Dec01
Political Economy8

You Have No Business Caring about the Supply Chain

Exhibit 1: In order to stop funds from going to African “murderous militias”, Congress passed a law requiring U.S. companies to make sure they don’t buy minerals from mines controlled by them. Instead of choking their funds, the law so impoverished the miners that they have no choice but to work for the militias directly.

Exhibit 2: Fair Trade keeps farmers poor by preventing them from switching to more valuable crops.

Exhibit 3: Boycotting manufacturers that use sweatshops sends sweatshop workers back to subsistence farming.

Dilbert Fungibles gonna funge.

Since we assign responsibility to the individual in order to influence his action, it should refer only to such effects of his conduct as it is humanly possible for him to foresee and to such as we can reasonably wish him to take into account in ordinary circumstances. To be effective, responsibility must be both definite and limited, adapted both emotionally and intellectually to human capacities.

F.A. Hayek, The Constitution of Liberty

We hold the man culpable who gives money to terrorist organizations, but not the man who buys oil whose revenue funds a terrorist organization. In other words, the supply chain is outside of his ordinary moral purview, just the same as we wouldn’t hold Hitler’s mother accountable for the holocaust. The deeds of children are outside the parents’ moral purview, even if they are “responsible” in some causal sense.

The problem with supply chain activism is that it assumes an impossible intellectual burden. It is a culpable conceit: embarking on a project without the knowledge necessary to avoid doing harm. General equilibrium teaches us that all prices are connected. A change in one reverberates throughout the system, and it’s impossible to predict who will benefit and who will lose. Even the effects after only one or two steps are difficult to see, as the three exhibits show. It is almost certain that someone you do not wish to support will benefit from any change in your purchasing habits. Once you assume the responsibility of scrutinizing the supply chain, you commit yourself to doing the impossible, and must (therefore) refrain from any purchase at all. As long as there are immoral people in the world, the only moral course of action is autarky, lest your money go to support their immorality.

Furthermore, it makes no difference whether the trigger is coercive or voluntary, though (obviously) much more harm can be done with a law. Exhibit 1 was a law, Exhibit 2 was entirely voluntary, and Exhibit 3 is just as true either way. It is true that subjectivism requires us to withhold judgment on voluntary activities. We have to concede that the self-satisfaction of the fair trade buyer is ultimately worth more in dollar terms than whatever well-being has been lost by coffee farmers as a class.

But this self-satisfaction is based on an incorrect chain of reasoning: More expensive goods, therefore, better-off farmers. Boycott Nike, prevent them from employing sweatshop workers, therefore, better-off workers. If people bought fair trade coffee and boycotted Nike knowing that the farmers and workers would be made worse off as a whole, we would call their vice hate, rather than conceit, and we would send the preacher rather than the economist to correct it. But as it is, we can hope that revealing the inconsistency of supply chain activism with its stated ends will be sufficient to do so.

So the next time someone tries to get you to boycott a company that uses sweatshops, or supports some cause you don’t like, or whatever country we just noticed is terribly unjust, don’t be fooled into accepting a morality by which you can only be condemned. There’s no forgiveness for consequentialist sins; only the exculpation provided by a definite and limited moral purview, adapted emotionally and intellectually to human capacities.

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Ethics, General Equilibrium, Trade, F.A. Hayek

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8 Comments

  • 1

    Jim Caton

    Dec 01, 2014 at 18:43 | Reply

    Meanwhile… Foreign Aid

  • 2

    Ken Amelio

    Dec 01, 2014 at 22:39 | Reply

    Is this a universal? If for example, you know that a company or nation employs slave labor, does it still apply? The cases cited all involve workers making free choices. The miner can choose to sell to Americans, or have to work for militants. What if the miner is a slave of the militant group though? At that point does one have a moral right to refuse to buy? Can there not be “supply line” factors which ARE knowable? Or in all cases do you view the moral imperative to be to select the cheapest market good (which represents a choice for efficiency alone)?

    • 3

      Cameron Harwick

      Dec 01, 2014 at 22:48

      In keeping with the theme of epistemic humility… I’m not sure. ;) Is it plausible that slaves would have been freed sooner if British consumers boycotted Southern cotton? If not, I don’t see “hurting slaveowners” as a very worthy goal on its own. At the very least, the burden of proof that that sort of action will do good is very heavy.

    • 4

      Jim Caton

      Dec 01, 2014 at 22:52

      What will the slaves eat when the factory closes? I am sure many will solve this problem. And that many won’t.

      Opposing slavery is good as it is an abomination. But let’s be clear that institutional change is costly for those who must also change.

    • 5

      Ken Amelio

      Dec 01, 2014 at 23:05

      Interesting. I’ve seen the specific limitations of the given examples before, but not sure I’d generalize the inability to use market forces to encourage desired behavior to this extent. Interesting thought though.

  • 6

    Joseph Sileo

    Dec 05, 2014 at 17:54 | Reply

    The Dilbert cartoon breaks down. Regardless of the source of the oil, by having a more fuel efficient vehicle the amount of oil coming ALL sources is reduced and by extension so is the oil from the “terrorist sponsoring” sources.

    Dilbert is wrong when he asserts that the terrorists will have less funds for obvious reasons, however the reduction of dependence on foreign oil (and all oil) and reducing the flow of HIS money to terrorist organizations is still a result of having a more fuel efficient car.

    • 7

      Cameron Harwick

      Dec 05, 2014 at 18:19

      Strictly speaking, that’s true. But the idea is that not only is his individual contribution minuscule, but so far as it does anything, it sets in motion compensating price changes so the money he prevents from going to terrorists is even less than dollar for dollar with what he refrains from spending (hence the fourth panel). Not zero, but much less than he would expend in the process.

      And, more importantly, his money going to terrorists is only morally relevant if he’s directly sending them money (in which case he could reduce their support one-for-one). It’s not morally relevant where the revenues for his ordinary purchases go, and his withdrawing support matters less there as well.

    • 8

      Joseph Sileo

      Dec 05, 2014 at 19:48

      I am not arguing that his goal would have more than a miniscule impact though. I don’t think any one action has anything more than a miniscule impact, unless it is something like setting off a nuke, or assassinating a particular arch duke….

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