Sorry, Virginia, there is no such thing as ‘fair trade’

I need to begin here by explaining that I am not specifically referring to ‘Fairtrade’ certification, which clothed in the language of good intentions,[1] bears the hallmarks of a marketing ploy[2] that may do farmers and workers no good at all.[3] My point is deeper, that even with the best of intentions, fair trade cannot be realized.

There are some starting points here. First, at least ninety years ago, in a point I harshly criticize capitalist libertarians for refusing to address, because in fact they don’t care, Max Weber pointed out what he called an elemental fact, that an economic system of exchange inherently privileges whomever has the greater power to say no, and that it does so at the expense of those with a lesser power to say no.[4] To make this more concrete, he essentially argues that in my impoverished and destitute condition, I am vulnerable to exploitation, because I will accept a crappy job, with low wages, and possibly even dangerous working conditions just to survive.[5] Further, because I work long, exhausting hours—assuming I can obtain them—just to subsist, I never get ahead. The exigencies of life being what they are, I am likely to wind up worse off than when I began.

Meanwhile, however, my employer will be profiting handsomely, as when I worked at Luxor Cab in San Francisco, and it seemed that whenever economic and financial conditions were hardest, John Lazar, the president of the company, would show up driving an even more expensive-looking luxury sports car than the one he had before. He was profiting directly from my and other workers’ losses, directly from our misery. And because he is on the right side of the power relationship, he is able to take advantage of opportunities which I do not have access to. His wealth accumulates, he is better off, even as I am worse off. Max Weber recognized this as well, albeit in language that requires you to know what he is saying even before you read it.[6]

In cybernetics, which is subsumed into complexity theory, this is called a positive feedback. When I use this term, I usually add the word destabilizing in parentheses because it is not a system feedback that restores the status quo—that would be negative feedback—but rather one that exacerbates change. When unchecked by negative feedbacks, positive feedbacks typically build on themselves, so over time, change becomes dramatic. In complexity theory, unchecked positive feedbacks eventually upend the system entirely and establish a new system characterized by unforeseeable emergent properties. (This, ultimately, is the hazard of climate change: There is no guarantee or even probability that an emergent ecological system will be one that supports human—or any other—complex life as we know it.)

Thus, as Nick Hanauer points out, widening social inequality actually threatens the rich with revolution[7]:

Seeing where things are headed is the essence of entrepreneurship. And what do I see in our [oligarchs’] future now?

I see pitchforks.[8]

Hanauer also notes that such change occurs unpredictably.[9] We never know with any precision where the tipping point will be.

So it’s fairly easy to accept, as one of my more interesting recent interlocutors did, that an “I’ve got mine” attitude is criminal, or at least anti-ethical. It does not facilitate the basic aim of ethics, which is that we need to work out how to live with each other,[10] but rather is brutal to subaltern folks in the present, and augurs poorly for the longevity of the rich. It yields a contest in which the better off strive not for progress, understood as a general improvement in societal well-being,[11] but rather, on the pretense of merit, seek to protect their own positions at the expense of merit. Hence Christopher Hayes’s argument that meritocracy is self-defeating.[12]

My interlocutor began from a position that effectively acknowledges that social inequality is inimical to ethical trade, a fact that effectively classifies nearly our entire economic system as—his word—criminal. But he continues to believe that ethical trade is possible and did not move from that position.

With this position he clearly differentiates himself from capitalist libertarians, for whom so-called ‘free markets’ and ‘free trade’ are assumed beneficent regardless of power discrepancies and for whom power discrepancies are seen as a necessary motivation. In other words, my motivation for competing to produce more efficiently is that in so doing, I win and, implicitly, you lose. And the threat that somebody else might come along, compete, and provide a good or service more efficiently than I do is what is supposed to prevent me from retaining my position solely on the basis of being rich and powerful—Hayes’s charge summarized above.[13]

The only way the capitalist libertarian argument can work is if there is free access to unlimited resources. This is what I call the Myth of Unlimited Opportunity. It means that there must be no obstacle preventing dissatisfied actors with ability from going out, exploiting wilderness, extracting resources, and, perhaps, individually manufacturing goods, which they may—if they choose—return to the market to trade for other goods and services. Hence Galt’s Gulch in Ayn Rand’s Atlas Shrugged. Hence the notion that workers are dependent upon the purportedly talented and hard-working rich,[14] and thus, especially in the neoliberal version, that corporate monopolies may be seen as benign, while unions are seen as the ‘true’ monopolies, which must be stamped out at any cost.[15]

I rarely bother to argue with capitalist libertarians (or so-called anarcho-capitalists) any more. Their world view romanticizes an individualism that was never practicable, and is even less so on an overpopulated, finite world. My recent interlocutor was more interesting, because he began largely by effectively acknowledging most of the foregoing. So the dispute between us was over whether fair trade was even possible.

Unfortunately, his position simply took ethical conduct as a given. If, in his view, you don’t act ethically, you are a criminal. And this applies to trade as well as to any other endeavor. He never shifted from this position. He was unwilling to question whether ethics are possible in an economic system of exchange.

My position is that an economic system of exchange is ethically impossible, that it is founded in a presumption that actors are motivated by self-interest, again the opposite of an ethical motivation,[16] and the accompanying presumption that societal progress is achieved through the mechanism of an ‘invisible hand.’ That reposes ethical conduct not in humans but rather in this mysterious ‘invisible hand.’

Indeed, the very point of a system of exchange is that it limits freeloading. I offer the fruits of my production (money) for the goods or services that you produce or have produced. In turn, having obtained a quantitatively realized value for your efforts, you may use that money to purchase what you need. But in purist capitalist libertarian and neoliberal theory, I only have such money if I am productive; I cannot survive as a freeloader.

There are lots of problems here. As I have elsewhere pointed out, money is an abstraction. I purchase your goods and services at the cost of reducing you to a quantitative value that treats your human needs as abstract, while I consider my money (an abstraction for property) rather more concretely.[17] The failure to properly value human need is inherently anti-ethical, or as my interlocutor phrased it, criminal. But you have, at least, not given me something for nothing.

At an even more basic level, the concern about freeloading is founded in an attitude toward fellow humans that they are all acting out of self-interest, that they would, if possible, obtain your goods and services at no cost to themselves, presumably through fraud, deception, slavery, or theft. This highlights another fallacy of fair trade, that all actors are presumed equally capable of defending their own interests. In fact, not only may they be handicapped by circumstances as Weber pointed out,[18] but they may simply not have talent for negotiation. Worse, they may not have talent even for marketing themselves so that they act effectively in the marketplace.

This is a matter of painful personal experience for me. I have no talent for marketing; when I attempt to do so, no matter what recipes I follow, I only attract con artists. In truth, I don’t even see how I fit into the market, who might value my abilities, or why. None of that even begins to make sense for me. Further, I have no talent for negotiation; the traumas I have suffered[19] have left me unable to deal with authority, even of the sort that might see my value and hire me. So my experience of the ‘free market’ is almost entirely traumatic, building on and reinforcing my earlier traumas. Now, my only prospect is of being further exploited.

My interlocutor, you may recall, however, was arguing from a position that effectively conceded all that. He acknowledged that power differentials are inimical to fair trade. What he did not acknowledge was the second part of Weber’s point, that even the slightest differential is inherently magnified over time.[20] Which, of course, is the very result we have today, and I would say, for the very reasons that Weber stated.

This means that for ‘fair trade’ to exist, not only must all actors begin on a perfectly and implausibly level playing field, with unlimited access to and equal ability to exploit resources, but they must be equally talented at negotiation and marketing. Which is to say that fair trade is a fairy tale.

  1. [1]Mother Earth News, “What the Heck Does Fair Trade Certified Mean?” June/July, 2008, http://www.motherearthnews.com/homesteading-and-livestock/fair-trade-certified-zmaz08jjzmcc.aspx
  2. [2]Dan Welch, “Fairtrade beans do not mean a cup of coffee is entirely ethical,” Guardian, February 28, 2011, http://www.theguardian.com/environment/green-living-blog/2011/feb/28/coffee-chains-ethical
  3. [3]University of London, “Research finds Fairtrade fails the poorest workers in Ethiopia and Uganda,” May 24, 2014, http://www.soas.ac.uk/news/newsitem93228.html
  4. [4]Max Weber, “Class, Status, Party,” in Social Theory: The Multicultural and Classic Readings, ed. Charles Lemert, 4th ed. (Boulder, CO: Westview, 2010), 119-129.
  5. [5]see also George Kent, Ending Hunger Worldwide (Boulder, CO: Paradigm, 2011).
  6. [6]Max Weber, “Class, Status, Party,” in Social Theory: The Multicultural and Classic Readings, ed. Charles Lemert, 4th ed. (Boulder, CO: Westview, 2010), 119-129.
  7. [7]Nick Hanauer, “The Pitchforks Are Coming… For Us Plutocrats,” Politico, July/August, 2014, http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html
  8. [8]Nick Hanauer, “The Pitchforks Are Coming… For Us Plutocrats,” Politico, July/August, 2014, http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html
  9. [9]Nick Hanauer, “The Pitchforks Are Coming… For Us Plutocrats,” Politico, July/August, 2014, http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014.html
  10. [10]Philip Kitcher, The Ethical Project (Cambridge, MA: Harvard University, 2011).
  11. [11]See, for example, Paul Krugman, “Who Wants a Depression?” New York Times, July 10, 2014, http://www.nytimes.com/2014/07/11/opinion/paul-krugman-who-wants-a-depression.html
  12. [12]Christopher Hayes, Twilight of the Elites: America After Meritocracy (New York: Crown, 2012).
  13. [13]Christopher Hayes, Twilight of the Elites: America After Meritocracy (New York: Crown, 2012).
  14. [14]Ayn Rand, Atlas Shrugged (1957; repr., New York: Plume, 1999).
  15. [15]Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics (Princeton, NJ: Princeton University, 2012).
  16. [16]Philip Kitcher, The Ethical Project (Cambridge, MA: Harvard University, 2011).
  17. [17]David Benfell, “Money is even more broken than I thought,” Not Housebroken, June 25, 2014, https://disunitedstates.org/?p=6449
  18. [18]Max Weber, “Class, Status, Party,” in Social Theory: The Multicultural and Classic Readings, ed. Charles Lemert, 4th ed. (Boulder, CO: Westview, 2010), 119-129.
  19. [19]David Benfell, “The ‘American’ Way,” Not Housebroken, July 5, 2014, https://disunitedstates.org/?p=6471
  20. [20]Max Weber, “Class, Status, Party,” in Social Theory: The Multicultural and Classic Readings, ed. Charles Lemert, 4th ed. (Boulder, CO: Westview, 2010), 119-129.

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