Tibor Machan On Why Businesses Should Strive To Maximize Profits

See Profit: the Right Standard for Business from Barrons (Hat Tip: Cafe Hayek). He disagrees with those who say coporations should be motivated by social responsibility. Here is an excerpt:

"This line of thinking is an unsubtle attack on capitalist economics. In a capitalist system, those who buy shares and invest in them own companies, whose managers’ professional commitment and purpose is to make them succeed in the marketplace. Such success is measured, naturally, by how profitable they are, how good a return they bring in from their owners’ investment.

The details depend on the kind of firm in question, obviously, but this is the general understanding of capitalist business. Just as physicians owe their service first to patients, managers owe it to their company’s owners.

Never mind that no one could reap profits without also advancing what one’s trading partner deems to be his or her economic interests. Never mind that once one makes a good return on one’s investment, a separate moral question arises about what to do with the wealth.

Rejecting the capitalist model is not only a rejection of gaining wealth but also a rejection of the private allocation of wealth. Advocates of corporate social responsibility, in other words, don’t want private individuals to be in charge of spending the profits made in business. They would like society or the public—which for practical purposes translates into government—to decide what happens to the wealth.

This used to be called socialism, but by now that grand experiment as a political economic system has had innumerable setbacks across the globe, so the term has been dropped, except by its opponents."

TIBOR R. MACHAN holds the R. C. Hoiles Chair in Business Ethics & Free Enterprise at the Argyros School of Business & Economics, Chapman University, in Orange, Calif. He is the author, most recently, of The Morality of Business, a Profession for Human Wealth-Care (Springer, 2007).