The Social Responsibility of Corporate Management: A Classical Critique

Philip R. P. Coelho, James E. McClure and John Arthur Spry ()

No 200201, Working Papers from Ball State University, Department of Economics

Abstract: Calls for corporate social responsibility are widespread, yet there is no consensus about what it means; this may be its charm. It is possible to distinguish the fiduciary duty owed to shareholders as expressed by Milton Friedman from all other paradigms of corporate responsibility. Friedman maintains that: “ . . . 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 deception or fraud.” Other paradigms argue that corporations have social responsibilities that extend beyond shareholders to stakeholders. The list of cited stakeholders is ill- defined and expanding, including non-human animals and non-sentient things. This paper defends the intellectual and ethical merits of fiduciary duty to shareholders, and compares and contrasts it to the stakeholder paradigm. The duty of managers to firms’ owners is the bedrock of capitalism, and capitalism will wither without it.

Keywords: Corporate Social Responsibility; Shareholder; Stakeholder; Capitalism; Socialism; Ethics; Principal-Agent; and Transparency. (search for similar items in EconPapers)
Date: 2002-01, Revised 2003-01
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Published in Mid-American Journal of Business 18 no. 1 (2003): 15-24.

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http://web.bsu.edu/cob/econ/research/papers/bsuecwp200201coelho.pdf First version, 2002 (application/pdf)

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Journal Article: The Social Responsibility of Corporate Management: A Classical Critique (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:bsu:wpaper:200201

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