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Tuesday, October 25, 2005

Corporate social responsibility? Friedman, Mackey, and Rodgers

Is it "the profit, only the profit, and nothing but the profit?" Or, are there motives other than the profit motive that figure in as well?  Go to Burkean Canuck for a summary of the Reason interchange and analysis.

Posted by Russ Kuykendall on October 25, 2005 | Permalink


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Comments as posted to Burkean Canuck:

'Corporate Social Responsibility’ has to be one of the fuzziest and most sentimentally feel-good socialist concepts to ever harass free enterprise. Beyond vague notions does anyone actually agree on what exactly this ‘responsibility’ is? Is it a legal responsibility, an ethical responsibility or is it responsibility as in the causal sense to be responsible ‘for’ something? Does it imply responsibility to be charitable, to be socially ‘conscious’? Does this ‘responsibility’ imply a higher standard of behaviour for corporations than for real people. And the ‘stakeholder’ terminology just adds another layer of fuzzy feel-good nonsense. What a minefield of sanctimonious bafflegab!!

I’m with Friedman. A public corporation (through its duly appointed executive EMPLOYEES) is responsible (within the rules of the game) to its owners only for ensuring its financial health. And the bottom line indicator of financial health for any public corporation is PROFIT. So, profit, regardless of how loudly and often the left says otherwise, is as Martha would say ‘a good thing’.

Some comments on: “John Mackey of Whole Foods, a multi-billion-dollar company, donates 5% of profits to charitable ends.” Unless Mr. Mackey can show a business case for why this ‘charitable giving’ strategy represents a better use of profits than, say, issuing dividends, selling products at a more competitive price or enhancing product quality or opening a new store or otherwise contributing to a stronger company then he’s WAY OFF BASE. In fact I’d say he’s in dereliction of his duty - abusing his shareholders’ trust. In the absence of a sound business case for charitable giving Mackey is in essence being ‘altruistic’ with other peoples’ money (who does he think he is - big government?) Where does he get off substituting his judgement in charitable giving for that of his shareholders’! No doubt Mr. Mackey will be seen proudly taking his bows and posing for the who’s who photo at the annual charitable gala in his home city.

The danger in this line of thinking is that companies will lose sight of their one real responsibility to their owners and as a result weaken themselves. And a weakened free enterprise system is a negative for all of society.

As for the Western Standard investors’ motives for publishing - it will likely turn out to be a mix of idealism, ideology and profit. They see a market for a publication that suits their politics. Anyway I don’t think the Western Standard is a publicly held company. But I agree it would be interesting to hear Ezra’s point of view on this.

Posted by: JR | 2005-10-26 7:40:31 PM

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