Fair Trade

Dr Mark Hayes

5th March, 2012

(Isa 58:1-9; Matthew 20:1-16)

In the name of the Father, Son and Holy Spirit.

It’s Fairtrade Fortnight and this is a Fairtrade college so it seems appropriate to talk about Fair Trade from a Christian perspective here tonight.

Fair Trade is about people using their spending power to improve the lives of the working poor. The Fairtrade Foundation helps people do this by licensing the use of its blue and green logo on products that meet Fair Trade criteria. Those criteria include a minimum price for the producers together with a premium that goes into social projects for their communities. Last year UK sales of Fairtrade products passed £1 billion for the first time. Those sales generated over £18 million of premium payments on top of minimum prices and altogether 1.2 million workers and farmers benefit from worldwide sales of Fairtrade products.

Our first reading (Isaiah 58:1-9) is uncomfortable for devout chapel-goers who take fasting seriously. Previous speakers in this term’s series of talks have already emphasised the Bible’s call to justice and Isaiah makes it clear that this is not an optional extra. Jesus himself, you may recall, announced at Nazareth at the outset of his ministry that he had come to fulfil this scripture. There is no room in Christianity for a private spirituality which ignores the plight of the poor and down-trodden, although I am not by any means advocating a purely social gospel. Fasting and penitence have their necessary place. Yet how are we to do justice?

One interpretation might be, don’t give up chocolate for Lent, eat more — as long as it’s Fairtrade! More seriously, we heard recently from the College Bursar about the importance, for the welfare of both society and the individual, of a radical commitment to giving. It is right that if we benefit from the rules and chances of the economic game, we should help those less fortunate. Yet we are also called to try and change the rules.

It is important to distinguish Fair Trade from giving. It has been a common misunderstanding, indeed accusation, that Fair Trade means paying over the odds. On the contrary, Fair Trade is not defined by the payment of a premium by the consumer but by the receipt of a premium by the producer. You can have the second without the first because there is a wide margin between consumer and producer prices, not all of which represents unavoidable costs. This is becoming increasingly clear as large companies switch entire product lines to Fairtrade. For example, Cadbury’s and Co-operative chocolate, Sainsbury’s and Co-operative bananas, Waitrose tea, or the vanilla in Ben & Jerry’s ice cream. Fairtrade is about changing the way we do business and changing the balance of power in favour of the working poor. That is where the controversy begins, because unlike philanthropy, Fairtrade challenges the conventional wisdom that business and charity must be kept separate. Ultimately, it challenges the very structure of power and trade relations.

I have a personal stake in Fairtrade. Nearly 20 years ago, on 2 July 1992, in a dingy office in the West End of Newcastle upon Tyne with bars on the windows to keep out the local bandits, Richard Adams and I signed the memorandum of association forming the Fairtrade Foundation. My draft of the principal object of the Foundation was simply “to relieve poverty by encouraging the purchase on beneficial terms of the fruits of the labour of poor people in any part of the world”. The challenge we then faced was to persuade the main development agencies, OXFAM, Christian Aid and CAFOD, together with the Charity Commission itself, that such an activity was charitable in law. This was not an easy task: charities rarely engage in trade as a principal activity, profit-making companies benefit in marketing terms from the label, it was even argued that someone in work in a developing country could no longer be considered poor. Fortunately, at least on this occasion, the Charity Commission deals in law and not conventional wisdom, and with the help of Andrew Phillips, now Lord Phillips, the Foundation was registered as a charity and its remarkable success story began.

If you want to know why the conventional wisdom is that you should not mix business and charity, just consider our second reading (Matthew 20:1-16). It is hard to imagine a better recipe for confusion and bad industrial relations than the example of our generous vineyard owner. The economists will surely point out that the sequel to this story must have been a catastrophic fall in wine production, as next day all the workers hang back until the eleventh hour and hardly any work gets done.

The parable of the workers in the vineyard has been interpreted from many angles and not usually at face value. Yet, while outrageous in business terms and clearly deliberately provocative, it does carry a serious economic message, namely that anyone willing to work is entitled to a living wage. To each according to his need, not just according to his work. And this sheds some light on the essential nature of Fair Trade.

I have already emphasised that Fair Trade is not to be confused with giving. The Fairtrade contract does indeed provide for a social premium to be paid into a community fund. Yet of equal, perhaps greater, significance is the minimum price for the product, a price intended to allow the producer to earn a living wage and to plan ahead.

The core of Fair Trade is not the ethical consumer or the Fairtrade label, important as they both are. The core is the associations of small farmers and other workers who had organised themselve to improve their bargaining power many years before Fairtrade labelling was invented. What the label provided was a mechanism through which these workers’ organisations could reach out directly to consumers who agreed that every worker should be able to feed, clothe and educate their children, receive a minimum standard of healthcare and build a better life for themselves.

As Fairtrade grew into industries that are not organised co-operatively, the Fairtrade contract began to provide support for improved terms and conditions for plantation and factory workers, including the right to collective bargaining. In other words, Fairtrade is about the balance of power between workers and employers and has more in common with trade unionism, minimum wages and the Factories Acts than it does with philanthropy. It is indeed a matter of economic justice.

This, of course, is anathema to neoliberal economists. They oppose Fair Trade for the same reasons they oppose minimum wages, trades unions, and most other forms of ‘interference with the free market’, as they would put it. These economists continue to argue in the Classical fashion that underemployment is, at root, the fault of the workers, not of the economic system as a whole. The Cambridge economist John Maynard Keynes’s careful refutation of the Classical theory of employment in a monetary economy has been ignored, not because it is technically wrong, but because of its radical implications, both for society and for the way we understand and use economic theory. And that is why I am now an academic economist: my personal battle continues on the field of ideas.

Yet a note of caution is in order. All human institutions are provisional and vulnerable to human weakness in its many forms. Fair Trade is not the Kingdom of Heaven on earth. Catholic social teaching does indeed encourage freedom of association by workers and as wide as possible a distribution of economic power in accordance with the principle of subsidiarity. Yet power can always be misused, at any level. Indeed Catholics, of all people, are painfully aware of the consequences of the abuse of power by a tiny minority of our own clergy. The experience of the 1960s and 1970s in this country led to a profound mistrust of unions, sometimes justified. The miners’ strike of the 1980s has left deep scars and divisions across the North of England.

Where Fairtrade has a particular strength from this perspective is that it extends solidarity beyond the groups of workers themselves to include the solidarity of the consumer. Consumers would not support Fairtrade long if the leaders of producer organisations, or indeed of the Fairtrade Foundation, lost sight of their original purpose and pursued their own personal advantage. The first remedy, as always, is transparency. And indeed the Foundation is required by its memorandum of association to research and report on its activities and regularly does so, warts and all. As a legal charity, the Foundation must act in the public interest and furthermore its trustees are themselves appointed by development charities. So we can hope that this unique exercise in mixing business with charity will not degenerate into being captured by special interests. On the contrary, it is a glimpse of what it takes to make a good society.

Fair Trade works. Don’t let any economist persuade you otherwise. Free enterprise is an excellent thing within proper limits, the challenge is to redefine those limits in order to attain a good society. Some of the most impressive entrepreneurs I have ever met are the leaders of workers’ organisations. So be confident that you do make a difference by buying Fairtrade and don’t worry about distorting the free market. The invisible hand, God’s invisible hand, works through us.