How Does Fair Trade go from inspiring examples to Transforming Capitalism?

Erinch Sahan, an exfamer who now heads the World Fair Trade Organization network, wants to pick your brains about how to transform capitalism

I think I’m sitting on a goldmine of examples that could help efforts to transform business and economies. I lead a global community of 330 real examples of alternative business models. These are the social enterprises that make-up the WFTO community, and I need advice on how they can galvanise efforts to achieve broader change.

Positive deviants like our Fair Trade Enterprises are great. They inspire and support each other whilst having direct impact on the people they’re built to benefit (about 1m workers, farmers and artisans in 70+ countries, north and south). But I joined this community primarily to broaden its impact. This means working with new actors, taking our examples to other movements/thought-leaders and supporting them to drive the economic changes that are so sorely needed.

And the moment seems ripe. Global debates have evolved, new economic thinking has emerged, new challenges (like inequality) have come to the fore and shareholder capitalism is now recognised as driving ever-growing inequality and ecological destruction (it has become supercharged in recent decades). Our WFTO community is well placed to show that alternatives are possible, and explicitly propose models that fundamentally shift the power structures and drivers within businesses themselves.

Alternatives like PODIE in Sri Lanka exemplify our 300+ members. They are structured to give their 2,000 spice farmers majority control on their board and ensure all profits are used to benefit these farmers. Other examples are Township Patterns in South Africa or Global Mamas in Ghana, businesses that exist solely to support artisan-owned producer groups, reinvesting profits for that purpose. Or Maquita in Ecuador, which runs several social businesses, investing all profits to benefit their community and ensures communities are represented on their board. In India, models like Creative Handicrafts and Last Forest demonstrate worker and farmer ownership can compete with profit hungry apparel factories and clothing outlets. Or Mahaguthi in Nepal, which protects its social mission by requiring all profits are reinvested to benefit its workers and artisans. The chief executives of such businesses aren’t pressured to drive down costs and squeeze their suppliers. On the contrary, the workers and farmers are the voices that dominate their board rooms, forcing management to run the business in their interests. You can hear their stories on our podcast series, FairTradio.

Imagine most firms and factories operated like these, giving power and priority to their workers, or that brands invested the value they capture to eliminate their environmental impacts and benefit their communities. Suddenly, we wouldn’t live in a world of cost-cutting and profiteering, but a world where businesses serve a social mission. This would change our economies from one based on greed and inequality to one built to benefit society.

Such a broader transformation needs deep changes in the underlying business ecosystem. This means a transformation in accounting rules, business schools, legislative frameworks (e.g. legal forms), tax codes, business regulations and trade agreements so they truly foster mission-led businesses (rather than profit maximising ones). Perhaps most critical is to reshape financial markets so they’re designed to finance mission-led businesses.

So back to my dilemma: I have a small(ish) team, focused on verifying and supporting our members (the Fair Trade Enterprises). We cannot lead the charge to remake the global business ecosystem, but we can be part of efforts to legitimise and inspire it. Think of us as a Proof of Concept. So who do we need to link up with to catalyse this debate? Should we find a star-economist or academics (e.g. should we chase Piketty or Sachs, trying to get them to use our example to show a new business world is possible) ? Or deepen our links with emerging movements demanding a new economic paradigm, or the social solidarity economy and social economy movements? All these have pros and cons, but we are at least in discussion with all these movements (I speak at their conferences, cross-promote on social media etc). There may be others that should be on our radar also.

The broader Fair Trade movement (beyond WFTO) is itself global and going strong. For instance, there are now over 2,000 Fair Trade towns powered by grassroots groups promoting Fair Trade. This movement focuses on promoting Fair Trade products and achieving practice change in mainstream businesses (including via regulation) – both critically important goals! But what the Fair Trade movement doesn’t focus on is promoting alternatives to shareholder capitalism, nor has it focused on shaping a business ecosystem that would foster such alternatives.

One obstacle is that people think “ah yes, I already know about and support Fair Trade – I drink the coffee/wolf down the chocolate,”. They’re often referring to the commodity certification system. That’s not who we (WFTO) are. We work with our friends who run the Fairtrade commodity system, who offer a solution to any business to buy raw materials like cocoa, sugar or cotton on Fairtrade terms. They work to get Fairtrade products onto the shelves of mainstream supermarkets.

Our approach is a bit different: we bring together businesses that are built in their entirety on benefiting their producers (including all their supply chains, their own premises and their very business DNA). This means the mission is reflected in their core structural features (like board, constitution, profit-distribution model) as well as in their behaviour and in their impacts (this is what our system verifies). We are essentially the social enterprise wing of the Fair Trade movement. But it’s often a challenge to convince people to think beyond commodities and Fairtrade products. This is why we have a communications challenge in getting the attention of movements/advocates/thought-leaders so they understand how we can help.

Our potential to support initiatives to transform economies is huge. But we need to decide where to focus our efforts. I think we have four viable options. Which should be our priority?

OPTIONS

  • Work with academics (research into our models will galvanise the interest of other movements)
  • Focus on the social and solidarity or social economy movements
  • Partner with INGOs to promote these business models in their campaigns and programmes
  • Present Fair Trade Enterprises as part of new economic paradigms

Advice please – and cast your vote (you’re allowed two each)!

Where should WFTO focus its efforts to transform the business environment for fair trade enterprises?

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Comments

14 Responses to “How Does Fair Trade go from inspiring examples to Transforming Capitalism?”
  1. Dustin Johnson

    It will be difficult to achieve transformational change in how businesses are structured without incentives and pressure from governments to adopt new models, so working with progressive policy makers in the North and the South to do so as people turn against shareholder capitalism will be a key component. Politicians like Elizabeth Warren and Bernie Sanders in the US would likely be interested in alternative models and could promote measures that would encourage or require companies to change their structure. I recall that Warren has already spoken some about that sort of move through wanting to require codetermination for American companies, as Germany requires.

  2. Hannah

    Fantastic to see such a large and international network of businesses being proactive about considering themselves an alternative to extractive capitalism!
    One of the key things preventing new economic thinking from breaking through is the way economics and business degrees continue to be taught in classrooms and universities around the world; stifling future generations of economists, policy-makers, and business leaders with narrow, neo-classical and unrealistic assumptions and models. Check out the work of Rethinking Economics (http://www.rethinkeconomics.org/), whose international network of local groups run hundreds of events every year providing a platform for your work to reach potentially thousands of students.
    On social/solidarity economics movements; check out the wonderful think tank CLES; https://cles.org.uk/ – who are looking to expand their work internationally, from the UK where they’ve been working with local councils to change local economic development thinking and practice to keep more value locked in the local communities in which it’s created.
    And lastly, a star-economist/academic to considering connecting with; woman of the hour Kate Raworth, whose just launched a competition (https://www.kateraworth.com/8thwaycompetition/) to find the best economic ideas of 2019, submitting an entry/winning this might help get more public attention on your network.

  3. The fifth option is generating and connecting with consumer demand for “good” products via the social enterprise model of fair trade. (Or perhaps that is part of your number 4.)

    While fair trade products sold by big box stores definitely are positive, most people who shop at one fair trade shop aren’t then connecting with other shops like you get with “location, location, location” with everyday stores at malls or on the street.

    Even with all the opportunities with selling products online and cross-promotion are we tapping the potential to increase the total amount “values-based” shoppers spend across shop for good stores. Creating engines for cross-promotion and efforts that bring in new people who have yet to take action on their theoretical willingness to shop with greater intent seem essential.

    Steven Clift
    http://goodcarts.co

  4. In the beginning… (now why does that sound familiar?) Alternative Trade started because consumer people cared enough to put themselves out there, to help producer people find their ‘voice’ in the global trade conversation.

    And then things got complicated…

    The organizational voices got louder and the people-voices could not be heard anymore.

    Consumers abdicated their responsibility to labels (fashion/ fair trade/ organic) and greedily chasing the bargains and buyers, the margins… we’ve forgotten that we can and should be asking not just the price, but the cost (human and planet).

    It is time we took back our power – committed to personal accountability for everything we buy…

    Maybe it is time for a fairer trade pledge.

    Instead of abdicating our responsibility to organizations and governments, we should work on becoming the solution we want to see (sorry Mr Ghandi !).

    • Now that’s a pledge I can get behind! And business models like the one you founded Rain (Turqle Trading if anyone is interested) demonstrate it is possible to build an entire consumer-facing business around a social mission. It is commercially viable but not profit maximising. This is what’s inspiring. This is what can be a game-changer in reimagining business. And this is what can arm other movements pursuing economic transformation with the examples of what’s possible.

  5. Hi Erinch – I’m sure that these are not mutually exclusive, but I understand the need to focus! The academic one is a challenge. We find that practice is way ahead of research. I feel that we are all relatively small movements and we have to seek like minded fellow travellers as allies. The social economy is part of the potential new paradigm too, but given the strong vested interests of the previous paradigm we need all the friends we can find.
    BTW like Exfamer – almost as good as Britisher!

    • Hi Lucy, yes indeed, it’s a pretty quietly radical idea that we can make business primarily serve interests other than that of financial capital. So we’ll need to rally together with many others struggling to transform economies. I find academics are typically slower, but can help legitimise efforts. And we need exfamers, Britishers and everyone else embracing the idea that we can decide what business is for!

  6. Philipp Kollenda

    Some truly inspiring stories! I have a feeling that to bring such rigorous fair trade models into the mainstream it is necessary to continue the work with labels and certification. The average consumer is lazy (as Rain Morgan pointed out), so instead of trying to convince people individually of the benefit of truly fair trade, maybe a fifth option is to convince labels to include characteristics such as board representation of workers, profit-sharing, etc. in their certification schemes.

    • Yes indeed Philipp, important that certification schemes ask deeper questions about the character and structure of the brands who use their labels. Many companies are stuck in a models of shareholder primacy, and won’t be able to change what they do with their profits, how they distribute power within their company (e.g. on their boards) etc. Such questions will risk alienating multinational brands who are stuck in a model where they can only invest in sustainability if it can lead to greater extraction of profits for shareholders. But I cannot see how we deal with the world’s problems without a focus on these questions of business purpose and power.

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