Part 2- Fair Trade vs. Free Trade: A Christian Choice?
Part 2 of 3…
This is the second installment of Cowan’s three-part series.
To Read Part 1 Click HERE
The scale of the fair trade market is tiny compared to the global economy. To which supporters might say at least it’s a start. Yes, it’s a start, but a bad start. Firstly, it favors only those few producers who are able to enter the market. More importantly it fails to deal with the real economic problems that the country the producer is in suffers from. The real problems are corruption in government and in communities, and legal systems that prevent entrepreneurs from rising up in the communities.
There are communities where someone like Trevor would have to pay protection money, just to stay alive. There are countries business regulations are so cumbersome, it would have taken months or even years to get such a venture off the ground.
We can also ask just how good fair trade is for us, as consumers. What the front-men of fair trade are doing is getting us to consume things we don’t need, just as much as the free trade system they are critical of in the first place. A lot of the “new” products they produce are dust collectors. The quality of which is very questionable in many cases. It seems odd that fair trade campaigners attack consumerism by promoting their own, economically questionable, form of consumerism.
I was asked in a class I was teaching a while back, should we not promote local crafts like these in these poor countries? The student asking the question thought it was great that he could go to Africa and see such colorful crafts, and visit real villages. My response was swift. I don’t want to be cynical, but what we are asking consumers in America to do is become poverty tourists. We are to go to poor countries and admire their simple crafts and way of life. Maybe, just maybe, the poor we are looking at want big flat screen TVs too!
If you travel along the klongs of Bangkok, the network of rivers and poor housing of that sprawling city, you can peer into people shacks and see color TVs blaring out. They may live in poverty, but they want many of the same things we want. We don’t get these things by working on such a small scale as fair trade, we get what we want by participating in a major and complex free trade economic system. The problems we see in poor countries need sound economic solutions, not piecemeal, however well intended, solutions.
So much for the economics, what about the morality? If economically fair trade doesn’t do much to help, and there are better ways to help on a small scale, then where is the moral high ground? It is hard to see fair trade becoming the major system of trade, because it is still essentially based on Socialist principles. It aspires to be an alternative to free trade, by rejecting free trade. Can you name one successful socialist economy? It doesn’t exist. Fair trade is the economic equivalent of throwing a few cents to a beggar on the street, rather than finding a way to get the beggar off the street and back into society.
Even more perplexing, where is the faith? My concern is that fair trade is part of a secular search for economic salvation, which is what Socialism and Communism were in the last century. It is new Indulgences for a new Age. Like the Indulgences of the medieval period, reviled so much by the Reformers, fair trade till receipts are becoming secular certificates easing our peace of mind. The poor souls are being taken care of because we have shown how much we care by buying their products. Is this cynical? No, it is being realistic.
In liberal churches, fair trade has effectively attained doctrinal status. Increasingly now, evangelical churches are promoting fair trade goods. We should not fall into this trap. I believe we should recognize an economic realism. This does not mean blessing Capitalism, it just means working with it. Historically, Capitalism has lifted more people out of poverty than any other economic system. Recent economic problems don’t change that, though it will mean that consumers in wealthy countries will become less prepared to pay the subsidy cost of fair trade goods.
What is confused is the notion that given a certain economic problem we ought to do a particular theological thing about it. From the premise that poverty is a bad thing we are offered specific solutions theologically blessed for the greater welfare of all, such as fair trade. The market, it can be argued, is a more efficient means to achieve a proper outcome for the rational economic actor, but this is an economic or political result not a theological one.
As Christians, we are called to live in the world, not to set ourselves apart from it. We help the poor when we participate fully in our economy, as it is and not as we would like it to be. The economy reflects who we are, and if we don’t like what we see then don’t blame the system. The problem is the moral quality of the people. The economy is like a knife. You can use it to cut bread to share or to kill someone. It depends on the person wielding the knife.
Part 3 to Follow…
7 Responses to “Part 2- Fair Trade vs. Free Trade: A Christian Choice?”
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I’m not so certain that free trade does not have at least a theological component. Trade at a profit is mentioned several times in the Bible in a positive light. Psalm 31 gives the picture of a noble wife, much of which is about her ability to trade and make a profit.
We know that Calvin was instrumental in setting up the banking system in Geneva. It seems to me that realizing we live in a fallen world, the free market, uses our propensity to follow our self interest to create good whether we mean to or not. In order to thrive, I have to supply my fellow man with what he wants – this was what Adam Smith famously observed..
Each time I travel I am struck by the fact that total strangers routinely take me to the airport, feed me breakfast, take me to a hotel where other strangers happily provide a room for me. Maybe they are virtuous people, maybe not, but it is in their self interest to provide these wonderful services to me either way.
All other systems of commerce try to coerce people into being virtuous. Free trade works, because it recognizes the fallen nature of man and the world. Any system that assumes any other view of man is doomed to failure. I think that is why fair trade will never become a dominant economic model for pulling masses out of poverty.
What distortion is this? I Quote “Fair trade is the economic equivalent of throwing a few cents to a beggar on the street, rather than finding a way to get the beggar back … into society.” Actually Fair trade means that the person already working gets the profit instead of the corporation doing the “free” trading.
Was the Good Samaritan being a socialist for helping the man on the road? Perhaps instead of giving the innkeeper two Denarii to care for him, he should have billed the traveller for the inn and his own services. There’s nothing wrong with emergency services personnel being paid for their work, but Jesus seems to be saying that there are also times when self-interest should yield to other values. A fair trade purchase will not solve global poverty any more than the Samaritan solved injury, but sometimes compassion without expectation of return is the correct action.
Daniel, the interesting thing about the Good Samaritan is that Jesus does not tell of giving the man the money directly but to the innkeeper, and of course he does not get into trouble in the first place because of his own foolishness but because he is attacked by robbers. You are right though, there are times when we can act compassionately, but since we are not Jesus we rarely act without self-interest in some shape or form – even if that self-interest is our salvation. I do allow room for charity by individuals, but am suspicious of government aid programs, handouts, dependency and entitlements.
Kevin, I think you miss the point. “Fair trade” leads to dependency and false market conditions, and so in the long-term is not about profit but subsidy, and the subsidy leads to development of products set by “free trade” cartel rather than market demand; hence coffee growers expand producing more coffee than people need and so other areas of investment suffer. The big corporations still get their money by branding this so-called care and selling it at a mark-up. A lose-lose situation.
Re Kevin’s remarks. While the producer absolutely should make his profit, so should the trading company – it is not an either or proposition. Distribution channels are just critical to the producer in order to get products to the market. After the fall of the Soviet Union there were almost no distribution facilities in Eastern Europe and crops rotted in the fields to the detriment of both producers and people needing food. The few people with trucks made a killing and rightfully so. Without them, the farmer went broke and the people went hungry.
Just to add a bit of experience in working with “fair trade systems” I would challenge all to look at what actually is happening to the underlying price paid for a product. It is pretty well documented that the farmer or local crafts person does not get much, if any, of the seeming “good Samaritan” mark-up. Instead my experienc in working with local producers is that fair trade tends to force them to the worse quality productivity standards and the pricing is less than true free market would give. We need to see that one effect of “fair trade” is monopolistic practices, with the resulting reduced economic benefits.
I know this is sad, but it is true.
For those of us really interested in aiding development, we need to become active in helping local communities address the corruption and cultural issues that David Cowan highlights. This is tough, hard work. But there are successes and these should be celebrated.