Do businesses have ethical obligations beyond what the law and shareholders require? | The CQ Researcher Blog
“In a free-enterprise, private-property system,” Friedman wrote, “a corporate executive is an employee of the owners of a business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom.”
In this view, going beyond those basic requirements — for instance, as Friedman wrote, spending more to reduce pollution than “the amount that is in the best interests of the corporation or that is required by law” — amounts to improperly spending money that belongs to the shareholders.
The U.S. concept of free-market capitalism is not, of course, universally accepted. Karl Marx, the intellectual father of communism, saw profit as the result of capitalist exploitation of workers. Socialist and communist systems assert that some or all of business profits rightfully belong to society.
But among those who embrace capitalism, many say ethical obligations go well beyond simply making a profit.
A survey of business executives from around the world by consulting firm McKinsey & Co. found that only a minority wholeheartedly embraced Friedman’s view. Sixteen percent of respondents agreed that business should “focus solely on providing the highest possible returns to investors while obeying all laws and regulations.” But 84 percent said the role of large corporations should be to “generate high returns to investors but balance [that] with contributions to the broader public good.” [Footnote 14]
Does business believe in the absolute pursuit of profit to the exclusion of all other goals? A study by McKinsey and Co. indicates otherwise. This is an unexpected result based on my perceptions but, of course, I live in the Southern United States where free market worship is one very short step below the more traditional forms of worship.
I hope the study is correct. We need business leaders willing to be valuable members of our communities. Without their participation, the ties that bind us together as a people, a civilization, weaken.