Earlier I described Solomon's criticism's of Friedman's approach to business ethics. It makes the point that business ethics and economics have differing perspectives on the purpose of business, each of which is legitimate within its own frame of reference. At this level we have a rather sterile debate. Over two hundred and fifty years ago the philosopher David Hume noted the immense gulf between the words 'is' and 'ought'. I therefore propose that economists should leave questions of 'ought' to philosophers, and concentrate on questions of 'is'.
A Pragmatic Account of Corporate Social Responsibility
Let me then define what I mean by the phrase ‘corporate social responsibility’. In my opinion CSR describes the practical reality that companies are increasingly being judged not just by the products and profits they make, but also by how these profits are made. It is important to stress however that this definition is limited to the societal and environmental constraints put upon a company's core function of profit maximization by the provision of goods and services. Companies respond to these constraints in response to the two classes of 'stakeholders' who really do matter to them: customers and shareholders. Earlier I stated my agreement with Friedman that companies should not give shareholders' money away. To repeat, corporate social responsibility is not an invitation for companies to take over charitable functions better left to foundations and publicly elected bodies. In economic terms it can be described as a constraint upon business activity which must be integrated into management decision-making in order to maximise long- term profits.