From Joel Bakan's The Corporation:
Friedman thinks that corporations are good for society (and that too much government is bad). He recoils, however, at the idea that corporations should try to do good for society. “A corporation is the property of its stockholders ... Its interests are the interests of its stockholders. Now, beyond that should it spend the stockholders’ money for purposes which it regards as socially responsible but which it cannot connect to its bottom line? The answer I would say is no.” There is but one “social responsibility” for corporate executives, Friedman believes: they must make as much money as possible for their shareholders. This is a moral imperative. Executives who choose social and environmental goals over profits — who try to act morally — are, in fact, immoral.
There is, however, one instance when corporate social responsibility can be tolerated, according to Friedman — when it is insincere. The executive who treats social and environmental values as means to maximize shareholders’ wealth — not as ends in themselves — commits no wrong. It’s like “putting a good-looking girl in front of an automobile to sell an automobile ... That’s not in order to promote pulchritude. That’s in order to sell cars.” Good intentions, like good-looking girls, can sell goods. It’s true, Friedman acknowledges, that this purely strategic view of social responsibility reduces lofty ideals to “hypocritical window dressing.” But hypocrisy is virtuous when it serves the bottom line. Moral virtue is immoral when it does not.
Corporations are created by law and imbued with purpose by law. ... at least in the United States and other industrialized countries, the corporation, as created by law, most closely resembles Milton Friedman’s ideal model of the institution: it compels executives to prioritize the interests of their companies and shareholders above all others and forbids them from being socially responsible — at least genuinely so.
[Adam] Smith, in his 1776 classic, The Wealth of Nations, said he was troubled by the fact that corporations' owners, their shareholders, did not run their own businesses but delegated that task to professional managers. The latter could not be trusted to apply the same "anxious vigilance" to manage "other people's money" as they would their own, he wrote, and "negligence and profusion therefore must prevail, more or less, in the management of such a company."
The "best interests of the corporation" principle, now a fixture in the corporate laws of most countries, addresses Smith's concern by compelling corporate decision makers always to act in the best interests of the corporation, and hence its owners. The law forbids any other motivation for their actions, whether to assist workers, improve the environment, or help consumers save money. They can do these things with their own money, as private citizens. As corporate officials, however, stewards of other people's money, they have no legal authority to pursue such goals as ends in themselves - only as means to serve the corporation's own interests, which generally means to maximize the wealth of its shareholders.
Corporate social responsibility is thus illegal - at least when it is genuine.
Now isn't that sweet.