----------------- HES POSTING ----------------- 
In response to Sam Bostaph: 
 
Thanks for your intervention here. Let me repeat the pertinent quote that I 
found interesting--and that you found to be "clarified" in subsequent 
paragraphs. 
 
It said: 
 
"When I hear businessmen speak eloquently about the 'social 
responsibilities of business in a free-enterprise system,' I am reminded of 
the wonderful line about the Frenchman who dicovered at the age of 70 that 
he had been speaking prose all his life. The businessmen believe that they 
are defending free enterprise when they declaim that business is not 
concerned 'merely' with profit but also with promoting desirable 'social 
ends; that business has a social conscience' and takes seriously its 
responsibilities for providing employment, eliminating discrimination, 
avoiding pollution and whatever else may be the catchwords of the 
contemporary crop of reformers. In fact they are--or would be if they or 
anyone else took them seriously--preaching pure and unadulterated 
socialism. Businessmen who talk this way are unwitting puppets of the 
intellectual forces that have been undermining the basis of a free society 
these past decades." 
 
TO WHICH I RESPOND: 
 
Note first the wonderful line about the "free enterprise" system (I have 
commented on this matter previously, but here it is again--it seems to be 
everywhere). That is, "free enterprise" seems to mean that businesses are 
free to do what they have always done and if we need for them to change we 
are going to have to pay them to do so. Note, also, the wonderful put down 
of "the current crop of reformers"--those who worry about unemployment, 
discrimination, pollution and other "catchwords" in fashion at the moment. 
We then come to Friedman's coup de grace--such fellows are "preaching pure 
and unadulterated socialism."  Then there is some curious talk "free 
societies." Are societies not "free" is they show concern for pollution and 
unemployment--and take policy measures to rectify those situations? 
 
Now if MF were some innocent who did not understand the force of the words 
he chose to use this would all be excusable. Most of us see it in term 
papers written by sophomores. But I am of the belief that people who know 
better, and MF seems to qualify here, use words for calculated purposes. 
There can be no doubt that here MF wishes to equate those who care about 
discrimination, pollution, and unemployment with those who are "socialists" 
and enemies of what he is pleased to call "free societies." I should 
imagine that in the 1970s, and perhaps even today, those words are selected 
with a specific purpose in mind.  He can then apply all sorts of salve and 
fancy words later on--but the message is not in doubt. 
 
Again, he is free to his views--my gripe is that he is using his prestige 
as an accomplished economist as a disguise to sway others that caring about 
pollution or unemployment makes one a socialist or an enemy of a "free 
society." For one who regularly denounced Soviet nomenklatura for their 
vapid propaganda, MF is not bad at it either. Unlike the sophomore, but not 
unlike the nomenklatura, MF knew precisely what he was doing and he chose 
his words to serve his ends. 
 
Let us now turn to his allegedly exculpatory elaboration: 
 
"What does it mean to say that the corporate executive has a 'social 
responsibility' in his capacity as businessman? If this statement is not 
pure rhetoric, it must mean that he is to act in some way that is not in 
the interest of his employers [the owners of the business]. For example, 
that he is to refrain from increasing the price of the product in order to 
contribute to the social objective of preventing inflation, even though a 
price increase would be in the best interests of the corporation. Or that 
he is to make expenditures on reducing pollution beyond the amount that is 
in the best interests of the corporation or that is required by law in 
order to contribute to the social objective of improving the environment. 
Or that, at the expense of corporate profits, he is to hire 'hard-core' 
unemployed instead of better-qualified available workmen to contribute to 
the social objective of reducing poverty." 
 
TO WHICH I RESPOND: 
 
We see here yet another sleight of hand by MF. And just who is to say that 
acting "socially responsible" is not in the interest of the owners?  Of 
course if you define "interest" narrowly--as he does here--then it seems to 
suggest "paying more than is absolutely necessary to produce a product at 
the lowest possible cash cost." On this tack MF is then free to denounce 
government for regulations that force firms to pay "more" than they would 
otherwise pay for the waste disposal services of the nearby river. But the 
fundamental problem is his denial that some companies choose to behave in 
ways that demonstrate "social responsibility" and still manage to survive. 
To doubt this is to make a fetish of the stuff we teach sophomores about 
alert and agile firms always perfectly yet precariously poised on some 
fictitious production possibilities frontier--moving to and fro at the 
slightest provocation from market signals. Such stories make for nice 
lectures, but they cannot possibly be said to describe the world MF seeks 
to invoke with his rhetoric. Michael Porter even has a hypothesis named 
after him now for discovering that a number of firms undertake some 
environmental improvements beyond what is "necessary"--and that a number of 
them have found that the possible threat of regulations some time in the 
future have caused them to reassess their processes and procedures and 
after "re-engineering" things discovered that they are now more 
"competitive" than hitherto. That is, their production costs are lower, 
their revenue picture is enhanced--and they have jumped ahead of their 
competitors in technology adoption. Of course the true believers find it 
incredulous on the grounds that if it were not efficient before how could 
it possibly be efficient now? Such is the fate of those who adhere too 
closely to their deductive truths at the expense of open-minded empirical 
work one finds in business schools where devotion to certain deductive 
truths is less severe than in other places we might mention. 
 
 
"In each of these cases, the corporate executive would be spending someone 
else's money for a general social interest. Insofar as this actions in 
accord with his 'social responsibility' reduce returns to stockholders, he 
spending their money. Insofar as his actions raise the price to customers, 
he is spending the customers' money. Insofar as his actions lower the wages 
of some employees, he is spending their money." 
 
TO WHICH I RESPOND: 
 
Cute and rhythmic, but merely a classic case of Friedman's statics. Notice 
the lack of feedback, evolutionary adjustment, and learning in this stark 
reductionist world. It is sheer static nonsense. Do firms behave in 
"socially responsible" ways? The last decade has seen a number of them 
appearing to do so--and a wise strategy it seems to be. Or, as MF himself 
might wish to put it, "we cannot be sure what they are doing or why they 
are doing it, but they sure seem to be behaving AS IF they cared about what 
the consuming public thinks of them." For a pure instrumentalist like MF 
that is the end of the story. Q.E.D. So did MF really believe his "AS IF" 
trick, or only when it seemed useful to do so? 
 
Sorry Sam, MF's elaboration did not help much at all. 
 
Dan Bromley 
 
------------ FOOTER TO HES POSTING ------------ 
For information, send the message "info HES" to [log in to unmask]