THE VALUE OF FAIR TRADE

An article by Warwick alumnus Dr Andrew Walton, University of St Gallen, Switzerland

Fair Trade goods have been part of the public consciousness now for at least two decades, and their popularity with consumers shows no sign of slowing down - even in a recession. As Fair Trade Fortnight (Feb 27th-Mar 11) gets underway Warwick alumnus, Dr Andrew Walton, asks an important question: What, if anything, is the exact value of Fair Trade?

Fair Trade products, in some form or other, have been available for purchase in the UK for approximately 50 years now. In the last two decades such products have very much come to prominence. Readers will undoubtedly know the label from their local supermarket and may have witnessed churches, towns, and even entire countries becoming Fair Trade areas. The popularity of Fair Trade continues to rise each and every year, even during recession.

It is important to remember, however, that a project’s popularity does not bestow any necessary merit upon it. It is entirely possible that Fair Trade’s supporters are simply “backing the wrong horse”. In other words, it remains important to ask: what, if anything, is the exact value of Fair Trade?

Now, to answer this question, it is helpful to distinguish between two sub-questions:

1) What values might Fair Trade advance?

2) Is Fair Trade successful in advancing these values?

This distinction separates two importantly different issues. As I will note below, there is a range of different values that Fair Trade might be thought to advance. However, it is not clear that Fair Trade does, or is even equipped to, advance all of these values. So, separating these questions will help us form a clearer view on what exactly what Fair Trade can and does achieve. It helps pinpoint Fair Trade’s value much more precisely.

Fair Trade’s record in, say, reducing poverty is reasonably positive.

First, then, let us consider question 1 – what values might Fair Trade advance? Answers that have been given to this question are extremely diverse, but it is perhaps possible to dichotomise them into two broad camps. On the one hand, some have understood Fair Trade to be, in essence, a form of charity; a mechanism for helping to alleviate poverty. On the other hand, some believe it to be aimed at revolutionising our economic system; a challenge to the very core of modern capitalism. There are, of course, many other views. Nevertheless, it perhaps would not be unfair to say that most views fall either within these two camps or somewhere between them. We could postulate, then, that there is a spectrum of views that range from Fair Trade as Assistance to Fair Trade as Avant-Garde.

With this classification in mind, let us turn to question 2 – is Fair Trade successful in advancing these values? Views on this question also vary. However, there does seem to be some discernible pattern. To wit, Fair Trade’s level of success in advancing the ends associated with Fair Trade as Assistance is reasonably high, but it decreases the more one focuses on the kinds of ends endorsed by the viewpoint of Fair Trade as Avant-Garde.

On the one hand, Fair Trade’s record in, say, reducing poverty is reasonably positive. For example, time and again, impact studies undertaken by the Colorado State Centre for Fair and Alternative Trade have reported that producers in Fair Trade cooperatives feel the benefit of greater economic security and enhanced access to shelter, sanitation, education, and health care.¹

On the other hand, what Fair Trade does not seem to provide is a system of exchange that is dramatically, or even much, different to the standard model presented by contemporary global markets. It is clearly different on some accounts. The protection of human rights afforded to Fair Trade workers is better than that offered to many producers in developing countries by some other trade networks. But Fair Trade does not alter power relations in the market to any great extent. Producers are still very much dependent on the whims and tastes of consumers and even the structures and benefits of the Fair Trade project are determined by institutions operating in wealthier countries. When one pushes further towards ‘alternative economics’, Fair Trade is less successful still. Ultimately, this movement does nothing to move away from economic transactions based on standard supply-and-demand conventions, systems of monetary exchange, or emphasis on product quality.

To place this information in visual format, the effectiveness of Fair Trade might appear something like the diagram above right. In essence, the more one attempts to conceptualise it as a radical, revolutionary activity, the more ineffective Fair Trade appears. Is this a problem for Fair Trade?

To many of Fair Trade’s advocates, I believe it might seem so. If this analysis is correct, Fair Trade is not a modern day St George slaying the evil dragon of capitalism. It is not the case that, through Fair Trade, “the ‘invisible hand’ has given way to the idea of working ‘hand in hand’”.²

But my sense is that Fair Trade supporters should not be disappointed with these conclusions. To be sure, Fair Trade does not change the fundamental rules of the economic game. However, it is not clear that it needs to do so in order to be of value. Even many resolute left-wing thinkers now deem the market to have some value as an economic institution and have shifted their objections to capitalism more towards the issue of wealth distribution. On this account, the lack of a revolutionary dimension to Fair Trade’s activities is not great cause for concern. Moreover, and perhaps more importantly, Fair Trade clearly has been successful in pursuing other worthy goals, such as poverty reduction. Even radical anti-capitalists should appreciate this and Fair Trade’s successes on this front are sufficient to give it plenty of credence.

In short, then, Fair Trade does have some value. It is simply important to remember that its value is not in terms of changing the economic world, but in terms of assisting the world’s poor. This value is not to be underestimated. Indeed, it is almost certainly sufficient for Fair Trade to be deemed deserving of a good proportion of its popularity.

Further reading:

• A. Walton, 2010, ‘What is Fair Trade?’, Third World Quarterly, 30:3, pp. 431-447.
• A. Walton, 2012, ‘Consequentialism, Indirect Effects, and Fair Trade’, Utilitas, 24:1, pp. 126-138.
• A. Walton, ‘The Common Arguments for Fair Trade’, Political Studies, forthcoming.

Footnotes:

1. These studies can be found here.

2. EFTA, 2001, Fair Trade in Europe (EFTA: Maastrict), pp. 1-2, quoted in L. Raynolds, 2002, ‘Consumer/Producer Links in Fair Trade Coffee Networks’, Sociologia Ruralis, 42:4, p. 410.

Andrew Walton is Assistant Professor in Political Theory in the Global Democratic Governance Unit, Department of Political Science, University of St Gallen, Switzerland. He received his PhD at the University of Warwick in 2010 on the subject of Global justice, the WTO and Fair Trade.