Economics

CASE1 : BUSINESS - Public or Profit?
Indian big business firms, such as Reliance, TISCO, L&T, Grasim, ITC etc., are admired for their size and industrial muscle. In 1993, Reliance ranked second in the super 100 corporate bodies in India. Production of goods and services by such industrial giants has led to better jobs, which in turn have raised standard of living of the people. Not onlythe business has raised the incomes but also, while competing for profits, it has contributed to the development of industrial climate.
Of course, the large growth of business in India has produced some undesirable side effects. For example, social costs are imposed when wastes are dumped into the air and water; or when the earth is defaced by strip mining. In addition there is a tendency forpower to become over centralized in the hands of giant corporations. Because of the increasing number of mergers and takeovers in the past few years, moreover, some people fear big business power and are skeptical and distrustful of corporate India. These people feel that business is profit-mad and will stop at nothing in its pursuit of money. They feel that business is not working for the publicgood; instead, business seeks only to maximize profits.
Is profit maximization the serious problem that some think it to, be? Is there another side of the story?-
According to Professor Milton Friedman, "Business has one and only one social responsibility-to make profits (so long as it stays within legal and moral rules of the Gameestablished by society). Few trends could so thoroughly underminethe very foundations of our free society as acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible".'
Why does Friedman feel that the public good is served better if a business focuses on profit maximization that if business focuses instead on social responsibility?
In order to maximize profits, business must efficientlymeet the consumers' demand for goods and services. In essence, it is thus the consumers, not the captains of industry who dictate the actions of business. Consumers are a signal to business to produce what society desires. In meeting this demand, profits supply the motive for business to innovate and to strive for more efficient means of production. The profit motive moves society's scarceresources to the areas of highest demand, thereby maximizing utility and benefit for all.
On the other hand, if business is forced to change and pursue social responsibility instead of profit, then the consumer loses his vote on the actions of business. Should business determine, for example, whether society needs a new hydroelectric project or more funds for senior citizens' health care? There aresome who say yes. On the other hand, in a democracy, isn't it the job of elected government representatives to decide what society needs ? Leaving decisions about the public good to business would surely increase the very corporate power that some people fear. Isn’t’ it better for Indian business to be controlled by market forces and to leave decisions concerning social responsibility to a moredemocratic process?
Questions: 1.Does business perform a public service when it attempts to maximize profits, or should its main goal instead be some form of social responsibility?
2.Friedman Stress profit maximization, "so long as it (business) stays within legal and moral rules of the game established by society", what are the rules of the game?, where do you draw the line, for example, whena business pollutes the environment while maximizing profits
3.What is the government's role in business? Could government, through the sue of tax incentives and other measures, make profit maximization and the maximization of social good one and the same?

CASE 2: Dabbawallahs of Mumbai:

A dabbawallah is a courier who picks up a lunch full of dabba from a client’s home in the morning...