R. Edward Freeman’s argument against the Separation Fallacy and How Milton Friedman would respond to Freeman’s argument.
Most businesses are believed to be in need of ethics. Ethical considerations are very important when making any business decisions. If ethics and business could be divorced, the business decisions that will be made afterwards will solely be for the profits. The business people with thus fail to put into considerations the impact their decisions might have on other people, societies and businesses as well. This is because at that time, business decisions will be made and not ethical decisions.Freeman calls this the separation fallacy (Freeman, 2010).
Almost any decision made in business has some ethical content in it. This is confirmed by answering the following Open Questions Argument among Freeman’s Arguments:
- Who benefits or is harmed by this decision?
- When making this decision, whose values are realized and whose rights are enabled?
- What kind of people will making this decision make us be?
- Whose value is destroyed or created by this value?
These are the questions of ethics. For example, we would not find these questions odd if our decision is, “I would like to break into the office and steal the money left.” Business decisions are some sort of decision and thus addressing these questions is paramount. According to Freeman, this is a rule of philosophy that is termed as “addressing the like cases alike.” According to him, the differences between all other decisions and the business decisions is negligible and thus have to be treated in the same way (Freeman, 2010).
Another argument by Freeman is the Responsibility Principle. In this, he states that most people at most times should be ready to accept the responsibility of the effects their actions might have on others. According to Freeman, it should apply to managers of businesses in the same way that it is applicable to everyone else (Freeman, 2010). It is basic to ethics. For example, if we say a statement like, “Mike hit Tony pretty hard”. It is natural that we may find one asking the question like, “Why did Mike do that?” This question shows that someone is responsible for the action.
According to Freeman, the habit of giving responsibility to people is in most cases not limited to the “bad” actions. The good things can also be given responsibility. Giving the responsibility to people can be termed as a double edged sword. If one wishes to be given responsibility for the good things they have done, they should as well be ready to accept responsibility in case of a bad action.
According to Milton Friedman the executive’s have the responsibility of making profits which are subject to ethical custom and law. Friedman supports ethics and believes that a business should not at one point be free of ethics but should ensure that at all times the business makes maximum profits just as long as ‘it stays within the rule of the game’. With this, he meant that a business should engage in a free and open competition which should transpire without fraud or deception (Friedman, 2007). A business has only one social responsibility. It has to use all of its resources and engage in several activities which are designed to increase its profits. This will only happen if it stays within the rule of the game as described earlier.
Friedman’s rule might seem as easy as it sounds but that’s not so. This is because as Friedman implies, ‘the rule of the game’ are not set by the impartial referees. In the US for example, the laws and the regulations are crafted in a system that can be deemed political and some businesses may expend huge sums of money so as to ensure that the rules are in their favor. Friedman also focuses on making profits for the business. He however does not give suggestions on how long or the time-frame that the profit increasing strategy needs to transpire
In his theory of social responsibility, Milton also fails to provide proof that the exercise of social responsibility in any business is by its nature a socialist and unfair practice. Most people perceive this to be for only profit making purposes and not for any other purpose and that one should do anything so as to achieve what they want even if they have to steal or use the unethical means. This is because most people do not read this rule to the end and thus end up misunderstanding it. This might thus make Milton’s theory seem wrong.
On the other hand, Freeman’s model is less confusing. This is because it gives people the chance to view things ethically. The four questions presented earlier are set to be used by any business personnel when making business decisions. These provide guidance to the making of decisions about several issues in the business so as to avoid regrets later. Freeman also suggests that as much as other decisions deserve some bit of seriousness, business decisions also require the same level of seriousness. None of them should matter more than the other. As well, he urges people to be ready to take responsibility for the good and the bad (Freeman, 2010). A compliment for doing something good should be very well appreciated and at the same time, a mistake done should be acknowledged as well.
In my view, I can say both the authors are right. It is only that there degree of thoughts differ. As much as Friedman’s theory may leave one asking a lot of questions, it in makes sense. This is because, when a business is set to start, the business person always hopes to make some profit from the business. This is always the motive of the business. He however incorporates the issue of ethics within profit maximization by insisting that the managers abide by the rule of the game even when making profits. Freeman on the other hand also ensures that a business is carried out while keeping in mind the impact it might have on others when making the decisions you opt for. Both of them are right. It basically depends on the understanding of someone and the means they chose to employ this. This is so despite of the many disadvantages of Milton’s thoughts.
According to the above discussion, it is clear that most business decisions have some bit of ethical content. The separation fallacy thus prevents us from making ethical decisions and thus should be done away with.