Readers' Forum

The profit motive theory has the correct ele ments, though Milton Friedman was mistaken to say that a manager's unauthorized diversion of profits to social causes is taxation without repre sentation. Harris correctly demolishes that claim, but the manager's action is still wrong: it is embez zlement, not taxation. Authorized expenditures on charity are covered by the profit motive theory, as Friedman argues. If the owners want to spend money on charity or social causes, the manager is obliged to do so. If the owners care only about profit, and the manager believes that a particular form of charity is the most profitable action (as in the case of Ford Motor Company in 1914),then he is obliged to car ry out that act of charity even if he isn't charitable himself. There willof course be cases where little charity is authorized by the owners. Harris correctly says, "executives cannot simply leave their humanity at the door when they come to work." However, the manager isn't being coerced. If he feels a need to do more for charity than his employers wish, then he can seek a contract allowing him to do more. (If nothing else, by being paid more so he can con tribute his own money.) If he's a good enough manager, the owners may decide to spend more on charity rather than lose him. If not, he should find an employer with more sympathetic views.

Douglas Den Uyl's argument that owners in general don't really care what managers do with profits above a certain rate of return seems weak, especially when he equates maximizing profits with having perfect information. Reasonable own ers don't expect perfect performance, but they expect a manager to do his best with the informa tion he can reasonably get. Spending money on unauthorized and unprofitable charity rather than investing in an obvious business opportunity is likely to raise hell at the next stockholders' meet ing-as it should. BRIAN TILLOTSON Huntsville, Alabama Mr. Harrisreplies: Mr. Tillotson's criticisms are well founded, and I certainly agree that any manager who engages in "unauthorized" charity is acting improperly. How ever, in the "Natural Rights" section of my essay,I never refer to individual action. I cite only corpo rate action, undertaken by the corporation as a whole and approved, presumably, at higher levels than that of a mere manager. Natural rights theory only justifies-and I only advocate-authorized charity.

My criticism of Dr. Friedman's position rests on his opposition to all corporate charity-whether authorized or not-except in cases where the busi ness was started for nonprofit purposes. (For the record, I admire Dr. Friedman's work, and this is one of the few areas in which I disagree with him.) As for "unprofitable" charity, I clearly state that unwise charitable contributions should "be treated as ... a technical failing, possibly resulting in dismissal for the parties involved.... " 1: FRANKLIN HARRIS, JR. Auburn, Alabama 44 A REVIEWER'S NOTEBOOK The Casefor Conservatism by John Chamberlain I n his introduction to Francis Graham Wilson's little book on The Case for Conservatism (Transaction Publishers, 78 pages, $21.95 cloth) Russell Kirk notes that Lionel Trillingcould write in 1949that "liberalism is not only the dom inant but even the sole intellectual tradition." But no sooner had Trilling made his remark than "the literary and philosophical adversaries of liberal dogmata rose up in numbers."