Businesses have responsibilities. Corporate executives in businesses have political principles that are in line with their business’s responsibilities; in that there are consequences if these responsibilities are ignored. One of these responsibilities include the power vested in corporate executives who run businesses to decide whom to pay taxes, by how much and for what purpose. For political principles to be acted upon and implemented, the businesses should be seen as political entities. Therefore they should be elected through a political process and a political machinery set up to make assessment of taxes imposed and expenditure made to foster social objectives. This political process should also determine the objectives to be served. Therefore this is not seen as a responsibility of businesses.
“Social responsibility” doctrine justifies wage restraint by trade unions. This is evident when union officials are asked to subordinate the interest of their members to some more general purpose. If the union officials try to enforce wage restraints, the consequence is likely to be wildcat strikes, rank-and-file revolts and the emergence of strong competitors for their jobs. On the contrary, union officials can do good but only at their own expense. This is because on the doctrine’s grounds, those who favor taxes and expenditures have failed to persuade a majority of their fellow citizens to be of like mind and that they are seeking to attain by undemocratic procedures what they cannot attain by democratic procedures; thus it is hard for “evil” people to do “evil” especially since one man’s good is another’s evil.
Trade union officials do good but only at their own expense. This is because if an individual proprietor acts to reduce the returns of his enterprise in order to exercise “social responsibility”, he is spending his own money and not someone else’s. If he wishes to spend his money on such purposes, that is his right and there’s no objection in doing so. On the other hand, calling on corporate to exercise a “social responsibility” would mean calling on them to refrain from hypocritical window-dressing of any kind since it harms the foundation of a free society. We should admire these individual proprietors or owners of closely held corporations or stockholders of more broadly held corporations who disdain hypocritical window-dressing as approaching fraud.
Social responsibility with regards to an individual proprietor using his own money is encouraged. This is because it may be in the long-run interest of a corporation since it could be easier to attract desirable employees through this. It may also reduce the wage bill. In addition, it may lessen losses from pilferage and sabotage and cause the stockholders to contribute more to charities they favor; given the laws about the deductibility of corporate charitable contributions. Contrary to this, this is widely used as a way to only generate goodwill as a by-product of expenditures that are entirely justified on its own self-interest considering the wide-spread aversion to capitalism and profits in the present climate of opinions.
It would be inconsistent of Milton Friedman to call on corporate executives to refrain from the hypocritical window-dressing because it harms the foundation of a free society since whether blameworthy or not, the use of the cloak of social responsibility does clearly harm the foundations of a free society. Milton Friedman has been impressed time and again by the schizophrenic character of many businessmen. They are capable of being extremely far-sighted and clear-headed in matters that are internal to their businesses and are incredibly short-sighted and middle-headed in matters that are outside their businesses but affect the possible survival of business in general. This short-sightedness is exemplified in speeches by businessmen on social responsibility and this may gain them kudos in the short run. Looking at it the other way, corporate executives in turn benefit from the hypocritical window-dressing in that it is seen in a realist way as a source of profit increment.