• Things fall apart

    Real Carpio So

    Real Carpio So

    THIS is what the economist Milton Friedman actually wrote in 1970: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profit, so long as it stays within the rules of the game, which is to say, engage in open and free competition without deception or fraud.”
    Four decades following this article in the New York Times Magazine, it seems a lot of energy has been spent disproving and demolishing the first half of Friedman’s statement.

    However, lost is the fact that Friedman was cautioning business executives not to perpetuate their social agenda with company funds. Moreover, he was scolding companies practicing social responsibility mainly for their own self-interest.

    Today, not much has changed.

    Primarily in the form of social responsibility, business ethics that dominate public opinion today is confirmatory and impotent. It reports and strengthens what already exists. It confirms what the public already knew. It is resigned to the unavoidable consequences of economic efficiency and necessity.

    As currently practiced, business ethics is limited to three functions. First, it serves to remind business of the service that it has to render to society. Second, it attempts to correct the system. And third, it represents principles and practices that the business can convert into profit in the long run. In short, for business, ethics is just a means to an end. It comforts the conscience of businesses. Studies that attempt to convince business to adopt ethical practices have primarily revolved around financial returns and performance.

    In 2005, Roussow & Van Vuuren defined business ethics as “a practice aimed at identifying and implementing standards of conduct that will ensure that, at a minimum level, business does not detrimentally impact on the interests of its stakeholders, and at an optimal level, that business will enhance the interests of all who are affected by it.” The minimum and optimal levels were not defined and are thus, understandably arbitrary.

    Fear of upsetting the current structures of society and “rules of the game” has confined current business ethics “to smooth out the creases within the status quo.” Predisposition to be inclusive and pluralistic has failed to arrive at universality.

    Current practice has been focused on offering alternatives to alleviate the detrimental effects of business. Perhaps identification and diagnosis of the flaws of the systems and the contradiction within can provide an eye-opening perspective.

    Western thought is preeminent in current discourse. Mindsets deemed deviant are only accepted or rejected always in light of the preeminent thought. Perhaps it may not hurt to examine divergent strains of thought independently.

    Events such as financial crises and scandals destabilize the coherence of a fabricated picture of society. These are opportunities for radically diagnosing the insufficiency of the system. Unfortunately, these opportunities are easily and often missed.

    At most, the practice of ethics in today’s business is cosmetic and is a piecemeal reform of business organizations. If only the same fervor against Friedman’s “world’s dumbest idea” is channeled to revolutionize current practice, business ethics could have been rescued from being misused as a mere management tool.

    Real Carpio So lectures on strategic management, organizational behavior, and management of organizations at the Management and Organization Department of Ramon del Rosario College of Business of De La Salle University. He is also an entrepreneur and a management consultant. He coaches selected clients on strategic planning and marketing. He welcomes comments at . The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators.


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