Think of the Fair Trade story and chances are that you think of coffee, chocolate or perhaps a Fair Trade jewellery. The first product to carry a mass market fair trade label was coffee from a co-operative of indigenous farmers in Oaxaca, sold to consumers in the Netherlands.
The principles of Fair Trade are simple enough. At its core is the idea that producers, even in the poorest of circumstances, and consumers, even in the richest, can meet each other’s needs through trade and that markets can be reshaped around that act of co-operation. This is embodied in several ways across the Fair Trade movement, and the World Fair Trade Organization label is about the enterprises who produce what we buy – verifying that they and their supply chain is fully committed to Fair Trade.
But what if those rules and business models were applied to an entire economy? Can we have a Fair Trade Economy?
Now is not a bad time to ask that question. In the last year 80% of new wealth went to the richest 1% of the world’s population. Meanwhile, 3.7 billion people who make up the poorest half of humanity got none of that wealth.
Our economy isn’t working as it should. Alongside growth and record profits, we have stagnating wages, spiralling inequality and a planet stretched beyond its limits. We need innovation and fresh ideas and the experience of Fair Trade provides inspiration.
There are three changes which would need to be at the heart of a Fair Trade vision.
1.The terms of trade need to change
The terms of trade determine where money goes and the way businesses deal with each other when they buy and sell products or services. If cocoa and coffee markets pit farmers against each other, rewarding those who are willing to produce a set quality at the lowest price, we are creating conditions that trap people in poverty.
The alternative that Fair Trade presents is trade conducted in a spirit of co-operation and long-term relationships. The elements of this alternative include fair pricing, long-term commitments, transparency and genuine supply chain partnerships.
2.Dispersing economic ownership
It is a commonplace assumption that those who own and control businesses will be investors. As a result, ownership of the economy has narrowed rather than widened.
As the World Inequality Report argues “economic inequality is largely driven by unequal ownership of capital”. If the gains from business go to those who invest financially, rather than those who are involved and invested in other ways in the business, then we have hardwired business to drive inequality.
The Fair Trade world is full of alternatives, where enterprises are owned or controlled democratically by people involved in the business. The Jute Works in Bangladesh, for example, operates with a model of democratic leadership representing workers and producers on boards and management committees.
When you have an enterprise structured equitably it has an effect on business priorities. The outstanding record of gender equality in Fair Trade businesses, far ahead of listed companies, is one illustration. Whether it’s women’s empowerment, sustainable use of natural resources or treating workers fairly, when the owners are involved they can make trade-offs and decisions that are good for the business and society that would otherwise be crowded out in the pursuit of short-term profit.
3.Giving workers and producers a say
Third is a new set of rights for the workforce. Creative Handicrafts in India is a Fair Trade enterprise that’s owned by the factory workers and has a structure where the workers are the priority and have the power. In Argentina and Nicaragua, there is now a specialist programme to finance worker buyouts of mainstream companies called The Working World. Meanwhile, in a range of countries, such as the UK through the accelerator programme Unfound, a new generation of producer-owned technology firms are emerging.
Taken more widely, this is an agenda of ‘one worker, one vote’. The moral purpose is to recognise the fairness of rewarding effort in a workplace with a voice in that workplace.
The trend in today’s economy is the opposite - towards an aggregation of power to the company and away from the workers. If you’ve too much of an imbalance of power then, as Karl Popper argued, you have no freedom of exchange. One of the most radical lessons of Fair Trade is the potential that exists to build trading relationships that overturn assumptions of who has power and who has not.
If making these three changes sounds far-fetched, remember this is exactly how Fair Trade was originally perceived. One supermarket chief said he wasn’t going to stock Fair Trade goods, because ‘only vicars would be mad enough to buy them’. Now, there’s hundreds of Fair Trade products on European supermarket shelves, including the Co-op here in the UK, which has the widest range of any retailer worldwide.
Fair Trade is not a blueprint but an experiment. Fair Trade enterprises are diverse experiments in the question of ‘what if we made business differently?’. There is no standard way of replicating these models, but what they show is that business and markets can dance to a different beat. They can embrace co-operation and solidarity, prioritise goals other than profit maximisation and give real power to people.
So what if the world economy was populated by such enterprises and the rules of business, finance and trade fostered them? What if economic and trade policy shifted from rewarding investors and accommodating big business to dispersing ownership and changing the terms of trade?
We’d bet there’d be less inequality, less poverty and a healthier planet. We can’t make this happen overnight, but we can decide to make a start.