Abstract

Is it legitimate for a business to concentrate on profits under respect for the law and ethical custom? On the one hand, there seems to be good reasons for claiming that a corporation has a duty to act for the benefit of all its stakeholders. On the other hand, this seems to dissolve the notion of a private business; but then again, a private business would appear to be exempted from ethical responsibility. This is what Kenneth Goodpaster has called the stakeholder paradox: either we have ethics without business or we have business without ethics. Through a different route, I reach the same solution to this paradox as Goodpaster, namely that a corporation is the instrument of the shareholders only, but that shareholders still have an obligation to act ethically responsibly. To this, I add discussion of Friedman’s claim that this responsibility consists in increasing profits. I show that most of his arguments fail. Only pragmatic considerations allow to a certain extent that some of the ethical responsibility is left over to democratic regulation.