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The conscientious consumer

Anuradha Shenoy  |  New Delhi 

Students of international economics have, in the last three decades, invested substantial time in drawing diagrams to illustrate the and The storyline these theorems espoused was simple.
All countries should only focus on producing those goods domestically in which they had a comparative advantage in terms of factors of production. Goods that could be produced outside at lesser cost, should be imported without any tariffs.
Protectionist policies would prove more expensive for countries. Free markets in equilibrium, resulting from a system of free trade, would promote aggregate global welfare. A higher would follow for all countries.. hooray!
We bought the story. So did Mexico. It joined in the 1980s.
Unfortunately, everyone did not live happily ever after. What happened? Mexico, reeling from its worst inflationary spiral and greater wage inequality after joining NAFTA, was interested in knowing the answers. The rest of the world, experiencing much the same effects, was equally curious.
Suddenly, economists saw light. Social distribution mechanisms in developing countries, they discovered, were not on a par with Western standards. The result? Free trade wasn't really fair. Within countries, brokers and middlemen were exploiting marginalised producers.
By employing child labour on zero wages, producers made huge profits. Global protests followed. 'Free trade' debates moved to 'fair trade' debates with a focus on social distribution mechanisms in the early 1990s.
and Charlotte Opal's book, Fair Trade: Market-driven Ethical Consumption documents the "Rise", the "Present" situation and the "Impact" of the Fair Trade Movement. While the small font tends to be stressful on the eyes, the content of the book is an easy read, intended for a lay-audience.
Thankfully, theoretical supply and demand charts are kept to a bare minimum. Instead, there are several country case-studies, richly depicted, which are extremely informative. Different countries, different commodities, different people, but one striking common denominator. Free trade has actually given several developing countries a raw deal.
The book has several assets. Trade policy is documented from the perspectives of several stakeholders: corporate, advocacy, NGO, government, producer and consumer views are all well documented.
The authors also provide solutions to some issues, which include purchasing directly from marginal producers, as well as providing them with access to market information and credit. Finally, a chapter on the marketing of fair trade: its recommended branding and communications strategy would be an enjoyable read for any advertising professional.
However, from an academic standpoint, the book could have been strengthened if it had placed itself within a discussion of the three development paradigms: neoclassical economics, dependency theory and world-systems theory.
As eminent political commentator Allison Graham had said, "where you sit determines where you stand." The authors here argue their case from within a dependency paradigm. The problems as well as the solutions, as any well-informed student of political economy will tell you, would be completely different within a neoclassical or world-systems paradigm.
Further, a brief chapter in ethical paradigms the authors used to guide their discussion would have been exceptionally helpful. For example, are they using Amartya Sen's or John Rawls' philosophical framework?
Sen, the principal proponent of integrating the disciplines of economics and ethics, is sorely conspicuous by his absence, all the more so given his renowned views on social distribution mechanisms.
Moreover, terms such as "price ceilings" and "lower interest rates" freely abound in the list of solutions. They sound suspiciously like the socialist protectionist policies of yore. Does fair trade, then, mean that the wheel has turned full circle ? Questions all left unanswered.
Still, the book leaves a mark. Last week, I bought a bar of imported chocolate. Before buying it, I found myself flipping it over to see if there was a fair trade certification mark on it. I'm pleased. I've moved up two notches in the consumer typology that Nicholls and Opal depict on page 186, from being a 'Do what I can Consumer' to being a 'Conscientious Consumer'.
Not quite up there yet, the ultimate badge being that of the 'Global watchdog' (an ethical hardliner)... but still, aren't these minor differences in individual practice those that shape major differences in state policy? I think Mexico would agree.
and Charlotte Opal
Sage Publications
Price: £22; Pages: 277


First Published: Wed, August 31 2005. 00:00 IST