Friedman Assign

FRIEDMAN

Friedman’s target is most specifically to deny room for social responsibility in a business ethic.

Square One: Fiduciary duty to Stockholders

· The (now) classic line: the manager is the agent of their employers (i.e. stockholders)

· The key issue is framed as a question about the ends for which the manager can appropriately deploy company resources

· On that topic Friedman says this is a question about whether the manager can work to purposes that are outside of the purposes the stockholders lay out for him

What are the Arguments?

· To fulfill a social responsibility, the manager would have to be “spending other people’s money”

· In other places Friedman describes this as “imposing taxes” AND deciding how to spend them

· I think there’s an implicit argument to appeal to our intuition that this is unfair – that it is forcing people to do things for which they have not consented

· The Political Argument (“principle”)

· If the manager is imposing and spending “taxes”, then this is a political activity and subject to the standards of politics

· If so, the manager’s exercise of social responsibility is clearly a violation of justifiable political standards

· “no taxation without representation”

· No control over how the manager does this

· He is not elected to bear this responsibility for society

· It also violates the legitimacy of the power the manager has been given through control of the company

· Friedman believes that the stockholders bestow this legitimacy (and should)

· Private agent versus civil servant

· A separate line of attack: the Market Argument (“consequences”)

· Friedman argues that biting the bullet here and going down the political path would be subscribing to the position that Political Mechanisms should supplant Market Mechanisms in allocating resources (making this socialism)

· Friedman thinks this won’t work/is inappropriate

· CEOs/managers do not have the wisdom to make decisions about social welfare

· If they try to do so, stockholders will fire them (what kind of argument is this?)

· When artificial political means are used to enforce social welfare, more problems result (ex: unions and wage restraint)

· Related: Friedman is concerned that this is circumventing of democracy (if they cannot convince through government, they become social “vigilantes” (my word))

· Straight up: this undermines free society [THIS IS HIS MAJOR PLATFORM IMO]

· lack of compulsion makes it harder to coerce/control for good OR bad purposes

· market system undermined by government regulations

· While this might begin as just the exercise of conscience by managers, it will end with the “iron fist” of governmental control (this is “suicidal”)

· The market ideal is a conception of freedom exhausted by un-coerced consent. Social responsibility undermines this ideal since it requires use of resources independently of consent and violates the consensual agreements of stockholders and managers

· Social responsibility prioritizes a principle of conformity over the respect of individual agency

· Friedman grants that some degree of conformity is unavoidable, but (this is the implicit argument I see) if we can get by without it we should

· A final quick argument: Friedman is skeptical of altruistic intentions behind social responsibility in business. Instead, he thinks this is usually a long-term strategy for profit/success. While he is unwilling to condemn this, he does “admire” the “disdain [for] such tactics as approaching fraud”