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Identify the key criticisms leveled by Arrow and Calkins &
Wight against Friedmans position as represented by his
NY Times article. Identify the criticism that seems to you to
be the most telling against Friedman. Can you defend
Friedman against that criticism? Has reading Arrow and/or
Calkins & Wight changed your view of the social
responsibility of business? [2-3 pages
Solution
Friedmans had a strong stand in his article The Social
Responsibility of Business is to Increase its Profits.
According to him, a corporation is an instrument owned by
stockholders, and companies should work to maximize the
profit of the organization, hence the owners- stockholders
(Friedman, 1970). He suggested managers to work for
profit maximization within legal guidelines, but indirectly
framed the ethical framework and its limits which can be
easily penetrated. His views were preventing managers
from backfire as they are not trained for social
responsibility; rather they are in the industry for profit
maximization.
Calkins and Wight have openly criticized Friedmans
position in their article The Ethical Lacunae in Friedmans
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Concept of the Manager. The first critic \'s statement is the
counter of Friedmans stand on the social responsibility of
manager, as the manager is the only withholder of social
responsibility. Calkins & Wight made a point that in todays
management requires values and virtues be successful and
also emphasizes on the inconsistency between the
consequentialist profit maximization the only moral duty of
the manager the theory by Friedman.
Second critic by Calkins and Wight in on the model of
Friedman, where the role of manager is discussed, but not
the reason behind the profit maximization should be the
only motive of managers. The principle management
agreement suggests that manager should keep the
shareholders interest in top even discarding his own
interest, which cannot account for real and authentic
relationships (Calkins, Wight, 2008).
Arrow in his article Social Responsibility and
Economic Efficiency contradicted the primary motto of
Friedman by stating that: Profit maximization cannot be the
sole motive as they tend out to be an altruistic motive
because self centered form of economic behavior does not
allow any such motives in business. Such motives cost
general public which cannot be compensated like heavy
pollution, because of sacrifice of ethics and sole motto of
profit maximization. Arrow gave examples of other
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motivating factors which bound manager to be socially
responsible and work under the ethical framework and not
go for profit at any cost, such as taxation, legal liability
and code of ethics.
Arrow raised the points and focused on the list of
incentives on which managers can work rather than
focusing on the sole motive of maximum profit of
shareholders. Friedmans article suggested that if a
manager is not working for shareholders profit, he is
working like government organization or a government
employee. His example of used cars was very illustrative
where the seller can defend himself for breaching ethics,
but the relationship of customer and manager will spoil if
he hides the damage details from customer for profit
maximization. Every business commitment cannot be
written down in points, there are business commitments
which are verbal insurance and these are mostly
compromised, what Friedmans article suggested was
commitment like these are loopholes, but according to
Arrow these commitments should not be breached.
In defense for Friedman I can only say he wrote
the truth of the real life working environment. The
competition in this globalization, if a manager is not
working for profit, he might lose his job, its the CEO who
needs to needs to undergo decision making which is
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socially responsible, manager today is not equipped to
carry the load of competition and social responsibility
concurrently.
Arrow and Calkins & Wight made valid points and
no doubt the focus is more on ethics and reminding
manger of their roles and responsibility, they surely
changed my view on the motivation that drives the
business and important considerations which should not be
limited while decision making. Their views made me
familiar of other factors of framework which should not be
compromised even if working in a competitive environment.

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