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Friedman's Stockholder Theory of Corporate Moral Responsibility

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Teaching Business Ethics

Abstract

In this paper I critically discuss MiltonFriedman's classic article, ``The SocialResponsibility of Business is to Increase itsProfits.'' Friedman offers several argumentsfor his stockholder theory of corporate moralresponsibility, according to which acorporation's only moral responsibility is topromote the financial well-being of itsstockholders. I first consider aninconsistency in his statement of his position– namely, the distinct and non-equivalentconstraints he places on profit-maximization(``the rules of the game'' and ``the rules ofsociety''). I then turn to a consideration ofsix arguments Friedman gives to support histheory, spelling them out in detail and showingthat none of them is sound. I conclude with abrief intuitive argument against his theory.

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REFERENCES

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Authors and Affiliations

  1. Central Michigan University, Mt. Pleasant, MI, 48859

    Sean McAleer

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  1. Sean McAleer
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McAleer, S. Friedman's Stockholder Theory of Corporate Moral Responsibility. Teaching Business Ethics 7, 437–451 (2003). https://doi.org/10.1023/B:TEBE.0000005711.70399.51

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  • DOI: https://doi.org/10.1023/B:TEBE.0000005711.70399.51

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