The other day, Tyler Cowen weighed in on the corporate social responsibility debate by opining that:
[Milton] Friedman has qualified his social responsibility claim for force and fraud, but what about negative externalities more generally (just ponder Tamiflu licensing if you want the appropriate headache)?
I'm not persuaded that the externalities issue gets us very far. Corporate conduct doubtless generates negative externalities. In appropriate cases, such externalities should be constrained through general welfare legislation, tort litigation, and other forms of regulation. It doesn’t follow, however, that corporate law’s fiduciary duties ought to deviate from the principle of shareholder wealth maximization. Instead, the rule ought to be – and is - that corporate directors are obliged to maximize shareholder wealth within the bounds of law.
