Duty, Boycotts, and the Pricing of Ethics

The social benefits derived from competitive markets certainly depend upon participants conforming to generally accepted notions of moral duty. These notions include perfect duties such as those against fraud, deception, and coercion, as well as imperfect duties such as those that favor beneficence but with practical limits. These duties are examined here where product markets, capital markets, and internal labor markets are shown to be capable of imposing conformance through both formal 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.