In my second blog post, I argued in favor of Friedman’s perception that the “only social responsibility of a business is to pursue profits” to the constraint of legal and ethical conduct. I supported this point by drawing parallels to what I believed was the embodiment of the ideal business man, the fictional Wall Street character Gordon Gekko. Though I believed this was viable, in reality, the pursuit of profits often encourages ethical and legal standards to be broken.
I did not take into account the willingness of firms to circumnavigate the law and ethical practices, nor did I recognize the consequences of the firms’ actions. In class 17, we examined the causes of the 2008 financial crisis, which in summary can be attributed to the unrelenting pursuit of profits from banks and investment firms. The pursuit of profits from these firms did not create wealth, which opposes Friedman’s argument, but instead encouraged deceptive business practices. Whether over-leveraging, shadow banking, the housing bubble or predatory lending are ethical or not – they are all legal – it led to a global economic catastrophe, all in the pursuit of profits.
My entrepreneurial and business ideals were erroneous, and I was doubtful if profits and societal benefits had any correlation. My doubts were quashed in class 20, when we learned about social entrepreneurship. A social entrepreneur uses the innovative, opportunistic qualities of an entrepreneur to make social change by applying business principles to make some type of social change, all while making profit. Social entrepreneurs benefit the lives of individuals by achieving, or attempting to achieve, social change, yet still have the capacity to make profits. Micro-franchisers, for example, supply ambitious, underprivileged individuals with the ability to operate a business and earn a livelihood. Though it may seem like a charity, a micro-franchise makes profit to sustain business, and do not solely rely on donations and outside funding to continue operations. Social entrepreneurs may not prioritize the pursuit of profits as the most important aspect of their business, but it is an essential part of their business function. Social entrepreneurialism has reshaped my perspective regarding how businesses can benefit society.
In light of this, perhaps my reworking of the famous Wall Street quote in my second blog post should be reworked again: “Greed is good, but only if the greed for profits does not outweigh the desire to benefit society.”
Daniel Boissonneau-Lehner
http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
