Monday, July 13, 2009

Mr. Friedman Turns 93

The 97th birthday of world renowned American economist, Milton Friedman, is coming up and a local Hong Kong Organization is getting together to celebrate him and his contribution to private enterprise. There will be a panel discussion including three professor from around Hong Kong who will speak on his ideas and their relevance to the current economy.

If you recall, Mr. Friedman was a huge advocate for creating shareholder value, stating that this is the only responsibility private enterprise has to society. The title of an article he wrote for the NY Times in 1970 reads “The Social Responsibility of Business is to Increase its Profits”. If you would like to read it, please see:

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers. That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose–for exam­ple, a hospital or a school. The manager of such a corporation will not have money profit as his objective but the rendering of certain services.

In either case, the key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation or establish the eleemosynary institution, and his primary responsibility is to them [as opposed to Society].

I personally think it is a very convincing read. The only thing I would add is that times have changed. Technology in communications has shrunk the virtual proximity between business and communities. Advancements in science have made it possible to measure the exact effect a business has on the environment and communities. Now, CSR (Corporate Social Responsibility) is needed to increase a business’ profits in order to meet its social responsibilities.

Currently working for an NGO who focus is Corporate Social Responsibility makes this brief particularly interesting. I’m a big fan of understanding all sides of an issue and I have to believe their will be some interesting perspectives on Social Responsibility.

The venue is at a private Portuguese club in central. The same one I went to for the Junto meeting. The brief is not until the end of the month. Can't wait!

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