… is from page 251 of the late Harold Demsetz’s October 1977 lecture “Social Responsibility in the Enterprise Economy,” as this lecture appears in the 1988 collection of some of Demsetz’s important works, Ownership, Control, and the Firm:
The rigidly controlled society may keep its people on the straight and narrow path, but it cannot be deduced from their taking that path that they are righteous. Ethical behavior is revealed when a person who chooses a morally superior course of action could have easily elected to follow an inferior one. The command economy, by virtue of its restrictions on choice opportunities, strips observed behavior of ethical significance.
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