Question

Consider this reasoning:

Because the executive is diverting some of the profits that rightfully belong to the shareholders and using them for purposes other than the shareholders directed, an executive who uses some profits fore addressing corporate social responsibility is actually "taxing" the shareholders.

Which of the following do you think would best represent Milton Friedman's view of this reasoning?

a) He would agree with it, because he argues that the purpose of business is to maximize profits for shareholders.
b) He would agree with it, because he believes that shareholders should be taxed.

c) He would neither agree nor disagree with it.

d) He would reject it, because he believes that all corporations--like people--have moral and social responsibilities.

Answer 1

Correct option is a) He would agree with it, because he argues that the purpose of business is to maximize profits for shareholders.

Milton Friedman doesn't believe in the concept of social responsibility. He believes that the only responsibility of the business is to maximize profits by utilizing the available resources in the best possible manner. Also, he believes that businesses fulfill their social responsibility by providing the goods & services to people at affordable prices, also they provide employment opportunities & adopt technologies that are not harmful for the environment. Businesses should always compete with each other to maximize their earnings without getting involved in any fraudulent practices. According to him a business social responsibility is to increase its profits.