How the philosophy of Milton Friedman played a role in management’s decision
Review the articles on the gulf oil spill and corporate social responsibility. In 250 words, explain how the philosophy of Milton Friedman played a role in management’s decision. Identify one other ethical framework, other than Free Market Ethics, that influenced management during this event.
The free market refers to an economy that relies solely on demand and supply that buyers and sellers want to make (Free Market, n.d.). In this aspect, free market ethics refers only to the ethical business practices that shareholders levy on executives. This idea is exactly what Milton Friedman advocated for. Friedman states that executives only responsibility is to their shareholders and, therefore, their only responsibility is to generate profits for them (1970). This is a stark contrast to CEO’s and other business leaders who state and perpetuate the idea of executives having “social responsibilities”.
This idea of social responsibilities has some roots in the virtue line of ethics. Virtue ethics is the idea that actions taken are good or bad based on how they are perceived by others within a social system (Geuras & Garofalo, 2002). Furthermore, these “good” action should result in others following their accepted good practices. Friedman defended against this line of thinking, while applied to business, because he argued that people, not businesses, had the responsibility to support society (1970). To further support his claim, he depicted executives that followed the idea of social responsibility as “civil servants”; however, civil servants should be publicly elected to their position in which CEO’s are not (Friedman, 1970).
Today, BP, the oil industry giant, still get slammed for its unethical treatment of the gulf oil spill in which millions of gallons of oil polluted large portions on the Gulf of Mexico. Verschoor, from Strategic Finance, further supports this claim by stating the BP focuses on cost and financial performance over safety and ethics (2010). While this concept does go against today’s socially mindfully society, BP’s actions are actually in line the Friedman’s idea of responsibility belonging to shareholders, not society in general.
Free Market. (n.d.). Retrieved from in The Law Dictionary: http://thelawdictionary.org/free-market/
Friedman, M. (1970, September 13). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
Geuras, D., & Garofalo, C. (2002). Practical Ethics in Public Administration. Vienna, Virginia.
Verschoor, C. (2010, August). BP Still Hasn’t Learned Ethical Lessons. Strategic Finance, 92(2), 13-15. Retrieved from https://search-proquest-com.ezproxy1.apus.edu/docview/744432623?pq-origsite=summon&accountid=8289