The Vogue of Social Responsibility

By Richard Epstein on September 25, 2014

by Richard A. Epstein at the Hoover Institution:

In September 1970, the late Milton Friedman published a bold manifesto entitled The Social Responsibility of Business is to Increase its Profits in the New York Times Magazine, where he argued that businesses do not need to engage in various charitable or public-spirited activities, even those that generally meet with approval from shareholders. The best defense of the Friedman thesis is that any discrete corporate effort to advance collateral ends will not enjoy the unanimous consent of all corporate shareholders, so that the contribution operates like an implicit tax on dissenting shareholders. The better track is for the corporation to make the shareholders rich, so that they in turn can embark on their own charitable operations, without having to bind their fellow shareholders.

Friedman’s overall thesis is subject to several lines of attack

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