A Resource for Understanding Economics
The social responsibility of business has been debated for years. One point of view follows Milton Friedman ’s maxim, “In a free society … there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” Others argue for the priority of ESG values, even if they conflict with profit-making. A more pragmatic perspective sees ESG simply as a set of tools that facilitates risk assessment and enhances long-run profitability.
The political responsibility of corporations has, unfortunately, received much less attention. Friedman himself alluded to political responsibility when he added the proviso that firms must “stay within the rules of the game” by pursuing profit through “open and free competition without deception or fraud.” Unfortunately, he failed to follow up by asking the critical question: In a free society, who makes the rules?