CSR - Stockholders v. Stakeholders

Prior to reading Milton Friedman's Capitalism and Freedom, I had read his article denouncing corporate social responsibility and was quite perturbed. Milton Friedman argues that "there is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud" (133). Although he makes a valid argument concerning the stakeholders' wants and that charitable giving should be left up to the individual, not the corporation, I think the times have changed since Milton Friedman's arguments against CSR. Many stakeholders are entering the market of Socially Responsible Investments by looking for investment options that maximize financial returns and social gains. I think Friedman is putting too much emphasis on the stockholders, and not the rest of the stakeholders as he argues against CSR initiatives. Nowadays there are so many stakeholders in business that affect how a business does. Overall, I think that CSR cannot hurt a company in terms of its stakeholders, it can only make a company more popular among more people.

Friedman strengthens his argument by saying, "If businessmen are civil servants rather than the employees of their stockholders then in a democracy they will, sooner or later, be chosen b the public techniques of election and appointment" (134). This is interesting because I have been reading some articles about CSR in developing countries where the political structure is quite weak. Some of the authors argue that if corporations spend a lot of time on initiatives outside of making gains for their stakeholders, they can appear to be stronger than the government which can be detrimental to a society and a political economy.
Overall, though, corporations have a lot of money and affect the citizens of the communities in which they operate. That being said, corporations in the least, have a responsibility to act as a citizen by not making the community any worse off by operating in it. Furthermore, given the emphasis put on social responsible behavior, I think it is beneficial for companies to undertake certain CSR initiatives to be competitive in today's economy. Unfortunately, my dear friend Friedman, CSR has become a part of business and now when measuring a business's success or failures, CSR will be taken into account.