Business Responsibility vs. Business Responsibilities

Reason features an interesting 3-way conversation among Milton Friedman, Whole Foods’ John Mackey, and Cypress Semiconductor’s T.J. Rodgers: "Rethinking the Social Responsibility of Business." Departure point is a Friedman citation: The Social Responsibility of Business Is to Increase Its Profits.

John Mackey, the founder and CEO of Whole Foods, starts off by disagrying with Friedman. He believes the above citation is too narrow a description of his and many other businesses’ activities.

T.J. Rodgers, the founder and CEO of Cypress Semiconductor, counters Mackey's point(s) by arguing that corporations add far more to society by maximizing “long-term shareholder value” than they do by donating time and money to charity.

You may access the conversation at Reason online by clicking here. The first comment here is also my comment to the conversation.

1 comment:

fCh said...

I would like to bring a few points about the conversation between Messrs. Mackey and Rodgers. I think their opinions on business are strongly informed by their very areas of economic activity. Whereas the former enjoys the highest pricing power in his sector, the latter is in an industry where just the opposite is norm. The former deals with each customer almost on an individual basis, whereas the latter deals with synthetic abstractions of aggregated customers. Thus, I think Reason's choice for the dialogue is rather unhappy. It should have been compared Whole Foods' business and social responsibility charter to that of Bang & Olufsen. It follows that Cypress Semi should have been compared, along similar dimensions, with Wal-Mart.

The conversation I started talking about cannot go too far since, I think, the positions Mackey and Rodgers are the result of a happy process of self-selection. Too much reinforcement has come along each one's professional path to see the other's point. Alas, neither one of these two protagonists would make happy camper in the other's business context!

I agree with Professor Friedman's assertion that it all comes down to rhetoric. Some customers like to feel they support socially responsible objectives, in addition to satisfying the primary need for nutrition, when paying premium prices. However, at the end of the day, it all comes down to good economic sense, and most any business person may well look at Mr. Mackey's socially oriented initiatives as worthy PR expenditures.

Thus, I would like to retain Professor Friedman's operational definition for a well run socially-responsible business: “The Social Responsibility of Business Is to Increase Its Profits.” And, short of an ideal free-market system, absent of 501c(3)s, Mr. Mackey is well advised to keep up with his social responsibilities.

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