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9.3 Is There Anything Definitive About Fair Trade?
Despite limits for a complete analysis of developing economies’ realities, there are
contributions which facilitate the comprehension of some mechanisms in role in
such economies. Economic development has been dominated by two main competing schools of thought – Marxism and Liberalism – and both do not fully contemplate underdeveloped economies’ specificities. On the one hand, Marxism is
considered to reduce developing economies problems to politics constraints,
whereas Liberalism reduces the problems to market constraints.
The main critique to Marxism originates from the structuralism approach (Choat
2010), which proposes that Marxism does not go beyond its political criticism and
the strict belief in the role of state to distribute income. As a result, it does not recognise the market reality and its potential dynamics as having a distributional effect.
On another hand, an analogous criticism can be applied to the Liberalism where a
government role is undermined in favour of the “invisible hand” that would solely
allow the market flow and grow with the competition.
The higher price instead of the lowest price for products and the high standards
in which they are required to be produced and distributed within the fair trade model
is an undeniable challenge to classical economic assumptions – which has succeeded as the increasing rate of fair trade revenues demonstrates, feeding the legacy
of the ethical consumerism model. Table 9.1 demonstrates the increasing revenues
of the first entrant in the market, Fairtrade International. If there is anything definitive about fair trade, it seems to be the response of consumers to sustainability
standards, reflected in the increasing rate of Fairtrade sales.
Although the wealth and income generation and allegedly changing realities of
small producers and communities, this socio-economic-environmental change is
also criticised. Fair trade faces criticism for using market tools and language to challenge the same market: the movement’s challenge to the conventional trade model
is accused of limitation because it relies upon commoditisation, and thus it is not
politically activist enough. Fair trade is accused of excessive stringency for the
small producers whose precarious conditions – financial, institutional and organisational – are out of the scope of the requirements for ethical trade. Fair trade is criticised because the proposed fair price higher than market prices for products holding
the fair trade seal creates a surplus that would not return entirely to small producers,
but it is shared along the supply chain with an amount going, for example, to retailers. Fair trade has been criticised for the space given to large corporations as
Starbucks and Nestle, which enjoy of the fairness halo effect of holding the fair
trade labelling but actually purchasing a very small amount of fair trade coffee
(Barratt Brown 2007). It can be observed that the movement is judged both from a
Liberal and a Marxist perspective. This reinforces the relevance of an evolutionary
perspective proposed in this analysis. Fair trade is proposed to be simply seen as an
example from within the market that uses the market language and tools to challenge the same market and produce social change. For doing so, its contribution can
be recognised as a transitional model, able to generate “change from within” and
A. C. Ribeiro-Duthie
9.3 Is There Anything Definitive About Fair Trade?
Despite limits for a complete analysis of developing economies’ realities, there are
contributions which facilitate the comprehension of some mechanisms in role in
such economies. Economic development has been dominated by two main competing schools of thought – Marxism and Liberalism – and both do not fully contemplate underdeveloped economies’ specificities. On the one hand, Marxism is
considered to reduce developing economies problems to politics constraints,
whereas Liberalism reduces the problems to market constraints.
The main critique to Marxism originates from the structuralism approach (Choat
2010), which proposes that Marxism does not go beyond its political criticism and
the strict belief in the role of state to distribute income. As a result, it does not recognise the market reality and its potential dynamics as having a distributional effect.
On another hand, an analogous criticism can be applied to the Liberalism where a
government role is undermined in favour of the “invisible hand” that would solely
allow the market flow and grow with the competition.
The higher price instead of the lowest price for products and the high standards
in which they are required to be produced and distributed within the fair trade model
is an undeniable challenge to classical economic assumptions – which has succeeded as the increasing rate of fair trade revenues demonstrates, feeding the legacy
of the ethical consumerism model. Table 9.1 demonstrates the increasing revenues
of the first entrant in the market, Fairtrade International. If there is anything definitive about fair trade, it seems to be the response of consumers to sustainability
standards, reflected in the increasing rate of Fairtrade sales.
Although the wealth and income generation and allegedly changing realities of
small producers and communities, this socio-economic-environmental change is
also criticised. Fair trade faces criticism for using market tools and language to challenge the same market: the movement’s challenge to the conventional trade model
is accused of limitation because it relies upon commoditisation, and thus it is not
politically activist enough. Fair trade is accused of excessive stringency for the
small producers whose precarious conditions – financial, institutional and organisational – are out of the scope of the requirements for ethical trade. Fair trade is criticised because the proposed fair price higher than market prices for products holding
the fair trade seal creates a surplus that would not return entirely to small producers,
but it is shared along the supply chain with an amount going, for example, to retailers. Fair trade has been criticised for the space given to large corporations as
Starbucks and Nestle, which enjoy of the fairness halo effect of holding the fair
trade labelling but actually purchasing a very small amount of fair trade coffee
(Barratt Brown 2007). It can be observed that the movement is judged both from a
Liberal and a Marxist perspective. This reinforces the relevance of an evolutionary
perspective proposed in this analysis. Fair trade is proposed to be simply seen as an
example from within the market that uses the market language and tools to challenge the same market and produce social change. For doing so, its contribution can
be recognised as a transitional model, able to generate “change from within” and
A. C. Ribeiro-Duthie