PP247 Lecture 5: Unit5SocialResponsibilityofBusiness
Document Summary
Milton friedman (1912-2006) is a nobel peace prize winning economist and defender of free markets. Classic defender of stockholder theory - the view that managers only have an ethical responsibility to the owners of the company. Milton friedman - the social responsibility of business is to increase profits . A manager is responsible to the owners of the business. In publically traded companies, that is the stockholders. This responsibility is to serve their interests and maximize profits. Managers should make as much money as possible for their companies while conforming to the basic rules of society (i. e. to law and ethical custom) Friedman dismisses the idea that managers should try to fight inflation, protect the environment, or help the unemployed (unless doing so is profit-maximizing) This is a violation of fiduciary obligation (obligation to act as a trustee), it involves spending the stockholders" money without their consent. It is a form of taxation without consent.
