Capitalism minus social responsibility
One of today’s headlines reports that oil profits soared as gas prices soared over the past few months. It reminded me of economist Milton Friedman’s position that he would take to court any corporation trying to practice social responsibility because that would be a direct conflict with the idea of the corporation’s purpose as serving profits to shareholders.
Is this a sustainable posture? How should powerful corporate boards and owners think about profit and the purpose of corporation now that many have exceeded the power and size of most nations?
October 28th, 2005 03:24
Definition is everything . . . so if profit is only regarded as maximizing economic return in the shortest period of time, then I supppose social responsibility would be pushed out of the equation. But, by taking a longer view, corporations might be able to make more money (or just as much) while providing for a more stable, renewable future through socially responsible practices. Wonder if that would meet Friedman’s fiduciary criteria?
October 28th, 2005 19:30
Sustainable position? Yes. Worthwhile position to sustain? Not for me. I refuse to separate social responsibility from the pursuit of profit because doing so makes it too easy to let business judgements that maximize profit trump behavior that is socially responsible. I hate the idea that I live in a place that demands that type of disassociation in order to make a pathetically small proportion of the population disgustingly wealthy, capitalism or no capitalism.
How’s that?
October 28th, 2005 19:43
The pathetically small proportion … makes me wonder what would happen if the pathetically large portion made more noise about the need for better distributions of wealth.
October 28th, 2005 19:46
If these companies are quite honest with themselves, they would know that that their real mission is to provide the best service or product of their choice, not to maximize profit. If the goal was the dollars, then all the companies would be in the same industry.
The secondary reward for being the best is the profit and what is integrated and pervasive and critical throughout all these ideals, though not explicitely named, is social responsibility. That is what actually drives the definition of “best”.
November 3rd, 2005 23:13
But Jack - would the large proportion ever do that - want a better distribution? And who would define what’s a better distribution? Sorry to be a skeptic - I don’t know. I want to believe, I want to believe…
November 3rd, 2005 23:18
I don’t know either, Jill, if there could ever be a right proportion. It would certainly not be something dictated or mandated top-down because it would need to be genuine, authentic, honest, organic - in order to be sustainable, unless we can and want to afford the heavy cost of enforcement.
For me the first steps involve legitimizing the value and power of the intangibles.