When talking about Business Ethics one has to realize that there are many different facets involved, and for someone to take a stance as to whether there is such a thing as ethics in business or to state that such a term in itself is an oxymoron, would be a very daring position to take.
In this essay I will try to divide and analyze the different approaches that are taken when economists and moral advocates discuss business ethics. I will also insert my own thoughts on the subject, and when there seems to be a conflict of general opinion on a certain aspect pertaining to business ethics, I will try to point out how the two sides, when given the details of each specific case under consideration, will more times than not, agree as to what course of action should be taken.
Reflection on Milton Friedman and the social responsibility of the Corporation:
There are a few different types of businesses out there: Sole proprietorship, Partnership, and Corporation. When Milton Friedman states that businesses cant have responsibilities, only people can, he is obviously talking about corporations and not a sole proprietor.
A sole proprietor is a person and he can have whatever social responsibilities he desires. As far as partnerships are concerned, Milton Friedman would say that their only responsibilitys are towards each other.
Now that we have determined what group of business Milton Friedman was discussing let us examine what he says. Then we will see that what he says makes logical sense, and most people will agree with him.
Milton Friedman agrees to a relatively large extent that business ethics when pertaining to the general aspect of corporations within the framework of the law is an oxymoron.
I think everyone will agree that a business as a profit making entity has one goal and that is to make money.
A corporate executive acts as an agent of his employers or the corporations stockholders in order to increase profits. He of course is also a person in his own right, and as a person he may have other responsibilities; Responsibilities to his family, his conscience, charity, church, city, etc. However, in this respect he is acting as principal, not an agent. He is spending his own money, time or energy. These are social responsibilities of individuals not of business. How can a corporate executive have a “social responsibility” in his capacity as a businessman? He is merely an agent.
If you would say that he should be obliged to some sort of social responsibility, you in turn would be telling him to act in some way that is not in the interest of his employers or stockholders. For example, if you would tell him not to raise prices in order to combat inflation, you would in turn be taking money away from the stockholders. If you would tell him to decrease pollution beyond what the law demands, and pass over the expenses to the customers in the form of price increases, you in turn would be taking money away from the customers in order to improve the rest of society. If you would tell him to lower the wage of some employees, he would be taking money from the employees in order to improve the rest of society. Either way you look at it someone would be losing out. What gives the executive the right to take from one and give to another because of some implied “social responsibility”.
Of course if the executive is asked to do something illegal or the business in itself is doing something illegal, even Milton Friedman will agree that anyone who knows about it should notify the proper authorities. However, in the case of whistle blowing I think Milton Friedman would condemn the employee for letting his ethical urges get in the way of his employee responsibility towards his employer.
Being that stockholders are each part owners of the company, if they want to act more ethical they can do as they please.
If you were to impose a set of ethical standards beyond the scope of the law, whose standards would we go by? There is a wide range of various ethical and religious groups .