The myth of fair trade
Fair-trade initiatives, known by a variety of names, are promoted as a way of alleviating the suffering of people in the Third World by insulating poor producers from the downward pressure on prices caused by global market competition. Proponents argue that fixed prices for their commodities allow fair-trade producers to pay their workers a living wage, hire adults instead of children, produce in a way that is better for the environment and local communities, and ensure that the conditions of production can be reliably reproduced.
It’s easy to understand the appeal. The suffering that capitalism inflicts on billions, paired with the feeling of powerlessness that ordinary people experience, is embedded in the philosophy of fair trade: that Western consumers have the power to make the marketplace moral.
In reality, fair trade has dismally failed to make an impact on global inequality, which is now worse than ever before. Take just one area, child labour. According to a 2021 International Labour Organization and UNICEF report, the number of child labourers has risen to 160 million worldwide, 70 percent of whom are engaged in the agricultural sector. The same report found that in sub-Saharan Africa alone, the number of child labourers has grown by 16.6 million in the last four years. Most of this labour is unpaid. The failure of ethical consumerism and fair-trade initiatives to make even a dent on this exploitation should tell us much about the system we’re up against and the methods that will be needed to challenge it.
Fair trade proposes an easy fix for global capitalism. The problem, however, is not at the consumer end of the process, but at the very beginning. For capitalists producing chocolate, paying workers less means selling chocolate cheaper. And because there are lots of other capitalists producing and selling the same or similar products, there’s a constant, inescapable downward pressure on production costs—and one of the biggest costs is labour.
The result of this pressure is evident in today’s chocolate industry. According to a 2015 US Department of Labor report, 2.1 million child labourers work in West African cocoa production. According to the World Economic Forum, most cocoa farmers earn less than USD$1 per day, below the extreme poverty line.
The obvious solution to this impoverishment is to redistribute the wealth of the global chocolate industry, which has annual revenues of some US$130 billion. But most chocolate companies, no matter how much they are criticised, are unwilling to pay more for cocoa because to do so would give their competitors a price advantage. To end the slavery in chocolate manufacturing would go against fundamental capitalist logic.
The minority of companies that don’t employ child labour are sometimes able to survive on the fringes. Tony’s Chocolonely, for instance, prides itself on producing “100% slave free chocolate”. But as Tony McCoy, spokesman for the World Cocoa Foundation, pointed out in an interview with the Washington Post, this is possible only on a very small scale, because the company sources only a few thousand tonnes of the 5 million tonnes of cocoa produced across the world.
More recently, the NL Times, a Netherlands-based news website, reported that Tony’s Chocolonely has been removed from a US list of slavery-free chocolate producers because the company has recently expanded and begun collaborating with Barry Callbaut, one of the big seven cocoa companies considered responsible for entrenching slavery.
In a statement responding to the move, Tony’s Chocolonely said, “Most chocolate companies don’t know how many cases of illegal labour there are in their cocoa value chain and therefore cannot do anything about it”.
Proponents of fair trade argue that you can “vote with your dollar” and search out more ethical companies. But it’s impossible to purchase a morally virtuous capitalism. World poverty is a product of a global system dominated by the concentration of capitalist wealth and power in the global North and smaller concentrations in the global South.
To get rid of this poverty will require directly challenging those in charge of that wealth, in every country. Production and distribution can’t be organised ethically because exploitation and oppression don’t begin with First World consumption habits. The blame lies with those who set these dynamics in motion, and have organised the system according to their first priority: profit.
While many proponents of fair trade are well meaning, the fair-trade industry itself is often anything but. Fair trade turns the moral outrage of Western consumers into a commodity that big brands can purchase in the form of fair-trade certification. For brands such as confectionery giant Mondelez, the decision to buy into such certification models is not made on a moral basis. Rather, as Peter Whoriskey reports in the Washington Post, it’s a means of shoring up their consumer base and evading criticism for their persistent use of child labour in Ghana and the Ivory Coast.
In response to criticisms over the past decade, the major chocolate companies have pledged to buy increasing amounts of cocoa certified by Fairtrade, Rainforest Alliance or UTZ. But, as reported in Whoriskey’s investigation, both the certifiers and the chocolate companies have been forced to acknowledge that such certifications have been totally inadequate in eradicating child labour. Whoriskey quotes a 2017 Nestlé report that summarises the weakness of such schemes: “Put simply, when the [certification] auditors came, the children were ushered from the fields and when interviewed, the farmers denied they were ever there”.
Even the certification itself has become a commodity subject to market competition. In the race to compete with its global chocolate rivals, Mondelez has since found a cheaper way to paper over its involvement in slavery, establishing the in-house fair-trade certification CocoaLife. With even less accountability than Fairtrade, CocoaLife allows Mondelez the same cover for the same crimes, at a cut price. Ethical certification, rather than fixing the problem of competition, often gives cover to companies that continue to profit from the most exploitative and oppressive of production methods.
Advocating for fair trade means fundamentally accepting the logic of the market as a means to solve inequality. This has consequences that go far beyond inducing guilt in consumers. For example, due to the limited impact of fair trade on prices, non-governmental organisation Oxfam has called for extra initiatives to raise prices on commodities such as coffee beans. Responding to a slump in coffee prices two decades ago, Oxfam published a briefing paper arguing for “the destruction of 15 million bags of low-grade coffee in exporting countries to reduce exports and stocks”.
This obscene capitalist practice of destroying consumable goods to make their production more profitable, famously described in John Steinbeck’s Grapes of Wrath, is pitched as a crucial component in reducing poverty. In reality, commodity slumps caused by supply exceeding demand are a routine expression of a system that produces for profit, rather than for human need. Fair-trade strategies, rather than challenging the most obscene aspects of capitalist production, can exist comfortably alongside them.
The alternative to fair trade is understanding that oppressed workers and small farmers are not simply victims, but potential fighters for their own liberation. Paying an extra dollar for chocolate isn’t going to save anyone. As consumers, we have no power to change the world. Either you purchase the products of their pre-existing system, or you purchase the apparently ethical alternatives, which rarely do a thing to challenge inequality.
Ending global poverty and exploitation will require a joint struggle against the concentrations of power and wealth in both the global North and South that dominate global production and reproduce oppression. Winning that struggle means rejecting the idea that we can civilise capitalism, or use the market against itself.
