Milton Friedman argues that:
a. It is the social responsibility of business to increase its profits
b. business should use all profits above a certain amount for the care of the homeless
c business should always engage in socially responsible spending
d business is a source of both capital and human resources which should be used to improve the conditions in society
e corporations are created by society and must meet the public’s expectations
The correct answer and explanation is :
The correct answer is:
a. It is the social responsibility of business to increase its profits.
Explanation:
Milton Friedman, a renowned economist, famously argued that the primary responsibility of a business is to maximize its profits while operating within the boundaries of the law and ethical norms. His views were outlined in his 1970 essay, “The Social Responsibility of Business is to Increase its Profits,” published in The New York Times Magazine.
Friedman believed that corporate executives are employees of the shareholders and have a fiduciary duty to act in their best interests. Since shareholders invest in businesses primarily for financial returns, the role of business leaders is to enhance profitability rather than engage in activities that do not contribute to this goal.
Friedman opposed the idea that businesses should divert resources to social causes, arguing that such spending constitutes an improper use of shareholders’ money unless it directly benefits the company (e.g., improving its reputation or increasing customer loyalty). He maintained that social and environmental issues should be addressed by individuals, governments, and nonprofit organizations rather than corporations.
Furthermore, he argued that if businesses were to take on broader social responsibilities, it could lead to inefficiencies and a misallocation of resources. He warned against corporate executives acting as “public servants,” as this would allow them to impose personal social values at the expense of the company’s profitability and shareholder returns.
However, Friedman acknowledged that businesses should operate within the law and ethical norms. His views remain highly influential in economic and business discussions, though they have been challenged by modern perspectives that advocate for corporate social responsibility (CSR) and stakeholder capitalism.