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Corporations today influence their communities and society at large in ways Friedman could not have conceived, and of which he might not have approved.
But the former can be achieved only by serving, not merely exploiting, your customer base.
Friedman wasn’t wrong, but his definition of “social responsibility” was surely too narrow and his faith in the market too naive.
He was responding to a public debate on the corporation’s role in society launched in the late ‘60s that sounds very much like the direct forebear of Occupy Wall Street.
Dissident shareholders at Bank of America, AT&T and dozens of other companies freaked out managements by questioning not their financial results but the “social impact” of their activities, and disrupted annual meetings with demands for proxy votes on such issues as their company’s role in the Vietnam War, its record on minority hiring and its contribution to pollution.
But the danger is that if it’s seen chiefly as a PR device, then corporate giving — currently a minuscule one-tenth of 1% of revenue among major corporations, according to the committee’s latest survey — will be first on the chopping block in economic downturns.
Moreover, the giving-for-giving’s-sake model always runs up against the notion that the only constituency that counts in corporate management is the shareholder.
In other words, are improved profits a collateral benefit or the main point?
Some might say that it doesn’t matter, as long as you end up with less penurious farmers or healthier peasants.
American corporations plainly are smarting from the accusation that they’ve abandoned their sense of social responsibility in pursuit of higher profits.
You can tell that by the defensive indignation with which the business community has greeted President Obama’s rhetorical attacks on “millionaires and billionaires.” And by Bank of America’s defensiveness in spinning the cancellation of its debit card fee as rather an act of consumer altruism.