In the United States (US), calls for a boycott on French wine was prompted in early 2003 as a result of the French opposition to the war in Iraq. A recent study found that the boycott resulted in 26 percent lower weekly sales at its peak and 13 percent lower sales of the six month period that the boycott lasted according to conservative estimates. Also, the study found that businesses should be concerned that consumers may boycott their products although theory suggests, consumers would not participate in boycotts due to a free – rider problem. (1, 2)
Many Americans today wrongly believe that they have no say in their economy and that it is in the control of “plutocrats” such as Bill Gates. However, this is not the case. (3)
Consumers determine what is produced — not entrepreneurs, farmers or the capitalist. Businessmen suffer losses and go bankrupt if they do not strictly obey the orders the public has conveyed to them by the structure of market prices. Consumers replace businessmen that do better in satisfying their demand with others. Rich people are made poor and poor people made rich by the consumer.
Austrian economist Ludwig von Mises called the consumer the captain of the economic ship because every business depends on repeat sales. There is no doubt, that some businesses treat consumers poorly. However, consumers harshly penalize such behavior with lower profits or bankruptcy. On the other hand reward is an opposite behavior. This is true for businesses that deal directly with consumers as well as suppliers and workers. In terms of businesses the demand for labor is said to be a “drive demand” in that it is derived from the consumer demand for the product. For example, if consumers prefer more Bibles and less alcohol, fewer workers will be manufacturing alcohol and more will be publishing Bibles. Therefore, in a capitalistic economy, it is ultimately the consumer who pays everyone's wages. All other things being equal, people who acquire skills producing goods and services for which there is stronger consumer demand will be paid more than those who work in industries in which there is weaker consumer demand.
Truly a form of economic democracy as consumer sovereignty under capitalism compared to political democracy is much more efficient. The majority rules and a minority can largely be ignored in political democracies. However, everyone's dollar counts the same in an “economic democracy.” For this reason, for niche markets with relatively small pockets of customers, businesses compete fiercely.
American Voice Institute Boycotts:
CNN Boycott - October 24, 2006
1. Chavis, Larry, Leslie, Phillip. Consumer Boycotts: The Impact of the Iraq War on French Wine Sales in the U.S , No 11981, NBER Working Papers from National Bureau of Economic Research, Inc NBER Working Paper No. 11981 Issued in January 2006 [Retrieved October 23, 2004].
2. Consumer Boycotts: The Impact of The Iraq War On French Wine Sales In The U.S. (PDF file of above report.).
3. DiLorenzo, J. Thomas. (2004) “How Capitalism Saved America.” New York: Three Rivers Press).
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