Fair Trade

This is a continaution of the conversation started in Hattie Ajderain: Fair Trade

"Fair trade bears a suspicious likeness to our old friend protection. Protection was dead and buried 30 years ago, but he has come out of the grave and is walking around in the broad light of day. But after long experience underground, he endeavours to look more attractive than he used to appear... and in consequence he found it convenient to assume a new name."

- William Gladstone (1809 - 1898)

No one would deny that there is a vast gulf in wealth and resources between the developed, and developing world. Indeed there is even consensus that trade rather than aid, is the best means for poverty alleviation. But there remains a fundamental debate regarding the type of trade policy that should be pursued.

Organizations such as the Fairtrade Foundation believe that Free Trade has not worked – the benefits are weighted heavily in favour of rich western superpowers, and smaller countries don’t stand a chance if forced into open competition, whilst farm subsidies remain for the superpowers. They’re right to argue for this, and their passion and sentiment is to be admired. However their solution is misguided, and potentially counter productive. Free Trade remains a viable alternative, as yet untried.

The Fairtrade label is a regulation that guarantees a certain wage to farm workers, governed by a multi-national collective agency. It is determined by covering the cost of production, plus an investment in the local community as a means to protect farmers from volatile prices. They argue that when US and EU farmers “dump” subsidised foods onto the global market, they depress the price, and put developing farmers out of business. How can third world farmers compete with Western, subsidized farms?

There is also another reason that would cause falling prices: mechanization. In Brazil, more successful  developing farmers were able to substitute labour for capital, and increase their productivity. The reason developed nations got to be so rich is by following this very path to prosperity, but the consequences are that less people are needed to create the same amount of goods. With a free regime, those workers will be able to move into higher valued industries, and raise their living standards. By paying them to stay in Coffee, the Fairtrade foundation consigns them to poverty. The Fairtrade foundation are also misguided in assuming that developing farmers are only competing with developed ones: they also compete with each other. By forcing them into a collective, the more efficient farms are not allowed to expand, and end up redistributing their income with less productive farms. The two types will both benefit from Fair Trade, but we’re forgetting another category: those farmers that aren’t part of the club. These are the truly poor, who now have greater barriers to enter the global market: the cost of complying with Fairtrade regulation. Since Fair Trade remains a cartel, it can only survive by restricting supply. Workers at Fairtrade firms will benefit too, but such a wage floor will lead to unemployment affects. It will become harder to find a job. This is the consequence of viewing the market as a static state of affairs, susceptible to central planning, instead of a creative process where no one can posses enough knowledge to manage it. Attempts to do so, means that business success becomes driven by political connections rather than entrepreneurial ingenuity and hard work.

When such power is given over bureaucratic decisions, the incentives for corruption increase. And aside from the perverse affects on incentives, there is also an issue of knowledge : will the Fairtrade foundation have enough information to be able to control “the market?” By attempting to regulate the price of farm produce, you can be assured that perversions will follow – they always have. Consider our own “Fair Trade” agreement, the Common Agricultural Pact. The result is that farmers (who tend to be well off relative to other groups) receive subsidies to waste resources in producing mountains of butter. The original intention of helping a people that felt threatened by market forces was genuine, but it has created a highly powerful interest group that can hijack the political process to divert wealth to themselves, at the expense of their countrymen. We can do better than create such a scheme in countries where the political system is already less robust.

I am not arguing for the status quo: the global imbalance of trading power is a disgrace, and reforms must be made. Instead of fighting barriers with regulation, however, I advocate attacking the barriers head on. If we can redirect the passion and momentum of the Fair Trade movement toward a genuine Free Trade regime, we can allow more successful third world farmers to escape the agricultural sector, and we can permit more people in poverty to have a stake in prosperity. Before making matters worse, let’s give Free Trade a chance.

Comments

[Matthew Whitfield]

AJE, thanks for such a thorough and insightful exposition of your thinking on this issue, I'm now at the clearest understanding I've had of what your position is.

I have a couple of points I'd like to make.

1) I still don't believe that in the case of regionally specific crops (tea, coffee, cocoa) that it's only the volume of goods in the marketplace that sets the price, only that this is one factor. Firstly, farmers from the EU and US cannot flood the market with cheap, subsidized products, since they cannot grow them in these instances. Secondly, although the volume of tea, coffee etc will vary due to the weather, time of year, level of mechanisation etc, surely the presence of a tiny handful of global buyers in the marketplace is the real reason why prices can be forced down. This IS Free Trade in action, and it IS unfair. I see what you're trying to say about a radically pure form of Free Trade solving the problem, but I can't see how even your model could produce anything other to what we have now, namely a few global players (this is a market on a global scale and is hardly open to small entrepeneurs with new ideas) who are able to maintain their position by keeping down prices and maintaining their efficiency. This is not a question of unfair subsidy preventing truly Free Trade from happening. What subsidies do Nestle, Brooke Bond, Cadbury etc enjoy? Aren't they just freely trading companies free to source their raw materials at the lowest price they can possibly get away with? Isn't this the real reason why prices are kept low?

2) Assuming that you're right that more Free rather than more Fair trade is what is required, is Fair Trade not at least an acceptable interim model to use in trying to improve the lives of producers NOW rather than at some ill-defined utopian point in the future? Also, you believe that Free Trade would create fairer prices across the board, but doesn't the existing model of Fair Trade come pretty close to achieving the same results? Even rich farmers in the UK form cooperatives to gain greater bargaining powers with buyers, and we have an extremely deregulated market in agricultural produce in this country. How else do supermarkets wield such power? Because a largely unregulated market allows them to!

[AJE]

"surely the presence of a tiny handful of global buyers in the marketplace is the real reason why prices can be forced down"

It is my understanding that the prices are falling because of (Fair Trade sponsored) overproduction, and mechanization. I will try to look into it.

"What subsidies do Nestle, Brooke Bond, Cadbury etc enjoy?"

According to The Rural Payment Agency, subsides from the CAP 2003/04 were:

NESTLE UK LTD £11,609,923.80
CADBURY INTERNATIONAL LTD 1,688,722.62
Brooke Bond: no mention

very casual empiricism, but a start. Sorry to divert back to theory, but I think my post Corporations is relevant.

"is Fair Trade not at least an acceptable interim model"
NO. More Socialism is not a valid interim between Mercentilism and Capitalism. (Although each term doesn't quite capture what I mean, they're equally ill-defined). We agree that the status quo is unjust: but I don't see how Fair Trade is more of an immediate measure than Free Trade, unless you claim that adding more regulations are easier than removing them. In which case you have to admit that all we'd be doing is postponing the inevitable, AND making it worse.

We did it with the Corn Laws, we can do it again.

[Quinn]

I am probably showing my ignorance here, but is it accurate to describe Fair Trade as socialist? I would have thought that Fair Trade could be seen as just another brand name, competing with the other brands in the same market. Put another way, couldn’t one company, let’s call them Firm A, just as easily decide that they are going to increase the price they pay to farmers (ie. Pay above the “market price”) so they can re-brand themselves as providers of an ethical product in order to compete with Firm B? Would that also be wrong?

And is it not possible to work towards and aspire to Free Trade, yet acknowledge that in its absence Fair Trade redresses some of the inequities in the current system of oligopolies, oligopsonies and subsidies?

[AJE]

It's a very good point: is it a regulation, or a brand?

I think that Fair Trade is the former, and The Body Shop the latter. The difference is that we can choose to use the Body Shop or not. The purpose of the Fairtrade movement is for it to become compulsory. Therefore it's intentions are socialist. You even have Oxfam encouraging children to picket their canteen if it won't sell Fairtrade produce - this is beyond voluntary choice, it's ethical bullying.

If it were simply a brand, then it's intentions run counter to it's consequences. In light of this, the only sensible reason for this policy to be pursued is for a redistribution of wealth.

I favour Free Trade because I think the truly poor would benefit more from a redistribution of opportunity.

What concerns me so much is not the present situation. It's the momentum behind the movement, and where that will lead.

[Matthew Whitfield]

"The purpose of the Fairtrade movement is for it to become compulsory. Therefore it's intentions are socialist."

Prejudicial nonsense. Firstly, you're assuming that Fair Trade fits into some neat category of 'Socialism', simply because its economic model falls outside of classical liberalism. Secondly, you've assumed that all forms of Socialism follow some dogmatic strand of Maxist Communist theory which talked of the inevitability of revolution - this is, granted, a left wing strategy, but Fair Trade does not claim to be either compulsory or inevitable. In any case, it's flawed logic to suggest that anything which is compulsory (or at least claims to be) must in some way be Socialist. I'll have to go to bed and sleep tonight, otherwise I'll get ill - does that make sleep a Socialist activity?

"You even have Oxfam encouraging children to picket their canteen if it won't sell Fairtrade produce - this is beyond voluntary choice, it's ethical bullying."

Why is encouragement construed by you as bullying? And, furthermore, how are children being given a volutary choice if they can only choose to buy (for example) chocolate produced by Masterfoods, Nestle and Cadbury - companies which the children may have legitimate ethical concerns about?

"What concerns me so much is not the present situation. It's the momentum behind the movement, and where that will lead."

Where will it lead? More investment in communities? Better educational standards? The children of coffee and chocolate growers getting on in life and finding a career beyond subsistence agriculture? Surely that will reduce production and raise prices in time. What really concerns you is, I believe, an ever increasing market share for Fair Trade products and consumers voting with their wallets for a more just marketplace. You think they're wrong to buy these products, that they're misguided. Does that mean that the alternatives are more 'right', that shopping and food production had, until the advent of Fair Trade, evolved into some kind of unimaginable perfection, and we're all fools to throw it away?

You knock Fair Trade as a solution to real problems, because you're ideologically opposed to it. The troubling thing for you is that those who support it, including Socialists, are using a free market to make it work - they don't mind using your ideology even though you could deconstruct their's until the cows came home. There's no getting away from it - the Fair Trade coffee et al is sitting there, right now, on the shelves of mainstream supermarkets, at relatively high prices, and people are buying it - choosing it - in a free and open market. Doesn't sound very Socialist to me. In your mind, everything can and should be bought and sold, except when people start buying into ideas you find distateful.

[AJE]

Thank you for provoking me.

"you've assumed that all forms of Socialism follow some dogmatic strand of Maxist Communist theory which talked of the inevitability of revolution"

I didn't mean to emphasize that aspect. It is the central planning that made me lump it under the "socialist" category, not necessarly the "revolution".

"Fair Trade does not claim to be either compulsory or inevitable"

I think it does.
e.g. "The producers, who supply the international Fairtrade market, will say Fairtrade should be the template for all world trade." - from here.
George Monbiot is clear on the issue also, as the Spectator article mentions.

"Why is encouragement construed by you as bullying?"
Because it's encouragement to prevent people from making free choices. It's having people tell me that I choose to consign people to poverty by not buying Fairtrade produce. Please, someone in the UK confront a Fairtrade volunteer and question them. And let me know what happens.

"Where will it lead? The children of coffee and chocolate growers getting on in life and finding a career beyond subsistence agriculture?"

The Fairtrade foundation prevents farmers from doing this. They block the consequences of mechanization, and subsidise over production. The greatest facilitator of rapid industrial change is Free Trade.

You are quite right to point out that they're having an affect, and an immediate one. But don't fall into the trap of the seen/unseen. What about the farmers who aren't allowed to join the Fairtrade club? We don't see their produce. What about the wasted resources? The wasted possibilities? All unseen. Yes, they've got coffee from the farmers to the shelves. So would Free Trade, if we could make steps toward it, and I don't agree that it's pointless trying.
It is (almost) commonly accepted that trade is better than aid. This is the reason the Fairtrade foundation was created. People on the left realise that changing the basis of trade is the surest way to alleviate poverty - the Free Trade movement has won a massive battle. What remains, is the type of trading arrangement. Free vs Fair. But don't lose sight of the bigger picture: the left have admitted we were right.
Also, lets look at areas where freer trading regimes have been allowed to flourish. It's the reason that Africa needs present attention, and South-East Asia less so.

Regarding your personal attacks, I think you're aiming for the wrong target. I am not ideologically against Fairtrade per se. Notice the interview with Coase I posted recently. I start off by wondering what will work. I started off thinking Fairtrade was a triumph of free-market initiative, and a wonderful wonderful thing. But the more i've thought about it, and the more i've read, the less I buy their theory. I can't see how it would work. And the more empirical evidence I see, the more that belief is confirmed. I am only "ideologically opposed" as a consequence of analysis that leads me to see it as being fundamentally unworkable.

Your last comment I contend. I do not write this blog as a means to stifle debate. I don't think everything can and should be bought and sold. I believe in free exchange. When I read your comment I did not think "fool, he must be corrected" I thought "great, Matthew's responded - what's he got to say?"

As I've said before, I don't think that people really are buying into an idea. I don't think they know anything about Fairtrade accept that it's "Fair" and it's "trade". Sounds great. But "Fairness" and "equality" are the constructs of social engineers. And sure enough, lurking beneath such moralistic claims lies the red tape of a central planning board.

Please, do not doubt my starting position. I want a trading regime that is fair, and free. I don't give a shit what it's called, but thinking about Fairtrade has led me to the position I've expressed. That position is a sunk cost though. I will suffer no harm if I change my mind, and am not stubborn. I am waiting to be set right.

And I encourage you to keep trying.

[Matthew Whitfield]

I've never accused you of trying to stifle debate, I merely explored what I consider to be your ideological position. You've disappointed me by pulling back from this position, claiming you're only interested in 'what works', and I think that's disingenous of you. You claim to be believe in 'free exchange', Free Markets and various other aspects of Classical Liberalism and, quite understandably, you have numerous problems with Fair Trade as a result. There's no shame in admitting an ideological opposition. As you stated, you were all for it when you thought it was a 'triumph of free market initiative'.

It's not my job to change your mind, to 'set you right', and I won't keep trying. It's my job to state that I'm in favour of Fair Trade - economically, politically, philosophically, as well as emotionally. I have a political position on this that I'm not going to budge from easily.

The message I got from Leo McKintry's article was a flawed analysis of left-wing thinking, criticised as doctrinaire, bullying, unworkable regulation. What Leo doesn't admit - and what you, and Tony Blair, and Michael Howard and countless others don't admit either - is that belief in the Free Market is as dogmatic a belief as anything the left has divised. And yet, it's dressed up as 'natural', 'right' and 'better', in order to spare the doctrine any serious analysis. The Market has conquered the world, the USA won the Cold War, and now we have to pretend that ideology doesn't matter any more. It does matter, because we all live under a hegemonic ideology, and one which appears to brook no opposition from dissenting belief structures. The Market is so large, and so pervasive, that it's stopped being able to identify itself - sure, it's there, but so is the sky, and nobody questions the sky.

I choose to question.

[Quinn]

AJE, you say, "Is it a regulation, or a brand? I think that Fair Trade is the former, and The Body Shop the latter. The difference is that we can choose to use the Body Shop or not." So, at the moment, you almost seem to be suggesting that Fair Trade is acceptable; it is not compulsory, it is an ethical brand we can choose whether or not to buy, but you are concerned where it will lead to. Okay; so could Fair Trade be valid as long as it remains voluntary?

You also mention Oxfam getting schoolchildren to picket their canteens and term this “ethical bullying”; whilst I don’t like the use of children in this way, why shouldn’t people who support Fair Trade campaign for its products to be used, particularly in areas such as canteens where you have no choice over what products are offered to you. If your canteen only stocked Fair Trade goods, would it not be legitimate for you to argue for them to be replaced by Free Trade alternatives? And while you may not like people telling you that you “choose to consign people to poverty by not buying Fairtrade produce”, isn’t that exactly your accusation against those who argue in favour of Fair Trade? I wouldn’t accuse you of ethical bullying for pointing out what you see as the errors and repercussions of opposing Free Trade; so why should it be different for those who support Fair Trade?

A couple of further points you made earlier. I am a little confused how you can claim, on the one hand, that "By paying them (the Fair Trade farmers) to stay in Coffee, the Fairtrade foundation consigns them to poverty", since Fair Trade prevents them from moving "into higher valued industries, and raise their living standards"; on the other hand you show concern for "those farmers that aren’t part of the club. These are the truly poor, who now have greater barriers to enter the global market". Presumably, being unconstrained by their Fair Trade obligations, they are free to toddle off to another more profitable industry; or isn’t the point that diversifying is not that simple, which is one of the things Fair Trade recognises?

Also, you state that "Fair Trade remains a cartel"; but isn't that the problem already, that the existing coffee firms constitute an anti-competitive cartel that FairTrade is trying to redress?

I am not without my doubts about Fair Trade, and I concede the many benefits of Free Trade, but ultimately to fully accept untrammelled Free Trade as a panacea requires a leap of faith in the infallibility of markets that I am unable to make. I believe markets can fail, that perhaps coffee is an example where the concentration of market power in a few hands leads to a worrying situation that even free marketers can appreciate, a far cry from the idea of perfect competition. Fair Trade as it stands seems to me to be one way for another player to break into an uncompetitive market and offer the consumer a greater choice.

(Apologies if some of this makes no sense; it is my third attempt at writing it as I am also dealing with my Son who is teething and likes turning the computer off while I am mid-flow, as he has done twice already. I am fed up, now, and this will just have to do.)

[Matthew Whitfield]

Quinn - I love you! You've identified all the points that slipped through my faulty thought processes and put them right up there on the screen.

And Anthony, something's occured to me. Following on from my post about your ideological position, I see now that a lot of what you say is similar to what leftwingers in Western Europe said during the Cold War as apologists for the Soviet regime. As the freemarketeers of the Right saw the USSR as the apogee of Leftist thought and revelled in pointing out the human rights abuses, economic inefficiency and political repression endemic in the ultimate Leftist state, so Socialists in the West were quick to point out that the USSR was in many ways a betrayal of Marxist thought, it wasn't pure, it had been corrupted. A truly Marxist, or at least a truly left wing, social democratic state, wouldn't allow such an awful, authoritarian regime to develop, said they. And so it is with today's Market. As you've said many times before, we can all see it's deep flaws, its exploitative nature etc, but in your Liberal model those faults are caused by a lack of radicalism, by a failure of purity.

I concede that you want fairer trade just as much as I do, but extrapolation from Pure economic theory does not solve problems. Yes, Corporations need to experience real competition - I'm no supporter of Protectionism - but doesn't Fair Trade give us a glimpse of how economic exchanges could be organised in a different way, isn't it the only option we have right now to say NO to the unfair power of Corporations?

[AJE]

Ok, so we've got Matthew battering away at my ideology, and Quinn questioning the economic theory... I can't promise to touch on all the points youv'e both raised, so press harder on any issue I don't acknowledge.

I largely agree with Matthew's point about "Libertarians being the new Communists". I completely concur, that someone saying "well it's not really free trade anyway" today sounds similar to a communist in the 1980s saying "it's not really Communism". Except for one important difference: the system I advocate does work in theory, and in practice.

Yes, I have this underlying burning passion for political and economic freedom. Thus far, it has always coincided with "what works". Can we forget the Cold War for now, and simply progress on a case by case basis? Whether you're Old Labour, Black, disabled, a post-modernist, whatever.... can we not just explore the issue of Fairtrade?

Quinn:

"Okay; so could Fair Trade be valid as long as it remains voluntary?"

I am not a moral philosopher, and whilst I slip into it from time to time, whether people want to do something or not I have no interest in convincing them to do what I think is right. As an economist, my job is to analyse alternative institutions and depict their means/ends as accurately as possible. So I might say "a minimum wage leads to unemployment effects". It's then up to you whether that's a trade off worth making. Yes, I'll have my say, but I do try to seperate my analysis from my opinion.
In this case, therefore, if people voluntarily choose Fairtrade products, then fine. To me, it's the same as choosing Apple products. Except one crucial difference: Fairtrade products are marketed based on their economic effects. I have analysed them, and the claims being made are counter-intuitive.
In my capacity as an econonomist, therefore, I am saying "theory doesn't predict what you claim will happen".
I think that people like Fairtrade because of it's claims regarding development, and I think those claims are wrong.
So I do not expect to sway anyone morally, and am not really trying to. I want a debate about the economic effects, and for people to be cautious enough not to dismiss what I say out of hand.

"I wouldn’t accuse you of ethical bullying for pointing out what you see as the errors and repercussions of opposing Free Trade; so why should it be different for those who support Fair Trade?"

A fair point. But is there any doubt that Fairtrade people claim ethical superiority? From what I've heard, there is not a debate between Fairtrade and Free Trade advocates across the schools of England. Again, I might well be wrong. What would happen if I confronted these people? Would we start comparing empirical evidence? To me this seems similar to the environmental movement.
"Ethical", because it is implied that those who don't support Fairtrade are apologists for abusive corporations. "Bullying", because the debate is beince decided by size, not conversation.

Also, I think you are falling into the trap of associating perfect competition as being the requirement of a free market economy, and deviation from this ideal condition as a "failure". This is perhaps the position of many economists, but an Austrian view is that the only necessity for a competitive system is free entry. The number of buyers/sellers is wholly irrelevent. Fairtrade foundation works by controlling entry/exit conditions, so it's wrong to think that it is making an uncompetitive market more competitive. Quite the contrary.

I think this boils down to:
"requires a leap of faith in the infallibility of markets that I am unable to make"
What do you mean by markets? People voluntarily interacting? Why are you unable to believe in the infallibility of human action that isn't coerced?

Finally, I hope you two aren't claiming that Fairtrade proves the capitalist model doesn't work. Their success, is indeed down to the fact that they're a brand. Their failure, if i'm right, will be down to them being a bureaucracy.
Be careful not to be one of those dickheads that wears a Che t-shirt, bought off the internet, and using his Sony mobile phone to text his mate which McDonalds they're going to destroy. Or an anarchist that speaks over someone else.

Yes, let's try to all move this debate away from polemics. I think that Matthew and myself are investing so much time into our respective sides, we'll need someone else to bridge our conversation.

[Quinn]

Anthony, I will just make a few points in response to some of your last comments to clarify where I am coming from.

“Is there any doubt that Fairtrade people claim ethical superiority?”
No, but there is also much smug arrogance that emanates from the ASI and the Globalization Institute, an assumption that they are right and anyone who disagrees is therefore economically illiterate.

“I think you are falling into the trap of associating perfect competition as being the requirement of a free market economy, and deviation from this ideal condition as a "failure"”
I don’t think I am. I know full well that perfect competition is pretty much a theoretical condition, largely absent in the real world. However, it often seems that the values associated with perfect competition are ascribed to the very real, far from perfectly competitive markets in which we actually live, and this makes me sceptical about some of the claims made for a pure free market economy. Perhaps you are right to say that Austrian economics has already dealt with this concern of mine; more reading required by myself.

The line about “leap of faith in the infallibility of markets”; I am talking here more about the market system as a whole, rather than one individual market. I guess I mean that I find it difficult to believe that if we just leave everything to market forces then everything will be hunky dory; this may well happen, but I have no reason to believe it will. A firm’s aim is to be profitable, but that may not necessarily coincide with what society would consider desirable, although it may do. I am not suggesting that the free market is immoral, but it is amoral.

“I hope you two aren't claiming that Fairtrade proves the capitalist model doesn't work.”
I am not anti-capitalist, I would not even consider myself particularly anti-globalisation. I have no objection in principle to Nike taking jobs to Indonesia, why should I. That does not mean that the actions of individual companies, and the failures of certain anti-competitive (and arguably un-free) markets are not ripe for criticism. For example, if free trade is working in the coffee market, then why is there this overproduction in the first place? If mechanization is required, won’t increasing the price paid to farmers assist them in this endeavour?

Finally, "Libertarians being the new Communists" I agree with for another reason. Both have valid criticisms to make about what they oppose, namely planned or market economies; it is their somewhat utopian solutions that I have trouble signing up to. As I suggested on my recent (fairly shit) post on my own blog, I find it unlikely that a single ideology can ever be right, certainly not an ideology that seems to immediately dismiss anything that does not fit neatly into its own theories. If we are really going go with “what works” then I am not suggesting we go for some woolly, worst of both worlds “third way”’ but I am calling for a bit of pragmatism.

[Matthew Whitfield]

I'd just like to echo some of Quinn's comments. I'm not anti-Capitalist, either, and I welcome the many benefits which trade and consumerism bring to me, this country and the whole world. I find it pretty offensive that you consider that my beliefs even come close to those of some proto-anarchist Nathan Barley type who oppose Capitalism because they think it's fashionable to do so. I simply question the doctrinaire assertion that there is no limit to the usefulness and benefits of markets. I simply don't believe this.

This is not a desire on my part to restrict people's freedom, far from it. It is about recognising that freedom is not a trite, easy to undertstand concept, that freedom is not just being able to choose where you buy your onions or where you receive healthcare. Freedom is a wider and deeper idea, and one which demands to struggle free from the straightjacket of Libetarian (and, indeed, Neo-Con) ideology.

[AJE]

"there is also much smug arrogance that emanates from the ASI and the Globalization Institute"
You should have felt free to include The Filter^ on that list! but seriously, the difference is that we have ethical superiority on the one hand, and economic arrogance on the other. I think we can agree on that.

I think we'd also agree that we want a system that is economically efficient (and here I mean efficient at doing what it's supposed to do i.e. no perverse incentives, the means lead to the desired ends etc, and not simply "Pareto Optimal") and a system that is ethical.

I find it frustrating that the debate seems to be more about ethics than economics, and I'm trying to provide some balance: the ethics are irrelevent if the economics is wrong! Ok, I accept the charge that academic specialists are quick to dismiss critics as being illiterate. That is a geniune problem, and I hope that this conversation shows that I am on your side in this. But if a bunch of specialists are adament about something, surely they must have a point? If they don't, find the specialists that disagree, and challenge them/us.

I am not suggesting that the free market is immoral, but it is amoral.
This is why I prefer is to unfree markets. It is truly democratic in that what tends to emerge, is what people want. i.e. Alcopops aren't a sign of market immorality, but consumer preferences which we may/may not agree with.
A free market will not eliminate poverty overnight (although I think that the most liberal societies in the world pretty much have eliminated absolute poverty), and so we do have an urge to give charity. Rather than change the economic system so that charity runs through it (as under any redistribution system), therebye stifling the chance to escape it, why can't we have a system that unleashes the capital already inside a developing nation?

Regarding mechanization, it seems that the Fairtrade model is committed to the romaniticized notion of the integrity of poor farmers. We in the west feel guilty amidst plenty, oh for the simpler times when we earnt an honest living... I don't want them all to be farmers. I want them to be doctors and teachers, so I don't want to artificially increase the wage rate of farmers. The mechanization is being done - that's preceding the overproduction, I believe. Fairtrade is a static model of production, and I want to see a dynamic one.

I don't think that my solutions are utopian in the slightest. Ok, I might ramble a little. But all that i'm saying is that the developing world needs the institutions that make the developed world as rich as it is. Simple things, like a law, property rights, the ability to sell whatever products you can make a profit for, etc. Show me a developing country that has integrated intself into the global economy, and is suffering as a consequence.

I'm not a libertarian, I hate the term "capitalism", the "left" vs "right" distinction is obfuscatory, and think we need to move this conversation away from ideology. The Orange Path is the new third way, and I had hoped Fairtrade was a shining example of the future, but as I say, I don't think it is.

Matthew, I think I completely agree with your last comment. But does that opinion (which we share) bring us closer to resolving the Free vs Fair debate? I don't think it does.

I will try to write an new post on this issue soon, which I hope can move the debate forward. Reading through this exchange, I think that we've descended a little into polemics. We shouldn't: we all have enough common ground, and expertise, to ascend toward solutions.

Let's all spend a little time doing more research, and within a week or two I'll to lead us on a different tangent.

That's not to say you shouldn't respond to what I've said just now, but we need to get beyong this hypothetical talk of "markets". The concept of a "market" as something to worship or doubt, is pretty useless.

[AJE]

Let me reword my last point:

We have started this debate by taking sides, either Free, or Fair. We shouldn't be surprised that we're just arguing.
We will start the next debate on common ground, and explore it together. If anyone has any suggestions as to how that would be best organised, let me know. An interview? A formal debate?

[Quinn]

If anyone has any suggestions as to how that would be best organised, let me know. An interview? A formal debate?

We could meet up for a pint. Or a cup of coffee.

[jesus martinez]

I think you guys should look at this:www.colostate.edu/Depts/Sociology/FairTradeResearchGroup/doc/tzotzilotic.pdf It seems that the idea of fair trade as a brand in a free trade system is a valid one, and the rules of free trade will see if the ethical trends will continue to be viable. But the point of a centralized command post for fair trade is not only scary to me, but has already proven to be a growing problem to the producers themselves. It seems here they suggest an even more democratic approach to a governing body for this, which would satisfy both of your issues. But yes, I believe we should keep fair trade as an ideal, but once this becomes a policy it somehow loses that romantic quality the bleeding hearts as myself want.

[Cheap Jordan 1]

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