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DUTY, BOYCOTTS AND THE PRICING OF ETHICSBy Prof. Richard RobinsonSUNY Fredonia AbstractThe social benefits derived from competitive markets certainly depend upon participants conforming to generally accepted notions of moral duty. These notions include negative duties such as those against fraud, deception and coercion, and also positive duties such as those that favor beneficence but with practical limits. These duties are examined here where product, capital and internal labor markets are shown to be capable of imposing conformance through both formally- and informally-organized boycotts. A categorization of classic and recent boycotts into those motivated by (i) sympathy for the suffering of others, and (ii) outrage over violations of generally accepted social norms is provided. It is argued that the former motivation seeks to establish new norms, and the latter seeks to enforce existing norms. Through this exploration, a resolution of the so called “Adam Smith problem” concerning the morality of the invisible hand is offered. The Adam Smith ProblemMarket philosophers have long argued about “the Adam Smith problem,” i.e. the apparent contradiction between Adam Smith’s ethical philosophy as expressed in The Theory of Moral Sentiments (1759), and the egoistical agent of the invisible-hand as expressed in Wealth of Nations (1776). In attempting to resolve this apparent conflict, Samuel Fleischacker (2004, p. 91) argued that “human beings can pursue even their individual interests together, that even society without benevolence need not be a hostile society, that economic exchange, even among entirely self-interested people is not a zero-sum game.” More recently, Mark White (2010) argued that in the Wealth of Nations, Smith did not make an argument in favor of egoism, although he did show that pursuit of self-interest might be sufficient for a hypothetical economic flourishing. Smith only argued that because agents knew their own self-interests, the economic philosophy of mercantilism was inefficient by its nature, i.e., that markets can operate based on self interest, not that they strictly should operate in this way. The moral behavior of participants still determines whether markets are hostile to society’s interests, and also the extent of this hostility.Chambers and Lacey (1996) point out that markets are capable of “pricing” participants’ sense of ethics in that through product- and capital-market boycotts, people can negatively affect the demand for a company’s products and securities thereby attempting to impose its ethical will on producers. We have a considerable history of product- and capital-market boycotts of those producers who appear to violate society’s sense of propriety. Generally these boycotts have been effective in changing some business practices especially in areas such as child labor, negative environmental impacts, consumer fraud, and the like. A few of these boycotts are reviewed below.In general, economists would argue that boycotting those practices that are generally perceived as unethical is potentially an effective method for people to force a more efficient allocation of resources; that if boycotts of this sort are effective, then in general, public welfare may potentially be enhanced. Assuming society wishes to discourage what it considers as immoral practices, then the market can certainly play a role in expressing society’s preferences. This is the invisible hand argument in support of potentially imposing ethical practices through competitive markets. Perhaps we live in a highly ethical society; perhaps we live in an amoral society. Whatever society’s ethical sense, it is potentially reflected through its markets. In this light, it is worthy to examine:a hypothetical society where markets meet certain generally accepted philosophical standards of duty, to what extent our duty criteria helps to understand the market forces that voice ethical considerations through different classifications of boycotts, and whether boycotts contribute to welfare efficiency.Shleifer (2004) argues that competition weakens the ethical behavior of firms. He argues that ethics evolved from the needs of social cooperation; that some ethical standards are antiquated in that they developed from outdated political indoctrination; that they are therefore subject to cultural relativism; and they are capable of economic tradeoffs. As an example of such a tradeoff, Shleifer argues that demands for cheaper shoes overcame society’s objections to child labor. This is a particularly simplistic and dark view of the relation between morality and markets, a view I attempt to refute here. I show that the evidence supports the argument that through boycotts, markets do force various changes in some business practice that society judges as unethical. I organize this empirical evidence around certain boycott characteristics, a categorization that I hope allows some understanding of the forces that lead to success or failure. Any organized analysis of society’s view of ethics should be based upon more substantive philosophy than cultural relativism or political indoctrination. For this reason, I organize the following analysis around the generally utilized Kantian notions of duty, both perfect (full obligations), and imperfect (partial obligations that have practical limits). I argue that the pricing of society’s sense of ethics is essentially the pricing of certain categories of Kantian duties, all of which can conceivably be fairly priced by the market. I also show that the Kantian criteria, and the associated duties required of market-participants, have strong implications for welfare efficiency. The Ideal Kantian MarketKant’s categorical imperative (CI) describes a process for deriving both personal and social-political moral maxims from which practical notions of duty emerge. Kant argued that the CI process reflects common understanding of how moral maxims should be formed. These maxims conform to the requirements of the CI as expressed in Kant’s three interrelated formulae: (i) universality, (ii) respect for individuals, both self and others, and (iii) the pursuit of the kingdom of ends. Broad notions of duty, including those duties that would apply to market interaction, stem from the second and third formulae. Given an acceptance of the CI as process for deriving more specific maxims, which in turn imply various duties, our ideal Kantian market requires two broadly generalized conditions:Kantian markets are ruled by a complete set of practical moral maxims that are consistent with the categorical imperative.Kantian markets are motivated by the pursuit of a moral community, i.e. Kant’s “kingdom of ends.”Concerning the first condition, by a complete set of moral maxims we should mean a set that is sufficient to operationalize the first two formulae of the categorical imperative. For example, this set of maxims would include those aimed at allowing no personal exceptions to their conformance, i.e., all must comply because all must be allowed to pursue their own ends provided they do not impinge on the freedom of others to pursue their own ends. In addition, the formula for respect for individuals requires that deception, outright fraud, and coercion are declared in violation, and this would apply to all contracts whether explicit or implicit, i.e., those contracts reached by both formal (legal) and informal agreement. Market interactions provide obvious applications for these contractual agreements.The second condition for Kantian markets is clearly the most abstract. It is formula (iii), the pursuit of the kingdom of ends that is the most difficult to envision as applicable to markets. We cannot envision legally requiring proper motivation, but we still must specify this requirement to describe our abstract notion of Kantian markets. In this abstract-idealistic model, all our market interactions are constrained to be within this motivation. Of course, the two market conditions are not independent. The second condition requires the first in that the pursuit of a moral community implies approval and pursuit of the duties referred to in the first condition. It must be explained, however, how the pursuit of a moral community motivation could conceivably operate in a market system of largely self-interested transactions. I state largely “self interested” since there are market transactions among more intimately connected agents such as those within families, within firms, and even within friendly communities. We can all envision the motivation of pursuing a moral community to be accepted and active in these latter groups, but we ponder how such motivation could flourish in markets with more disinterested agents and transactions. Is there an apparent conundrum in applying the third formula to these impersonal markets?The answer to this conundrum is explained by Sullivan (1989, p. 214-16). In Kantian analysis, there are two levels of moral community to be pursued:a civic moral-community of justice in the sense of pursuing all the moral maxims needed for judicially meeting the second formula, i.e., an impersonal community of judicial duty,a community that meets the required judicial duty conditions, but that also fully pursues the kingdom-of-ends motivation, i.e., a community of full moral duty.This bifurcated categorization implies that duty is dependent upon the degree of personalization of the particular market. This allows us to envision our kingdom of ends motivation to be always present even in distant and impersonal interactions such as those in the secondary-market for equity shares, or impersonal super-market transactions. In these impersonal markets, our duty obligations are of a judicial sort. Markets that exhibit more personal contacts, however, require a broader set of duties as reviewed in the next section. In particular, we can envision sub-communities within an overall community of judicial duty that also meet the conditions required for being a community of full moral duty. Whereas an overall market economy should certainly meet the conditions for a community of judicial duty, perhaps markets such as the labor market that is internal-to-the-firm could be envisioned as meeting the conditions for a broader community of full moral duty. The differences between these sets of duty are explored below.Notions of Duty and Market EfficiencyIn Kantian analysis, there are two types of duties: perfect and imperfect duties, frequently termed negative and positive duties. Duties stem from the moral law, or in our analysis, they stem from the moral maxims specified as necessary for a community of full moral duty. Perfect duties, often termed negative duties, are absolute prohibitions against actions that violate the second formula, actions involving deception, fraud, coercion and the like. But the second formula also requires imperfect duties, often termed positive duties, that stem from obligatory actions that have practical limitations, actions such as beneficence. For these duties, we are obliged to perform some actions such as various forms of charity, but for practical survivability reasons, we cannot give all to the poor. Although we are obliged to be charitable, there must be practical limitations to this charity; we are not obliged to make ourselves poor because of these activities, i.e. the second formula also specifies duty to oneself. A community of full moral duty clearly requires that all are committed to the second formula (respect for the dignity of others), and its associated positive and negative duties.It is more realistic, however, to expect that the former classification of duty should be performed within certain markets where agents are more closely connected, such as the internal labor markets of firms, rather than in the broader more impersonal markets where agents are distant from each other. In Kantian analysis, the self worth of agents motivates them to “pursue their own morally permissible welfare and happiness, but also to promote those of others.” (Sullivan, 1997, p. 156.) Markets are an expression of the mutual dependence of their participants, who we assume aim at fulfilling their own needs. This poses the following proposition:Proposition of mutual dependence: For freely competitive markets, mutual respect requires that both sides of a transaction not only pursue their own ends, but are also interested in enabling others to achieve their ends, and the closer the market participants, the greater this interest. Positive duties are clearly necessary for promoting the interests of all, but in Kantian analysis, the closer the relationship between agents, the greater the expectation of duties of a positive sort. Market transactions between agents who are closer, rather than more distant, should exhibit these positive duties with practical limitations that would themselves be more relaxed the closer the relationship is, i.e. the obligation for beneficence is stronger the closer the agents, and this closeness is largely determined by the nature of the particular market in question. For an example of this closeness-beneficence relation, consider the duty of charity as briefly reviewed above, especially in the context of the competitive firm, in particular the competitive corporation with publicly traded shares. These firms do have charitable expenses that are usually aimed at community relations, or the seeking of positive publicity. In either case, these contributions have bottom line impacts that justify their expenditures. There are other charitable contributions, however, those explained as being required of corporate social responsibility (CSR), that are unrelated to the bottom line, but are said to be required from a social-duty obligation. These CSR expenditures are, however, expected to be impersonal in that the corporation is distant from the intended beneficiaries. The counter argument of Chambers and Lacey (1996) is that distribution of these funds back to the corporate owners (in the form of dividends) might allow those closer to the intended beneficiaries to make the charitable decisions. Corporate shareholders legally own these revenues, and their charitable expenditures by management pose agency problems unless these expenditures positively affect future revenue. The duty of beneficence is greater among those closer to the beneficiary. We might expect, therefore, a greater extent and degree of effectiveness in charitable giving if these revenues were expended by shareholders rather than management.As stated in the above section, market efficiency clearly requires a community of judicial duty. Markets based on fraud and deception could not possibly be termed efficient since these markets would interfere with the worthy ends of participants, and therefore would implode in that they would be abandoned. The more participants perceive the probability of encountering outright fraud or even partial deception concerning the product, service, or payment, the more participants would leave the market. Furthermore, without the moral motivation of the pursuit of the kingdom of ends, we could not expect agents to fully conform to these negative duties, although fear of retribution, or ostracism if caught, might motivate a considerable degree of conformance. For this reason, the motivation of the third formula is also necessary for many market transactions, but perhaps not all.The Market Pricing of EthicsAs reviewed above, Chambers and Lacey (1996) pointed out that markets are capable of pricing ethics through boycotts of either product or capital markets, or both. Boycotts are expressions of moral disapproval and outrage by multiple agents who refuse to either purchase a product, or participate in its production. (A strike is a sort of boycott.) With widespread participation, boycotts are expressions of society’s moral disapproval. We must also point out that labor mobility, and certainly participation in internal labor markets, also are capable of pricing ethical behavior. People change firms if they believe that the internal responsibility assignments, evaluation and reward practices of their firms are unethical, or that abusive or humiliating behavior is practiced. Certainly a firm’s employment reputation influences its ability to engage talented employees, and therefore the firm’s performance. These are also examples of a type of boycott that need not be formally organized.All of these market forces are essentially transfer mechanisms for imposing society’s sense of ethics onto the firm. With respect to these market forces, the relevant question is “What do we mean by society’s sense of ethics?” Our notion of Kantian markets assists in answering this question. Violations of generally accepted obligations of duty may solicit boycotts of one source or another. Assuming these boycotts are broadly supported, they express society’s sense of ethics. In particular, violations of obligations of a community of judicial duty (prohibitions against fraud, deception and the like) should solicit either formally or informally organized boycotts to the extent that society is outraged by the violations, i.e., the greater the contempt for society’s sense of judicial-duty obligation, the greater society’s outrage. To proceed further in our analysis, however, we need the definitions below:Formally organized boycotts are defined as having leaders; they manifest reasoned argumentative-communications (propaganda) from these leaders to possible participants; and they tend to have a variety of public expressions from participants concerning the moral violations they perceived as justifying the boycott. Unorganized informal boycotts do not have leaders, but do have a variety of communications (letters to the editor, blogs, etc.) that express outrage. As illustrated below, informal boycotts are often so quickly successful that formal organization does not have time to be arranged. Sometimes the perceived immoral behavior is altered quickly before the boycott can be further organized.In analyzing boycotts, we must consider the difference between violations of positive versus negative duty. The latter involves violation of law or otherwise generally recognized social norms. These violations are frequently more easily recognized than violations of positive duty since positive duties have practical limits, and therefore pose a grey area as to whether the they are violated. Given the closeness of internal-employee arrangements, as an example, we expect that positive duty violations might still solicit boycott reactions. Beneficence is expected among close agents within firms; but beneficence being a positive duty, it has practical limitations. The extent of its practice is theoretically subject to a marginalist-maximization solution, since certainly there is the potential that beneficence will impact the firm’s returns. The relevant question is therefore, “Does the perceived violation of positive duty solicit sufficiently strong and widespread emotional-reaction so as to motivate a successful boycott?” The conditions for Kantian markets provided above, with associated perfect and imperfect duty, are not unrealistic unless the operational specifications of the duties themselves are overly extreme, but it is unlikely that the public would form unrealistic-impractical notions of duty. Markets would likely only react to violations of duty society judges as ethically necessary, realistically founded, and generally accepted. Chambers and Lacey (1996) pointed out the democratic nature of the firm’s pursuit of profit. As envisioned by Smith (1776), the marketplace is essentially a voting place where the invisible hand moves participants to respond to meet society’s needs. Under conditions of sufficient knowledge about the workings of the firm (especially about any externalities generated), the product market will democratically voice the concerns of the populace about perceived ethical lapses. Firms that pursue maximization of profits as a goal must respond to society’s sense of moral rightness. As evidence of this, I examine and classify several successful boycotts in a section below. By “successful” I mean that they ultimately lead to changes in firm behavior, and/or social policy. Judging the Morality of MarketsWhite (2008) points out that a market in which agents follow only negative (perfect) duties would be the impersonal marketplace of Smith’s Wealth of Nations; it would be minimally ethical. In Smith’s The Theory of Moral Sentiments, however, it is the sympathy for the suffering of others that motivates moral behavior. Indifference to the suffering of others essentially violates Kant’s second formula of respect for the dignity of others, of treating others as an “ends,” and this is true of all those we encounter be they strangers or friends, provided we do encounter them. Markets are, however, mostly impersonal, and some are very impersonal where we do not even encounter the corresponding other party. For example, consider online transactions. Feeling sympathy for the suffering of another agent during such an impersonal transaction is not generally expected. For some transactions we might term semi-impersonal, and certainly for those of a more personal interaction, Kant’s analysis of respectful beneficence is relevant, “Since our duty is to behave as if our help is either merely what is due him, or but a slight service of love, to spare him humiliation and maintain his respect for himself.” (1798, 4:448-9) It is clear then that some semi-impersonal market transactions might require more than mere performance of judicial duties if this transactions can be said to be ethical, i.e., we might need more than a minimally ethical marketplace even in impersonal transactions when the beneficiary of our effort is a stranger. Our motivation for such duty may well be the combination of sympathy and pursuit of the moral community. Both motives are relevant for our boycott analysis.Among the two motivations of sympathy and pursuit of the moral community, the latter is capable of stirring emotions of outrage over violations of established maxims of negative duty, and perhaps even violations of established maxims of positive duty. The sympathy motivation, however, might also lead agents to form boycotts aimed at establishing new maxims to alleviate perceived suffering. In essence, the boycott mechanism can stem from either motivation: sympathy, or outrage. If successful, the former motivation is likely to lead to new developments of, or variations in, required duties, and the latter motivation is likely to lead to enforcement of the already established duties. In the context of forming boycotts, sympathy stems from witnessing the suffering of others due to some market practice, a suffering that might be addressed by some new norm. As a result, we form a hypothetical alleviation for the problem. If others wish to alleviate this suffering by similar means, a boycott of that market practice might be organized. It is the suffering of others that ultimately motivates the boycott and possible new norm. In other situations that involve the flaunting of existing norms, however, outrage over this flaunting might also lead to a boycott.The argument here is that when active in markets, the boycott mechanism transfers these emotions of sympathy and outrage into imposing society’s sense of ethics onto firm behavior. We must realize that boycotts are essentially expressions of reasoned reflection about acceptable and enforceable moral duties. They are formed through public-democratic interaction and discourse, and hence they meet the Kantian requirements for forming or enforcing moral maxims.Gauthier (1986, Chapter VIII, p. 84-5) argues that markets are the ideal model for an ethical society. He argues that “in understanding the perfect market as a morally free zone we shall be led back to its underlying, antecedent morality” of mutually agreed upon constraints on behavior. This is a peculiar use of the term “morally free zone.” It appears to perpetuate the notion that perfect markets in the economic sense are essentially amoral, and that only violation of the neoclassical-economics perfect-market definitional-conditions (price fixing or negative externalities being examples) should be interpreted as unethical. Given our boycott analysis, however, a preferable term in this context would be that competitive markets have the potential of manifesting a fully-moral zone, where society’s sense of ethics is fully operationalized through the pricing mechanism of competitive markets. The less competitive the marketplace, the less the boycott effect could impose society’s ethical sense on the firm. A perfect monopoly would have a decreased motive to respond to society’s outrage since it is at least partly insulated from society’s preferences. Boycotting a monopoly would be less likely to succeed as compared to boycotting a competitive firm.Boycott Classifications and Effectiveness6.a Some Classical BoycottsToday’s social media facilitates the organization of boycotts. For example, Facebook offers a boycott communication page. As a result of instant mass-communication, attempts to organize boycotts have lower transactions costs than in the pre-social-media era, and as a result, are more numerous. Not only are complaints against business practices more easily mass-communicated, but similar complainers are more easily found. A casual review clearly indicates that most of these boycott attempts fail in having any substantial effect on the business in question. In this section, however, I wish to review several of the more classically successful boycotts for the purpose of a possible classification-system which might enable a judgment of those conditions that are more likely to lead to success. I also review some less-than-successful boycotts for comparison purposes.The successful product-market boycotts examined here include the California grape boycott in support of the Migrant Farm Workers’ Union during the 1960s and 1970s; the tuna boycott of Bumblebee, Starkist, and Chicken of the Sea in the late 1980s; and the Calvin Klein clothing boycott in 1995. A successful capital-market boycott is also examined. The ongoing Swiss company Nestle Foods boycott (due to problems associated with its powdered baby-formula exports to Africa), and the boycott of the French company Danone in 2001 (due to its employee relations) are two less-than-successful attempts reviewed for comparison purposes. As reviewed above, there are two categories of market interactions: (1) the impersonal transactions of strangers, and (2) the more intimate contacts of those familiar with each other during ongoing transactions. The example we previously reviewed of the former category is the supermarket purchase, and the example we previously reviewed for the latter category of more intimate contacts is the internal-labor market. In addition, I suggested that although both categories require a complete judicial conformance of negative duties, and both require some degree of positive duty, it is the latter category of transactions that is more likely to require a higher degree of positive duty given the greater personal contact. There are more extensive personal obligations of beneficence in the internal-labor market.I also suggested that there are two motives for organizing or joining boycotts: (1) Smithian sympathy, and (2) Kantian outrage. When current social norms are not perceived as alleviating some problem, it is sympathy for the suffering-of-others that motivates individuals to attempt to organize new social norms. This sort of sympathy may motivate some boycotts. Kantian outrage, however, stems from concerns for the flaunting of the perceived current social norms or laws, and the more blatant the flaunting, the greater the outrage, and therefore the more likely a boycott will be organized and successful. Table 1 presents a two-by-two matrix that categorizes boycotts into whether the perceived violation is between close or distant relations, and also whether the boycotts appear to be motivated by Smithian sympathy (a desire to develop new norms), or Kantian outrage (a desire to see current norms enforced whether these norms are actual law or generally accepted, but not legal, social standards). We classify six boycotts according to this matrix, four classic and successful boycotts, and two more recent, but unsuccessful boycotts. Note that in Table 1, it is questionable whether boycotts involving distant relations are purely due to perceived violations of negative duties. (Hence the “?” signs in Table 1.) They might involve some degree of flaunting of some societal perception of positive duty. In a similar way, violations involving those with close relations could involve violations of negative duties as well as positive duties, as is indicated in the table.Table 1: Classic Boycott Classifications by Type of MarketDistant Relations(Negative duties?)Close Relations(Nagative or Positive duties?)Smithian Sympathy(Establishes new norms.)TunaNestleDanoneKantian Outrage(Enforces existing norms.)Calvin KleinSouth AfricanCalifornia GrapeBoth the French company Danone Foods and the California Grape Boycotts involved labor relations. As such, both involved potential violations of close relations involving employees. The Danone boycott came in response to an announcement that the company would layoff approximately 200 employees in March, of 2001. The announcement came as a surprise to those separated from the company. In this sense, perhaps a perception of a positive duty towards employees was violated. In response, some local mayors ordered their hospitals and schools to boycott purchases from Danone, and they also attempted to organized a more general public boycott. The impact on Danone’s revenues and security prices was modest, and the boycott was eventually abandoned. Since Danone previously had very good employee relations, however, and these relations deteriorated, perhaps the boycott had some impact. (See danone1.html for a complete story about these events.)The California Grape Boycott began in 1966 with the organization of the United Farm Workers as led by Cesar Chavez. Grape growers refused to bargain with the Union, and this led to an organized boycott. The boycott was aimed at consumers of table grapes with the objective being the establishment of collective-bargaining agreements with the grape growers. The form workers argued that the grape growers had a positive duty to negotiate fairly. The boycott was nationwide, and by 1970, a majority of growers had signed collective agreements. The boycott was generally judged as successful. (See the Wikipedia report titled “Delano Grape Boycott.”)The Calvin Klein boycott, the tuna boycott, the South African disinvestment boycott, and the Nestle Foods boycott all involved the more distant relations of impersonal market transactions. Although not formerly an organized boycott, a rapid reduction in demand for Calvin Klein’s products occurred as a result of the public’s negative outrage concerning the company’s use of pubescent children in sexually provocative advertisements during 1995. These billboard and magazine advertisements were withdrawn quickly. This can be categorized as an informal boycott sine that company’s policies changed too rapidly for any fully organized boycott to be formed. (See casestudies/catalogue/Marketing/MKTG084.html for a complete story of these events.)The Nestle boycott concerns its marketing of baby formula in less-than-developed countries, especially Africa. The baby formula, as compared to breast feeding, is criticized for preventing a full development of the infants’ immune system. Although the boycott was formally organized in 1978, publicity concerning the problem began in 1973. Various agreements with the company were reached over the years, but these were judged as quickly violated, and the boycott reorganized. It is currently ongoing. These agreements clearly were attempts at establishing new norms for marketing baby formula, and as such, they clearly involved Smithian sympathy to develop new socially acceptable norms. (See the Wikipedia story on the Nestle boycott.)The tuna boycott involved the methods for catching tuna, which are frequently found with dolphin. Netting methods catch both, and in the past, both have been canned as one fish. In 1986 the International Marine Mammal Project and the Earth Island Institute began the boycott. In 1990, Starkist, Chicken of the Sea, and Bumblebee signed agreements to stop purchasing, processing or selling tuna caught in the offending way, and the U.S. Legal Standard for the Dolphin Safe Tuna label was established. This boycott clearly exhibited Smithian sympathy for development of new norms, and also clearly involved offenses of negative duties (perceived broad environmental degradation) of distant transactions. (See the Wikipedia story on the history of the tuna boycott.)Racial segregation policies formally began in South Africa in 1948. Boycotts of those companies doing business in South Africa began in the 1960s, along with boycotts of sports teams in international competition, university exchanges, and globally traded products. Capital market boycotts also voice society’s demand for moral reform of business behavior, and these were initiated against companies doing business in South Africa in the late 1960s by university and other foundations. The boycotts succeeded, multi-racial elections were held in 1994, and the apartheid policies were entirely ended. These boycotts were clearly initiated from outrage that the generally accepted norms against racial prejudice, as then existed in the Western Europe and North America, were violated. (See the Wikipedia story concerning the history of the South African boycotts.)Three of the six boycotts reviewed above, tune, Nestle and Danone, were motivated by Smithian sympathy. Two of these failed perhaps because the newly suggested norms were murky, or just unacceptable. It was not entirely clear that the layoffs at Danone (small in magnitude as compared to the size of the firm) should have been prevented, nor that the baby formula problem at Nestle was sufficiently widespread to warrant prohibition. One of the successful boycotts, the tuna boycott, was also motivated by Smithian sympathy for establishing new norms, i.e. new standards for fishing and canning. Clear and well-defined new agreements were ultimately formed. The California grape, the South African, and Calvin Klein boycotts were motivated by Kantian outrage over violation of clear-existing norms. The first of these involved the grape growers refusal to recognize the migrants’ union, a violation of clear expectations for U.S. employee relations. The South African boycott was motivated by outrage over clear norms against racial prejudice. The Calvin Klein boycott involved a company’s exploitation of children in violation of social-sexual norms. In each of these cases, the norms violated were clear and generally accepted by society.It is clear that boycotts of the sympathy sort are less likely to succeed than those motivated by outrage. New norms are difficult to form, and success can only occur when society perceives a clear need for a clearly understood new norm. Boycotts involving outrage over the flaunting of clearly established norms seems the most likely to succeed. In all cases, however, it is most important to recognize that it is the profit motive that allows boycotts to be particularly effective. In essence, profit seeking allows the market-voting mechanism to function. The invisible hand works to eliminate practices society judges as ethically unacceptable.6b. Some Recent Boycott AttemptsWikipedia maintains a list of ongoing boycotts. Starting in 2009, the Lesbian, Gay, Bisexual and Transgender Community (LGBT) initiated a boycott against The Salvation Army for its opposition to homosexuality. The boycott was organized by the Human Rights Campaign, an LGBT organization. It is clear that it is motivated by sympathy, and is an attempt to change societal norms. Following this initial Salvation Army boycott, the LGBT community also organized boycotts against Target in 2010, Best Buy in 2010, and Chick-fil-A in 2011. The stated reason for each of these boycotts was that these three companies were contributing to the campaigns of politicians opposed to same sex marriage. Each of these boycotts were motivated by sympathy for the pain of the community, and each aimed at establishing new norms such as allowing same-sex marriage. In 2013, the LGBT community also organized boycotts against Stolichnaya Vodka, and Russia holding the Winter Olympics. The stated reason for these boycotts was Russia’s treatment of gays. Again, the intention was to change existing norms.In 2015, the Human Rights Campaign organized a boycott against the State of Indiana, Governor Mike Pence, and the Indiana State Legislature for passing its Religious Freedom and Rights Act (RFRA), which created a religious exception to the State’s anti-discrimination law. This exception would allow discrimination against gays by those with religious objections to homosexuality. This religious-based exception was passed and signed by Governor Pence on March 26, 2015. Within one week, on April 2, the Governor signed a repeal to the religious exception. During the intervening week, the following boycott related events occurred:Angie’s List cancelled a $40 million expansion of its Corporate Headquarters in Indianapolis.Some States (Connecticut, Washington, and New York) established funding bans for travel to Indiana by state employees.The organizers of Gen Con, the largest gaming convention in the US, withdrew its 2016 convention in Indianapolis.AFSCM, the largest public employee union, withdrew its 2016 convention. Salesforce, and several other large corporations, withdrew from the Indy Big Data Conference.The National Forensic Association withdrew its 2016 National Competition from Ball State in Muncie, Indiana.Other large employers, such as Wal-Mart, also placed pressure on State politicians. On April 2, the State Legislature voted 76-17 to repeal the RFRA, and the Governor signed the new legislation that day.Table 2 classifies the more recent LGBT-led boycotts according to their motives. As indicated, the Indiana boycott was motivated by outrage over the perception that Indiana attempted to violate the generally accepted norms against discrimination. The boycott was intensive, quick and effective. These LGBT organized boycotts can be described as attempted applications of Kant’s Universal Principle of Justice (UPJ): maximize the freedom of the individual provided this freedom does not impinge on the freedom of others. Pursuit of this principle could be viewed as a combination of both a negative duty (do not impinge the freedom of individuals if they are not hurting others), and positive duty (an individual should pursue the UPJ in dealing with others). The Indiana boycott, with its quick reactions from numerous corporate and other organizational reactions, particularly manifested outrage over the perception that the State sought to modify a law so as to make discrimination possible, a backtracking on the previous UPJ-oriented well-established law. Table 2: Recent LGBT-Led BoycottsDistant Relations(Negative duties?)Close Relations(Nagative or Positive duties?)Smithian Sympathy(Establishes new norms.)HRC* campaign against (i) Russian companies, (ii) Best Buy, (iii) Target, (iv) and Chick-fil-A.HRC* against Salvation Army.Kantian Outrage(Enforces existing norms.)HRC* campaign against the State of Indiana.*Human Rights Campaign, an LGBT oriented organization.ConclusionIt is argued above that formal and informal boycotts are an efficient mechanism for transferring society’s sense of ethics through the marketplace and onto the competitive firm. For this mechanism to work, society needs clarity concerning the duties demanded of market participants. The Kantian analysis of perfect and imperfect duties helps us to organize perceptions of these obligations. When we envision product markets, capital markets, and internal labor markets as essentially mechanisms for voting, then we also envision that the expectations of ethical duty demanded of the participating agents are voiced by society. Boycotts are attempts to express society’s moral sense, and those boycotts that are successful do express society’s general preferences. In addition, the presented definition of Kantian markets voices two separate levels of what is meant by moral communities: a community of judicial duty, and a community of full moral duty. The former notion is applicable for the more impersonal product and capital markets. The latter notion is applicable for markets exhibiting closer relations such as the internal-labor market. Boycotts work to enforce the ethical notions of both types of communities depending upon the type of market. It is also argued that the motivations for these boycotts are either Smithian sympathy or Kantian outrage. The former leads to the development of new market duties, and the latter leads to enforcement of existing norms. The evidence supports the usefulness of this bifurcation of motivation. Those boycotts motivated by sympathy for the suffering of others, do attempt to establish new social norms, but are only weakly successful. Those boycotts motivated by outrage are attempts to enforce existing norms, and tend to be more successful than those motivated by sympathy. In addition, this Kantian analysis more properly describes the competitive market’s ability to pursue welfare efficiency than the traditionally envisioned neoclassical-economic model. This neoclassical model restricts the ethical content of markets to violations of the perfectly competitive conditions. In this sense, the Kantian duty analysis properly compliments the neoclassical analysis. It moves economic notions of competitive markets from the amoral (morally neutral) vision to an ethical vision.ReferencesChambers, Donald and Nelson Lacey (1996), "Corporate Ethics and Shareholder Wealth Maximization," Financial Management, Spring/Summer, p. 93-95.Fleischacker, Samuel (2004), “On Adam Smith’s Wealth of Nations,” Princeton University Press, Princeton, NJ.Gauthier, David (1989), Morals by Agreement, Oxford University Press, Oxford, UK.Kant, Immanuel (1785), “Fundamental Principles of the Metaphysics of Morals,” in Basic Writings of Kant (2001), edited by Allen W. Wood, The Modern Library Classics, The Modern Library, New York._____________, (1798), The Metaphysics of Morals, edited by Mary Gregor, Cambridge University Press, Cambridge, UK. Reprinted in 2012.Rawls, John (2000), Lectures in the History of Moral Philosophy, edited by Barbara Herman, Harvard University Press, Cambridge, Mass.Robinson, Richard (2018), “Duty and Boycotts: A Kantian Analysis,” Journal of Business Ethics, 149, pp. 117-126.Shleifer, Andrei (2004), “Does Competition Destroy Ethical Behavior?” American Economic Review, Vol. 94, No.2, (May), p. 414 - 418. Sullivan, Roger, (1989), Immanuel Kant’s Moral Theory, Cambridge University Press, Cambridge, UK.____________, (1994, 1997), An Introduction to Kant’s Ethics, Cambridge University Press.____________ (1996), The Metaphysics of Morals, by Immanuel Kant, edited by Mary Gregor, Cambridge University Press, Cambridge, UK.White, Mark D. (2008), “Adam Smith and Immanuel Kant: On Markets, Duties, and Moral Sentiments,” http:// abstract=1318605. ____________, (2011), Kantian Ethics and Economics, Stanford University Press, Stanford, CA. ................
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