...Who is justified? Milton Friedman vs. Thomas Mulligan Social responsibility, business, shareholders, taxation, executive branches and socialism are not common words that we use in our daily routine life, unless you are in a business or administration scopes. Also, you may not aware about who is Milton Friedman, and why Thomas Mulligan has strong oppositions toward him. In this essay you are going to read a comparison of two different arguments by Thomas Mulligan and Milton Friedman. Their contentions are about corporate social responsibilities. What are responsibilities for executives and companies? Do they have to fulfill them or not? Are social responsibilities only for individuals? Wikipedia defines Social Responsibility as “an ethical framework which suggests that an entity, be it an organization or individual.” It means it is not only obligated for individuals or just companies. However, Milton Friedman doesn’t think so; and Thomas Mulligan has strong arguments against Friedman’s. Milton Friedman is an American economist that received Nobel Memorial Prize in Economic Sciences. He has lots of theories and doctrines about monetary policy, taxation and socialism. One and the most popular of his article published in New York Times Magazine at September 13, 1970. In his article, he approached to social responsibility of companies’ and stakeholders’. Briefly, he stands behind the view that "There is one and only one social responsibility of business to increase its...
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...Although I do agree with many points brought forward in Thomas Mulligan’s critique of Milton Friedman’s essay “The Social Responsibility Of Business Is to Increase Its Profits”, I still believe Friedman’s essay has a stronger overall argument. One of Mulligan’s main points in his critique of Friedman’s essay is the idea of the counter-paradigm in which “Lone Ranger” executives do not exist. Instead, “a business’ strategy is designed by many stakeholder groups, including executives and stockholders”, and in this way, the executive is no longer just working for the maximization of profits. Although it is easy to see how this counter-paradigm disproves part of Friedman’s argument, a key piece is still missing in addressing the “Lone Ranger”...
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...Critical Analysis: "The Social Responsibility of Busine Critical Analysis of "The Social Responsibility of Business" from Milton Friedman In this essay I evaluate Milton Friedman’s essay: “The Social Responsibility of Business Is to Increase Its Profits” in 1970, on the Social Responsibility of a business and his theory, which is called the “Efficiency Perspective”. In every article and book that I have read about social responsibility, Friedman’s “Efficiency Perspective is placed centrally. During my research I found that Friedman is often criticised for being too classical. Friedman believes that manager’s foremost objective or even moral obligation to the firm should be to maximise profits always. There is however one condition that makes his perspective more complicated, not only for me, but also for several well-known authors. According to Friedman, the managers obligations should be carried out: “…while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom”. This leads to one of the main questions of my essay: To what extent does Friedman’s “Efficiency Perspective” give foundation for responsible and moral international management behaviour? And need we any concern if it fails to do so? To fully answer the questions, I first need to explain the two different parts of the first question: responsible international management behaviour and moral international management behaviour. In businesses nowadays they...
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...The view that the main role of business is to make as much money as possible is accepted as a matter of fact. However, to say that the social responsibility of a business is just to make a profit is open to debate. In this essay, I will present an claim against the role of business in social responsibility and pose an argument for businesses role in social responsibility. The argument against the role of business in social responsibility is the main thesis of Milton Friedman. Milton Friedman’s view is that in a capitalist economy, there is one and only one responsibility of business to use its assets and participate in activities created to grow its profits so long as it stays within the regulations of the game and participates in open and...
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...Consumption “Estimates of the marginal propensity to consume from decade-average observations on actual consumption and actual disposable income tend to be higher than estimated based on quarter observation. This is evidence against Keynes’s theory of consumption and in favor of Friedman’s permanent income hypothesis.” Explain and discuss. Introduction Consumption expenditure accounts for the largest proportion of the Gross Domestic Product in most countries. Referring to Miller (1996), consumption is the total of goods and services that people in the economy wish to purchase for the purpose of immediate consumption. More importantly, consumption is one of the main determinants of an economy’s aggregate demand and economists can therefore estimated the aggregate demand as well as evaluate the effects of fiscal policy based on the determinates of consumption. This essay will commence by explaining the Keynesian consumption function and the consumption puzzle. It will then discuss the Friedman’s permanent income hypothesis before explaining the difference of marginal propensity to consume between cross-section data and long-term time series data. Finally, it will conclude that permanent income hypothesis by Milton Friedman provides a more complete model for people to research consumption and aggregate demand. The Basic Keynesian Function Over the past few decades, there are lots of works have done to research consumption. The most famous study is J M Keynes’s General Theory published...
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...Operating Today in New Zealand Go “Beyond Profits”? In 1970, it was argued by Nobel Prize-winning economist, Milton Friedman, that the only social responsibility of business is to increase its profits (Friedman, 1970). Since Friedman expounded his widely acclaimed philosophy on the social responsibility of business, many experts in the area of business and social responsibility have retaliated with their own views on corporate social responsibility (CSR). One of these views is the idea that businesses should go beyond the classic economic paradigm, a-la Friedman, to carry out certain responsibilities to society such as ethical and philanthropic responsibilities (Carroll, 1991). In order to have a better understanding of one’s position on the CSR debate, this essay will specifically target the corporate social responsibilities of businesses within a general New Zealand context so that one might precisely answer the question “Should Businesses Today Operate beyond Profits”? “Responsible governance” in New Zealand (NZ) management is equivalent to the organization’s “environmental, social and risk management practices and the interests of its shareholders and increasingly wide stakeholders (Birchfield, 2011). The definition of responsible governance seems to be in favor of the CSR position as businesses in NZ are clearly obliged to more responsibilities other than Friedman’s ultimate profit-maximizing goal. However, a resent consensus in the business consulting and corporate analysis...
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...may simply say that they have no reason to be ethical. They see why they should make a profit, and most agree they should do so legally. But why should they be concerned about ethics, as long as they are making money and staying out of jail? Other managers recognize that they should be ethical but identify their ethical duty with making a legal profit for the firm. They see no need to be ethical in any further sense, and therefore no need for any background beyond business and law. A third group of managers grant that ethical duty goes further than what is required by law. But they still insist that there is no point in studying ethics. Character is formed in childhood, not while reading a college text or sitting in class. These arguments are confused and mistaken on several levels. To see why, it is best to start with the question raised by the first one: why should business people be ethical? Why Should One Be Ethical? There is already something odd about this question. It is like asking, “Why are bachelors unmarried?” They are unmarried by definition. If they were married, they would not be bachelors. It is the same with ethics. To say that one should do something is another way of saying it is ethical. If it is not ethical, then one should not do it. Perhaps when business people ask why they should be ethical, they have a different question in mind: what is the motivation for being good? Is their something in it for them? It is perfectly all right to ask if...
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...CCGL 9018 Final Essay Name: CHAN YIK UID 3035036503 Case study of Wal-Mart Introduction In this essay, the case of Wal-Mart will be discussed by applying the Milton Friedman’s argument on CSR and utilitarianism. Wal-Mart is the largest retailer in the world, however, it is also known for ruthless exploitation of employee, squeezing suppliers, and crushing communities. It has been the Public Enemy No. 1 for a generation of activists and reformers. To cope with these oppositions, Wal-Mart responded vigorously and, instead, announced plans to preserving the environment, fighting hunger, empowering women and providing access to healthy, affordable food. The essay will try to argue the problems of Wal-Mart dominating the world in the retail business to create great profit by giving low wages to the employee according to Milton Friedman and utilitarianism. Also, it will discuss how the plans announced by Wal-Mart deal with the global responsibility. Moreover, how should government involve in this situation. Problem: Low-wages for the Employee 1. Milton Friedman According to Milton Friedman, an American economist and philosopher, the most important social responsibility of a corporation is to maximize profit for its owner- stockholder (Friedman, 1970). He suggested that if a corporation put the focus on being socially responsible, it would make the corporation less competitive with those competitors who did not put much focus on social responsibility. For the...
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...their nation. Governments take the form of different types. There are many different types; Capitalism, Communism, Totalitarianism, Oligarchy, Socialism, Democracy, and even Social Democracy. However I write about only one today…Socialism. I will be taking various examples from Milton Friedman’s The Road to Serfdom. In Milton’s first chapter “The Abandoned Road” he speaks of the history of what we have been founded upon. Individualism speaks to our very core, with the development of Socialism we have been straying too far from what we know, what works. In chapter two, “The Great Utopia”, he speaks about how the French writers who laid the foundations of Socialism call for the control of the people through a strict dictatorship. This dictatorship that would take place will inevitably call for the end of all revolutions of the people so that the government may put its plans into action. Democracy and Socialism have one thing in common: equality. However with Democracy it calls for equality in liberty and freedom whereas Socialism calls for equality through strict restraint and servitude. “I shall not serve” says the free people of a free nation. Jumping forward to chapter nine “Security and Freedom” Milton argues that with security you shall limit your personal freedoms and even your economic freedoms. In the sense of job security one wants to have a stable income and even a minimum wage at which they can charge their employer for their personal...
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...stakeholder models of corporate social responsibility. Can the US government’s actions be justified from either (or both) of these models? Consider both short and long-term consequences of this government intervention. Conclude whether the action taken by the US government is best for society?’ The Global Financial Crisis of the last few years has caused widespread problems for the US government, who were forced to spend billions of (taxpayer) dollars bailing out many of the world’s largest top banks. While a controversial decision, the US government acted on the belief that these institutions were ‘too big to fail’ and their collapse would have far reaching consequences that could have lead to a much dire situation. Throughout this essay, the causes and effects that lead to the GFC and the need for a bank bailout, along with what exactly it entailed will be presented. Then, the US governments’ response in bailing out the banks will be analysed using both a Stakeholder and Shareholder model of Corporate Social Responsibility. Their decision will attempt to be justified against these models by examining both the long and short term effects of the government intervention and conclude whether or not the action taken by the US government was in the best interests of society at large. The global financial crisis of the 21st century was a phenomenon that deeply affected the world and in particular the...
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...1933, real GDP plunged nearly 30%. Real per capita disposable income sank nearly 40%. More than 12 million people were thrown out of work; the unemployment rate soared from 3% in 1929 to 25% in 1933. Some 85,000 businesses failed. Hundreds of thousands of families lost their homes (Wheelock 2008). The money supply had fallen 35%, prices plummeted by about 33%, and more than one-third of banks in the United States were either closed or taken over by other banks (Parker 2010) . Milton Friedman and Anna Schwartz, in their 1963 book A Monetary History of the United States, 1867–1960, call this massive drop in the supply of money “The Great Contraction.” Monetarists, including Friedman, argue that the Great Depression was mainly caused by this monetary contraction, poor policy-making by the American Federal System, and continued crisis in the banking system. While there are many credited theories that provide an explanation for the Depression, this essay will focus on Monetarism and John Maynard Keynes’s argument for government stimulus in order to combat the economic downturn. Causes For The Great Depression In their book A Monetary History of the United States, 1867–1960, Friedman and Anna Schwartz stated that the Depression began with America’s weak banking system (Friedman et al. 1971). From 1930-1933, 10,000 banks closed. The majority of the U.S banks were small institutions. The Fed did not expect these small banks to have such a large effect on the money supply, causing the...
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...Tesco, corporations, society and consumers In this essay we are going to start to look closer at what is important for a business and what is important for society. We are going to look closer at Corporate Social Responsibility (CSR), and find out what it means for a business and society. Some businesses, especially big businesses, shape many aspects of our lives. Some are around us all the time. Some have turnovers larger then a normal person can imagine. Some multi nationals have turnovers larger then some states. That being the case, how de we want them to conduct themselves? How do we want them to behave? To start, we have to answer some questions. What is important when you are a businessman and you manage a business? Do you have some responsibility to the society and the rest of the world? To answer these questions we are going to look at both sides of the spectrum. At one side of the spectrum we have the free market views of people like the economist Milton Friedman. He has argued that a business not should think about the society and the problems that the society meets. The only social responsibility of a business is to make money and get the highest profit as possible – anything else is theft from the shareholders pocket. “There is one and only one social responsibility of business–to use its 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...
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...Thesis Capitalism has been the subject of ethical criticism since it was first introduced into society. I defend the morality of capitalism because it gives people incentive to work, establishes a web of trust between them, satisfies their material well-being, and generates a wide spectrum of prosperity. Exposition As citizens of the United States, we are members of the leading capitalist economy in the world. Our production and distribution is mostly done privately and we operate in a “profit” or “market” system. The capitalist system has been a target for criticism throughout the last three hundred years and is being discussed now more than ever due to the recent recession and financial crisis (Shaw and Barry n.d., 1). Its effects, structure, varieties, and possibilities provide for a large field of study and writers from several different disciplines have provided their input to the debate. Most fundamental is the question of whether our capitalist system is a morally justifiable one. This question can’t be answered by reviewing the efficiency and productivity capitalism provides, but instead requires a thorough analysis of ethics. A capitalist society is characterized by the private ownership of property and a free market that grants citizens the right to use their resources for their own benefit. Private property is the ownership of productive resources like companies, stocks, and bonds and should not be confused with personal property. Personal property consists...
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...The Methodology of Positive Accounting Charles Christenson The Accounting Review, Vol. 58, No. 1. (Jan., 1983), pp. 1-22. Stable URL: http://links.jstor.org/sici?sici=0001-4826%28198301%2958%3A1%3C1%3ATMOPA%3E2.0.CO%3B2-Z The Accounting Review is currently published by American Accounting Association. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/about/terms.html. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/journals/aaasoc.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. The JSTOR Archive is a trusted digital repository providing for long-term preservation and access to leading academic journals and scholarly literature from around the world. The Archive is supported by libraries, scholarly societies, publishers, and foundations. It is an initiative of JSTOR, a not-for-profit organization with a mission to help the scholarly community take advantage of advances in technology. For more information regarding JSTOR, please...
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...Academy of Management Learning & Education, 2005, Vol. 4, No. 1, 75–91. ........................................................................................................................................................................ Bad Management Theories Are Destroying Good Management Practices SUMANTRA GHOSHAL Advanced Institute of Management Research (AIM), UK and London Business School The corporate scandals in the United States have stimulated a frenzy of activities in business schools around the world. Deans are extolling how much their curricula focus on business ethics. New courses are being developed on corporate social responsibility. Old, highly laudatory cases on Enron and Tyco are being hurriedly rewritten. “What more must we do?”, the faculty are asking themselves in grave seminars and over lunch tables (Bartunek, 2002). Business schools do not need to do a great deal more to help prevent future Enrons; they need only to stop doing a lot they currently do. They do not need to create new courses; they need to simply stop teaching some old ones. But, before doing any of this, we—as business school faculty—need to own up to our own role in creating Enrons. Our theories and ideas have done much to strengthen the management practices that we are all now so loudly condemning. vested interests, which are dangerous for good or evil” Keynes (1953: 306). This is precisely what has happened to management. Obsessed as they are with the “real world” and sceptical...
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