Milton Friedman was not only wrong on CSR, but dangerously wrong
The continued fall out from the VW scandal has made me mull on the risks of ignoring corporate social responsibility (CSR) in the favour of profit. Milton Friedman, the late guru of the Chicago School of Economics and advisor to both Ronald Reagan and Margaret Thatcher, had no time for CSR, famously saying:
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.
Now you could argue that if the business case for CSR is as strong as people like me argue it is, then CSR is compatible with the Friedman Doctrine as it will lead to increased profitability.
There is some logic in that, but the problem is the mindset. As soon as you read the doctrine, your mind narrows down to a purely financial/economic frame. You start ignoring the fact that any business is completely dependent on society and the environment to survive. If you forget that crucial truth, you are putting the long term future of your business at serious risk.
We have to do business in the real world, not within the models of economic theorists.