Do Boycotts Really Work? Another Look at the Bud Light Situation
Source: Wall Street Journal.
However, Modelo taking the top spot has sparked a debate in and of itself as some conservative figures have made the complaint that Modelo is still largely owned by Anheuser-Busch. In America, the company was broken up by an antitrust law; however, outside of North America, Modelo is still owed by Anheuser-Busch. As such, the boycott does not really work. In response to this, other right-wing figures have taken the firm stance that this complaint is cynical and that “Bud Light is suffering massive and sustained losses.”
This raises the economic question regarding whether a boycott of one part of a company is sufficient or if one must boycott the entire company. This answer has two major parts. The first part turns to the concept of economic calculation, which Ludwig von Mises describes by saying:
The preeminence of the capitalist system consists in the fact that it is the only system of social cooperation and division of labor which makes it possible to apply a method of reckoning and computation in planning new projects and appraising the usefulness of the operation of those plants, farms, and workshops already working.
Mises further addresses the fact that there are countless decisions that businesses must make daily. What factors of production should be used? Where should the business be located? What specialized employees should they have? What technology do they need? Which procedures should they use? What investments should be made? Through all these questions, Mises comes to one answer: economic calculation. Businesses make their decisions based off profit and loss, as Mises states later: “Profit is the reward for the best fulfillment of some voluntarily assumed duties. It is the instrument that makes the masses supreme. The common man is the customer for whom the captains of industry and all their aides are working.”
Mises even explains that, while it does not always feel like it, economic calculation even applies to the biggest of big businesses. They must sell what is profitable, and they must abandon what is not. To some, it may seem silly to say something should or should not be profitable over an ad. However, if Bud Light’s ad had been successful and sales had skyrocketed, no one would be saying that the ad did not really affect the product; the company would be bragging about their marketing.
At the end of the day, value is subjective. When making profit and loss decisions, businesses must recognize the subjective values of the consumers, who have clearly spoken regarding their preferences. As Mises explained regarding economic calculation, profit and loss decisions and market prices determine everything from the general location of the factory to the specific employee that is hired. As such, boycotting one specific product of one specific company still forces businesses to recognize in their calculation what the consumers want.
The flip side of this coin is to look at the reductio ad absurdum of the concept that one must boycott all Anheuser-Busch products in order to properly send a message. To this, one could easily ask, “Why stop there?” Those of us in the Austrian school know that the values of consumers do not just impute to the price of the beer but all the way back to the original factors of production. As Murray Rothbard has explained:
Producers’ goods are valued in accordance with their expected contribution in producing consumers’ goods. Higher order producers’ goods are valued in accordance with their anticipated service in forming lower-order producers’ goods. Hence, those consumers’ goods serving to attain more highly valued ends will be valued more highly than those serving less highly valued ends, and those producers’ goods serving to produce more highly valued consumers’ goods will themselves be valued more highly than other producers’ goods. Thus, the process of imputing values to goods takes place in the opposite direction to that of the process of production.
One could claim that by buying beer of any kind, a consumer keeps the factors of production oriented toward beer. If one really wanted to hurt Anheuser-Busch, the consumer could boycott beer in its entirety. This would result in the factors of production fleeing to other markets. As such, Anheuser-Busch would have no ingredients for their beer because wheat would be used instead for the higher-valued good of bread.
Of course, any reader would read this and think, it’s ridiculous to boycott the entire product across the board, even from other companies. Boycotts can be successful with far less than that. Boycotting one single product of a company like Anheuser-Busch—especially their former best-selling product—can still drastically impact their decision-making regarding profits and losses and can still make an enormous difference.