Markets with Morals: Why Conservatives Should Embrace Fair Trade and Rethink Capitalism

By David Peterson ’12

How should conservatives think about economics?  For most conservatives today, this question has been settled almost definitively: capitalism and the free market provide the ideal system.  However, as I shall attempt to show, such a system not only violates justice generally, but also undermines the traditional social values that conservatism upholds.  If this is the case, then we as conservatives, out of fidelity to our central principles, need urgently to reconsider our economic practices.  To see this, let us consider the issue of Fair Trade, a movement recently embraced by Princeton in its choice of bananas at student dining halls.

Aimed at developing countries, Fair Trade is motivated by a desire to help workers and producers attain greater sustainability, better wages, and more humane conditions – and such a desire seems quite admirable.  Nevertheless, conservative critics of Fair Trade contend that the movement subsidizes inefficient industries, rather than allowing the free market to bring about the best outcome for all.  Such critics, then, would allow current market conditions to remain.  This criticism, however, is unsound, and is motivated implicitly by two common but specious conservative defenses of capitalism.  Let us examine these in turn.

First of all, there is the argument that, through the natural competition of the market, capitalism ensures that a producer (regardless of his motivations) always acts justly and unselfishly so that his workers and patrons, who might otherwise work or buy elsewhere, are satisfied.  Though prima facie plausible, this argument fails on closer scrutiny.  In the first place, problems of individual action prevent justice from being ensured, particularly in the non-union conditions that Fair Trade seeks to remedy.  For instance, while workers could effect change by refusing collectively to work for an unjust employer, it is not in the interest of each individual qua individual to refuse to work: someone else will surely take the refused job. Exploitation, pitiful pay, and squalid conditions thus come to be accepted as social givens.

But if injustice is not mitigated by capitalism, neither is selfishness.  From the considerations above, it should be manifest that, since producers can be unjust almost with impunity, there are essentially no restraints on selfish behavior. Coupled with the fact that the profit motive serves as the impetus for production in the free market, this means that greed and selfishness are given free rein, engendering grave injustices.  As is clear in the case of many developing countries, capitalism thus turns into a form of tyranny.  This is why movements such as Fair Trade are needed to regulate the market.

Now, a conservative capitalist may in fact agree that injustice and selfishness are not ameliorated under capitalism.  While granting this point, however, he may yet advance the second argument implicit in the above criticism of Fair Trade: capitalism is the most efficient system and leads to the greatest material prosperity.  This might well be true as a factual claim.  But when it is invoked as the normative claim that the end of economics ought to be increased efficiency (and hence material prosperity) alone, deep problems arise.  Why is this so?

Considerations of efficiency, it must be noted, should be taken into account only if the end pursued and the means to that end are not in themselves morally wrong.  But conservative criticisms of Fair Trade fail to meet either requirement.  First, to posit efficiency alone as an end is at best misguided, at worst immoral.  Human trafficking, for example, may represent a very efficient market, but that fact does not overcome the utter depravity of the industry: in fact, it contributes to it.  Likewise, even if the end of an industry is good, the means employed can vitiate that end.  In relation to Fair Trade, then, we must ask: Are the present economic conditions of many developing countries – conditions instrumental to the end of production – unjust and hence immoral?

There is good reason to answer affirmatively.  Just transactions between individuals, or groups of individuals, hinge upon the ability of those making trade agreements to reasonably accept the terms of those agreements.  While such ability may exist within local economies, it becomes practically nonexistent when both prices and the ends of production are imposed by factors external to those economies.  Such an imposition robs producers of information about the market, decreases their ability to change the ends or techniques of production in response to market variations, and, if their products are no longer demanded, can force them to either accept low prices or go bankrupt.  Since all of this is so, conservative appeals to the inefficiency of Fair Trade and to the efficiency of the free market carry no weight.  No amount of efficiency can remedy pervasive structural injustices.

In responding to these conservative defenses, what I take to be the intrinsic problems of capitalism have begun to emerge.  Let me now enumerate these briefly.  First of all, capitalism is exploitative.  This is so not because it creates a division between rich and poor (which it arguably does), but because it systematically provides an advantage to the rich over and against the poor.  The more perfect capitalism becomes, the more workers become mere instruments of production.  Second, capitalism is unjust.  As we have seen, this is because the replacement of local economies with global markets subjects trade agreements to external impositions, thus precluding truly free decisions.  Third, the very success criterion in capitalism is immoral, for it involves the valorization of greed and the accumulation of wealth.  Consequently, even those who are not exploited are themselves locked into an unethical way of life.

This has ominous implications for traditional conservative values.  In the first place, the logic of capitalism tends towards the atomization of society, and with it the destruction of shared values.  As a society comes to possess no conception of the common good over and above personal preference, the formation of communities becomes nearly impossible.  Seeing themselves as divorced abstractly from traditions, individuals start to view society (and other people) as a mere instrument for their personal satisfactions, rather than as a locus of shared meaning.  Fragmented and individualized, society becomes in reality nothing more than just such an instrument.  Moreover, this lack of a common good leads to political impotence, for it becomes extremely difficult for individuals to forge effective political purposes in common.  What results from this fact is that the state increasingly takes control.  Capitalism leads to atomism, and atomism leads to statism.

For conservatives, these structural and consequential problems of capitalism should be cause for an urgent reconsideration of current economic practices, both at home and abroad.  This requires not just critical, but also constructive thought.  While such considerations are beyond the scope of this article, the arguments for Fair Trade advanced thus far may point toward a more humane economics based upon local communities, widespread individual ownership of the means of production, worker cooperative organizations such as guilds, and productivity defined not as profit, but as doing good work.   However inchoate at present, such a vision of economics is, I believe, not so much a flight from conservatism as a return to a fuller and truer embodiment of it.

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