 | This article has multiple issues. Please help improve it or discuss these issues on the talk page . (Learn how and when to remove these template messages)
|
Dollar voting is an analogy that refers to the theoretical impact of consumer choice on producers' actions by means of the flow of consumer payments to producers for their goods and services.
In some principles-of-economics textbooks of the mid-20th century, the term "dollar voting" was used to describe the process by which consumers' choices influence firms' production decisions.[ citation needed ] Products that consumers buy will tend to be produced in the future. Products that do not sell as well as expected will receive fewer productive resources in the future. According to this analogy, consumers vote for "winners" and "losers" with their purchases. This argument was used to explain and justify market allocations of goods and services under the catchphrase "consumer sovereignty".[ citation needed ]
Consumer boycotts sometimes aim to change producers' behaviour. The goals of selective boycotts, or dollar voting, have been diverse, and have included a desire to see decreased corporate revenues, removal of key executives, or reputational damage. [1]
The modern idea of dollar voting can be traced back to its development by James M. Buchanan in Individual Choice in Voting and the Market. [2] As a public choice theorist, Buchanan considered economic participation by the individual to be a form of pure democracy. [3] [ non-primary source needed ] Also known as political consumerism, dollar voting's history in the United States can be traced back to the American Revolution, when colonists boycotted several British products in protest of taxation without representation. [4]
If voters feel disenfranchised politically, they may instead use their spending power to influence politics and the economy. Consumers use dollar voting because they hope to impact society's values and use of resources. [4]
Dollar voting has faced criticism in modern America for being class-bound. Dollar voting is archetypically used by middle and upper middle class consumers who spend their money at local farmers markets, community agricultural programs, and the preparation of "slow food". [5] These purchases do not affect low-income producers and consumers in the food market. [5] Dollar voting has also been criticized as a form of conspicuous consumption for the well-off, serving more as virtue signalling than actual consumer preference. [5]
Dollar voting has also been criticized for being a sort of consumer vigilantism. While most economists and economic philosophers accept that consumers have a right to their personal moral choices in the market, large-scale movements to influence consumer spending could have potentially dangerous implications.[ example needed ] [6]
Efforts to encourage corporations and firms to act in environmentally friendly ways have become popular. It is unclear whether firms that create negative environmental externalities will actually change their method of production to satisfy such desires. [7] Dollar voting also could dissuade citizens from law-making efforts to check unmitigated self-interest in firms and consumers, instead shifting this responsibility over to the market.
Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics focuses on the study of individual markets, sectors, or industries as opposed to the national economy as a whole, which is studied in macroeconomics.
Fair trade is a term for an arrangement designed to help producers in developing countries achieve sustainable and equitable trade relationships. The fair trade movement combines the payment of higher prices to exporters with improved social and environmental standards. The movement focuses in particular on commodities, or products that are typically exported from developing countries to developed countries but is also used in domestic markets, most notably for handicrafts, coffee, cocoa, wine, sugar, fruit, flowers and gold.
Public choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science". Its content includes the study of political behavior. In political science, it is the subset of positive political theory that studies self-interested agents and their interactions, which can be represented in a number of ways – using standard constrained utility maximization, game theory, or decision theory. It is the origin and intellectual foundation of contemporary work in political economy.
James McGill Buchanan Jr. was an American economist known for his work on public choice theory originally outlined in his most famous work, The Calculus of Consent, co-authored with Gordon Tullock in 1962. He continued to develop the theory, eventually receiving the Nobel Memorial Prize in Economic Sciences in 1986. Buchanan's work initiated research on how politicians' and bureaucrats' self-interest, utility maximization, and other non-wealth-maximizing considerations affect their decision-making. He was a member of the Board of Advisors of The Independent Institute as well as of the Institute of Economic Affairs, a member of the Mont Pelerin Society (MPS) and MPS president from 1984 to 1986, a Distinguished Senior Fellow of the Cato Institute, and professor at George Mason University.
In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's activity. Externalities can be considered as unpriced goods involved in either consumer or producer market transactions. Air pollution from motor vehicles is one example. The cost of air pollution to society is not paid by either the producers or users of motorized transport to the rest of society. Water pollution from mills and factories is another example. All consumers are made worse off by pollution but are not compensated by the market for this damage. A positive externality is when an individual's consumption in a market increases the well-being of others, but the individual does not charge the third party for the benefit. The third party is essentially getting a free product. An example of this might be the apartment above a bakery receiving the benefit of enjoyment from smelling fresh pastries every morning. The people who live in the apartment do not compensate the bakery for this benefit.
A market system is any systematic process enabling many market players to offer and demand: helping buyers and sellers interact and make deals. It is not just the price mechanism but the entire system of regulation, qualification, credentials, reputations and clearing that surrounds that mechanism and makes it operate in a social context. Some authors use the term "market system" to refer to specifically to the free market system. This article focuses on the more general sense of the term according to which there are a variety of different market systems.
In Marxist philosophy, the term commodity fetishism describes the economic relationships of production and exchange as being social relationships that exist among things and not as relationships that exist among people. As a form of reification, commodity fetishism presents economic value as inherent to the commodities, and not as arising from the workforce, from the human relations that produced the commodity, the goods and the services.
Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices. While once it was possible to describe CSR as an internal organizational policy or a corporate ethic strategy similar to what is now known today as Environmental, Social, Governance (ESG); that time has passed as various companies have pledged to go beyond that or have been mandated or incentivized by governments to have a better impact on the surrounding community. In addition national and international standards, laws, and business models have been developed to facilitate and incentivize this phenomenon. Various organizations have used their authority to push it beyond individual or even industry-wide initiatives. In contrast, it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Moreover, scholars and firms are using the term "creating shared value", an extension of corporate social responsibility, to explain ways of doing business in a socially responsible way while making profits.
Ethical consumerism is a type of consumer activism based on the concept of dollar voting. People practice it by buying ethically made products that support small-scale manufacturers or local artisans and protect animals and the environment, while boycotting products that exploit children as workers, are tested on animals, or damage the environment.
Man, Economy, and State: A treatise on economic principles is a 1962 book of Austrian School economics by Murray Rothbard.
Consumer sovereignty is the economic concept that the consumer has some controlling power over goods that are produced, and that the consumer is the best judge of their own welfare.
Ethical Consumer Research Association Ltd (ECRA) is a British not-for-profit publisher, research, political, and campaign organisation which publishes information on the social, ethical and environmental behaviour of companies and issues around trade justice and ethical consumption. It was founded in 1989 by Rob Harrison and Jane Turner and has been publishing the bi-monthly Ethical Consumer Magazine since. Its office is in Manchester.
In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services to buyers in exchange for money. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and allocation of resources in a society. Markets allow any tradeable item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale.
In economics, competition is a scenario where different economic firms are in contention to obtain goods that are limited by varying the elements of the marketing mix: price, product, promotion and place. In classical economic thought, competition causes commercial firms to develop new products, services and technologies, which would give consumers greater selection and better products. The greater the selection of a good is in the market, the lower prices for the products typically are, compared to what the price would be if there was no competition (monopoly) or little competition (oligopoly).
Cooperative federalism is a school of thought in the field of cooperative economics. Historically, its proponents have included J.T.W. Mitchell, Charles Gide, Paul Lambert, and Beatrice Webb.
In public choice theory, tax choice is the belief that individual taxpayers should have direct control over how their taxes are spent. Its proponents apply the theory of consumer choice to public finance. They claim taxpayers react positively when they are allowed to allocate portions of their taxes to specific spending.
The benefit principle is a concept in the theory of taxation from public finance. It bases taxes to pay for public-goods expenditures on a politically-revealed willingness to pay for benefits received. The principle is sometimes likened to the function of prices in allocating private goods. In its use for assessing the efficiency of taxes and appraising fiscal policy, the benefit approach was initially developed by Knut Wicksell (1896) and Erik Lindahl (1919), two economists of the Stockholm School. Wicksell's near-unanimity formulation of the principle was premised on a just income distribution. The approach was extended in the work of Paul Samuelson, Richard Musgrave, and others. It has also been applied to such subjects as tax progressivity, corporation taxes, and taxes on property or wealth. The unanimity-rule aspect of Wicksell's approach in linking taxes and expenditures is cited as a point of departure for the study of constitutional economics in the work of James Buchanan.
An alternative purchase network (APN) is a contemporary commerce channel established as an alternative to perceived consumerism, and the cultural and economic hegemony of the global market. Alternative purchase networks aim to promote ethical shopping behaviour, which has an environmentally-friendly approach and considers local realities.
Critical consumption is the conscious choice to buy or not buy a product because of ethical and political beliefs. The critical consumer considers characteristics of the product and its realization, such as environmental sustainability and respect of workers’ rights. Critical consumers take responsibility for the environmental, social, and political effects of their choices. The critical consumer sympathizes with certain social movement goals and contributes towards them by modifying their consumption behavior.
This glossary of economics is a list of definitions of terms and concepts used in economics, its sub-disciplines, and related fields.
