Eric Fichtl

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The Fair Trade Movement in Historical Perspective

Explaining the “In and Against the Market” Predicament



Within the alternative trade movement, the reorientation into the mainstream was met with mixed emotions. For some, entering mainstream conventional retail markets signified a departure from the foundational cause of the movement—the construction of a parallel, alternative trading system based on a set of principles different from the conventional trade system’s imperatives. For others, labeling and mainstreaming meant scalability—the possibility of spreading the fair trade message to a mass consumer segment, entailing the ability to bring many more impoverished producers into the system—and also the chance to “teach by example,” to demonstrate that trade could be conducted differently—more fairly, even better—than the conventional system had thus far managed to do. This is the underlying tension referred to in the polarized phrases—“in and against”, “inside and outside”—that I laid out at the start of this thesis.

In the early 1990s, this disjuncture became reflected in the very name of the movement, which had referred to its activities as “alternative trade” since the earliest stages. As FLO-certified products surpassed traditional “alternative” handicrafts in sales, the movement’s discourse and name shifted to embrace the term “fair trade.” While this phrase clearly emphasized the “fairness” attributes of the products and the terms of trade behind them—a trait that had always been part of “alternative trade” too—there was also a slightly less politicized tone to the term “fair trade.” As IFAT’s Carol Wills explained,

The word “fair” wasn’t the word that was used at all to start with, it was “alternative”; that these types of organization were providing an alternative to conventional international trade which tended to marginalize small producers. I think alternative was rather a good word, because it was alternative in all kinds of ways: cutting out the middleman, trading directly…; alternative distribution channels; alternative work force, volunteers in many cases… But then the word went out of fashion in a lot of countries and tended to get associated with brown rice and sandals and beards… It was just not seen to be the right word anymore. Well, [Britain’s national labeling initiative] the Fairtrade Foundation came in at the beginning of the 90s and the phrase “Fair Trade” began to be more widely used…[180]

In 2005, reflecting the discursive shift from “alternative” to “fair” trade, IFAT changed its name from the International Federation of Alternative Trade to the International Fair Trade Association, although it retained its familiar acronym.[181] The motion to include the word “fair” in IFAT’s name had been opposed at the 2005 IFAT general assembly, but the name change was implemented nonetheless.[182] This semantic shift is indicative of a deeper and ongoing philosophical debate within the movement about where it is headed and what it is doing. And although the tension partly reflects the circumstances of the movement’s origins being simultaneously “from the top” (Northern ATOs) and “from the grassroots” (Southern producers)[183], it should be noted that most of these debates have played out in the global North, and that considerably more research is needed into the views, concerns, and strategic priorities of Southern fair trade stakeholders.

There are two tendencies within the alternative/fair trade movement. On the one hand, there are those who, based on a critical understanding of structural limitations in the conventional capitalist system, have pushed for the gradual construction of a parallel alternative trade system; I call this trajectory the idealist position, which can be linked to the movement’s use of the term “alternative.” On the other hand, there are the advocates of mainstreaming, who are driven by the imperative of maximizing the volume of fair trade and thus the quantity of fair trade’s beneficiaries; I refer to this as the realist position, which is more closely aligned with the use of the term “fair.” Gendron et al have labeled this polarity in the fair trade movement a “clash between a ‘radical and militant’ pole and a more ‘soft and commercial’ one.”[184]

The idealist position has its roots in the early stages of the alternative trade movement—what Tallontire called the goodwill and solidarity stages, or what Fridell calls the first phase of the fair trade network—and corresponds to Gendron et al’s “radical” and “militant” pole. It is rooted in a worldview that sees limited capacity or motivation for conventional traders—whose profits are deeply linked with the maintenance of power asymmetries in trade relations—to provide benefits to highly marginalized producers. To resolve this impasse, proponents of the idealist position began laying the groundwork for an alternative trade system that would bypass conventional trade channels and their related mores by actualizing a network of exchange based on solidaristic ties, direct purchases, mutually agreed pricing, and an avoidance of confrontational or competitive negotiation and practices. This alternative system would thus stand against and outside the conventional system, relying on its own parallel networks of exchange. It is generally understood and accepted among the idealists that the construction of the alternative trade system is a long-term project that may have limited benefits in the short-term, and that for a time it might have to serve more as an exemplar than as a major player in international trade.

The realist position aligns with Tallontire’s mutually beneficial trade, trading partnerships, and marketing of the fair trade brand stages, and with Fridell’s network’s second phase. The realists, while accepting many of the idealists’ structural critiques of conventional trade, also saw limitations in the nascent alternative trade system—particularly with regard to scale. The realists thus sought to develop auditable standards and consumer-facing certification marks which would allow alternative trade to enter the conventional mainstream; they are what Gendron et al have called the “commercial” or “soft” pole of fair trade. The realists’ strategy proposed that, rather than constructing an alternative trade system parallel to the conventional one, the imperative of providing maximized benefits to producers required the fair trade movement to enter the conventional trade system. As the head of the U.S. national labeling initiative, Paul Rice, put it, “We’re about trying to get as many farmers as we can into this model so that they too can get a better price for their products and improve their living standards.”[185] For the realists, the perceived opportunities of embedding fair trade within the market as opposed to outside it included the capacity for rapid scaling up through already existing distribution networks and the chance to act as models which, by highlighting their successes and normative standards, might provoke reform within the conventional system and reorient conventional traders’ “business as usual” practices toward measurable commitments to greater fairness.

A limitation of the realist approach is that fair trade certification, as practiced by the leading realist organization FLO, applies only to the conditions of the producer community and the commodity chain from producer to initial buyer; FLO standards do not impose or imply any conditions on the trading practices of organizations once they have purchased certified fair trade products, which means that large for-profit corporations and conglomerates that do not adhere to the wider principles of the movement can still partake in a limited (from the idealist perspective) form of fair trade alongside more fully committed traders—and it all occurs under the same certification mark. In this regard, the realist position can be seen as one based on meeting an accepted and certifiable set of minimum standards for producer well-being and moving products through the commodity chain, yet which leave room for considerable ambiguity about other aspects of business. Conversely, idealists tend toward a holistic view of fair trade that goes beyond product standards and emphasizes the need for alternative practices throughout the fair trade process. Idealists often implement practices such as cooperative management within their Northern operations, insisting that these conditions should be met by all fair traders and not just Southern producer communities. The idealist position thus tends toward a maximal view of fair trade as a way of being and eschews a minimalist focus on the transactional aspects of trade. IFAT’s FTO mark, launched in 2004, aims to be a label for organizations that adhere to this model of fair trade practice.

Given this philosophical disjuncture, the shift toward mainstreaming of fair trade created several tensions for the movement. Indeed, one of the realists’ perceived advantages of mainstreaming also engendered one of its challenges: the sudden ability of very large and more experienced businesses to partake in the retailing of fair trade products. Small but full-fledged fair traders were threatened as they faced competition from large conventional retailers that had opted to sell labeled fair trade products. In mid 1999, U-landsimporten—then Denmark’s largest ATO and the organization responsible for launching the Danish Max Havelaar fair trade label—saw its own coffee lines pushed off supermarket shelves by conventional retailers’ fair trade labeled coffees.[186] In Canada, Planet Bean, a 100 percent fair trade coffee roaster, encountered difficulties getting supermarkets to stock its coffee since many chains had already opted to carry a single fair trade line distributed by the major Canadian roaster Van Houtte.[187] The ability of conventional traders to procure certified fair trade products as a miniscule percentage of their overall product array, yet to benefit from the ethical “halo effect” of association with fair trade, has been dubbed “fairwashing.”[188] Moreover, where once ATOs had filled the demand for fair trade goods with minimal competition, in the age of mainstreaming ATOs faced a steep learning curve if they were to hold their ground against better capitalized companies with massive promotional budgets and ingrained clout in the conventional distribution networks.

Marketing to a more mainstream audience thus created tensions for fair traders. While quality could certainly be used as a selling point, this product characteristic was not unique to fair trade, nor was it the primary focus of the organizations involved in the marketing. Another complication, noted by Low and Davenport, is that “those motivated to join ATOs do so because they want to promote [fair trade] and improve lives, not because they want to market great-tasting coffee.”[189] As Claudia Salazar-Lewis, a product development manager at Cafédirect, explained,

We want people to buy because it is good quality and once the people start buying it because it is a very good product, then people will start getting the (fair trade) message… It’s not that we wanted to do it that way, it just came out in all the different studies that they are more concerned about the quality of the product than the fair trade element.[190]

Mainstreaming also sparked debate between idealists and realists about the extent to which fair trade principles should apply in the North as well as the South, especially as neoliberal policymaking dismantled worker protections across the board.[191] If the Southern groups that supplied fair trade products must meet criteria about democratic organization and the right to unionize, for example, should Northern organizations also have to meet these standards?

The example of Starbucks as a fair trade licensee provides a useful case study for analyzing a number of the idealist-realist tensions raised by mainstreaming. Starbucks is the world’s largest specialty coffee roaster and retailer; between company-operated stores and licensed franchises, Starbucks has 9,401 retail outlets in the United States, and 3,767 outlets in 38 other countries worldwide[192], logging some 44 million customer visits per week.[193] The company also sells its branded merchandise via an extensive distribution network including supermarkets, bookshops, and other chain retail outlets. Initially, Starbucks opposed the procurement of fair trade coffee, but in 2000 the company did an about-face and began purchasing fair trade coffee amid the threat of nationwide protests organized by the U.S. nonprofit and fair trade advocacy group Global Exchange.[194] In 2001, Starbucks purchased 1 million pounds of fair trade certified coffee.[195] By 2003, this figure had increased to 2.1 million pounds and the company was selling fair trade coffee in its stores both in bags and as its “coffee of the day” once a month.[196] In 2004, Starbucks was the world’s largest single buyer of fair trade coffee[197] and for fiscal year 2006, Starbucks purchased 18 million pounds of fair trade certified coffee, making it the largest buyer, roaster, and retailer of fair trade coffee in North America.[198] In 2004, Starbucks also launched its C.A.F.E. Practices code of conduct that mimicked aspects of fair trade, including a prefinance facility for producers and the payment of premium prices (which have hovered near the FLO-determined fair trade minimum price and in some cases even exceeded it).[199] From a realist perspective, Starbucks’ policy shifts and increased fair trade procurement are signals of success for fair trade in the mainstream, ultimately yielding increased benefit to producers.

For fair trade idealists, while these numbers are undeniably large, Starbucks epitomizes many of the characteristics of the conventional trade system that they long ago set about trying to build alternatives to. Idealists note that Starbucks has long refused to disclose information about the plantations where the bulk of its coffee was sourced and that Starbucks’ much vaunted corporate social responsibility codes lack the rigorous independent verification that fair trade roasters routinely partake in.[200] They also stress that Starbucks is a highly stratified company with massive pay and benefits disparities and a long history of opposing unionization among its staff.[201] Starbucks has also been known to source coffee from plantations where child labor was used and has directly contracted U.S. prison labor for some of its packing operations, among other discordant attributes.[202] All these are anathema to fair trade principles, but because FLO’s standards apply only to producer communities and to the actual transaction between the producer and initial buyer, Starbucks is accepted as a licensee of FLO’s fair trade label. Idealist detractors also note that Starbucks’ fair trade procurement is minimalist, amounting to between 1 and 6 percent of the company’s total coffee procurement.[203]

Given these facts, idealists have argued that fair trade is essentially an ethical shield for Starbucks (and other conventional retailers), allowing them to deflect activists’ criticism and benefit from the fair trade halo effect without committing to the deeper principles of the movement by altering their business practices. Moreover, as Young describes:

Fair trade has also now been adopted by the commercial sector, not as a principle for business, but as a useful marketing tool which differentiates them in the market and has some benefit to the producer too. Fair trade has become one of the tools in the CSR armament rather than a basis for doing business.[204]

The idealist-realist tensions boiled over in 2004, when a group of 100 percent fair trade coffee roasters pulled out of the TransFair USA certification system (the FLO-affiliated national labeling and certification body in the United States) while committing themselves to remain fully fair trade and transparently auditable.[205] As one of the roasters declared at the time, “Without people outside the increasingly corporate-friendly TransFair system pushing for the original vision of a better model, [the movement] will be watered down into nothingness.”[206]

The realist response was delivered by Paul Rice, the director of TransFair USA, who argued, “If a corporate giant roasts a million pounds of fair-trade coffee in one year, they are still doing far more than some of the smaller 100-percent roasters will in their entire history.”[207] Rice’s underlying point was consistent with the realist position that the opportunity to trade at such volumes enabled the maximization of benefit to producers, even as it dismissed longstanding ATOs’ involvement in building the movement. Realist positions like Rice’s have caused discomfort among the more idealist-inclined fair traders. For instance, IFAT’s Carol Wills has noted reluctance among IFAT members to explore closer integration with FLO because of the latter’s mainstream linkages:

Not all fair trade organizations are sure they want to be associated with the FLO certification mark because it’s carried by the likes of Starbucks and others and our members say, “We are not Starbucks and we don’t want to be associated in the minds of consumers with the Starbucks of the world. We believe that those organizations giving the impression that they are Fair Trade somehow dilute Fair Trade.”[208]

The gulf between TransFair USA and the idealist roasters that split from it in 2004 was eventually bridged, but not without some careful posturing by both sides. Rice, speaking much more diplomatically by 2007, said, “I think from Starbucks’ perspective, they are doing a lot. From the perspective of the Fair Trade activist community, I think that there’s a strong feeling that Starbucks could and should do more.”[209] Dean’s Beans, one of the 100 percent fair trade roasters that fell out with TransFair in 2004, neatly encapsulated the idealist take on the realist-idealist tension on their website:

There are only two ways to know that the particular coffee you are drinking is Fair Trade. First, if the package contains a Fair Trade Certified logo from Transfair USA. This organization certifies coffee transactions, not companies. So if you see the Transfair logo on a coffee, you can be sure that the company paid a Fair Trade price for that batch. It doesn’t mean that the company is committed to Fair Trade, has prefinanced anything, has a long term relationship with that farm group or any of the other, deeper commitments of Fair Trade, regardless of the generalized language several Transfair licensees use to describe Fair Trade, and (by association) their own practices. But at least the farmers got a Fair Trade price for that coffee. The second way to be assured that Fair Trade and even broader trade justice practices are undertaken is if the company is a member of the Fair Trade Federation (FTF). FTF coffee members are committed to being 100% Fair Trade, as well as incorporating a host of social and economic justice principles and practices into their businesses.[210]

Despite such instances of discord, these two tangential positions have remained under the same tent even as the tension over the movement’s direction—over whether it is “in or against” the market—remains palpable.[211] In his article discussed earlier in Part 2, Fridell also makes the point that some groups, like Oxfam, have maintained positions which situate them in both the fair trade movement and the fair trade network, simultaneously advocating commodity agreements and state-supported socioeconomic policies (the movement) and promoting the continued growth of voluntarist fair trade activities (the network).[212] I would argue that, within what Fridell calls the fair trade network, the sort of dualism that Oxfam has exhibited is quite widespread, and has manifested itself in the form of the idealist-realist tension. Indeed, the idealist and realist positions are not mutually exclusive, nor are they rigidly polarized. Drawing too strict a dichotomy risks oversimplification by conflating contestations over strategic outlooks with (barely existent) disputes over fundamental values.

A case in point: Many ATOs that subscribe to the idealist goals of constructing an alternative trade system do so while trading products that are certified by the realist organizations. And while labeling has been part and parcel of the drive toward mainstreaming in fair trade, the accompanying standards—and the concomitant ability to transparently audit against these standards—have been one of the movement’s major advances, embedding a set of principles that essentially account for the triple bottom line of business success, environmental sustainability, and labor well-being into a segment of the conventional market system. These standards have also allowed the movement to compare itself favorably in terms of credibility and holism against conventional firms’ more voluntaristic codes of conduct. As Tallontire notes, among the variety of ethical trading and business codes of conduct, “Fair trade is the only approach to responsible trade that actually includes criteria on the terms of trade.”[213] Furthermore, Gendron et al point out that as a result of fair trade’s standards, “companies must now work with a definition of their social performance fixed not only by their public relation specialists, but also by a myriad of NGOs comprising of as many Southern actors as Northern militants” (where “militants” means idealists).[214] Despite concerns about certification’s limitations, idealist members of the movement have benefited both from the system’s credibility and from the increased exposure afforded by the marketing of the fair trade brand carried out in large part by realists. For this reason, most idealist ATOs that trade products in the range of FLO-certified commodities opt to use the FLO labeling system on these products, although many also subscribe to IFAT’s FTO mark standards.

Planet Bean, a small Canadian cooperative company that trades in several fair trade food products, is an example illustrating the interconnectedness of the idealist and realist positions. While Planet Bean is committed to laying the groundwork for an alternative trade system, and entrusts its long-term viability to the formation—with several other cooperatives—of an overarching “mother cooperative” that will create economies of scale in a variety of its operational areas, Planet Bean continues to roast and sell 100 percent TransFair Canada-certified fair trade coffee, as well as chocolates and teas certified by FLO affiliates in Europe, and actively markets its coffee to mainstream supermarket chains.[215]

The critical point is that fair trade actors espousing idealist and realist positions share many of the same convictions and are interdependent to a large extent. This confluence of opinion, despite underlying tensions, is what allowed the leading fair trade associations to develop a jointly accepted definition and strategic intent statement for fair trade in 2001 under the auspices of FINE. Idealists and realists are fundamentally committed to assisting marginalized and impoverished producers through direct purchases, long-term relations, and trade based on mutual respect. Each of the positions holds the core belief in maximizing the return to the primary producer, which distinguishes both of them from conventional traders whose primary objective is maximizing profit. To note these core commonalities is not to say that the idealist-realist tension doesn’t express real differences in fair traders’ beliefs. As even a cursory examination of price calculus—one of fair trade’s most fundamental divergences from conventional trade—makes clear, idealists and realists can differ in practice while concurring on aims.

While some fair trade observers make the mistake of reducing the entire movement to little more than a system of price floors[216], this position ignores the wider principles of the movement. And while FLO has made minimum prices a major aspect of its current fair trade standards, this system has never obtained in the considerable network of trade in handicrafts and cultural goods that comprises a significant—though now minority—portion of the fair trade system. Moreover, there is considerable debate within the movement about the best way to determine “fair” prices. Most in the movement agree that a minimal standard is for the producer to receive a remunerative price, or one that covers the costs of sustainable production. This view has a long history that can be dated at least as far back as Adam Smith, who said “It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.”[217] As Fridell’s argument implied, the experience of the postwar international commodity agreements, with their price bands for staple commodities, was also influential on the thinking of fair traders—particularly FLO.[218] While FLO’s minimum price system is more complex than generally acknowledged (see Appendix 2), including variations for regional costs of living and product quality, researchers Nicholls and Opal offer a simplified version of FLO’s price formula as equal to “cost of production + cost of living + cost of complying with Fair Trade standards”[219] FLO standards also require the payment of a social premium to producers on top of the minimum price, which is directed toward community development projects chosen by cooperatives or disbursed to hired workers for their own livelihood improvement. FLO itself contends that “Fairtrade is a market-responsive model of trade: the farmers only receive the Fairtrade Minimum Prices and Premiums if they have a buyer willing to pay them, and many producer groups continue to also sell in the conventional market.”[220]

Noting the criticism that floor prices may distort market mechanisms[221], researchers Hira and Ferrie have proposed the idea of adjusting the fair trade minimum price from one of guaranteed floor prices to one that, through negotiated agreements, guarantees “a minimal percentage of the final price to farmers, thus preserving the efficiency and flexibility of the price signal to reflect market supply and demand conditions.”[222] The Mexican coffee cooperative La Selva has advocated reducing the fair trade minimum price in the hopes of increasing fair trade demand, while also suggesting that producer participation in fair trade should be for delimited periods of time in order to increase producer incentives to improve operations and diversify their clientele.[223] There are also increasing calls for FLO’s minimum prices to be more fully differentiated vis-à-vis quality, so that fair trade product lines can be segmented at several quality levels and price points.[224]

Many ATOs involved in the trade of handicrafts negotiate prices directly with producers in a collaborative discussion that balances the buyer’s understanding of consumers in Northern markets and the producers’ understanding of their costs of living and production, in a process that resembles a melding of labor and subjective theories of value. As Martha Lynd, a researcher and ATO businesswoman, explains:

We at Maya Traditions together with the weaving groups’ representatives calculate the production costs—the costs of thread and time involved in producing a weaving. We factor in the additional costs for the other materials and the sewing time required to manufacture the weaving into a finished product. By comparing these costs with an estimation of the amount we can charge for the item in the U.S. market, we can determine whether an item will be competitively priced or whether it will be too expensive. We pay the weavers the highest price the business can afford. Part of our fair trade commitment means that we maintain a low markup.[225]

These negotiations can be challenging, as Paul Myers of Ten Thousand Villages explains:

It becomes sensitive at the point where we determine what’s fair, and then we add on our costs, and then the price we need to charge for it at the end is too high. At that point we have to go back to the artisans and say, “We can’t buy it because we can’t sell it at that price.”[226]

Such discussions often lead to small simplifications in product design which result in a price that both parties agree is fair.

Krier, in a survey published by the four composite members of FINE, defined a fair price as one that is “mutually agreed between Fair Trade producers and buyers with the objective of providing a living wage and of covering the costs of sustainable production (all production costs are taken into account).”[227] An alternate view is provided by EFTA’s Marlike Kocken, who has suggested that “it might be better to give up the image of paying a fair price, particularly for handicrafts. It would be closer to reality to say that Fair Trade pays the maximum amount that is feasible on the market.”[228] In short, while there is no firm consensus on the precise definition of a “fair price” within the fair trade movement, idealists and realists do agree on the fundamental points that prices should be remunerative and that profit should not be the primary motivation in trade relations. Indeed, fair trade—of both the idealist and realist variety—is characterized by its overt commitment to the deprioritization of profit-seeking, to the extent that some highly successful fair trade organizations are also nonprofits, while even the newest generation of for-profit fair trade companies prioritize profit only to the extent that it can be achieved while meeting the range of fair trade principles (or, as in the case of Cafédirect’s “fairtrade plus”, exceeding them).

This brief presentation of fair traders’ views about price—while far from exhaustive—is illustrative of the commonalities among realists and idealists even in the absence of complete agreement. Clearly, fair traders in both camps acknowledge that they must respond to market imperatives—but not at the expense of their core values and commitments. Nonetheless, fair traders’ intentional deprioritization of profit maximization has struck some neoliberal observers as suspect. One prominent neoliberal critic, Brink Lindsey, has characterized fair trade—in language not unlike that once reserved for lampooning the strategies of what Fridell called the broader fair trade movement—as another of those “well-intentioned, interventionist schemes to prop up prices above market levels” that ignores “market realities.”[229] However, such critiques of fair trade (based largely on the perceived distorting effect of fair trade’s partial use of floor prices) are not entirely grounded. Beviglia Zampetti has argued that fair trade prices are “not necessarily antagonistic to traditional market-based efficiency maximization”[230] since, as Becchetti and Adriani point out,

The bilateral definition of a price different from the market one has strong microeconomic grounds. We must consider in fact that, traditionally, trade in primary products occurs between a monopolistic/oligopolistic transnational company which buys from a large number of atomistic LDC [less developed country] producers at a price which is affected by the relative bargaining power of the two counterparts. The fair trade price may therefore be ideally considered as the market price which would prevail if the two counterparts would have equal bargaining power and may therefore be viewed as a non governmental minimum wage measure taken by private citizens in developed countries.[231]

Moreover, such neoliberal critiques of fair trade price systems employ an elitist double standard, as Peter Singer elucidates:

Pro-market economists don’t object to corporations that blatantly use snob appeal to promote their products. If people want to pay $48 for a pound (0.45 kg) of Jamaican Blue Mountain coffee because that’s what James Bond prefers, economists don’t object that the market is being distorted. So why be critical when consumers choose to pay $12 for a pound of coffee that they know has been grown without toxic chemicals, under shade trees that help birds to survive, by farmers who can now afford to feed and educate their children?[232]

Ultimately, the more holistic sense of cost accounting to which Singer refers is what alternative traders originally sought to infuse in their trade relations with producers, and is the same one that fair traders have succeeded in injecting into the conventional market—at least as a conceptual challenge to narrowly economic “generally accepted” accounting principles. As Gendron et al have convincingly argued of fair trade,

One must recognize that the incursion of militant action in the economic arena is not without risk, and that commercial logic may alter social movements. However, the inverse is also true: the market can be transformed by the entry of new actors responding to different market logics and free from a typically market rationality… [F]air trade contributes towards the ethical ordering of the market by imposing a framework of reference which will inevitably confront traditional economic actors.[233]

Fair trade can thus be seen as introducing a measurable and auditable social responsibility norm into both business practices and price calculus,[234] and “the ingenious side of fair trade is that it requires no extra effort and limited expense on the part of consumers.”[235]

Further still, it is clear that both idealist and realist fair traders accept the basic Polanyian argument that the formation of a society based on market relations is a construct[236], and as such, it can be re-constructed to encompass and internalize social, environmental, and monetary imperatives that are too frequently dismissed as “externalities” in conventional market discourse. Fair trade’s stated—and independently certified—principles are fundamentally about re-embedding in exchanges the social relations which have been largely abstracted out of such transactions since the creation of “market society”—when, as Polanyi has so eloquently demonstrated, even humans and nature were commodified into labor and land, and assigned prices called wages and rents.[237] Idealist and realist fair traders concur with the Polanyian premise that humans and nature are “fictitious commodities,”[238] that labor and land should not be considered mere economic inputs—and that to exploit them as such cannot be done without drastic social and environmental dislocation and destruction as an inevitable result. Through the normative device of their standards and trade practices, fair traders seek to preclude such destruction of producers and their ecosystems, while enabling consumers who purchase fair trade items to engage in a symbolic yet effectively real re-embedding of social relations across vast distances and international and intercultural borders. As such, fair trade can be seen as a rejection of the narrow and abstracted economistic free market view that, as E. P. Thompson noted, made for “a political economy which diminished human reciprocities to the wages-nexus.”[239]

There are many perspectives from which to approach fair trade’s idealist-realist tension. For a final analytical framework, I turn to Ten Thousand Villages’ Paul Myers, who expresses the predicament in more simplistic, but no less illustrative terms:

Some people come down on the side of mission and some on the side of business. And some say you can’t be both. Most would say you have to be both, but don’t emphasize business too much or you’ll be like everyone else. Others say don’t become too mission or you’ll be like all of the other crowd [of ATOs] who never gets it together.[240]

Combining mission and business, in Myers’ terms—or idealism and realism in mine—is the dual imperative common to all fair traders. But as much tension as it may generate, the realist-idealist polarity is not a strict split in the movement: “the debate is not around the effect of the institutionalization of the fair trade social movement, but rather on how this should be achieved.”[241] Whether entering conventional markets through labeling, or operating as ATOs in alternative distribution networks and competing with conventional retailers for customers, both idealist and realist fair traders operate by a unique set of principles and ensure that, at the very least, the minimally acceptable fair trade standards and terms of trade are met. Thus, the fundamental difference between the positions occurs not so much on the level of everyday practice, despite some differences, but rather on a strategic and temporal level.

The realist position emphasizes pragmatism and possesses (or at least professes) a certain confidence in its ability to both operate within and challenge the conventional system which it critiques; realists believe in practicing fair trade while simultaneously utilizing the conventional market toward their ends and trying to reform it. Initially, a sense of urgency propelled the realist position—a desire to scale up much more quickly than alternative trade had accomplished. Idealists believe that fair trade principles should apply on multiple levels of practice, yet on the whole accept the certification systems and transactional audits of the realist position even as they attempt to construct a parallel system outside conventional channels of distribution. In the idealist position, too, there is a temporal and strategic concern: Is the realist rush to mainstream, idealists wonder, diluting the movement’s ethical underpinnings by affording “unprincipled” opportunists the chance to wear a fair trade fig leaf? Does mainstream fair trade jeopardize the long-term project of building an alternative trade system?

The inherent tension in the alternative/fair trade movement derives from the emphasis that different movement actors have placed on satisfying the priorities of the idealist and realist tendencies. As Gendron et al argue, “it is not the actual institutionalization of fair trade which is being debated [between the ‘militant’ and ‘commercial’ poles], but rather the challenges inherent in finding an economic institutionalization acceptable to social economic movements.”[242] Put differently, the process of fusing the political and economic projects of fair trade has fueled tense debates between the movement’s idealists and realists about the best way forward, but all alternative/fair traders nonetheless concur that the movement must keep growing to increase its influence and impact. In short, the idealist-realist tension is essentially a question of how to accomplish the movement’s objectives, not whether to do so. And I submit that the answer to the oft-posited question is that fair trade is both in and against the market, for strategic and temporal reasons that are completely rational even if utterly perplexing. For now, as fair traders seek to articulate a compromise between the two positions’ more salient distinctions, we must learn to live with this paradox.

Balancing the opportunity costs of pursuing the movement’s strategic objectives via an alternative network or the mainstream system—and deciding how immediate the movement’s results should be—have been a source of much tension in the fair trade movement. But neither the idealist nor the realist position is inconsistent with the larger aims of fair trade. Despite the tension the positions engender when pursued simultaneously, both approaches—and the many interstices and hybrids between them—offer new opportunities for fair trade to expand its impact and to continue providing benefits to disadvantaged producers worldwide.


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Masters Thesis for:
New School, Graduate Program in International Affairs
May 2007
Advisor: Professor Stephen Collier
Reader: Professor David Gold

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