Fairtrade

[vimothy]

I think that the debate on this thread has moved away from being useful to people making semi-metaphysical statements about the ability to act under conditions of capitlism. Fuck waiting for the revolution. It will never come.

The point is not whether it's possible for Fair Trade to be positive and a good for the developing world, but whether it actually is. And I do not think that the onus is on me to prove that it is not (though I think it's pretty clear that it's not), but on the Fair Trade companies and their supporters to prove that it is. Can anyone explain theoretically and demonstrate empirically how Fair Trade produce helps, not just Fair Trade producers (which is a circular argument a la polz), but developing nations generally?

And it's not good enough to say, "well, I hope it has a positive effect, and that's worth something". It isn't. There is a massive distance between good intentions and good outcomes, and the history of development is testimony to that fact. Why use price floors? There are much more sensible ways (like subsidies) to achieve similar aims to those stated. As long as the effect of Fair Trade is minimised, then these price floors will have surely have little effect on the whole market -- but that's a bit of strange position for Fair Trade to be in, the idea that it is justified to the extent that it has no significant effect.

Moreover, it's bemusing to see so many people (not necessarily on Dissensus) who wouldn't believe that any company is even capable of delivering social goods, uncritically accept the claims of the Fair Trade companies. I'm much more suspious of companies who tell me that their product represents the best interests of humanity, and much more comfortable with companies that I know are out to make a buck. With the latter, at least you know where you stand.

 

[vimothy]

This is very good:

Paths to Prosperity: Approaches to Institutional Change and International Development - Karol Boudreaux & Paul Dragos Aligicia

 

[noel emits]

I think that the debate on this thread has moved away from being useful to people making semi-metaphysical statements about the ability to act under conditions of capitlism. Fuck waiting for the revolution. It will never come.

You do? That seems a strange blanket dismissal of all the various voices on this thread. But then I'm not sure what you mean by 'semi-metaphysical', as if that means that the 'metaphysical' (do you mean 'moral' or 'ethical' questions?) has no value in this debate. Perhaps what you really mean is it's not an aspect you are interested in, while others might consider it of basic importantance. And considerations of how we can act under real conditions, if that's what people were discussing, are also far from irrelevant.

Fair Trade as it is may not work and may be counter-productive but the point about registering a consumer vote for an idea of 'just trade' is a perfectly practical one and something we can do 'under conditions of capitalism'. If you think that 'Fair Trade' is not helpful then your vote can go elsewhere but the point still stands.

 

[vimothy]

You do? That seems a strange blanket dismissal of all the various voices on this thread. But then I'm not sure what you mean by 'semi-metaphysical', as if that means that the 'metaphysical' (do you mean 'moral' or 'ethical' questions?) has no value in this debate. Perhaps what you really mean is it's not an aspect you are interested in, while others might consider it of basic importantance. And considerations of how we can act under real conditions, if that's what people were discussing, are also far from irrelevant.

What I mean is that bun-u and nomadologist are barking up the right tree for the wrong reasons. Yous seem to have come away with the opposite impression to the one that I'm trying to give. Saying "it's impossible to act in a positive way under capitalism, because it all reproduces capitalism power relations" is a deeply impractical philosphy of despair, IMO. It's not that I'm uninterested in that debate. I find it interesting enough to comment on it here. I just don't find it productive.

Fair Trade as it is may not work and may be counter-productive but the point about registering a consumer vote for an idea of 'just trade' is a perfectly practical one and something we can do 'under conditions of capitalism'. If you think that 'Fair Trade' is not helpful then your vote can go elsewhere but the point still stands.

Ok, so --

I've already agreed that pretty much everyone wants to make the world better, and obviously many are even prepared to pay a premium on products in the hope that this premium will do something good, even if they're not quite sure what that is.

What you're saying (it seems) is that even if it's not directly helpful to the producers, and not indirectly helpful to developing economies, it still has value because it sends a message to the market. What message does it send? It sends a message that says "more please -- there are large margins on "ethical" products". What we're left with is, even if Fair Trade doesn't actually work, it still sends a message to the big companies that there is a big growing market for Fair Trade. I'm sure they're thinking, "great!"

Here's how I see the best-case realist senario: Large companies up their prices because consumers think they are contributing to developing world externality costs, when in reality only a very small percentage of the premium goes to poor producers. Fair Trade price floors don't distort markets to the extent that most producers do not selll commodities through the Fair Trade system (i.e. to the extent that Fair Trade has little impact), but as the market for ethical goods grows, and given the ability of (and incentives for!) companies to increase their margins at the expense of the consumer (because the consumer thinks they're benefiting the third world) Fair Trade price floors will distort commodity markets, create dead-weight loss and keep developing economies locked into agricultural industries, which is to say, it will keep third world economies in the third world.

 

[Mr. Tea]

Vimothy, can I ask you: why is it necessarily the case that poor countries will remain poor for as long as their chief form of economic activity remains agriculture? There are still people who make a living from agriculture in the developed world, even in a very urbanised, service-oriented economy like the UK (BSE, foot and mouth, rapacious supermarket monopolies etc. notwithstanding). Of course, developed-world farmers have access to all sorts of technology that third-world producers don't. So couldn't third-world farmers reap the benefits of the technology we've been using for decades, perhaps with the benefits of hindsight to avoid some of the environmental problems we've caused for ourselves along the way? Or are they better off giving up farming altogether and adopting industry of some sort (which surely requires much more in the way of technological advancement, and poses even greater threat to the environment, than farming)? Or could they actually make a decent living for themselves if they didn't have to compete with the unfair subsidies paid to developed-world farmers by those countries' governments?

 

[vimothy]

Good question. Farmers in the developed world make money for a few different reasons:

1. Modern agricultural industries are heavily capital intensive (to a large degree, meaning that per capita, they are very productive, which is where the profits come from chiefly).
2. Most (significant) labour demanded is high skilled, and wages have to be competitive with other industries.
3. Markets are frequently protected and farmers are subsidised by Western governments, so that developed world agriculture doesn't have to compete fairly with undeveloped world agriculture.

The way that industry contributes to growth is by making productivity increases, which then feed profits back into capital acquirement and abour markets. A very generic model of development is to move into manufacturing, where there are opportunities to 1, achieve productivity increases (as there aren't really in coffee farming or cotton picking) and where you are 2, selling to markets where demand is elastic*, i.e. markets where your productivity increases will not necessarily result in job losses across the board. Increased movement of labour from agriculture to manufacturing will put upward pressue on wages for farm labour and so benefit farmers workers as well.

I think this process could describe US manufacturing as easily as US agriculture, BTW.

*EDIT -- sorry...

 

[vimothy]

So to answer your question, agriculture will not solve the problem of developing world industries as long as agriculture is relatively unproductive (basically, as in labour heavy and capital light -- farming needs to grow in order to affect development) and agricultural markets are inelastic (as in, demand won't change very much even with price). They can't just grow more coffee, even using modern farming techniques, because the price of coffee will fall as supply increases and demand remains relatively still, and less poor people will be employed doing it.

 

[vimothy]

Half a Cheer for Fair Trade - Philip Booth and Linda Whetstone

Abstract

The fair trade movement claims that the products it provides are sourced “justly” and that purchasing fair trade products brings economic benefits for the poor. Whilst it is clear that fair trade might bring some benefits to particular groups, whether it brings significant net benefits to the poor in general is questionable. Moreover, the claim that fair trade transactions are more “just” cannot be substantiated. Customers also might be surprised to learn that the majority of the Fairtrade Foundation’s income is spent on promoting its own brand.​

Ethical food revolution picks up pace with 62% rise - Alastair Dalton

98% of Fairtrade chocolate is manufactured and packaged in Europe. Only 8.5p of a £1.70 bar of Fairtrade chocolate remains in the country of origin.

12p per pack of coffee is the additional income a farmer gets through the Fairtrade brand. But the typical UK supermarket shopper pays 75p extra compared to other brands.

4p of the extra £1 cost of a bag of Fairtrade bananas compared to other bananas gets back to the farmer.

1/3 more land is required to farm free-range produce than conventional techniques.

3p extra is all the farmer gets per 227g pack of coffee beans when purchased at the Fairtrade guaranteed price of 72p per lb.

Critics say fair trade is bad for economic development in the long run. Fairtrade subsidies keep peasant producers, especially in Africa, tied to small-scale, inefficient farming methods when these countries need large-scale, mechanised agriculture.

Fairtrade agreements often favour one group of farmers over another. For instance, it discriminates against the major, low-cost, highly mechanised plantations of Brazil and Vietnam.​

The bitter cost of ‘fair trade’ coffee - Hal Weitzman

 

[noel emits]

Saying "it's impossible to act in a positive way under capitalism, because it all reproduces capitalism power relations" is a deeply impractical philosphy of despair, IMO.

Indeed. I'll happily argue for that on a metaphysical level as well.

What you're saying (it seems) is that even if it's not directly helpful to the producers, and not indirectly helpful to developing economies, it still has value because it sends a message to the market.

Well no, I was saying that if you (one) finds that it doesn't work then obviously it is sending the wrong message and something else should be done. I was just saying that that is part of the rationale behind buying Fair Trade products. Obviously if used effectively a vote with the wallet is a language that all producers will understand.

I do buy Fair Trade 'organic' tea from the supermarket so I am probably a mug but it doesn't cost any more than regular organic tea and it's only about 20p more than the other stuff so for the amount of tea I drink that's really not a big deal.

 

[Mr. Tea]

Arguments about distortion of the market aside, it seems that most of the criticism of the Fair Trade concept is a criticism of the way it is actually implemented - only a small amount of the extra cost goes to the producers, some firms lie to make it sound like they participate in the scheme much more than they really do - rather than the concept itself. In other words, it would be worth doing if it went further, and was more rigorously applied, than it is in reality at the moment.

 

[nomadologist]

Easy: some kind of report, summarising the findings of an investigation, that concludes "Fair Trade companies pay their producers no more, or almost no more, than the regular, exploitative companies". (which is what Mr. U seems to be claiming)



I assume you mean "fair trade"? Well if you ask the companies involved, I'm sure they'll furnish you with plenty of evidence. Seems to me that the onus of proof is on someone claiming that they don't, in fact, do what they claim to do. (And if that is the case, as it seems to be with Nestlé, it is illegal and there are government bodies set up to stop them from doing so.)

What kind of report? We all know that companies fairly and accurately report those sorts of metrics.

So show me some of the metrics that prove that "fair trade" products are having a positive net effect against the economic exploitation of the developing world. There must be some "reports" out there somewhere...

 

[nomadologist]

As far as putting "ethical labels" on exploitatively produced commodities, see "conflict-free" diamonds. It's a way to make sure that all diamonds flow through client government channels (and particularly Israel), not to groups opposed to Western interests. It's the same cartels holding a tighter reign on their product. Even the poor regulatory agencies have found millions of dollars of "blood diamonds" in the "legitimate" market.

I think it is interesting the anxiety that centuries of alienation from labor has produced... not just ethical labels, but TV shows about production, making-of docs, etc... the mode of production getting spectacle-ized, ... you see why people with leftist sympathies are wary of this.

Or watch American TV for a half hour and catch all of the Chevron and GE and myriad companies touting their "earth friendliness" and the different "options" you have now --namely whether you want to overpay for a barely functional partially ethanol-powered vehicle because it makes you feel better (regardless of whether this is really the best option in any sense) and you can afford to do so.

Wasn't there a thread about that a while ago?

 

[nomadologist]

Arguments about distortion of the market aside, it seems that most of the criticism of the Fair Trade concept is a criticism of the way it is actually implemented - only a small amount of the extra cost goes to the producers, some firms lie to make it sound like they participate in the scheme much more than they really do - rather than the concept itself. In other words, it would be worth doing if it went further, and was more rigorously applied, than it is in reality at the moment.

Right. It's just so typical of a consumerist society that people are happy to jump on a "fair trade" bandwagon only insofar as it becomes just another easy set of consumer choices and does not demand any real political engagement or attention to policy-making.

 

[Mr. Tea]

What kind of report? We all know that companies fairly and accurately report those sorts of metrics.

Well obviously I meant a report carried out by an independent non-commercial body of some kind.

So show me some of the metrics that prove that "fair trade" products are having a positive net effect against the economic exploitation of the developing world. There must be some "reports" out there somewhere...

I dunno, maybe they're not having any effect - but maybe they are. It just seems churlish to dismiss the whole thing out of hand because it's a voluntary scheme companies can take part in and all companies are, like, totally evil.

 

[nomadologist]

Who said all companies are "like, totally evil"? All companies have to operate according to a bottom line, and as I'm sure even Vimothy will admit, this entails pushing the ethical envelope, especially with regard to things like sales metrics and charitable deeds.

My point is there are no agencies that measure things like the net effect of one company's products on the global economy at large. This sort of thing would be expensive beyond belief if it were even mathematically possible. Until these sorts of numbers become feasible, "fair trade" is simply another clever form of lifestyle branding, and companies know this and use it to their advantage. Why shouldn't they?

 

[vimothy]

My point is there are no agencies that measure things like the net effect of one company's products on the global economy at large. This sort of thing would be expensive beyond belief if it were even mathematically possible. Until these sorts of numbers become feasible, "fair trade" is simply another clever form of lifestyle branding, and companies know this and use it to their advantage. Why shouldn't they?

Agreed. I think that I have been too hard on Fair Trade, however. I'm all for an empirical approach to development, and perhaps, given the relatively small amounts of coffee producers selling through Fair Trade price floors (1% of coffee sales -- coffee is the second most traded commodity in the world), the distortionary effects will be negligible. I doubt that very much of the extra cost makes it to the coffee growers, because the incentives for the companies are to sell at a premium and shave only a little bit extra off for the poor farmers. Otherwise, they'd already be "fair trade". I don't think it's the end of the world, but I don't think that it will do much good, especially if more coffee sales become Fair Trade. I'm prepared to be proven wrong, though...

 

[vimothy]

EDIT: tripple post

 

[vimothy]

fucking hell...

 

[comelately]

This Fairtrade debate has been interesting for sure, but there is another dimension to the debate surely? After all, more or less the only way to buy chocolate that has not been tainted by slavery is to buy fair-trade.

 

[nomadologist]

Agreed. I think that I have been too hard on Fair Trade, however. I'm all for an empirical approach to development, and perhaps, given the relatively small amounts of coffee producers selling through Fair Trade price floors (1% of coffee sales -- coffee is the second most traded commodity in the world), the distortionary effects will be negligible. I doubt that very much of the extra cost makes it to the coffee growers, because the incentives for the companies are to sell at a premium and shave only a little bit extra off for the poor farmers. Otherwise, they'd already be "fair trade". I don't think it's the end of the world, but I don't think that it will do much good, especially if more coffee sales become Fair Trade. I'm prepared to be proven wrong, though...

Totally agree, and this is actually one issue (one that ends up being part of a whole range of issues) that I think the right approaches with the proper trepidation and a realistic sense of the enormity of the task, where the left doesn't seem to want to really face this and instead turns to--what else?--a pat set of aesthetic band-aids on our boo-boos.

It's one area of many (including eco-friendliness) where neo-liberals and the new "left" is its own worst enemy and even a self-parody of its own values. Whole Foods and these new lifestyle brands are, sadly, bastions of the current "left" and a testament to its failure to recognize that old boogeyman class and the related economic challenges. At best. At worst they are actually contributing to the problem in the fashion that you suggested above.

Sometimes it makes sense to me why the neo-con movement sprang up--there had to be a knee-jerk reaction to the sort of "fair trade" SUV-driving Soccer mom patrons of Trader Joe's that became the voice of the former party of strong centralized government and even stronger social programs for the underclass. Where are the policies that limit the power of multi-nation megacorporations? Where are the subsidies for farmers? Where are the limitations on corporations' and the governments abuse of energy and fuels?? Where are the funds for initiatives to find creative solutions to projected future energy crises?

Nope just buy "organic" peanut butter and drive a hybrid.