Friedman (Social Responsibility)

Q: What is Friedman’s central claim?

A: The only social responsibility of business is to maximize shareholder profits within the rules of the game.

Q: According to Friedman, why shouldn’t managers pursue social goals?

A: Because it effectively taxes shareholders, employees, and customers without their consent.

Q: What limits does Friedman place on profit-seeking?

A: Firms must follow laws, avoid deception/fraud, uphold contracts, and respect fair competition.

Q: Why does Friedman reject corporate social responsibility (CSR)?

A: Managers are agents of shareholders; using corporate resources for social goals is misuse of property.

Q: What is a common student misconception about Friedman?

A: That he endorses “profits at any cost” — he explicitly says profit-seeking is limited by rules and moral constraints.