Friedman on business ethics (part 2)

Now that we have introduced Milton Friedman’s classic essay on business ethics (see our previous post), let’s jump right in, shall we? Professor Friedman’s first paragraph is by far his weakest one, for it contains some outlandish and sensational claims. In particular, he begins his 1970 essay by claiming that proponents of corporate citizenship or corporate social responsibility (CSR) are “preaching pure and unadulterated socialism” and that such CSR proponents are “unwitting puppets of intellectual forces that have been undermining the basis of a free society these past decades.”

Such claims, however, are irresponsible, if not just plain wrong! After all, a socialist system is one in which business firms are strictly regulated or owned by the government outright, and as I noted in my previous work, the concept of a “free society” is a fuzzy one, since all societies have rules, and since such rules by definition impose limits on our freedom to do as we please. Nevertheless, in fairness to Friedman, we should put his essay into its proper historical context. At the time he published his essay in 1970 (almost fifty years ago!), the world was divided into two great ideological camps – the free world (led by the USA) and the socialist bloc (led by the USSR) – and both sides were engaged in a fierce and worldwide struggle of heroic proportions. The idea of free markets was under siege and in retreat across the globe. In fact, within a year after publishing his essay, President Richard Nixon, a Republican (!), would issue a draconian executive order (Number 11615) on 13 August 1971, imposing a 90-day freeze on wages and prices, the first time the U.S. government had enacted wage and price controls since World War II!

Given this historical context, it’s possible that Milton Friedman made his melodramatic claims about CSR simply to grab the attention of his readers. That said, however, Friedman did himself no favors by equating CSR with socialism and as incompatible with freedom. As a result, we are going to overlook this first paragraph and focus instead on the remainder of his essay in our next few blog posts …

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About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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2 Responses to Friedman on business ethics (part 2)

  1. Pingback: Friedman’s critique of CSR (part 3) | prior probability

  2. Pingback: Preview of Class #6: Milton Friedman versus Elizabeth Warren | prior probability

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