Tuesday, March 23, 2010


I don't claim to know anything about economics, and some of this is stridently put, but here are some Oxford students (over on Facebook) lamenting what they might call the tyranny of so-called Fair Trade monopolies:

Christian Aid and Ctrl Alt Shift have been campaigning against the sale of non-Fairtrade produce for the past two weeks. A Christian Aid campaigner said, "We don't want fair trade to be an issue, we want it to be the norm."

TESCO already sells Fairtrade bananas. These misguided souls organised a flash mob to protest TESCO's decision to give customers the option to buy non-Fairtrade bananas.
Many JCRs have attempted to make their pantries stock only Fairtrade goods.

We offer the following arguments to the effect that Fairtrade is morally abhorrent. Even if you don't agree with every single one, we hope you at least realise that it is an open question whether Fairtrade helps poor people, and therefore reject the moral arrogance of those who want to deny Oxford students the option to buy non-Fairtrade produce.

1. Fairtrade schemes require all workers on a farm to be paid a minimum wage. This reduces demand for labour, and results in unemployment for farm workers whose marginal product is worth less than the minimum rate. A caveat: The empirical evidence on whether minimum wages harm employment in rich countries is mixed. But note that poor countries tend to have laxer labour protection laws, and fewer social safety nets: So it is reasonable to think (1) that Fairtrade is quite likely to increase unemployment in those cases, and (2) unemployment will have more disastrous consequences.

2. Fairtrade schemes require all farms to be run as collectives. This means that every worker must have a stake in the farm's capital and decision-making process. This discriminates against the poorest workers - those who have no capital and little access to financial markets - who cannot buy in to a Fairtrade collective because they bring little to the table. It also discriminates against itinerant labourers who might otherwise be hired on temporary contracts (say, around harvest season, when there is more work to be done).

3. Fairtrade accreditation is, by necessity, available only to registered businesses. Registering a business in most parts of Africa typically takes several months and lots of bribes. Therefore, Fairtrade schemes discriminate against new entrants to the market, and against poorer farms that operate as part of the 'informal' economy.

If you buy Fairtrade, you are discriminating in favour of farmers who already own land and capital, against workers who have nothing to sell but the sweat on their backs. You discriminate in favour of the already employed, and against the itinerant poor who can't be integrated into neat little collectives. You discriminate in favour of established, registered farms with government connections, and against newer, smaller farms that can't afford time or bribes. How is this just?

Given a choice between two otherwise-identical goods, I'd pay a premium for the one that's _not_ Fairtrade. I think it's the morally right thing to do. Won't the True Believers at Christian Aid and Ctrl Alt Shift at least admit it's an open question?

HT: Daniel Newman (via The Facebook)


Pete said...

I know some Christians who are coffee producers in Africa- they view fair trade coffee as a disadvantage to the poorest, and find it to be an immoral approach to business. I never really understood the reasons - and dont know if these are their reasons! Interesting...

Marc Lloyd said...

Thanks, Pete. Very interesting.

Dave W said...

There seem to be two distinct issues.

First, whether it is morally a good thing or a bad thing for consumers here to let suppliers know that they would prefer to buy products where a greater proportion of what they pay ends up in the pockets of the people labouring in the fields.

Second, there is the question about whether or not those organisations currently acting under the "Fair trade" banner are achieving that and are doing so in the most effective way.

Marc Lloyd said...

Thanks, Dave. Yes. And also broarder economic concerns about the effect of giving one group of workers a rate above the market rate. E.g. what that does to other poor workers etc. Does it also discourage the workers in question from doing something genuinely economic etc.

Anonymous said...

I'm no economist myself (much of what the A-level taught me has been since lost), but it does seem like it might be another example of Christians jumping on the bandwagon of an idea that seems and sounds righteous without having actually done much thinking.