Task 3: Business Ethics in Practice

/ca. 20 minutes/

We can agree with Edward R. Freeman that business is about purpose. Still, a successful business requires making a profit. The profit motivation is recognized by many as one of the core drivers in business. 

One of the most well known supporters of this view was Milton Friedman, an American economist, who received Nobel Prize in Economic Sciences (1976). Friedman was an advocate of the free market principle, which he expressed in Free to Choose: A Personal Statement, a book and a ten-part television series broadcast. 

Please watch two parts of the "Free to Choose" series: "Milton Friedman on Self-Interest" and "The Profit Motive" and try to answer the following questions:

Video 1: Milton Friedman argues that corporation shouldn't try to do anything good for anybody, yet it should act from its pure self-interest, namely profit. Take a moment and think about the examples brought in the first part of the video: flood and a death caused by a lack of electricity.

Source:  Sidewinder77, Milton Friedman on Self-Interest and the Profit Motive 1of2 (5:25 min) [access 13.06.2020]. Derived from Youtube: http://www.youtube.com/watch?v=ev_Uph_TLLo&list=PLEDBC45346CFEE362

Video 2: In this part, a student asks a question reffering to the Ford Pinto Case. The cases involving the explosion of Ford Pinto's due to a defective fuel system design led to the debate of many issues, mostly centering around the use of a cost-benefit analysis by Ford and the ethics surrounding its decision not to upgrade the fuel system based on this analysis. With reference to this discussion, Milton Friedman brings a statement that “the real fundamental principle is that people individually free should decide how much they are willing to pay for reducing the chances of their death”? 

Source:  Sidewinder77, Milton Friedman on Self-Interest and the Profit Motive 2of2 (6:56 min)  [access 13.06.2020]. Derived from Youtube: http://www.youtube.com/watch?v=iPqdRqacpFk&list=PLEDBC45346CFEE362

Do you think it is a realistic approach? Think about the whole case. 
Do you think that corporations should use a cost-benefit analysis as referral in cases like the Ford Pinto? 

To complete this activity, please create a post and take part in the discussion by answering the questions given above.

If you are interested in some more examples of firms' unresponsible handling and critical approach to corporations, we recommend that you read "What is the Purpose of a Corporation?" by Steven Mintz in his blog "Ethics Sage": https://www.ethicssage.com/2019/10/what-is-the-purpose-of-a-corporation.html (Accessed 3.06.2020)

If you want to know more about different notions regarding CSR, we invite you to read the articles from references, as well as further readings. 

References:

• Wikipedia, Free to Choose: A Personal Statement, with Rose Friedman, (1980), highly influential restatement of policy views, https://en.wikipedia.org/wiki/Free_to_Choose (Accessed 3.06.2020)

Further readings:

• M. Friedman, The Social Responsibility of Business is to Increase its Profit, "The New York Times Magazine", September 13, 1970. Copyright @ 1970 by The New York Times Company
• A. Karnani, (2010), The case against corporate social responsibility, Wall Street Journal, Aug. 23: 1-5.
• Leggett Ch. (1999) The Ford Pinto Case: the Valuation of Life as it Applies to the Negligence-efficiency Argument, Law & Valuation, https://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html (Accessed 3.06.2020)