Saturday, August 27, 2005

Corporate Social Responsibility

For some reason Milton Friedman's 35-year-old NY Times article The Social Responsibility of Business is to Increase its Profits has become popular with del.icio.us users (probably an interesting study of technologically-mediated memetics in itself) .

Friedman's arguments are a bit too tied up in the ideology of liberty for me, but I do agree with his conclusion. A market-based society accepts that voluntary trade is, generally speaking, the best way to allocate resources. A profit-driven company is an integral part of this system and if companies start worrying about aims other than profit* in any significant way, the system will be undermined.

Does this mean that companies should be given free reign to do whatever they want? Of course not. Companies (just as people) are bound by the laws of the society in which they operate. If we as a society think that there are certain things business should and shouldn't do, we should change the law to reflect that. Insisting that companies should be nice at the expense of their own bottom-line will do nothing more than ensure that only companies that ignore our whingeing will survive.

Changing the rules of the game means that we can control the conduct of companies without undermining the whole capitalist system.

*Long term profit - donating to charities and whatnot is simply good PR and will often increase, rather than undermine, long-term profitability.
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