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October 24, 2005
Maximizing Profit
Tyler Cowen askes: What is the social responsibility of business?
Milton Friedman has long suggested that the social responsibility of business is to maximize profits. Recently he tried to clarify this view...
Afterwards, Tyler lists some discussions of this rule, but I think (personally) he is taking it too much at "face value".
For example, just because one's social responsibility is to maximize profit doesn't mean that giving money to charities or behaving in some prima facie non-profitable way is going to hurt profits. For example, many people buy at Whole Foods because of their socially responsible policies. Isn't that then potentially increasing profits vs a non-differentiated grocery store? If you provide that caveat - that charitable acts have a positive impact to the bottom line, then most anything that a company does can be said to be an effort to maximize profits (this is, of course, if the decision maker(s) believes that the act will improve profits).
Posted by jb at October 24, 2005 02:14 PM
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