the word “freedom”, where we are concerned specifically with political freedoms. That is, the type of valuable freedom that we are after is democratic, not capitalist. This is an important distinction, because, as DesJardins and McCall point out, we can imagine capitalist societies with no democratic freedoms, and conversely imagine democratic countries that are socialist. What Friedman is talking about is capitalism. And restricting capitalism in the way that Friedman rejects does not affect, in any way, our democratic freedoms—our political participation in deciding how our country should be run.
There is one further point to be made. Friedman may be thinking that in a capitalist or free market economic system, we have the freedom to do whatever we choose to do with our own property (this moves into an argument from property rights). And this is the freedom that Friedman thinks is truly valuable. Any social responsibilities we might identify and enforce will restrict this type of freedom in some way. But, as DesJardins and McCall once again point out, there are many different types of freedom, in addition to property rights freedom. There is freedom of religion, freedom of speech, freedom of the press, and freedoms of equality, for example. And we cannot have all of these freedoms unreservedly. There are costs and benefits, and a free market system, which creates great freedom for owners to use their property as they see fit, has the cost that some of these other freedoms are suppressed. Freedom is not all or nothing, and we have to balance out which types of freedoms are the truly valuable freedoms, and sometimes restricting some freedom is necessary to allowing other, more valuable freedoms. Plausibly, restricting certain freedoms with respect to property use, through social responsibilities, gives us other, more valuable freedoms, such as those mentioned above.
Based upon an analysis of Friedman’s paper, I have attempted to give a fair and accurate presentation of the essence of one of his arguments against the Broad View of social responsibility. The argument discussed was the argument from freedom. I have shown that this argument has weaknesses at a number of levels, but particularly with respect to equivocation over what is meant by “free”. Friedman’s argument fails to be persuasive because he does not discuss the various types of freedoms that might be valuable, and the various ways in which they might come into conflict with each other. However, it should be obvious that while I have shown how this particular argument against the Broad View fails to be persuasive, I have not addressed the wider issue of whether we should adopt the Narrow View or the Broad View of the social responsibility of businesses.
(1147 words)
Bibliography
DesJardins, J. & McCall, J. (1996). Doing Business Ethics: An Analysis of Friedman. In Contemporary Issues in Business Ethics (3rd ed.), (pp. 12-21). CA: Wadsworth.
Friedman, M. (1998). The Social Responsibility of Business is to Increase its Profits. In D. M. Adams & E. W. Maine (eds.), Business Ethics for the 21st Century, (pp. 41–45). CA: Mayfield.
Shaw, W. H. & Barry, V. (2001). Moral Issues in Business (8th ed.). Belmont, CA: Wadsworth.
[1] Friedman, 1998.
[2] Friedman, 1998, p. 42.
[3] Friedman, 1998, p. 42.
[4] Friedman may be using rhetorical exaggeration at this point and in other places, but I shall nonetheless endeavour to take him at his word at all times.
[5] DesJardins & McCall, 1996, p. 16.
[6] DesJardins & McCall, 1996, p. 16.