Stance The concept of the essence of business has always differed from various schools of thoughts, with each proposing a distinct purpose of the establishment of an entity. The simplest definition of a business is, any profitmaking activity that provides products and services for human needs. The seller trades a good, service, or idea to a buyer at a price where both parties walk away benefitted. It is at this core definition where we find the basis for the argument that increasing profit is the only social responsibility of a business. This statement can be further expanded on with a quote from Milton Friedman, a Nobel Prize-winning economist, ““There is one and only one social responsibility of business — to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” “There is one and only one social responsibility of business” In breaking down this quote, we must first establish what social responsibility entails. Social responsibility is defined as is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems. In short, it is what a business should be held accountable for (outside of government regulations) in regard to its external impact. The business itself holds no conscience, no duties, no motives outside a basic functionality, because the workings of a business is run by the people who are part of it. This includes the employees, the chairmen, the corporate executives, and the shareholders. In most instances, the corporate executives are the ones making the business decisions. These individuals can have their own sense of social responsibility, to eliminate waste, to donate to charity, to freely loan their lawn equipment to their neighbor. This can be done on their own time and by their own finances. If a business executive were to decide on exercising his desire for social responsibility through the power his position gives him, he is acting on behalf of the shareholders, the employees, and those who have any personal stake in the business. Let’s say, as a simple example, a company was to switch to an eco-friendlier material that was also more expensive to purchase. This could lead to a decrease in returns for the shareholders of the business, and/or a prevention for an employee salary increase. This may be in the interest of “social-betterment,” but is at the expense of the shareholders’ and employees’ money. This doesn’t mean that these shareholders and employees do not care about the environment, but their involvement in social responsibility should be enacted in their own time and with their own money. It also places the decision maker of the business into the role of a public servant instead of a leader in a private enterprise (cite). Another drawback of business-mandated social responsibility is the matter of accountability for these individual-decided actions. Although the individuals make up the business, the social responsibility begins and ends with maximizing profit. “to use it resources and engage in activities designed to increase its profits” Increasing profits cannot mean continually driving up prices with no consideration of anything other than money. In order to make a profit, business must provide their goods and services at a price that brings in revenue, without overestimating the value of the product for the customer. Maximizing profit includes anything that would lead to a customer making a purchase. If customers are severely dissatisfied with a company’s reputation it could lead to less purchases, negative publicity, and even boycotting, which all would drive down profits in the long run. So, businesses awareness of its public image is important in maximizing profit. Publicity depicts the image of the company as seen by its stakeholders. Bad publicity occurs due to various activities such as contractual infringements, environmental degradation and other corporate scandals (Moisescu & Tanasa, 2016). Good publicity entails a good reputation, hence more profits in the long run. Several companies have lost significant amounts of profits due to bad publicity. They are; • Tesla's Self-Driving Crash and Elon Musk's Robotic Response • The Yahoo 2016 Hacks • The EpiPen Price Hike • Snapchat's "Blackface" Filter “so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” The “rules of the game” refers to the basic standards of society that businesses are held to, both in regard to the law and regards to ethical custom. Social responsibility would only include what goes beyond the basic functions of a business. There are business-specific laws, including immigration and employments laws, environmental regulations, trade and contract laws, intellectual property rights, income taxes, and more. These hold businesses to certain standards to avoid instances of deception and fraud that Friedman mentions. When government regulations for the businesses change, businesses are required to adhere to these rules. There are instances where businesses can engage in practices that aren’t necessarily illegal, but by ethical standards are not considered right. Businesses ought to adhere to these ethical standards, but by no means have to. These potentially unethical situations could have negative effects on a business, which could affect the company’s profit. Ethics is defined as the fundamental principles of decent human conduct. Since businesses are made up of individuals and not human themselves, business ethics takes this definition and expands to say applied ethics that can address issues that arise in a business environment. Basic moral conduct, whether used or not, would not be considered social responsibility. “in effect imposing taxes” Earlier, the idea of a businessman spending someone else’s money was mentioned. In addition to being the individual’s choice, when a business decided what money to “take” and how to spend it, the business as acting as if it was imposing taxes and deciding how the expenditures will be spent. This is a common occurrence in society, but by the right and the job of the government. The primary source of income to the government is imposing taxes on individuals and businesses. While taxation is in essence for the benefit of the general public, there are several arguments on why it is unlawful and particularly not a business’s concern. First, taxation deprives a business’ employees and shareholders of its right to ownership and control of the property. Secondly, and most importantly, taxation is in effect slavery, as it considers not the consent of the person to whom it is imposed. Tax is mandatory and not voluntary. Also, the ultimate benefit of taxation falls on citizens and society, which can be at the expense of making profits. All these arguments boil down to the informed conclusion that making profits is as valid for a businesses, and not the right to impose taxes. “pure and unadulterated socialism” For a businessman to claim that the business has a “social conscience” to eliminate pollution, save the animals, or provide unneeded employment opportunities, he would be preaching “pure and unadulterated socialism.” In the recent past, business practices have tremendously changed following various technological advancements and changes in the sociological aspects of the business. The current markets orientations require a capable system that conjoins the various stakeholders to business. Von Mises (2016) points out that in a socialist system, commodities are monitored by a centralized system, thereby inhibiting competition. In effect, buyers and sellers transact in a free market. Socialism essentially forms a pool, whereby risks are significantly minimized. The profits are distributed throughout the society and expenditures such as those incurred by the government can be met. https://www.forbes.com/sites/chrismyers/2016/08/30/the-new-rules-of-the-game-balancing-profitsand-social-responsibility-in-the-21st-century/#6dc49afd3afb https://www.worldfinance.com/special-reports/the-six-biggest-brand-disasters-of-the-last-decade https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NYT_09_13_1970.pdf https://miltonfriedman.hoover.org/objects/56664/social-responsibility-of-business?ctx=46df95e7-43334f99-adb3-2ab39c638a18&idx=0
Purchase answer to see full attachment