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A critique of 'fair trade'

I hear a lot about 'fair trade' and also a lot about 'ending subsidies' and I find that I am adamantly opposed to both concepts, not on the basis of economic principles, but on humanitarian grounds.
I hear a lot about 'fair trade' and also a lot about 'ending subsidies' and I find that I am adamantly opposed to both concepts, not on the basis of economic principles, but on humanitarian grounds.

My criticism of 'fair trade' centers on two ideas. The first is that fair trade is so unlikely to succeed that it surprises me to think that people are seriously considering the idea, and the second is that fair trade is damned dangerous, so dangerous in fact that once again I find it hard to believe that people would seriously be thinking about such a thing. That people think in such ways shows that on this planet, at this stage in the history of humanity, everyone has been conditioned to think about 'markets' and looking for solutions to human problems that revolve around 'going to market' and 'buying and selling products'. When there is no solution that does not involve 'going to market' or 'marketing a product' well then one must suppose that no solution exists, nothing can be done. Its hopeless, or perhaps simply utopian. In fact, given a choice between 'marketing' and human life, this planet currently chooses marketing every single time, and will continue to do so, even if it means that the day comes in the not to distant future when we will have to all become like the Germans in World War Two, and somehow learn to turn a blind eye to monstrous acts of genocide, which are already well underway (targeting about a billion people at the moment, not to mention many tens of thousands of species of animals, who made the mistake of being in the wrong place at the wrong time, and thus impeding the progress of the marketing of something or another, and thus, after millions and even tens of millions of years of existence and long epochs of development before that, now must go extinct and be wiped off the face of the earth, so that people can trade things at markets.

Surely to God, as one billion people are pushed into Polish style ghettos like the Jews before them, and the forests become Auschwitz and the wild lands become Bergen Belsen, this generation will leave behind a legacy even more monstrous than the one we associate with the Nazis in World War Two.

Now it is unlikely that 'Fair Trade' is going to succeed as a strategy and this has to do with the stresses developing in the Free Marketing System, stresses which are inevitable and unavoidable, since this system is based upon the endless growth in the consumption and marketing of products. That such an ideology is sterile and spiritless goes without saying, and many of the people I have encountered over the years, are really unhappy with their lives which they enslaved to making and consuming products. I remember some years back working for a temporary employment agency and getting sent here and there and everywhere, and everywhere I went I found my self dealing with some of the most miserable, unhappy, bad tempered, and sullen collection of people you could imagine. I understood how they felt, you know, because it was a wretchedly short life to be spent in chains. Even so, even now when I think 'temporary employment agency' I get a feeling of horror because I don't want to have to see something like that again, and I hope I never have to again. It was instructive, making that tour of the miserable wretchedness of the life of those who drag themselves unhappily to work so things can be 'marketed' and 'traded' but I don't want to ever have to endure such misery again. If only they could win the lottery so they could escape the wretchedness of their lives.

All this leads me to conclude that the present 'development' of human society marks one of the lowest of the lowest low points in human civilization to this time. Furthermore, that so many people could be so damned miserable and consequently so damned hard to get along with, and at the same time just go plodding along right straight to the grave is really remarkable. This brings to mind the perennial hope of the dedicated leftist that 'they will rise up in revolutionary power' and do something about it. Now most people who are concerned about the world don't put much hope in that ever happening, which is why they look for 'market based solutions' like 'fair trade' or 'ending subsidies' and so on.

A good part of the problem here could be with leftist themselves, and often leftists can be some of the most difficult people on the planet when it comes to taking criticism with a certain amount of grace (while at the same time they are often known for being fiercely sectarian and divisive). I know, speaking for myself, that even though I am sympathetic I do not identify with much of what I hear from the left, because it does not resonate with me. You know, I think the worst thing you can do is talk about 'the worker's state' or to go around calling people workers and talking to them about their jobs, when the fact is that so many of these people just hate their jobs with a passion, and the thought of laboring away in a 'worker's paradise' just does not resonate with people, as the course of the last century and half proves conclusively.

If I could just make an off the cuff suggestion, instead of calling people 'workers' and thus resonating with their much loathed jobs they do at work they despise, you might want to talk about the new world, where people aren't workers. You know it might be the case that the 'workers of the world are the true revolutionary force' as standard doctrine states, but it does not follow that they long for a revolution so they can 'work for the state' or that they long for a revolution so that after that they can go back to work knowing that they have changed bosses (as though somehow the thing they hate the most is the bosses). No, the thing they hate most of all is being workers, and while it is true that people have to do some work of some kind to live, and always have, whether or not people have to work as much as they do now, which is the real source of their misery is another question altogether. For example, we know that often the contribution of the worker to the cost of production in modern society could be as little as 15 or 20 per cent, and so when you think about it, once the drive to create 'profits' for other people is eliminated, a lot of work could be eliminated as well. So one could imagine talking to people not about being 'workers', which is something they hate, but instead talk to them about not working, at least not as much. And believe me, that would be a message that would resonate, unlike traditional leftist talk, which never has resonated because people just hate going to work. For example, perhaps people could work a month and then take a month off, or work such a number of months, and then spend a few months doing something they might actually love and which would make life worth living. No one has been dreaming of such a world, or talking much about it, but I just toss the idea into the air for consideration...

But I digress...

One of the principle reasons why fair trade will go nowhere is that at the present time it is in the interests of the 'free market' economies to trade as unfairly as possible, in order to dump their surplus commodities. The alternative is a spiral into deflation, as the endless drive for higher growth and more and more profits drives a free market economy into inevitable overproduction. This whole system we live under today is irrational and predicated upon a nonsensical fiction which teaches that endless growth is good and is actually possible. If we think in terms of a graph, where 'E' represents the economy and 'g' represents the rate of growth, then we can imagine a graph heading ever upwards, soaring off the earth and out into the deepest space as 'g' rises to infinity. Such a stupid idea lies at the core of modern society and is the root source of so many of the problems that those who consider themselves progressives just deplore.

All throughout the 18th and 19th centuries the free market crashed again and again as deflationary pressures caused by this constant growth into overproduction contributed to capsizing the economy. Now a great crash has not occurred for over half a century, so that the only people alive today who remember the last great Crash would be in their 80s or 90s, and entire generations of people are alive today who have no understanding of just what the term 'Great Depression' really means.

The reason for this has to do with the fact that there are multiple causes of deflationary collapse. The fundamental cause of economic crashes is growth, leading to over production, and over supply of goods that no one can sell, which fuels deflation (dropping prices) which hits profits, which hits jobs, which means that even less goods can be sold, which leads to deflation, which hits profits, which hits jobs...Its called a crash. It hasn't happened for a while since Roosevelt's New Deal policies targeted income inequality, by using various policies and tools to keep wealth moving to the bottom of the pyramid, fueling consumption. The first three decades under 'Reformed Capitalism' saw the most rapid growth in the history of the modern economy for that very reason. However, 'Reformed Capitalism' does not target the root cause of crashes, which is growth, and thus the frequency of crashes decreases, but the forces building up to a crash (endless growth) remain in force. Crashes happened all the time during the first two centuries of capitalism, sometimes one crash following another in as little as twenty years, and this frequency was due to the rampant income inequality that existed during the age of the Robber Barons as they were called. Deflationary pressures build more rapidly in an economy where income inequalities exist.

Over the last couple of decades pressures and stresses have been building in the free market economy. The drive for growth has led to such things as 'neo-liberalism' as it was called (which temporarily allowed corporations to keep up their growth and profit figures, at the expense of undermining the base of the economy in countries around the planet - which increases income inequality, which ruins markets). So desperate for those corporations for growth figures and profits, that they went ahead and did those things, even though it means that places like Argentina, and other countries in South America and Africa are now lousy markets, and thus poor places to dump the surplus production of a free market system in its advancing old age. 'Neo-liberalism' was thus a very short sighted policy, but it worked for a while, and in order to understand why it is that people on this planet can be found to do so many destructive and stupid things it is required that one understand certain fundamental facts about how 'free market' economies work, since it is these irrational processes that drive human behavior under this current system.

Currently the American economy is groaning under the weight of over production and a burden of unsold goods. One report I heard recently described an economy running at well below capacity with ware houses filling with unsold goods. Currently you can buy a car for thousands of dollars off, and all sorts of incentives, which means that currently you don't make much of a profit selling a car these days (as little as a couple of hundred bucks after all those deals get deducted) but at least they are still managing to move those cars into a glutted market (which gluts the market even more, but that's a problem for tomorrow - in the 'free market' one must always think about the current quarterly report).

About a week and a half ago the Federal Reserve issued a statement that I thought was fairly blunt. They said that 'pricing power' in the economy 'was muted' and that the threat of 'to low inflation' was the principle danger facing the American economy 'for the foreseeable future'. What they meant is that the danger of deflation is now the big issue for the economy for as far ahead as economists can forecast, so for the future as far as we can see it at the moment, the battle with deflation is going to be the all consuming issue. This battle won't be helped by the fact that corporations will be trying to grow some more, and produce more, and generate more and more profits and ever quarter will be trying to report more and more growth, which is a poor idea, growth being what you don't need in a deflationary economy, but nevertheless is what we will be getting, if only someone can figure out a way to do it. First neo-liberalism provided ways to bring in temporary profits and capital gains from buying third world assets at fire sale prices and so on, which could be reported as growth, and perhaps that cash cow is not completely milked dry. Then there is always that phony accounting book keeping trickery, which is a way of reporting growth, if you are really hard up to report growth.

And there is also 'free trade' which is anything but free. Basically the idea here is that you use a crow bar to pry open markets in other countries so you can fight deflation and thus report more growth and profits by dumping surplus commodities into those markets thus clearing the way to make more products. At the same time you want to make sure that those other countries can't dump any products into your country, thus hurting your deflationary market, where its already hard enough to sell things, and as the Fed stated, it doesn't look like it will be getting any easier for the foreseeable future. This is basically the idea of the American government right now, and it is hardly 'free trade', but then they aren't trading because its like a sacred belief system for them to practice 'free trade' but rather because they are using such tactics as super low interest rate and borrowing huge piles of money and lowering the dollar all in the fight against the building deflationary pressure in the overgrown and overly mature American economy.

Now there are other strategies to use in the fight against deflation, which could buy a few years and stave off a great Depression for a while. For example, income inequality since the time of Reagan has grown so much that it is now the same as it was the 1920s just before the last great Depression. As well income inequality between nations is now greater, thanks to 'neo- liberalism' Income inequality is not the sole cause of the crash, but it does make crashes happen faster than would otherwise be the case. The government, in addition to making the income inequality even worse with all those tax cuts, is also using the borrowing spree tactic, just like they tried in the 1920s as they headed for that great Crash (they called the borrowing spree 'telescoping the future into the present' according to a presidential commission at the time - in otherwords, they bought themselves some time through all the borrowing and heavy using of credit by consumers and so on...)

So this would summarize my first critique of 'fair trade'. It just won't be happening since the government is determined to trade as unfairly as they can possibly get away with (and do as much bullying of each individual country as they can). The reason for this is not that they are simply cruel bastards. Certainly they are willing to behave like cruel bastards, and thus tank the economy of Argentina, as one example, to buy themselves a few years. Think deflation and everything will begin to make sense...And so to advocate 'fair trade' to those people and actually expect them to pay attention is unrealistic...Not a chance...Rather they will be bastards and they will keep being bastards right up to the bitter end, and then if the economy crashes, they will be even worse bastards by sending cops and the army out to shoot people in the streets like they did the last time...

My second criticism of fair trade centers on the humanitarian aspects, and here I am thinking about the one billion people currently forced into slums in the world and struggling to live on less than a dollar a day. Some were pushed out to make way for hydroelectric dams, which displaced tens and tens of millions of people. They were promised compensation, to get them to move, which never comes, and thus they live in slums. Many people were displaced by what was called 'the Green Revolution', which brought in a shift to large estate farms, which had to be created once again by pushing small people out. As well many countries became dependant on large mono-crop plantations to bring in export earnings. Others were swept into slums by the waves of neo-liberalism, that demanded that 'shock therapy' be done to poor countries, sending millions out of work. Many people were fired from state companies, to make them 'lean and competitive' so they could be sold at fire sale prices - the resulting capital gains could then be booked as growth and profits by hard up corporations, thus saving them the hassle of trying to get crooked accountants to hide false numbers in shady books.

One thought I cannot escape is how much this current system resembles the system of genocide under the Nazis. The Nazis stumbled towards genocide step by step. First they took away the money and property of Jews and sent them to slums. Same thing happens today. The Nazis considered for a while sending the Jewish people to Madagascar, but finally settled on places like the slums of Poland. And then they found themselves in the middle of a World War with millions of slum dwelling Jews to deal with, and while those Jewish people were dropping dead in those ghettos all the time, the Nazis needed a real solution, which first consisted of shooting people and burying them in pits and when that wasn't efficient enough, they developed the system of building centers run with industrial efficiency for the production and processing of large numbers of slum dwelling corpses.

Now it is important to keep in mind here that we live in a system where already there exists the precursors to genocide. That genocide is not taking place at this moment is simply due to circumstances that exist at the present moment in time. The existence of these billion human beings is marginal at the best of times, and a kind of low level genocide is underway even at the present, in that an estimated 30 to 40 thousand children die every day of hunger and diseases caused by malnourishment, and the natal death rate is statistically high for children born in these conditions, and a proportionally higher percentage of women die of complications from child birth, and as well the life expectancy is low, sometimes approaching only one half of the life expectancy of most people today, and given that this life expectancy figure is averaged over entire populations, and that the marginal slum dweller can be expected to drag down the life expectancy statistic while the better off raise it, we can assume then the true life expectancy for many people trapped in these circumstances is actually lower than the official figures, dismal as they are, would suggest. All of this constitutes genocide through the process of attrition.

Under these conditions a descent into the kind of genocide that developed in Germany during the second world war is not difficult to imagine, since one billion human beings are currently living desperate lives and their survival is only marginal at best. Just a small turn for the worse, a global down turn in the economy or, perhaps, even 'fair trade' which pushes up the value of commodities could be enough to trigger a full scale genocide. Now given how the Nazi genocide developed in a stages, and given how we are now at the stage where the subjects of genocide are, like the Jewish people before them, confined to desperate lives in filthy slums, it is not hard to imagine that when the dying starts, and the bodies begin to pile up, that once again the ovens will appear on earth. After all, when that many corpses need to be disposed of burning them up in ovens makes perfect sense. Furthermore, if they are going to be dying in any case one can imagine shipping a lot of people to central locations so that they can be near the ovens, and then, as the genocidal mentality continues to work itself out, the merciful thing to do would be to start building gas chambers, perhaps, to put them out of their misery, and thus the ovens can be fed with corpses with modern industrial efficiency, just as it was in Nazi Germany. And in Nazi Germany none of this happened all at once, but rather it proceeded in steps, one thing just following after another.

What we see here is the developing signs of a very dangerous situation. None of this seems to far fetched to me, given the great danger facing the very poorest people on earth, whom no one wants, and yet, at the present time, no one has yet brought themselves to just get rid of once and for all. Rather they are left to battle for survival and to die through attrition, at least at the present time, but the signs are truly ominous for the future, since the genocidal intent is clearly obvious, and the humanitarian intent is noticeably absent. Money and 'profits' and the 'free market' come first in this place and people come last, so that even though the means exist to better the lives of people, the will to do so does not.

And none of this makes me a big fan of 'fair trade' since I find it hard to understand how these one billion victims, who can barely make ends meet today, when commodity prices have collapsed, will be able to survive if 'fair trade' or 'the end of subsidies' and other frightening talk I hear about, actually succeed in driving up the price of survival well beyond the 35 cents or 50 cents or 70 cents a day so many people are living on today.

At the moment I am not to worried that this will happen, because the stresses in the free market system make it unlikely that anyone will be to interested in trading fairly, when they need to dump their surplus production onto a market somewhere to protect themselves from a deflationary collapse which is, sooner or later, the end result of the growth policies of a free market economy. As well political considerations make it unlikely that those subsidies will be ending any time soon, and so we can look forward to a world flooded with surplus commodities, with mountains of unsold food, which, for the time being in any case, will help to keep the genocidal monster at bay for at least a little longer.



nice! 15.Nov.2003 14:39


Great post. Made my fucking day.

Sorry, I guess this is just a junk reply, but I really felt like saying something

what the hell? 10.Sep.2004 07:09

mike england

what are you talking about? everyone dreams of not having to work. don't you think if these people didn't have to work then they wouldn't. And if you can manage getting through life not working for months and not having to sell or consume anything then please us all how. You seem to be dead set against fair trade but you haven't offered any rational or logical alternative.
to conclude, what the hell?

Blind Critism 05.Oct.2004 04:58

Iain A Davies lixiad@nottingham.ac.uk

I stumbled across your article and read it with considerable interest. I am guessing from the writing style and spelling that you are undoubtedly a North American and therefore have little knowledge or experience of dealing with fair trade or the farmers it aids. The first query I have with the article is the drawing on the catastrophic events of the Second World War in an attempt to curry favour to your later arguments despite the fact they are unrelated. This use of rhetorical script is the same style of marketing which you yourself appear to be berating. Thus undermining your entire argument. Secondly the blinkered view you put forward regarding fair trade itself is disturbingly under-researched. I have worked within and written on fair trade for 10 years and find the views put forward in this article to be wholly inaccurate. In the first instance, despite North America's beleaguered forays into fair trade, it has been a fast growing market in Europe for the last 12 years. Prior to this it was still a relatively successful market when run through charities and Alternative Trading Organisations, where products were used to portray a solidarity message and used for education and campaigning purposes. This history can be traced back to the 1950's in Europe. I therefore don't feel that simply because you have done no research beyond your blinkered view does not constitute fair trade as a strategy doomed to fail. For a start off it is easily over 40 years old under the modern format and if traced back can be easily paralleled with the Roman ideal of "Fair Price". From your arguments however I detect that actually the article is not meant to be a condemnation of fair trade at all but of the market mechanism, with some sideline misguided hope that one-day you can sit on your arse and not have to work. It has nothing to do with the humanitarian arguments you set out with. For starters: you hint that fair trade is protectionism, building on the old adage of your former federal economists which led to both the slow uptake of the true humanitarian aims of fair trade and conversely the gross protectionism of everything else that actually help make the economists richer. You even manage to throw in the Nestle argument against fair trade that in the long run it makes things worse by encouraging other countries to begin production of already over supplied goods. Of course these are well-ploughed fields of argument on which there has never been anything other than wild speculation. To begin with - the coffee market - without doubt probably the only fair trade you have come across due to the lack of product ranges available outside of Europe. The international commodity price for chocolate is knocking around 40-50 cents per pound, whereas the average cost of production is approaching 80 cents per pound. This is far from an encouraging point for the underdeveloped nations to become involved in mass production of coffee. With the fair trade price and fair trade premium, the cost of production is covered, but to achieve this the farmer must satisfy the social auditors of the Fairtrade Labelling Organization. Therefore just anyone cannot provide fair trade. In fact the regions targeted by the initiative are generally the very single-crop economies you discuss in your article. These are regions with very little choice about what they do. They have low transferable skills and poverty enforces desperation in the communities and you see a turn to illegal activities, such as cocaine production, as common practice to provide the necessary incomes. So in summary, you obviously have very little knowledge of the industry, or the producers, or the market for fair trade outside of your own backyard. I have worked with producers, retailers and even strategists and marketers for fair trade products. The producers are able to earn sufficient wages to at least provide slightly better lives for their families. The Fairtrade Licensees are packed with former VSO and humanitarian workers who really care for the communities they help. As such they provide the assistance they can to the communities. This included schools and medical centres in producer communities that don't just benefit the people who are involved in fair trade but also the wider community giving vital "lifestyle" benefit that without fair trade they could not have. As far as marketing is concerned, it is just how any system of trading has to work in the modern market, which is some fair trade does not have any choice about. I am not saying the system is perfect. I certainly don't think that fair trade will solve all of the worlds ills, but a blanket denunciation of the good fair trade achieves is unconstructive. Currently it is one of very few ethical business strategies that does actually work. Fair trade acts within the market mechanism because there is no other option at the moment. Until the utopia you obviously believe will emerge effortlessly is already upon us, the best way found to date to give disenfranchised economies an ability to proactively make a difference to their lives, is the use of trading to increase wealth. Fair trade is successful, enduring and effective in its goals and even a modicum of research may have provided this evidence.