socialresponsibilitypb

=**__Are profits the only social responsibility of business?__**=

When one looks at the question “Is increasing profits the only social responsibility of business?” they must first consider who the stakeholders are and what other issues surround this main issue. In the case of the social responsibility of businesses there are many stakeholders including: the owners of corporations, the stockholders (who can function as part owners sometimes), the employees of the corporations, and the general public. All of these parties have many things to gain and lose depending on which way the general consensus on the position slides. The owners and stockholders main interest is profit. They have started or invested in the company expecting to gain money, hopefully at a faster rate than other moneymaking options. The employees work in order to support their families with the paychecks they receive. The general public may purchase the goods or services produced by the corporation; similarly they may experience negative effects of business decisions made by the corporations. It should be noted that corporations originally formed as a collective of individuals (generally a fairly small number) that desired to pool support and money to fund projects and potentially start a business. It has since formed into multinational entities that are raking in multimillion dollar profits. These corporations are also treated now as individuals rather than business in some aspects due to the fact that they are representing a selection of individuals. Due to these facts there are many issues that are at stake here besides the social responsibility of business. Some of these issues involve politics, corruption, profits, future generations, and the environment. If profitability is the only responsibility of business then there needs to be a movement to get political leaders more involved in sustainability and related issues. Similarly if they are involved in these issues they will require money to remedy the issues, most likely by increasing corporate taxes or personal taxes, thus impacting profits. Within both of these two issues is the sub issue of corruption, where other corporations may benefit from increased funding of environmentally friendly projects or there may simply be no way to enact the necessary reform due to monetary pressures put on the policy makers in the form of campaign contributions and the like. Milton Friedman, the author of the article “The Social Responsibility of Business is to Increase its Profits”, takes the stance that profits are businesses only social responsibility. His argument for this position is as such; Corporations are owned by a singular owner or a large number of shareholders, or some combination of those two. This group in turn chooses corporate executives (CEO, CFO, and the like) to run the business. These executives are entrusted with the job of running the corporation in accordance with the owner wishes (Friedman, 1). No matter if the owner is a singular person or a large group of people they generally have the same motive, to make money (legally). Due to the fact that executives are put in place to fulfill the owner’s desires they take on the task of making money. Friedman argues that executives are therefore unable to focus on other social responsibilities unless the owner(s) specifically state those things as an objective. Similarly, if the executive were to go against the owners wishes and take money out of the business to promote other social agendas, it seemingly would fall under the same case as “taxation without representation” (Friedman, 2). This is due to the fact that both owners and other employees are having money taken that could potentially be theirs and put into those social responsibilities. Friedman argues that the government is in place for exactly the measures being discussed as the corporate social responsibility. The difference is that it is the main job of government, with its numerous checks and balances, to focus on these social responsibilities. The last point that Friedman makes is that corporate executives, even if they were given permission by owners to pursue other social responsibilities, are simply not as knowledgeable as someone whom is in the industry already (Friedman, 3). This means that executives would either be required to hire on a separate company or group of workers to focus on the problem. Elsewise, they would have to enact policies by themselves which may in fact be misguided. Friedman concludes by saying that executives that run the business should not be focused on other social responsibilities unless there is a correlation that allows them to further maximize profits (Friedman, 5). While all of the premises of the argument do correctly support the conclusion, it seems that there may be a few faults in the premises themselves. First off, I would say that Friedman’s view of a corporation seems to be one that is mechanical in nature. While this is true if you are attempting to generalize corporations, many executives have more than just the owners interests in mind. They are also looking out for themselves and their families, as well as being pulled in many different directions by shareholders who desire different objectives of the company. On top of that, there may be governmental pressures or pressure from employees below them. Any of these things may change an executive’s position from purely profit based toward an aspect of social responsibility. This may be the result of a moral dilemma or a character flaw. In any case, this would lead them away from purely caring about profits. Another issue with Friedman’s argument is that corporations regularly lobby for changes in government policy, meaning that they are attempting to change government in a way that will ultimately benefit them. This implies that they are able to sway government officials opinions, essentially disrupting the job of government. This means that there is a steady streams of money going into attempts to ensure that the government is unable to either enact or pay for changes that would fall under the potential social responsibilities of business. If business was entirely outside of the government, allowing the government to impose taxes as it saw fit, they could say that it is government’s job. Unfortunately, this is not the case. Government is being pressured to not take action in the aspects of these social responsibilities due to the desire of business to make as much profit as possible. Lastly, it seems unreasonable to suggest that adding an extra branch of a company to address other social responsibilities is a bad thing. It means that there would be more workers able to provide for their families. Secondly, this division may eventually be able to become either a marketing tool or could function as an efficiency branch, improving overall operations. It seems as if these reasons alone do not negate Friedman’s argument yet instead show that it is one that could be defined as a stretch of one’s logic. The article “Business and Environmental Sustainability”, written by Joe DesJardins, argues for that fact that businesses must take on more social responsibilities than strictly profit. He begins with the assumption that the world finds itself in a bad place in the early 21st century. This is portrayed by war, famine, disease, drought, and economic issues. This is the case because of the fact that businesses are currently operation on the viewpoint that growth is the best means for addressing public issues and the idea that businesses must operate separate of environmental and ethical concerns (DesJardins, 36). From this initial assumption, DesJardins makes the argument that a sustainable business model is the only way to ensure the survival of humanity. He then bases this new business model of development on ecological economics. The model is supported on the “three pillars of sustainability”; economic, ecological, and ethical (DesJardins, 36). Instead of dealing with the one tenet, profitability, the addition of two more tenets means that one now has to find a balance of all three. If business owners and executives do not then they are following an unsustainable business model. Under this model, an important distinction is made between growth and development. The definition of growth is that of simply getting bigger. Development means getting better. With this distinction, one can see that the GDP is not an acceptable way to measure the strength of the economy, mainly due to the fact that growth may not be bad but misdirected growth is bad. This model focuses on three main aspects in which businesses can start to become sustainable. The first is that of sustainable consumption, or the idea that businesses do in fact impact purchasing choices of consumers. This is done in three main ways; first by shaping consumer demand with marketing and advertising, second by addressing the manner in which businesses encourage over-consumption, and third by creating more sustainable products to meet consumer demand (DesJardins, 45). The second is sustainable products and production. This can be done by ensuring that raw materials for product are sustainable. Another way is to treat wastes as another product that can serve a useful purpose. Last is supply-chain responsibility or the way that both raw materials and finished product are moved and stored. These points can easily be affected by improving efficiencies, reducing energy usage, a shift to sustainable energy sources, and an overall dematerialization. These three aspects will allow businesses to begin the transition away from profiteering. The three tenets of this sustainable business model form a framework that would require businesses to focus on more than just profits. This would aid both the environment and the individuals that work for the company, which seems as if it may be a net positive even if they corporation is losing out on money. DesJardins finishes his argument by summarizing that there is already a shift towards a sustainable business and that it will truly become a thing once business must focus on natural resources once natural capital becomes the limiting factor on business but until then there is not enough pressure to switch. DesJardins main argument is that eventually sustainable and ethical business practices will have to become commonplace. This will be the result of a limited amount of natural resources that now plays a large roll on businesses profits. A sustainable business will essentially be guaranteed to continue to remain profitable rather than potentially lose their ability to do business altogether. While this eventually may be the case, there are a few flaws in this argument as well. First and most glaring is the fact that businesses are essentially being forced to switch into this model to due market pressure. It seems that this is still the natural way that business runs its course. Just because there is now an environmental factor at play doesn’t necessarily mean that they are truly concerned about sustainability or ethics. Rather it means that executives needed to shift their methods of profit maximizing to one that works long term. If it did not work long term then the company would dissolve and that would not appease owners either. The second issue is that the three aspects that were discusses as a way to transition to this business model are either obvious or outlandish. This is due to the fact that the first aspect of consumer demand is not in the best interest of any business and the second and third aspects are simply good ideas that haven’t made their way into mainstream corporate society yet. While it seems that a focus on profits is not the best option, there is no true evidence that focusing on ethics and the environment will help businesses become better and not just bigger. The article “Sustainable Development: Economic Myths and Global Realities” is written by William E Rees. In this article, Rees takes the stance that businesses do have a social responsibility to the environment and then attempts to show a manner in which this can be achieved. He begins this argument by stating that we hold opinions that may not be entirely correct (Pojman, 661). These opinions influence major day to day decisions and therefore must be changed in order to move toward sustainable development. The philosophies of Descartes and Bacon both led to these opinions. Their philosophies state that we can view the world as a very mechanical one where there is a sense of separateness between all sectors (Pojman, 662). This view leads us to believe that exponential growth is both a good thing (as the economy isn’t necessarily connected to other things) and the only possible reality (because we view machinery as getting exponentially better) (Pojman, 663). Rees then goes on to state the second law of thermodynamics “in any closed isolated system, available energy and matter are continuously and irrevocably degraded to the unavailable state” (Pojman, 663). This implies that even a model of sustainable development based on consumption is not viable; let alone an exponential growth model. This is due to the fact that resources are always being removed in some manner. Therefore we must find a way to violate the second law; this is done by recognizing that the sun is an external (to our globe) power source which can aide us (Pojman, 664). Therefore we must undergo a pragmatic shift in philosophy. This can be accomplished by viewing the environment as a true form of capital and then attempting to live off its interest (Pojman, 667). An example of this would be to create a forest that is relatively dense and then slowly remove trees, allowing the others to continue to grow. After you remove these trees you continue to plant new trees and remove old trees, allowing the forest to remain essentially unchanged yet we benefit with the natural resource of wood. Similar examples can be used in other cases as well. This is an extension of the view that businesses should be concerned with other social responsibilities besides the environment. This article is an attempt to show how a business would try to execute a sustainable practice, rather than focusing on only profits. I personally believe corporations need to transition from a purely profit driven model to a model where the environment, ethics, and profits are all important. In that regard I agree more with DesJardins model, due to the fact that this is exactly what he is advocating. My problem with DesJardins is that he views this switch as something that will happen naturally due to the fact that we will eventually begin to feel the squeeze to profits brought on by a diminishing supply of natural resources. While this is what may truly happen due to the current societal model of business and government, it seems apparent to me at least that we should attempt to enact change sooner. I believe that this could be done with an increase in pressure by workers (both union and nonunion) to prove to corporations and businesses that we are tired of being taken advantage of personally and we are tired of being taken advantage of environmentally. This would require a major philosophical shift in the populous, from the stance of the American dream (read: the desire to make as much money as possible) to the stance of the //future// American dream. By this I imply that we should attempt to make the world as good as possible for future generations, rather than take advantage of the world for our generation. This to mean would be the true definition of advancement, mainly because we are undergoing a continuous building process rather that a continual destruction process. In order to begin this shift there needs to be an increase in individuals who actively speak out against corporations that harm everyone’s interests as well as an increase in individuals who attempt to promote positive changes in the corporate environment. This would also require the executives of these corporations to undergo a philosophical shift form that of profit mongering to a desire to create a business that provides a service to consumers through an environmentally and ethically friendly manner. This could mean an objective to increase worker moral (for example, green buildings and other social programs that incentivize individuals to work hard due to the benefits they receive from the company) or the desire to decrease ones environmental impact, ensuring that the business will be around for future generations. Similarly, there needs to be a shift in corporate philosophy to ensure that executives are not in it to make as much money as possible and leave and instead ensure that executives are focused on improving the company long term. This means that there should no longer be a focus on short term profits (which eventually turn into long term deficits) and rather focus on the long term projects that will allow the company to continue to be profitable in the long run. These changes would be the start of a move towards a more sustainable business practice, which is exactly what I desire.

Works Cited DesJardins, Joe. "Business and Environmental Sustainability." //BUSINESS & PROFESSIONAL ETHICS JOURNAL// 24.1,2 (2005): 35-59. Web. 5 Oct. 2012. Friedman, Milton. "The Social Responsibility of Business Is to Increase Its Profits." //The New York Times// 13 Sept. 1970: n. pag. Web. Pojman, Louis P., and Paul Pojman. //Environmental Ethics: Readings in Theory and Application//. Boston, MA: Wadsworth, 2012. Print.