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Much of Milton Friedmans argument or doctrine is built around the desire for free trade, a smaller government, and a steady increase of money supply within a growing economy. His emphasis on monetary policy is also reflected in his approach to the social responsibility of companies or their executives. Friedman stated that all social responsibility should be placed on shareholders and that the companies themselves have no obligation to any social norm unless shareholders decide otherwise (Friedman, 2003). In my opinion, not only is this approach unfeasible in the current economic climate, but largely unethical and non-representative of values that economic and political positions are trying to represent.
The shareholder theory claims that executives, as employees of a company, have a primary role in increasing the shareholders and the businesses profits and focusing on their interests. However, this means that if a company were to implement capital anywhere else outside their own company, such as in the form of a donation or investment that does not directly profit them, they would need to make this capital by charging their customers higher or paying lower wages. In Friedmans opinion, the returns to the stakeholders are the priority. However, this creates an incredibly poor environment for workers, clients, and in the long run, investors (Posner, 2019). It also strips customers and employees from their freedom to decide if or what cause they would like to support instead of relying on their executives. Generally, the lack of social responsibility by companies has proven to negatively affect their relations with clients and, as such, experience decreases in sales. Essentially, the stakeholder theory, when driven to its extreme especially, is harmful to even the shareholders it is prioritizing. Political and economic freedom are entangled and can shift together.
References
Friedman, M. (2003). Capitalism and freedom (40th ed.). University of Chicago Press.
Posner, E. (2019). Milton Friedman was wrong. The Atlantic.
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