MAAE's Thesis Fairness in Fair Trade

KATHOLIEKE UNIVERSITEIT LEUVEN

Fairness in Fair Trade:

More Justice in Order to Make Fair Trade! An Ethical Approach from “A Theory of Justice” to Fair Trade’s Practices.

Master in Arts in Applied Ethics Academic Year 2006-2007

INSTITUTE OF PHILOSOPHY

AND FACULTY OF THEOLOGY

Jezús Martínez [email protected]

Promoter: John Verstraeten

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FAIRNESS IN FAIR TRADE: MORE JUSTICE IN ORDER TO MAKE FAIR TRADE!

An Ethical Approach from “A Theory of Justice” to Fair Trade’s Practices

Preface ...................................................................................................................................................... 4 The Law of Peoples ................................................................................................................................. 5

Why Peoples and not states? ................................................................................................................................ 5 Cooperative Organizations................................................................................................................................... 6 Duty of Assistance ................................................................................................................................................ 7

A. Part One -Theory- A Theory of Justice ............................................................................ 9 §1. Justice as Fairness ............................................................................................................................ 9

§1.1. Traditional Conceptions of Justice ........................................................................................................... 11 §1.2. Formal Justice and Pure Procedural Justice............................................................................................. 12

§2. The Principles of Justice................................................................................................................ 13 §2.1. Two Principles of Justice .......................................................................................................................... 14 §2.2. The Principle of Efficiency....................................................................................................................... 15 §2.3. The Difference Principle (the second principle of justice) ..................................................................... 16

§2.3.1. The Principle of Redress ................................................................................................................... 17 §2.3.2. The Principle of Mutual Benefit....................................................................................................... 18 §2.3.3. The Principle of Fraternity................................................................................................................ 18

§3. Principles for Individuals ............................................................................................................... 19 §3.1. The Principle of Fairness .......................................................................................................................... 19 §3.2. The Natural Duties .................................................................................................................................... 20 §3.3. Permissions ................................................................................................................................................ 20

§4. The Original Position ..................................................................................................................... 21 §4.1. The Circumstances of Justice ................................................................................................................... 21 §4.2. Formal Constraints of the Conception of the Right ................................................................................ 22 §4.3. The Veil of Ignorance ............................................................................................................................... 23 §4.3. The Rationality of the Parties ................................................................................................................... 24

§5. The Definition of Good for Plans of Life (Goodness as Rationality)...................................... 25 §6. The Principles of Rational Choice (short-term) ........................................................................ 25 §7. Deliberative Rationality................................................................................................................. 26

B. Part Two - Practice - Fair Trade .................................................................................... 29 §8. Fair Trade........................................................................................................................................ 29

§8.1. Evolution .................................................................................................................................................... 30 §8.2. A Brief Chronology in Fair Trade ............................................................................................................ 31

§9. Fair Trade Today ........................................................................................................................... 32 §9.2. Fair Trade’s Principles and Objectives .................................................................................................... 33 §9.3. Worldwide Movement .............................................................................................................................. 34

§10. Max Havelaar................................................................................................................................ 36 §10.1. Max Havelaar and Multinational Companies (MNCs) ......................................................................... 38

§11. Fair Trade in France.................................................................................................................... 40 §11.1. National Activities within Fair Trade .................................................................................................... 42 §11.2. Political Movement, Support and Legal Framework ............................................................................ 44

§12. World Trade Organization (WTO) & Fair Trade .................................................................. 46 §13. The Impact of Fair Trade ........................................................................................................... 47

§13.1. Fair Trade goes along with other Movements. ...................................................................................... 49

MAAE’s Thesis: Fairness in Fair Trade: More Justice in order to Make Fair Trade!

An Ethical Approach from “A Theory of Justice” to Fair Trade’s Practices by Jezús Martínez 3

§14. Inequalities in Fair Trade ........................................................................................................... 49 C. Part Three - Applied Ethics - Business Ethics................................................................ 52

§15. Ethical Trade & Fair Trade........................................................................................................ 52 §15.1. “To each his own” (suum cuique tribuere) ............................................................................................ 54

§16. Humanisation of business............................................................................................................ 55 §16.1. Corporate Social Responsibility: a Humanistic strategy within Business Ethics?.............................. 56 §16.2. The Socratic Method ............................................................................................................................... 57 §16.3. The Aristotelian Principle ....................................................................................................................... 59

§17. On Justification: A Theory of Justice & Fair Trade .............................................................. 61 §17.1. The Principles of Moral Psychology...................................................................................................... 61 §17.2. Moral Development for Producers ......................................................................................................... 62 §17.3. Moral Development for Consumers....................................................................................................... 63

§18. Fair Trade in the Original Position ........................................................................................... 65 D. Justice in Fair Trade...................................................................................................... 68 E. Provisional Conclusions................................................................................................. 70

Bibliography: ...................................................................................................................... 71 Annex 1............................................................................................................................... 74

Annex 2............................................................................................................................... 76 Annex 3............................................................................................................................... 80 DIAGRAM OF THE PRINCIPLES OF JUSTICE 1.............................................................................................................28 TABLE 1: FAIR TRADE INTERNATIONAL ORGANIZATIONS............................................................................................ 32 TABLE 2: COMPARISON OF ‘TRADITIONAL’ FAIR TRADE AND ETHICAL TRADE ............................................................ 53 TABLE 3: BELGIAN CONSUMERS: FAIR TRADE BELIEFS, ATTITUDES AND BUYING BEHAVIOUR. ................................... 64

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Preface The core of this thesis focuses on whether fairness is actually applied in fair trade. For this, I have studied the theory of justice by John Rawls, in which I found that its principles and conceptions might contribute to do this. The fair trade movement is not a new thing for me as I studied it in the course of Ethics in Organizations four years ago, during my Bachelors in International Trade. Since that time, I have been working along with it, from producers in my home country, passing through fair trade associations in France until personally becoming an active fair-trade consumer. Throughout this paper, I will try to analyze the main question that concerns me: is it truly evident that fair trade is fair? I think that it is a lack of congruence being call “fair” or “just” while it often seems that fairness is not carried out in the process, when equality of opportunity for producers and consumers is not respected and when the people who have the most disadvantages are not beneficiated through this idea of fair trade. Furthermore, with the Master in Applied Ethics Program, I was taught, among other things, about A Theory of Justice, an ethical theory that is part of the social contract theory. Justice is a virtue, but can be seen as a social ideal, a political virtue and nowadays considered as an economical feature in trade. Therefore, merely as intuition and imagination, I would like to integrate the principles of justice into the fair trade movement. However, the former belongs to philosophy and the latter to human practices, the aim is to exemplify a discipline of applied ethics, specifically that of business ethics The following paper is divided into three parts: the first part is dedicated to explain several concepts of the theory of justice. That is, justice as fairness and other concepts of justice, the principles of justice and the original position and the rational choice of the parties. The second part is dedicated to the fair trade movement where I follow the idea that fair trade is in evolution. In this way, my claim of balancing equity and applying fairness in fair trade through the principles of justice could be possible through its evolution in the future. I shall take the example of fair trade in France, the role of Max Havelaar and other associations of fair trade. One section will be dedicated to the World Trade Organization, which can be a threat to the development of fair trade and the last section of the second part, I mention the inequalities and the impact of fair trade. The third part is the justification of applying the principles of justice into the fair trade movement. This is followed by the idea of moral development, which can be reached through the right practices of fair trade. Further, I mention the differences between ethical trade and fair trade and how these movements of the modern economy contribute to business ethics. The central idea of discussing business ethics through these practices is for the sake of humanizing business, in this sense it may be possible to have business activities for the benefit of humanity.



Before describing A Theory of Justice, I would like to introduce The Law of Peoples written by John Rawls in order to justify my interpretation of using John Rawls’s ideas. My plea to apply the principles of justice into the fair trade movement has an universal meaning -not only focusing in a domestic case or national framework- therefore through The Law of Peoples, I shall mention the importance of using peoples instead of states, the social cohesion of cooperative organizations and the duty of assistance from wealthier nations to burdened societies.

The Law of Peoples John Rawls wrote The Law of Peoples in 2001, in which he develops a political conception of the right and justice that applies to the principles and norms of international law. He uses the term “Society of Peoples” to mean all those people who follow the ideals and principles of the Law of People in the mutual relations. I shall only briefly mention few conceptions of The Law of Peoples: My aim here is to clarify that John Rawls through A Theory of Justice considered only its principles in a domestic case (however, Rawls’s Theory of Justice in §58, indicated how justice as fairness can be extended to international law), whereas in The Law of Peoples he applies another reasoning and principles in an international framework. Rawls proposes considering five types of domestic societies: The first is reasonable liberal peoples; the second, decent peoples, third, outlaw states and, fourth, societies burdened by unfavourable conditions. Finally, fifth, there are societies that are benevolent absolutisms: they honour human rights; but, because their members are denied a meaningful role in making political decisions, they are not well-ordered (as contrary to the liberal and decent people: “well-ordered society”)1. Through this thesis I propose the interactions of peoples from different countries and cultures with differences in social and economical status; it is the interaction of different types of domestic societies as Rawls suggested. In regard to burdened societies, the essential question is, how far liberal or decent peoples owe a duty of assistance to these societies? The aim of The Law of Peoples would be fully achieved when all societies have been able to establish either a liberal or a decent regime, however unlikely that may be. This is what John Rawls calls a Society of Peoples. According to John Rawls, both A Theory of Justice and Political Liberalism try to say how a liberal society might be possible and, on the other hand, The Law of Peoples hope to say how a world Society of liberal and decent People might be possible2.

Why Peoples and not states? One essential thing in The Law of Peoples is that John Rawls applies his ideas to the people/citizens instead of states/government. In contrast to states, how people see themselves

1 The Law of People, p. 4. 2 Ibid, 6.

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as free an equal and their fundamental interests, is the baseline of equality to establish citizens as citizens and peoples as people in The Law of Peoples. These interests of liberal people are specified by their reasonable conception of political justice. Thus, they strive to protect their political independence and their free culture with its civil liberties, to guarantee their security, territory, and the well-being of their citizens. This interest (as Rousseau calls amour-propre3) is a people’s proper self-respect of themselves as people, resting on their common awareness of their trials during their history and of their culture with its accomplishments. What distinguishes people from states is that just peoples are fully prepared to grant the very same proper respect and recognition to other peoples as equals4. This reasonable sense of due respect, willingly accorded to other reasonable people, is an essential element of people’s ideas who are satisfied with the status quo for the right reasons. The interests that move peoples (and distinguish them from states) are congruent with a far equality and a due respect for other people5.

Cooperative Organizations In addition to agreeing to the principles that defines the basic equality of all people, the parties will formulate guidelines for setting up cooperative organization and agree to standards of fairness for trade as well as certain provisions for mutual assistance. In the second and third part of this paper, I shall argue that social cooperation among the parties is crucial to succeed in the framework of fair trade. I shall consider only one of these organizations6, which is relevant in order to exemplify my aim of applying fairness in fair trade practices:

“Consider fair trade: suppose that liberal peoples assume that, when suitably regulated by a fair background framework, a free competitive-market trading scheme is to everyone’s mutual advantage, at least in the longer run. A further assumption here is that the larger nations with the wealthier economies will not attempt to monopolize the market, or to conspire to form a cartel, or to act as an oligopoly (See further discussion of Max Havelaar §10). With these assumptions (and supposing as in the Theory of Justice that the veil of ignorance holds), so that no people knows whether its economy is large or small, all would agree to fair standards of trade to keep the market free and competitive (when such standards can be specified, followed, and enforced). Should these cooperative organizations have unjustified distributive effects between peoples, these would have to be corrected, and taken into account by the duty of assistance7”.

3 Ibid. 34. 4 Ibid. 34-35. 5 Ibid. 62. 6 Cooperative Organizations (4.5) Ibid. 42. 7 Ibid. 42.



Duty of Assistance The principles among free and democratic principles8:

1. Peoples are free and independent, and their freedom and independence are to be

respected by other peoples. 2. Peoples are to observe treaties and undertakings. 3. Peoples are equal and are parties to the agreements that bind them. 4. Peoples are to observe a duty of non-intervention. 5. Peoples have the right to self-defence but no right to instigate war for reasons other

than self-defence. 6. Peoples are to honour human rights. 7. People are to observe certain specified restrictions in the conduct of war. 8. Peoples have a duty to assist other peoples living under unfavourable conditions

that prevent their having a just or decent political and social regime. The last principle is especially controversial, and it is indeed this principle that I will describe: the long-term goal of (relatively) well-ordered societies should be to bring burdened societies, like outlaw states, into the Society of well-ordered People. Well-ordered peoples have a duty to assist burdened societies. It does not follow, however, that the only way, or the best way, to carry out this duty of assistance is by following a principle of distributive justice to regulate economic and social inequalities among societies. Most such principles do not have a defined goal, aim, or cut-off point, beyond which aid may cease. A society with few natural resources and little wealth can be well-ordered if its political traditions, law, and property and class structure with their underlying religious and moral beliefs and culture are such as to sustain a liberal or decent society. There are three guidelines to carry out the principle of duty of assistance from liberal or decent society to burdened society: The first guideline to consider is that a well-ordered society need not be a wealthy society. Rawls recall here three basic points about the principle of “just saving” (within a domestic society) as it was elaborated in A Theory of Justice”§44.

a) The purpose of a just (real) savings principle is to establish (reasonably) just basic institutions for a free constitutional democratic society (or any well-ordered society) and to secure a social world that makes possible a worthwhile life for all its citizens.

b) Accordingly, savings may stop once just (or decent) basic institutions have been established.

c) Great wealth is not necessary to establish just (or decent) institutions. Thus the levels of wealth among well-ordered people will not, in general, be the same.

These three features of the saving process discussed in A Theory of Justice bring out the similarity between the duty of assistance in the Law of People and the duty of just saving in the domestic case9.

8 Ibid. 37. 9 Ibid. 106-107.

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The second guideline for thinking about how to carry out the duty of assistance is to realize that the political culture of a burdened society is all-important; and that, at the same time, there is no recipe, certainly no easy recipe, for a well-ordered people to help a burdened society to change its political and social culture. The crucial elements that make the difference are the political culture, the political virtues and civic society of the country, its members’ probity and industriousness, their capacity of innovation, and much else. Crucial also is the country’s population policy: it must take care that it does not overburden its lands and economy with a larger population that it can sustain, the emphasis on human rights and the status of women are also important elements. The third guideline for carrying out the duty of assistance is that its aim is to help burdened societies to be able to manage their own affairs reasonably and rationally and eventually to become members of the Society of well-ordered People. This defines the “target” of assistance. After it is achieved, further assistance is not required, even though the now well-ordered society may still be relatively poor10. The question is whether the principle has a target and a cut-off point. The duty of assistance has both: it seeks to raise the world’s poor until they are either free and equal citizens of a reasonably liberal society or members of a decent hierarchical society. That it is its target. It also has by design a cut-off point, since for each burdened society the principle ceases to apply once the target is reached11. Until here, I started this paper with John Rawls’s The Law of Peoples; therefore, I will proceed with the conceptions and ideas of A Theory of Justice. Clearly, I only mentioned –the duty of assistance & cooperative organizations- to consider this thesis along with the work of John Rawls, as a plausible approach including domestic and international cases.

10 Ibid. 11. 11 Ibid. 119.



A. Part One -Theory- A Theory of Justice “It is a peculiarity of men that they possess a sense of just and unjust and that their sharing a

common understanding of justice makes a polis”

Aristotle In 1971, the American philosopher John Borden Rawls (1921-2002) published A Theory of Justice. Its main idea is to develop justice, holding its two fundamental principles of justice, in terms of fairness. Justices as Fairness (1958) was the title of another works that John Rawls had previously published. It is an early version of his two principles of justice, by which persons should agree to assess and reform in their shared practices. Basically in presenting A Theory of Justice, John Rawls brings together his political and philosophical ideas expressed in previous papers12. In the Theory of Justice, John Rawls develops a hypothetical situation that will be the point of departure of his social theory of justice as fairness. In this situation, the two principles of justice applied to the primary subject of justice that is named by the author -the basic structure of society. In order to apply the theory of justice, it is necessary to understand its principles, the original position, the conception of right, the conception of the good, and other related concepts that form part of it. Rawls’ Theory of Justice certainly is not only based on political grounds, it is part of the moral philosophy following the most important utilitarian – Hume and Adam Smith, Bentham and Mill, and of course, the traditional theory of the social contract represented by Locke, Rousseau, and Kant. My aim in describing these concepts is to reach the relevant information, which I shall apply in the second part. Therefore, I will try to give a philosophical panorama of the theory of justice using the most important principles, conceptions and ideas.

§1. Justice as Fairness To begin with, I shall say the first assumption - justice as fairness - is the core of the theory of justice. Our topic is that of social justice in which justice is the first virtue of social institutions. A conception of social justice is to be regarded as providing, in the first instance, a standard whereby the distributive aspects of the basic structure of society are to be assessed. A conception of justice for the basic structure is worth having for its own sake, and therefore, justice seems to be a social ideal13. The guiding idea is that the principles of justice for the basic structure of society are the object of the original agreement. They are the principles that free and rational persons, who wish to further their own interests, would accept an initial position of equality as defining the fundamental terms of their association. These principles are to regulate all further agreements;

12 “Distributive Justice: Some Addenda” (1968), “Constitutional Liberty” (1963), “Distributive Justice” (1967), “Civil Disobedience” (1966), and “The Sense of Justice” (1963). 13 John Rawls, A Theory of Justice, p. 9.

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they specify the kinds of social cooperation that can be entered into. This way of regarding the principles of justice is, as Rawls calls it: justice as fairness14. In order to explain the propriety of the name “justice as fairness”, it does not mean that the concepts of justice and fairness are the same. Rather, it conveys the idea that the principles of justice are agreed to in an initial situation - the original position - that is fair. Justice as fairness begins with one of the most general of all choices which persons might make together, namely, with the choice of the first principles of a conception of justice which is to regulate all subsequent criticism and reform of institutions. One feature of justice is to think of the parties as rational and mutually disinterested (but not egoists). They are conceived as not taking an interest in one another’s interests. Then, having chosen a conception of justice, we can suppose that they are to choose a constitution and a legislature to enact laws, and so on, all in accordance with the principles of justice initially agreed upon. Our social situation is just if it is such that, by this sequence of hypothetical agreements, we would have contracted into the general system of rules which defines it. In working out the conception of justice as fairness, then, one main task clearly is to determine which principles of justice would be chosen in the original position. It may be observed that once the principles of justice are thought of as arising from the original agreement in the situation of equality, it is an open question whether the principle of utility15 would be acknowledged. For now, the persons in the initial situation or the original position would choose two rather different principles: the first requires equality in the assignment of basic rights and duties, while the second holds that social and economic inequalities (e.g., wealth and authority), are just only if the result benefits are for everyone, and in particular for the least advantaged members of society. The intuitive idea according to Rawls is that since everyone’s well-being depends upon a scheme of cooperation without which no one could have a satisfactory life, the division of advantages should be such as to draw forth the willing cooperation of everyone taking part in it, including those less well situated. In justice as fairness, the original position of equality corresponds to the state of nature in the traditional theory of social contract16. Justices as fairness is an example of what John Rawls calls a “contract” theory. A contract view holds that certain principles would be accepted in a well-defined initial situation. The merit of the contract terminology is that it conveys the idea that principles of justice may be conceived as principles that would be chosen by rational persons and, in this way, the conception of justice may be explained and justified. A theory of justice is, therefore, part of the rational choice. In addition, the term “contract” suggests plurality; the principles of justice applied to the relation among persons or groups and these principles are acceptable by all parties upon the advantages of social cooperation. Rawls assures that the most appropriate conception of this situation does lead to principles of justice contrary to utilitarianism and perfectionism (I will not go deeper in explaining the

14 Ibid. 11. 15 “The greatest happiness for the greatest number of people” 16 Ibid. 11.



differences between these ethical theories, although it will be clear enough that the social contract of justice as fairness uses both theories but it is an alternative approach in ethics), and therefore that the contract doctrine provides an alternative to these views. Even still, justice as fairness is not a complete contract theory: it is clear that the contractarian idea can be extended to the choice of more or less an entire ethical system, that is, to a system including principles for all the virtues and not only for justice17. I would say that justice as fairness is meant to be a fair state of affairs among all the parties in an initial situation. For this reason, justice is a political virtue that rules the social contracts established by, and for, the social cooperation of society. The conception of justice as fairness plays the role of social justice. As long as I explain Rawls’ concepts of the right and the good, we will reach a general conception of justice. Something to bear in mind is that in justice as fairness the concept of right is prior to that of the good.

§1.1. Traditional Conceptions of Justice Before describing in detail the elements of the theory of justice, I will briefly mention the traditional meanings of justice. Two traditional concepts of justice in the Western culture are: firstly, Aristotle’s definition of justice and secondly, a conception of justice by the Catholic Church. Going back to the Ancient Greece, justice concerns affected most of the human areas: marriage and family life, education, economics, politics, ethics, religion, the nature of knowledge and reality, and human destiny. Whether we have a natural desire to act justly is found in The Republic of Plato. It is exemplified by the allegory of “Ring of Gyges18” in which main concern is to know if the unjust person is better off than the just person. Socrates replied (to his chief opponent in dialogue, Thrasymachus) the contrary; he argued that the just person is better off and happier than the unjust person (I will not go further into this dialogue, but it gives an introduction of what is justice within the Greek thought). More specifically, Aristotle’s sense of justice, and from which the most familiar formulation is derived, is that of refraining from pleonexia. That is, from gaining some advantages for oneself by seizing what belongs to another: his property, his reward, his office, and the like, or by denying a person that which is due to him: the fulfilment of a promise, the repayment of a debt, the showing of proper respect, and so on19. It is evident that this definition is framed to apply to actions, and the persons are thought to be just insofar as they have, as one of the permanent elements of their character, a steady and effective desire to act justly. Aristotle’s definition clearly established an account of what properly belongs to a person and of what is due to him.

17 Ibid. 17. 18 The Republic of Plato (359c-360e). 19 Nicomachean Ethics. 1129b-1130b5.

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Furthermore, we find in the Catholic social teachings, with much philosophical reflection, three dimensions of basic justice: commutative justice, distributive justice and social justice20. Commutative justice calls for fundamental fairness in all agreements and exchanges between individuals or private social groups. It demands respect for the equal human dignity of all persons in economic transactions, contracts, or promises. Distributive justice requires that the allocation of income, wealth, and power in society be evaluated in light of its effects on persons whose basic material needs are unmet. If persons are to be recognized as members of the human community, then the community has an obligation to help fulfil these basic needs unless an absolute scarcity of resources makes this strictly impossible. Justice also has implications for the way the larger social, economic, and political institutions of society are organized. In this sense, social justice implies that persons have an obligation to be active and productive participants in the life of society and that society has a duty to enable them to participate in this way. This form of justice can be also called “contributive”. Furthermore, Catholic social thought recently stated: “justice demands that social institutions be ordered in a way that guarantees all persons the ability to participate actively in the economic, political, and cultural life of society21”. Neither of these two approaches contradicts Rawls’ definition of justice as fairness. In the ancient Greek conception such entitlements derive from social institutions, whereas the latter one states that social institutions will be ordered in such a way that benefits social and economic inequalities. Rawls’ definition is designed to apply directly to the most important case, the justice of the basic structure. Therefore, there is no conflict with the traditional notions of justice. Until here, justice as fairness has been defined as an initial conception of a theory of justice. I have chosen the interpretation of justice as fairness developed in the theory of justice because it corresponds to the main concern of my thesis: fairness in fair trade. Looking ahead in the theory of justice, justice as fairness is applied for a well-ordered society – a pluralistic society. Hence, differences in moral, philosophical and religious worldviews could still come into conflict. Justice as fairness avoids this conflict establishing a neutral and above all, a fair interpretation of justice to all the parties within a contractarian doctrine.

§1.2. Formal Justice and Pure Procedural Justice In order to deepen into a conception of justice, Rawls gives a variety of different meaning; I shall describe two conceptions of justice that allow me to better explain rules and principles within social institutions. We may call formal justice to the impartial and consistent administration of laws and institutions whatever their substantive principles are engaged to. Formal justice requires that in their administration laws and institutions should apply equally. That is, equally in the same way to those belonging to the classes defined by them. Formal justice is adherence as a principle, or as some have said, “obedience to system”. In addition, formal justice in the case

20 The contribution of the Catholic Church (text from the American Bishops). “Economic Justice for All”. B) Justice and Participation p. 595 -597. 21 Ibid. 597.



of legal institutions is simply an aspect of the rule of law, i.e. a legal system is a coercive order of public rules addressed to rational persons for the purpose of regulating their conduct and providing the framework for social cooperation. The rule of law supports and secures legitimate expectations, e.g., the principle of legality. Basically, formal justice or “of obedience to system”, can be seen as the substantive justice of institutions and the possibilities of their reform. Furthermore, Rawls describes another concept of justice that is related with the second principle of justice, specifically to fair equality of opportunity. As it has been said, the basic structure is the primary subject of justice then, the problem of distributive shares is a matter of pure procedural justice22. This concept is extremely important to apply justice as fairness. The notion of pure procedural justice is best understood by a comparison with perfect and imperfect justice. Two characteristic features of the former: first, there is an independent criterion for what is a fair division; a criterion defined separately from and prior to the procedure which is to be followed. Second, it is possible to devise a procedure that is sure to give the desired outcome. To illustrate perfect procedural justice, the simplest case of fair division, e.g., cake division: assuming that the fair division is an equal one, which procedure, if any, will give this outcome? The essential thing in this case is that there is an independent standard for deciding which outcome is just and a procedure guaranteed to lead to it. Imperfect procedural justice, on the other hand, is exemplified by a criminal trial. The desired outcome is that the defendant should be declared guilty if, and only if, he has committed the offence with which he is charged. Even though the law is carefully followed, and the proceeding fairly and properly conducted, it may reach the wrong outcome: the injustice springs from no human fault but from a fortuitous combination of circumstances which defeats the purpose of the legal rules. Its characteristic mark is that while there is an independent criterion for the correct outcome, there is no feasible procedure which is sure to lead to it. Pure procedural justice is obtained when there is no independent criterion for the right result: instead there is a correct or fair procedure such that the outcome is likewise correct or fair, whatever it is, provided that the procedure has been properly followed. In order, therefore, to apply the notion of pure procedural justice to distributive shares, it is necessary to set up and to administer impartially a just system of institutions. Only against the background of a just basic structure, including a just political constitution and a just arrangement of economic and social institutions, can one say that the requisite just procedure exists. Now, with these conceptions of justice that Rawls’s theory of justice utilizes, I shall proceed with the principles of justice thereof.

§2. The Principles of Justice The theory of justice may be divided into two main parts: (1) an interpretation of the initial situation and a formulation of the various principles available for choice there, and (2) an

22 Rawls. TJ. 85.

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argument establishing which of these principles in fact be adopted. In this part, the two principles of justice for institutions and other principles for individuals are to be explained. The primary subject of the principles of social justice is the basic structure of society, the arrangement of major social institutions into one scheme of cooperation. The principles of justice for institutions must not be confused with the principles which apply to individuals and their actions in particular circumstances.

§2.1. Two Principles of Justice First Principle: Each person is to have an equal right to the most extensive total system of equal basic liberties compatible with a similar system of liberty for all. Second Principle: Social and economical inequalities are to be arranged so that they are both: (a) to the greatest benefit of the least advantaged, and (b) attached to position and offices open to all under condition of fair equality of opportunity These principles primary apply to the basic structure of society; they are to govern the assignment of rights and duties and to regulate the distribution of social and economic advantages. They distinguish between those aspects of the social system that defines and secure the equal liberties of citizenship and those that specify and establish social and economic inequalities. Roughly speaking, the basic liberties of citizens are political liberties (the right to vote and to be eligible for public office), together with freedom of speech and assembly; liberty of conscience and freedom of thought; freedom of the person along with the right to hold (personal) property; and the freedom from arbitrary arrest and seizure as defined by the conception of the rule of law. These liberties are all required to be equal by the first principles, since citizens of a just society are to have the same basic rights. The second principle applies to the distribution of income and wealth and to the design of organizations that make use of differences in authority and responsibility, or chain of command. While the distribution of wealth and income need not to be equal, it must be to everyone’s advantage, and at the same time, position of authority and offices of command must be accessible to all. These principles are to be arranged in a serial order (Rawls calls it, “lexical order23”) with the first principle prior to the second. This ordering means that a departure from the institutions of equal liberty required by the first principle cannot be justified by, or compensated for, by greater social and economic advantages. The distribution of wealth and income, and the hierarchies of authority, must be consistent with both the liberties of equal citizenship and equality of opportunity. Thus, the priority rule24 reads as follows: 23 Ibid. 42, (§8). And explained further in page 541 (§82). 24 Ibid. 250, (§39).



The principles of justice are to be ranked in lexical order and therefore liberty can be restricted only for the sake of liberty. There are two cases: (a) a less extensive liberty must strengthen the total system of liberty shared by all, and (b) a less than equal liberty must be acceptable to those citizens with the lesser liberty The general conception of justice imposes no restrictions on what sort of inequalities is permissible; it only requires that everyone’s position be improved. For the present, it must be observed that the two principles are a special case of a more general conception of justice that can be expressed as follows: “All social values –liberty and opportunity, income and wealth, and the bases of self-respect- are to be distributed equally unless an unequal distribution of any, or all, of these values is to everyone’s advantage25”. The fact that the two principles apply to institutions has certain consequences. First of all, the rights and liberties referred to by these principles are those which are defined by the public rules of the basic structure. Whether men are free is determined by the rights and duties established by the major institutions of society. Liberty is a certain pattern of social forms. The first principle simply requires that certain sort of rules, those defining basic liberties, apply to everyone equally and that they allow the most extensive liberty compatible with a like liberty for all. The only reason for circumscribing the rights defining liberty and making men’s freedom less extensive that it might otherwise be is that these equal rights as institutionally defined would interfere with one another. Another thing to bear in mind is, since it applies to institutional forms, the second principle (or rather the first part of it) refers to the expectations of representative individuals. This expectation indicates their life prospects as viewed from their social station, and in general, expectations change. The assumption is that expectations are connected: by raising the prospects of the representative man in one position we presumably increase or decrease the prospects of representative men in other position.

§2.2. The Principle of Efficiency This principle is simply that of Pareto optimality26 (as economist refer to it) formulated so as to apply to the basic structure. This principle was not originally intended to apply to institutions but to particular configuration of the economic system, for example, to distributions of goods among consumers or to modes of productions. The principle of efficiency holds that a configuration is efficient whenever it is impossible to change it so as to make some persons (at least one) better off without at the same time making others persons (at least one) worse off. Thus a distribution of stock of commodities among certain individuals is efficient if there exist no redistribution of these goods that improves the circumstances of at least one of these individuals without another being disadvantaged. The

25 Ibid. 62. 26 (1906) Named after Italian sociologist and economist Vilfredo Pareto (1848-1923), Pareto optimality is a situation which exists when economic resources and output have been allocated in such a way that no-one can be made better off without sacrificing the well-being of at least one person. http://www.economyprofessor.com/theorists/vilfredopareto.php (revised on 27/11/07).

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organization of production is efficient if there is no way to alter inputs so as to produce more or some commodity without producing less of another. Now, the principle of efficiency can be applied to the basic structure by reference to the expectations of representative men (it is concerned to the second principle of justice). An arrangement of rights and duties is efficient if and only if it is impossible to change the rules, to redefine the scheme of rights and duties, so as to raise the expectations of any representative man (at least one) without at the same time lowering the expectation of some other (at least one) representative man. An arrangement of the basic structure is efficient when there is no way to change this distribution so as to raise the prospect of some without lowering the prospect of others. The principle of efficiency cannot serve alone as a conception of justice (since efficiency is to be balanced against equity!). Therefore it must be supplemented in some way. Before turning to the next principle, the difference principle, there is another concept that I shall take into account, that of natural aristocracy. On this view no attempt is made to regulate social contingencies beyond what is required by formal equality of opportunity, but the advantages of persons with greater natural endowments are to be limited to those that further the good of the poorer sectors of the society. The aristocratic ideal is applied to a system that is open, at least from a legal point of view, and the better situation of the favoured by it is regarded as just only when less would be had by those below, if less were given to those above. In this way, the idea of noblesse oblige27 is carried over to the conception of natural aristocracy.

§2.3. The Difference Principle (the second principle of justice) This principle is the most important one from a moral point of view28. Combining the principle of fair equality of opportunity with the difference principle we reach a democratic interpretation. The difference principle is a strongly egalitarian conception in the sense that unless there is a distribution that makes both persons better off (limiting ourselves to two-persons for simplicity), an equal distribution is to be preferred. This principle removes the indeterminateness of the principle of efficiency by singling out a particular position from which the social and economic inequalities of the basic structure are to be judged. Assuming the framework of institutions required by equal liberty and fair equality of opportunity, the higher expectations of those better situated are just if and only if they work as part of a scheme which improves the expectations of the least advantaged members of society. The intuitive idea is that the social order is not to establish and secure the more attractive prospects of those better off unless doing so is to the advantages of those less fortunate.

27 The Italic style is made by John Rawls. 28 Ibid. 82.



Moreover, Rawls gives two concepts that apply directly to the difference principle: chain connection29 and close-knitness. Meaning that inequalities in expectations are chain-connected; that is, if an advantage has the effect of raising the expectations of the lowest position, it raises the expectations of all position in between. Thus the expectations are close-knit; that is, it is impossible to raise or lower the expectation of any representative man without raising or lowering the expectation of every other representative man, especially that of the least advantaged. An important point to be noted here is that the difference principle is compatible with the principle of efficiency. For when the former is fully satisfied, it is indeed impossible to make any one representative man better off without making another worse off, namely, the least advantaged representative man whose expectation we are to maximize. Thus justice is defined so that it is consistent with efficiency, at least when the two principles are perfectly fulfilled. Justice is prior to efficiency and requires some changes that are not efficient in this sense. Consistency obtains only in the sense that a perfectly just scheme is also efficient.

§2.3.1. The Principle of Redress We should note that the two principles of justices lead to express an egalitarian conception of justice. In this sense, the difference principle gives some weight to the considerations singled by the principle of redress, but the difference principle is not of course the principle of redress. This is the principle that undeserved inequalities call for redress; and since inequalities of birth and natural endowment are underserved, these inequalities are to be somehow compensated for. This principle holds that in order to treat all persons equally, to provide genuine equality of opportunity, society must give more attention to those with fewer native assets and to those born into the less favourable social positions. The idea is to redress the bias of contingencies in the direction of equality. It is plausible to say, as most such principles are only as a prima facie principles, on that is to be weighted in the balance of others. There is another way to deal with it. The basic structure can be arranged so that these contingencies work for the good of the least fortunate. Thus we are led to the difference principle if we wish to set up the social system so that no one gains or lose from his arbitrary place in the distribution of natural assets or his initial position in society without giving or receiving compensating advantages in return. The natural distribution is neither just nor unjust; nor is it unjust that men are born into society at some particular position. These are simply natural facts. What is just or unjust is the way that institutions deal with these facts. The social system is not an unchangeable order beyond human control but a pattern of human action. In justice as fairness men agree to share one another’s fate. In designing institutions they undertake to avail themselves of the accidents of nature and social circumstance only when doing so is for the common benefit. This common benefit leads me to the next principle.

29 Ibid. 81.

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§2.3.2. The Principle of Mutual Benefit The difference principle expresses a conception of reciprocity. It is a principle of mutual benefit. Assuming chain connection, each representative man can accept the basic structure as designed to advance his interests. The social order can be justified to everyone, and in particular to those least favoured; and in this sense it is egalitarian. It seems necessary to consider in an intuitive way how the condition of mutual benefit is satisfied. To illustrate this: consider two representative men A and B, and let B be the one who is less favoured. Now B can accept A’s being better off since A’s advantages have been gained in ways that improves B’s prospects. If A were not allowed his better position, B would be even worse off than he is. The difficulty is to show that A has no ground for complaint (See Nozick argument in Annex 3). Perhaps he is required to have less that he might since his having more would result in some loss to B. Now, what can be said to the most favoured man? To begin with, it is clear that the well being of each depends on a scheme of social cooperation without which no one could have a satisfactory life. Secondly, we can ask for the willing cooperation of everyone only if the terms of the scheme are reasonable. The difference principle, then, seems to be a fair basis on which those better endowed, or more fortunate in their social circumstances, could expect others to collaborate with them when some workable arrangement is a necessary condition of the good of all. Moreover, there is a natural sense in which the harmony of social interest is achieved; representative men do not gain at another’s expense since only reciprocal advantages are allowed. Thus it is to realize the ideal of the harmony of interests on terms that nature has given us, and to meet the criterion of mutual benefit, that we should stay in the region of positive contributions.

§2.3.3. The Principle of Fraternity There is a further merit of the difference principle. It provides an interpretation of the principle of fraternity. Fraternity is held to represent a certain equality of social esteem manifested in various public conventions, as well a sense of civic friendship and social solidarity. The difference principle, however, does seem to correspond to a natural meaning of fraternity: namely, to the idea of not wanting to have a greater advantages unless this is to the benefit of others who are less well off, e.g., the family in its ideal conception. Once we accept it, we can associate the traditional ideas of liberty, equality, and fraternity with the democratic interpretation of the two principles as follows: liberty corresponds to the first principle, equality to the idea of equality in the first principle together with equality of fair opportunity, and fraternity with the difference principle. In this way there is a place for the conception of fraternity in the democratic interpretation of the two principles, and we see that it imposes a definite requirement on the basic structure of society. The others aspects of fraternity must not be forgotten (ties of sentiments and feelings), but the difference principle expresses its fundamental meaning from the standpoint of social justice.



I have considered the principles which apply to institutions or, more exactly, to the basic structure of society. However a complete theory of right, as the theory of justice belongs, needs principles for individuals to be chosen as well.

§3. Principles for Individuals Basically, the principles of individuals are divided in two: obligations and natural duties. With an accurate interpretation of Bradley’s phrase: “the individual is a bare abstraction30”, Rawls says that a person’s obligations and duties presuppose a moral conception of institutions and therefore that the content of just institutions must be defined before the requirements for individuals can be set out. Meaning that the principles for obligations and duties should be settled upon after those for the basic structure. Therefore, I shall use the same interpretation; in order to apply justice as fairness in fair trade, the principles of justice would apply first to the institution of fair trade and therefore it is possible to establish those principles that will be chosen, namely obligations and duties, to the individuals. The principles of the theory of justice, I believe, are the benchmark that would support fair trade’s movement. And, not only is important the choice of individuals who follow these principles as an exercise of their practical reasoning, but most of all, of its institutions which role is indispensable to set up a fair agreement for all the parties. I shall pursuit the social practices of fair trade in part two, for now, I shall explain the first obligation for individuals in a theory of justice: the principle of fairness.

§3.1. The Principle of Fairness This principle is to account for all requirements that are obligations as distinct from natural duties. The principle of fairness holds that a person is required to do his part as defined by the rules of an institution when two conditions are met: first, the institutions is just (or fair), that is, it satisfies the two principles of justice; and second, one has voluntarily accepted the benefits of arrangement or taken advantage of the opportunities it offers to further one’s interests. The main idea is that when a number of persons engage in a mutually advantageous cooperative venture according to rules, and thus restrict their liberty in ways necessary to yield advantages for all, those who have submitted to these restrictions have a right to a similar acquiescence on the part of those who have benefited from their submission. We are not to gain from the cooperative labours of others without doing our fair share (this is a problem of conventional trade in the market economy, in part three I will take this issue §15.1.). The two principles of justice define what is a fair share in the case of institutions belonging to the basic structure. So if these arrangements are just, each person receives a fair share when all (himself included) do their part. By definition the requirement specified by the principles of fairness are the obligations. There are several characteristic features of obligations which distinguish them from other moral

30 See F.H. Bradely, Ethical Studies, 2ND ed. A Theory of Justice p. 110.

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requirements. For one thing, they arise as a result of our voluntary acts; these acts may be the giving of express or tacit undertaking, such as promises (e.g., the rule of promising) and agreements (e.g., the principle of fidelity), but they need not be, as in the case of accepting benefits. Further, the content of obligations is always defined by an institution on practicing the rules of which specify what it is that one is required to do. And finally, obligations are normally owed to definite individuals, namely, those who are cooperating together to maintain the arrangement in question.

§3.2. The Natural Duties There are many natural duties, positive and negative. The following are examples of natural duties: the duty of help another when he is in need or jeopardy, provided that one can do so without excessive risk or loss to oneself; the duty not to harm or injure another, and the duty to inflict unnecessary suffering. The first of these duties -the duty of mutual aid- is a positive duty in that it is a duty to do something good for another; whereas the last two duties are negative in that they require us not to do something that is bad. The distinction between positive and negative duties is intuitively clear in many cases, but often gives ways. The distinction is important only in connection with the priority problem, since it seems plausible to hold that, when the distinction is clear, negative duties have more weight than positives ones. In contrast with obligations, it is characteristic of natural duties that they apply to us without regard to our voluntary acts. That is, they have no necessary connection with institutions or social practices; their content is not, in general, defined by the rules of these arrangements. A further feature of natural duties is that they hold between persons irrespective of their institutional relationships; they obtain between all as equal moral persons. In this sense the natural duties are owed not only to definite individuals, say to those cooperating together in a particular social arrangement, but to persons generally. This feature suggests the particular property of the adjective “natural”. In justice as fairness, one fundamental natural duty is the duty of justice. This duty requires us to support and to comply with just institutions that exist and apply to us. It also constrains us to further just arrangement not yet established, at least when this can be done without too much cost to ourselves. Thus, if the basic structure of society is just, or as just as it is reasonable to expect in the circumstances, everyone has a natural duty to do his part in the existing scheme. Each is bound to these institutions independent of his voluntary acts, performative or otherwise. Thus even though the principles of natural duty are derived from a contractarian point of view, they do not presuppose an act of consent, express or tacit, or indeed any voluntary act, in order to apply. We should note that, since the principle of fairness may establish a bond to existing just arrangement, the obligations covered by it can support a tie already present that derive from the natural duty of justice. Thus a person may have both a natural duty and an obligation to comply with an institution and to do his part.

§3.3. Permissions



Rawls says very little about another kind of principles for individuals, the permissions. Permissions are those acts which are at liberty both to do and not to do. They are acts which violate no obligation or natural duty. Among permissions, many such actions are morally indifferent or trivial, but there is an interesting class of supererogatory actions. These are acts of benevolence and mercy, of heroism and self-sacrifice. It is good to this actions but it is not one’s duty or obligation. Supererogatory acts are not required, though normally they would be were it not for the loss or risk involved for the agent himself. A person who does a supererogatory act does not invoke the exemption which the natural duties allow. And finally, a supererogatory act raises questions of first importance for ethical theory. Some of the actions which justice as fairness counts as supererogatory may be required by the utility principle.

§4. The Original Position The original position is understood as a purely hypothetical situation characterized so as to lead to a certain conception of justice. It is not, therefore, thought of as an actual historical state of affairs. The original position is, one might say, the appropriate initial status quo, and thus the fundamental agreements reached in it are fair. Within a social theory, the aim is to characterize the initial situation so that the principles that would be chosen, whatever they turn out to be, are acceptable from a moral point of view. The original position is a state of affairs in which the parties are equally represented as moral persons and the outcomes are not conditioned by arbitrary contingencies or relative balance of social forces. In this sense, justice as fairness is able to use the idea of pure procedural justice from the beginning namely, the initial situation. It is clear, then, that the original position is a purely hypothetical situation (although for the purpose of my thesis, I shall create, however hypothetical, a possible situation that would apply in the institution of fair trade). The conception of the original position is not intended to explain human conduct except insofar as it tries to account for our moral judgments and helps to explain our having a sense of justice. Justice as fairness is a theory of our moral sentiments as manifested by our considered judgments in reflective equilibrium. These sentiments presumably affect our thought and action to some degree. It is necessary that the principles that would be accepted play the requisite part in our moral thought and action.

§4.1. The Circumstances of Justice The circumstances of justice may be described as the normal conditions under which human cooperation is both possible and necessary31. Although a society is a cooperative venture for a mutual advantage, it is typically marked by conflict as well as an identity of interests. There is an identity of interests since social cooperation makes possible a better life for all than any would have if each were to try to live solely by his own effort. There is a conflict of interests since men are not indifferent as to how the greater benefits produced by their collaboration are distributed, for in order to pursue their ends they each prefer a larger to a lesser share.

31 In this section, Rawls follows Hume in A Treatise of Human Nature. Ibid. 126.

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These circumstances may be divided into two kinds. First, there are the objective circumstances which make human cooperation both possible and necessary. Thus, many individuals coexist together at the same time on a definite geographical territory. These individuals are roughly similar in physical and mental powers; or at any rate, their capacities are comparable in that no one among them can dominate the rest. They are vulnerable to attack, and all are subject to having their plans blocked by the united force of others. Further, there is the condition of moderate scarcity understood to cover a wider rage of situations. Natural and other resources are not so abundant that schemes of cooperation become superfluous, nor are conditions so harsh that fruitful ventures must inevitably break down. While mutually advantageous arrangements are feasible, the benefits they yield fall short of the demands men put forward. Second, the subjective circumstances are the relevant aspects of the subjects of cooperation, that is, of the persons working together. Thus while the parties have roughly similar needs and interests, or needs and interests in various ways complementary, so that mutually advantageous cooperation among them is possible, they nevertheless have their own plans of life. These plans, or conceptions of the good, lead them to have different ends and purposes, and to make conflicting claims on the natural and social resources available. Moreover, although the interests advanced by these plans are not assumed to be interests in the self, they are the interests of a self that regards its conception of the good as worthy of recognition and that advances claims in its behalf as deserving satisfaction. Also men suffer form various shortcomings of knowledge, thought and judgment. As a consequence individuals not only have different plans of life but there are diversity of philosophical and religious belief, and of political and social doctrines. For simplicity, Rawls stresses the condition of moderate scarcity (among the objective circumstances), and that of mutual disinterest or individuals taking no interest in one another’s interest (among the subjective circumstances). Thus, in brief, that the circumstances of justice obtain whenever mutually disinterested persons put forward conflicting claims to the division of social advantages under conditions of moderate scarcity.

§4.2. Formal Constraints of the Conception of the Right The situation of the persons in the original reflects certain constrains. These restrictions Rawls calls the constraints of the right, since they hold for the choice of all ethical principles and not only for those of the justice. These conditions are: generality, universality, publicity, ordering on conflicting claims and finality32and they apply to the conceptions of the rational choice. Taken together, then, these conditions on the conception of the right come to this: a conception of the right is a set of principles, general in form and universal in application, that is to be publicly recognized as a final court of appeal for ordering the conflicting claims of moral persons. Principles of justice are identified by their special role and the subject to which

32 See the complete definition. Ibid. 130.



they apply. Now by themselves the five conditions exclude none of the traditional conceptions of justice.

§4.3. The Veil of Ignorance The idea of the original position is to set up a fair procedure so that any principles agreed to will be just. The aim is to use the notion of pure procedural justice as a basis of theory. Somehow we must nullify the effects of specific contingencies which put men at odd and tempt them to exploit social and natural circumstances to their own advantage. Now, in order to do this, Rawls’s theory of justice situates the parties behind a veil of ignorance. They do not know the various alternatives will affect their own particular case and they are obliged to evaluate principles solely on the basis of general considerations. It is assumed, then, that the parties do not know certain kinds of particular facts. First of all, no one knows his place in society, his class position or social stratus; nor does he know his fortune in the distribution of natural assets and abilities, his intelligence and strength, and the like. Nor, again, does anyone know his conception of the good, the particular of his rational plan of life, or even the special features of his psychology such as his aversion to risk or liability to optimism or pessimism. More than this, Rawls assumes that the parties do not know the particular circumstances of their own society. That is, they do not know their political and economical situation, or level of civilization and culture that has been able to achieve. The persons in the original position have no information as to which generation they belong. These broader restrictions on knowledge are appropriate in part because question of social justice arise between generations as well as within them, for example, the question of the appropriate rate of capital saving and of the conservation of natural resources and the environment of nature (e.g., sustainable development or genetic policy). The only particular facts, which the parties know is that their society is subject to the circumstances of justice and whatever this implies. It is taken for granted, however, that they know the general facts about human society. They understand political affairs and the principles of economic theory; they know the basis of social organization and the laws of human psychology. Indeed, the parties are presumed to know whatever general facts affect the choice of the principles of justice. There are no limitations on general information, that is, on general laws and theories, since conception of justice must be adjusted to the characteristic of the system of social cooperation which they are to regulate, and there is no reason to rule out these facts. Further, given the principles of moral learning, men develop a desire to act in accordance with its principles. In this case a conception of justice is stable. The restrictions on particular information in the original position are, then, of fundamental importance. Without them we would not be able to work out any definite theory of all. The formal constraints of the concept of right, those applying to principles directly, are not sufficient for our purpose. The veil of ignorance makes possible a unanimous choice of a particular conception of justice. Now, the reasons of the veil of ignorance go beyond more simplicity. We want to define the original position so that we get the desired solution. If knowledge of particulars is allowed, then the outcome is biased by arbitrary contingencies. If the original position is to yield agreements that are just, the parties must be fairly situated and treated equally as moral persons. The arbitrariness of the world must be corrected for by adjusting the circumstances

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of the initial contractual situation. Moreover, if in choosing principles we required unanimity even when there is full information, only few rather obvious cases could be decided. A conception of justice based on unanimity in these circumstances would indeed be weak and trivial. But once knowledge is excluded, the requirement of unanimity is not out of place and the fact that it can be satisfied is of great importance. It enables us to say of the preferred conception of justice that it represents a genuine reconciliation of interests.

§4.3. The Rationality of the Parties The parties in the original position are rational persons. In choosing between principles each tries as best he can to advance his interests. But, also the parties do not know their conception of the good. This means that while they know that they have some rational plan of life, they do not know the details of this plan, the particular ends and interests which it is calculated to promote. How, then, can they decide which conception of justice are most to their advantage? They assume that they would prefer more primary goods rather than less. It is rational for the parties to suppose that they do want a larger share, e.g., a person does not suffer form a greater liberty. Now, a rational person is thought to have a coherent set of preferences between the options open to him. He ranks these options according to how well they further his purpose; he follows the plan which will satisfy more of his desires rather than less, and which has the greater chance of begin successfully executed. Here, Rawls made a special assumption: a rational individual does not suffer from envy. He is not ready to accept a loss for himself if only others have less as well. He is not downcast by the knowledge or perception that others have a larger index of primary social goods. Or at least this is true as long as the differences between himself and others do not exceed certain limits, and he does not believe that the existing inequalities are founded on injustice or are the result of letting chance work itself out for no compensating social purpose. Indeed envy hinders a sense of justice; envy is a lack of self-confidence in our own worth combined with a sense of impotence. There is another assumption: the persons in the original position try to acknowledge principles which advance their system of ends as far as possible, Rawls called, mutually disinterested rationality. A further assumption to guarantee strict compliance is that the parties are presumed to be capable of a sense of justice (§17). It means that the parties can relay on each other to understand and to act in accordance with whatever principles are finally agreed to. Their capacity for a sense of justice ensures that the principles chosen will be respected. Finally, if the parties are conceived as themselves making proposals, they have no incentives to suggest pointless or arbitrary principles, e.g., colour of one’s skin or the texture of one’s hair. The rationality of the parties and their situation in the original position guarantees that ethical principles and conception of justice have this general content. To complete the notion of rationality of the parties in the original position, I should define two more conceptions: deliberative rationality and the principles of rational choice. Before doing this, a complete theory of justice must include, as I argued earlier, the concept of the



good33. In justice as fairness, Rawls explains that a person’s good is determined by what is for him the most rational plan of life given reasonably favourable circumstances.

§5. The Definition of Good for Plans of Life (Goodness as Rationality)

Now with the basic idea of applying the definition of the good to plans of life, Rawls uses Royce’s thought that a person may be regarded as a human life lived according to a plan. For Royce an individual says who he is by describing his purposes and causes, what he intends to do in his life. If this plan is a rational one, then Rawls says that the person’s conception of his good is likewise rational, meaning so far goodness as rationality. Then these definitions read as follows: first, a person’s plan of life is rational if and only if: (1) it is one of the plans that is consistent with the principles of rational choice when these are applied to all the relevant features of his situation, and (2) it is that plan among those meeting this conditions which would be chosen by him with full deliberative rationality, that is, wit full awareness of the relevant facts and after a careful consideration of consequence. Secondly, a person’s interests and aims are rational if, and only if, they are to be encouraged and provided for by the plan that is rational for him. Thus, in order to identify a person’s rational plan, it is a plan belonging to the maximal class which he would choose with full deliberative rationality. Indeed with certain qualification we can think that a person as being happy when he is in the way of a successful execution (more or less) of a rational plan of life drawn up under (more or less) favourable conditions, and he is reasonably confident that his plan can be carried through. Someone is happy when his plans are going well, his more important aspirations being fulfilled, and he feels sure that his good fortune will endure. A plan then, is made up of sub-plans suitably arranged in a hierarchy, the broad features of the plan allowing for the more permanent aims and interest is that complement one another. Since only the outlines of these aims and interest can be foreseen, the operative parts of the sub-plans that provide for them are finally decided upon independently as we go along. Revision and changes at the lower levels do not usually reverberate through the entire structure. If this conception of plans is sound, we should expect that the good things in life are, roughly speaking, those activities and relationships which have a major place in rational plans. And primary goods should turn out to be those things, which are generally necessary for carrying out such plans successfully whatever the particular nature of the plan and of its final ends.

§6. The Principles of Rational Choice (short-term) There are three principles of rational choice for the short term. The first of these is that of effective means. The principle holds that we are to adopt that alternative which realizes the end in the best way. More fully: given the objective, one is to achieve it with the least expenditure of means (whatever they are) or given the means, one is to fulfil the objective to

33 The philosophical definition of the good, I think it is not necessary for my purpose in this thesis; the whole definition of the good given by Rawls is in Annex 1.

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the fullest possible extent. This principle is perhaps the most natural criterion of rational choice. There is some tendency to suppose that deliberation must always take this form, being regulated by a single final end. Otherwise it is thought that there is not rational way to balance a plurality of aims against one another. The second principle is that one (short term) plan is to be preferred to another if its execution would achieve all of desired aims of the other plan and one or more further aims in addition. Rawls refers to this criterion as the principle of inclusiveness34. Thus we are to follow the more inclusive plan if such a plan exists. The third principle we may call that of the greater likelihood. Suppose that the aims, which may be achieved by two plans, are roughly the same. Then it may happen that some objective have a greater chance of begin realized by one plan than the other, yet at the same time none of the remaining aims are less likely to be attained. A greater likelihood of success favours a likelihood plan just as the more inclusive end does. Once we have been considered the application of the principles of rational choice to the short-term case. Let examine the other extreme in which one has to adopt a long-term plan, even a plan of life, e.g., a profession or occupation. Accepting the idea of a long-term plan, then, it seems clear that such a scheme is to be assessed by what it will probably lead to in each future period of time. The principle of inclusiveness in this case runs as follows: one long term plan is better than another for any given period (or numbers of period) if it allows for the encouragements and satisfaction of all the aims or interests of the other plan and for the encouragement and satisfaction of some further aim or interest in addition. The more inclusive plan, if there is one, is to be preferred: it comprehends all the ends of the first plan and at least one other end as well. If this principle is combined with that of effective means, then together they defined rationality as preferring, other things equal, the greater means for realizing our aims, and the development of wider and more varied interests assuming that these aspiration can be carried through.

§7. Deliberative Rationality To some extent the simple principles of choice do not suffice to order plans. Sometimes they do not apply, since there may be no inclusive plan, say, or else the means are not neutral. To be sure, there is one formal principle that seems to provide a general answer. This is the principle to adopt that plan which maximizes the expected net balance of satisfaction; or to express the criterion less hedonistically if, more loosely, one is directed to take that course most likely to realize one’s more important aims. But this principle also fails to provide us with an explicit procedure for making up our minds. Rawls introduces the notion of deliberative rationality following an idea of Sigdwick’s. He characterizes a person’s future good on the whole as what he would now desire and seek if the consequences of all the various courses of conduct open to him were, at the present point of time, accurately foreseen by him and adequately realized in imagination. An individual’s good

34 In this principle, Rawls follows Perry’s General Theory of Value. Ibid. 412.



is the hypothetical composition of impulsive forces that results from deliberative reflection meeting certain conditions35. Adjusting Sidwick’s notion to the choice of plans, we can say that the rational plan for a person is the one (among those consistent with the principles of rational choice once there are established) that he would choose with deliberative rationality. In the definition of deliberative rationality it is assumed that there are no errors of calculation or reasoning, and that the facts are correctly assessed. Moreover the agent’s knowledge of his situation and the consequences of carrying out each plan are presumed to be accurate and complete. In the account of deliberative rationality, it is assumed a certain competence on the part of the person deciding: he knows the general features of his wants and ends both present and future, and he is able to estimate the relative intensity of his desires, and to decide if necessary what he really wants. He can envisage the alternative open to him and establish a coherent ordering of them: given any two plans he can work out which one he prefers or whether he is indifferent between them, and these preferences are transitive. Once a plain is settled upon, he is able to adhere to it. Finally, there are certain time related principles that also can be used to select among plans. The principle of postponement, that holds, other things equal, rational plans try to keep our hands free until we have a clear view of the relevant facts. The principle of continuity; it reminds us that since a plan is scheduled sequence of activities, earlier and later activities are bound to affect one another. The whole plan has a certain unity, a dominant theme. And, another closely related principle: it holds that we are to consider the advantages of rising, or at least of not significantly declining, expectations. In brief, our good is determined by the plan of life that would adopt with full deliberative rationality if the future were accurately foreseen and adequately realized in the imagination. These matters we have just discussed are connected with being rational in this sense. Here it is worth stressing that a rational plan is one that would be selected if certain condition were fulfilled. The criterion of the good is hypothetical in a way similar to the criterion of justice. When the question arises as to whether doing something accords with our good, the answer depends upon how well it fits the plan that would be chosen with deliberative rationality. Until now, I have chosen the most important elements of Rawls’ theory of justice for the aim of my thesis. In order to create a fair situation, however hypothetical, I shall apply the principles of justice along with other conception of Rawls’ theory of justice in fair trade. It is to say though, that several conceptions of the theory of justice are omitted, or more exactly, I did not use them36. To conclude this part, I will say that this theoretical section is mainly based in the first part of the theory of justice, chapter I, II and III, taking some concepts from the chapter VII “Goodness as Rationality”. The principles of justice (with the priority rule) have been chosen

35 See The Method of Ethics, 7th ed. Pp. 111f. Ibid. 417. 36 Annex 1.

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through our practical reasoning; firstly, defining a conception of the right, secondly, choosing the principles for the institutions and the principles for the individuals (See diagram): The principles of justice are chosen through:

Diagram of the Principles of Justice 1

Note: The priority rule is adapted upon the principles of justice. The first principle -the liberty principle- is prior to the second principle -the difference principle.



B. Part Two - Practice - Fair Trade

Fair trade is not up in the sky that you should say “who will go up the sky and get it for us and tell us of it; that we may carry it out?”

NO, fair trade is something very near to you. It is already in your mouth and in your hearts. You have only to carry it out proactively with other stakeholders lest you be out of touch with

the reality on the ground.

Fair trade is not something across the sea, that you should say “ who will cross the sea to get it for us and tell us of it, that we may carry it out?”

NO, fair trade is something very near to you. It is already in your mouth and in your hearts. You have only to carry it out by networking and promoting its’ true spirit, its’ code of

practice, its’ vision and mission.

Fair trade is an attitude of mind. Fair trade is an attitude of heart

What more? Fair trade is here to stay, long life Fair trade, long life IFAT, and long life Fair trade supporters and organizations around the globe.

Peter Wahome

§8. Fair Trade Fair trade is a social practice where the principles of justice are to be applied. Throughout this section, I shall give a current situation of the institution of fair trade. The participants of fair trade movement begins with the producers (and workers) and extends to the consumers and all the participants in between such as associations, supermarkets, world shops and organizations; for simplicity, I shall refer to them as the actors of fair trade, especially the fair trade associations as they are the pillar of fair trade. All these participants are citizens within different societies that support fair trade movement. To begin with, I shall describe the evolution of this little business that is increasing its presence in the market economy although it still only represents less than 1% of the international trade. Is fair trade a new paradigm of the 21st Century in the market economy? Indeed, fair trade is not only making movement within the market economy, it is also a socio-political movement. That is, or, it seems to change the rules of the market economy (price mechanism or the comparative advantage) for that of applying justice (fair or equitable) in trade. Fair trade is only one human activity among the several practices of applied ethics within that of business ethics.

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§8.1. Evolution37 Fair trade is a business in which profits are increasing, and it is more than that; it is an ethical practice in business. Nowadays some people say that “fair trade is a fashion”, but I do not share this viewpoint. Rather, I think that fair trade is the evolution of making businesses. By fashion we understand some tendency that has an expiry date, and afterwards, it will be out of date. But, to be sure a fashion has a beginning and an end in time and space; so with evolution it is quite similar - though people who think that fair trade is fashion may be influenced by the first stages of its evolution. According to fair trade’s facts and figures, for many European consumers, buying fair trade products has become a habit. This habit is being made by their rational choice in regard to responsible (or ethical) consumerism and it is influenced by a pattern of moral psychology in human behaviour. Of course, this needs further explanation. For now, to say that fair trade is an ethical practice, it must be seen from a philosophical approach within business ethics. In this way, ethical trade and fair trade itself are both relative modern concepts and I shall attempt to speculate on its evolution. I shall say then, that the fair trade movement is in evolution: an ongoing success story as declared by the four major associations in international fair trade: FLO, NEWS, EFTA and IFTA38 in a survey published in 2005. Indeed, it is a success. In the North hemisphere, with mostly consumers39, fair trade is well positioned in the market, supported by citizens, students, public institutions such as universities or government, and more and more enterprises are taking actions towards fair trade practices, whereas in the South hemisphere, with mostly producers collaborating with fair trade movement, roughly speaking, fair trade products are not even known in the markets, nor do the citizens know about this movement. Therefore, my point of view is that fair trade movement is not absolutely equitable. In other words, in order to acquire fairness or equity within fair trade practices, the principles of justice should be applied in the framework of the institution of fair trade; henceforth the individuals and organizations promoting fair trade would have a plausible claim of a comprehensive conception of justice in regard to the principles and rules thereof. Let us see the evolution of fair trade. First of all, what is meant by fair trade? A post-colonialist instrument and above all, an economical way over Southern nations ruled by affluent countries with an altruistic ideology or, an alternative trade based on charity and represented by religious communities? This was the beginning, perhaps, of fair trade movement. Nowadays, through evolution though, neither of these ideas meant to be fair trade. Fair trade challenges the international rules of trading imposed by international organizations such as the World Trade Organization (WTO). In which rules and principles are benefiting the strongest party, the most favoured nation or, more exactly, multinational companies (MNCs).

37 By evolution, I mean as the gradual development of something (in this case fair trade movement) from a simple to a more complex form. Although this term refers to biology, I do not mean it in that sense. 38 FLO: Fairtrade Labelling Organization, IFAT: International Fair Trade Association, NEWS!: Network of European World Shop, EFTA: European Fair Trade Association. 39 I rather prefer the French term “consum’acteur” which tries to mean consumers with responsible actions. http://www.consom-acteur.com/ (revised on 15th November 2007).



Fair trade’s mission, among others, is to give access to the international market while creating economical and social benefits for small and poor producers. In this way, fair trade dignifies their work. I think that fair trade is the right way (but not the “only right way”) of trading. It is based on respect for humanity - workers and consumers - to the environment - nature and animals - and, if the legal framework allows, respect for the rules of international trade beginning with a local and sustainable development. What would be the future of fair trade then?

§8.2. A Brief Chronology in Fair Trade In 1964, Oxford Committee for Famine Relief (Oxfam) started with the first world shops in the United Kingdom. Analogously, in the Netherlands Christian and pacifist movements represented fair trade. In the same year, a multilateral act took place in Switzerland. It was the first United Nation Conference on Trade and Development held in Geneva with the aim to start a forum of dialogue and negotiations between North and South nations. Simultaneously, the group of the least developed nations created the Group of 77, (today 131 members). I mention this, since it was the first collective claim by the developing nations for a new international economic order. The slogan of this conference - “trade not aid” - makes a start of fair trade movement. During this period, or more exactly after the decolonization period, several movements of freedom started to trade products. At that time it was not called fair trade, instead it was part of a movement of solidarity in commerce (le commerce solidaire40). For instance, food products such as: coffee from Tanzania (made by Ujamaa, Nigeria, by the African socialist movement), wine from Algeria or coffee from Nicaragua (after the Sandinista movement 1979). And craft products inspired by religious groups on the theology of liberation, such as: Ema and Tara from India and Jute Works from Bangladesh41. Evidently, it was not yet established the criteria of trading as an economical activity e.g., certification or quality in products. It was, above all, a solidarity movement in a social and political context. A few years later, world shops were installed in Germany and Switzerland, and in 1971, Oxfam-Magasins du Monde started with world shops in Belgium. In France, Artisans du Monde created the first boutique of fair trade in 1974 (see photo # 4 in Annex 2), and seven years later, the Fédération Artisans du Monde. Thereafter, Andines - another French association - was created in 1987. In 1988, Nico Roozen and Frans van der Hoff created Max Havelaar –“the label of fair trade”. They chose this name inspired by the Dutch writer Édouard Douwes Dekker ‘s novel Max Havelaar (with the pseudonym Multatuli) published in 1860. However, it was not until the 90’s that the so-called alternative commerce was establishing the basis for fair trade. An alternative commerce based mainly in five conditions at that time: (1) a democratic organization, (2) just (fair) wages for producers, (3) positive social effect, (4) respect to the environment, (5) and quality products. 40 Oxfam-Magazins du Monde 30 ans! P.16. 41 Ibid. 16.

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Certainly an important issue defining fair trade standards is the label Max Havelaar (1988) that was introduced first in the Netherlands. Thus, fair trade’s certification began with the world’s number one agricultural export: the coffee. One of the founders, a Catholic priest, Fr. Frans van der Hoff, had this idea inspired by the situation of Mexican coffee producers. He became a priest in Chile in 1968, but after the civil war and President Allende’s death on 11 September 1973, he went to Mexico. He was working with indigenous people in Chiapas within the cooperative UCIRI42. Therefore, in the following years, the creation of the earlier mentioned, four international fair trade organizations in Europe took place: EFTA, IFAT, NEWS! and FLO. (See table 143). FLO IFAT NEWS! EFTA Established 1997 1989 1994 1987 Type of Members

National Labelling Organization

Producer organization, importing org., others.

National Worldshops Associations

Importing Association

Members in Countries

20 in 20 countries

280 in 62 countries

15 in 13 countries

11 in 9 countries

Members in Europe

15 in 15 countries

63 in 12 countries

All All

Head Office

Bonn, Germany Culemborg, The Netherlands

Mainz, Germany

Maastricht, The Netherlands

Table 1: Fair Trade International Organizations.

By this time, we can reach a previous fair trade’s definition established by EFTA in its Annual General Meeting held in May 1999: “Fair Trade is an alternative approach to conventional international trade. It is a trading partnership which aims at sustainable development for excluded and disadvantaged producers. It seeks to do this by providing better trading conditions, by awareness raising and by campaigning (for the consumers)44. Certainly this definition lacks principles and it is too vague. However, this is no longer the official definition of fair trade.

§9. Fair Trade Today In October 2001, the fair trade definition was agreed upon and fully revised by FINE45; it is a clearer and more complete definition than the previous one. “Fair Trade is a trading 42 A model Mexican cooperative UCIRI: http://www.uciri.org/ See more information in §13. 43 Fair Trade in Europe 2005 p. 26 44 Zsolt, Boda. “Conflicting Principles of Fair Trade”. p.20 45FINE is an informal coordination of the four international fair trade networks: EFTA, IFTA, FLO and NEWS! Since April 2004 FINE runs the Fair Trade Advocacy Office in Brussels.



partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers - especially in the South. Fair Trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.” At the present time, this is the official definition of fair trade movement.

§9.2. Fair Trade’s Principles and Objectives It is clear that the fair trade movement only could be possible through cooperation among the parties involved. It is a general cooperation from South to North and North to South. These peoples are cooperating inside their groups and these groups are cooperating among other groups. Regularly, individuals in the South are organized in cooperatives and, on the other side; the individuals in the North are working within for-profit and non-profit associations. Due to the fact that these individuals have different circumstances (§4.1.) and different plans of life (§5), their objectives or aims are different as well. However, in order to achieve the best results for both groups (meaning for simplicity only two groups: South and North people) they must agree on similar objectives and principles through cooperation. The main idea is that the fair trade movement is thought to be a mutually advantageous cooperative venture according to rules and principles benefiting everyone and in particular, the least disadvantaged (marginalized) producers (or workers). Therefore, cooperation in fair trade has four basic criteria46 that function as principles in this trading partnership system:

• Having a direct relation between producers and consumers, avoiding as much as possible, intermediaries and speculators.

• Fair pricing47 that allows the producers and their families to lead dignified lives: “Everyone should be able to live from their work in a dignified way”(see similarity with United Nation’s Human Rights, article n°2348). In cases where producers are salaried, respecting working conditions that conform to the minimum international standards recommended either by the International Labour Organisation (ILO) or the country itself, whichever are the greater, respecting the right to Union representation and prohibiting forced labour and child labour.

• The authorization of partial financing before the harvest (in fair trade movement, the minimum rate is 60%) if the producers so demand.

• The establishment of long-term contracts and relations, based on mutual respect and the respect of ethical values. The aim of these relations is not only a fair principle but

46 Fair Trade Development proposals for the XXIst Century, p.12. 47 See relevant information in “Le Prix Equitable”. (October 2002). And critics about fair price in Jacquiau, 301. “Le prix de l’équitable”. 48 Article 23. Universal Declaration of Human Rights: (1) Everyone has the right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment. (2) Everyone, without any discrimination, has the right to equal pay for equal work. (3) Everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. (4) Everyone has the right to form and to join trade unions for the protection of his interests.

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also sustainable development for groups of producers or wage earners. In some cases, fair trade organizations have also set up “progress” criteria as well as minimum criteria.

Fair Trade organizations assure that all these criteria are respected. According to these organizations, the objectives of fair trade could be summed up as the following:

Obtaining fairer prices and conditions for groups of small-scale producers. Developing trade practices in the direction of sustainability and social and

environmental cost accountability through, for example, campaigning for charges in legislation.

Raising awareness among consumers of their power to contribute to the development of fairer trade.

Encouraging sustainable development and the expression of local culture and values within a context of cross-cultural dialogue.

Basically in fair trade there are two primary purposes: 1) to promote the development of marginalized producers and 2) to contribute to the transformation of the international trading system. These are the two main objectives acknowledged by most leading stakeholders in the movement. However, it is not always simple to establish similar objectives between producers, importers and consumers. Empirical research highlights the fact that various stakeholders in fair trade movement do not necessarily pursue the same objectives e.g., for stakeholders from the North, commercial partnerships are often a means of raising consumer awareness, whereas producer groups are above all interested in increasing their sales49. The conflict of interests, which is reflected in the objectives of fair trade, is evidently found in the different circumstances of each group. Therefore, the conflict of interests needs to find the equilibrium between increasing sales of small-scale producers and promoting ethical consumerism.

§9.3. Worldwide Movement Europe is the best example to explain the rapid development of fair trade movement. Although the fair trade movement has partnerships in the South hemisphere, its development is increasing mainly in Europe, North America and Japan, Europe represents the biggest market for fair trade products with an estimated 60% to 70% of all global sales, and there is a huge potential for further growth50. Empirical research collects data from national and international fair trade organizations in 25 European countries and it reveals that the annual aggregate net retail value of fair trade products (labelled and non-labelled) sold in Europe now exceeds €660m. This is considerably over double the figure five years ago, when it was estimated to be about €260m. The increase of 154% over 5 years represents a sustained average annual increase of about 20% per year. Fair trade has thus become one of the fastest growing markets in the world. About €120m of the annual retail sales are generated through sales via the world shops. There are now over 2,800 of these specialist shops within Europe, stocking almost exclusively fair trade products51. This incredible evolution is reflected not only in sales and profits, also in people’s knowledge and people’s attitude towards the fair trade movement. 49 Fair Trade and the Solidarity Economy: the challenges ahead, p. 6. 50 Fair Trade in Europe 2005, p. 5. 51 Ibid. 7.



In France, for example, only 9% of the population said that they know about fair trade in the year 2000, while in 2006, around 75% knew about fair trade52. Or, in Switzerland, 47% of all bananas, 28% of the flowers and 9% of the sugar sold are now fair trade labelled. And in the UK, a market with eight times the population of Switzerland, fair trade labelled products have achieved 5% market share of tea, a 5% share of bananas and a 20% share of ground coffee53. The impact on the market is becoming impressive; this would not have been possible without fair trade labelling initiatives. Through the label of fair trade, the products obtained the access to mass market or supermarket. However, is it the same successful story all over the European Union? Unfortunately not. In the first 15 countries of the European Union, countries such as Greece and Portugal do not have much development in fair trade practices. At the moment, Portugal has eleven (11) world shops, but it does not have fair trade products in the supermarkets nor is the label of fair trade present in the Portuguese market (the last European country with the fair trade label was Spain). Greece, on the other hand, has an even worse scenario than Portugal in regard to fair trade practices. Fair Trade Hellas founded in 2004 with the help of a European Programme has participated in different events, festivals and fairs, where they have sold food products imported from CTM Altromercado (Italy). The first fair trade shop was scheduled to open in spring 2006; located in a highly visible place in the Kolonaki district, one of the most fashionable and trendy shopping areas in Athens. Increasing awareness is therefore a priority for the fair trade movement in Greece. According to the survey54, the Greek market is thought to have strong potential for developing fair trade activities. After May 2004, with the entrance of the ten members of the European Union, these countries are basically in the very beginning of fair trade movement. Malta may be regarded as the fair trade pioneer among the new EU member states. Fair trade was introduced in Malta in 1996, when “Koperattiva Kummer Gust” (fair trade cooperative) was officially registered. Today the cooperative consists of over 100 members. Fair trade products imported by Koperattiva come mainly from Italy although a small amount comes from Equal Exchange in Edinburg, Scotland. In Poland there is only one organization dealing with fair trade issues. It is the Polish fair trade association “The Third World and Us”. At this stage it mainly consists of informative and educational work such as the presentation on fair trade given in April 2005 at a public debate organized by the association in cooperation with the Foreign Ministry, or lectures given in the main Polish towns at universities and workshops for teachers. In this way, there are plans to import fair trade products via Germany and to sell them both as a wholesaler and retailer being developed. In Hungary there was an early attempt in 1995 to establish fair trade. It involved the opening of a fair trade shop in Pécs, the fifth-largest town in Hungary, with strong support from EZA in Austria. This initial endeavour unfortunately failed due to the lack of purchasing power and prohibitive tariffs on coffee imports and the shop consequently had to close down after approximately 18 months of operation. There are now plans to establish a Hungarian fair trade association with a broad membership base comprised of different Hungarian NGO’s. For

52 Survey Ipsos-Max Havelaar from Commerce Équiable, dossier de presse. 53 Fair Trade in Europe 2005, p. 7. 54 Ibid. 47.

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the rest of the European countries fair trade is in its first stages or even in countries such as Latvia or Lithuania there is no formal fair trade structures. Though NEWS! Association, it was a project called “NEWS! goes East” in order to expand fair trade movement within the Eastern countries. Basically, this is the panorama in Europe regarding fair trade practices. The evolution of fair trade is not exactly the same as the most affluent countries within Europe. If the legal framework establishes better rules to promote fair trade along with NGOs, fair trade associations, public institution and the citizens' support, fair trade may increase its presence in the last 12 countries that have entered into the European Union faster. If this argument is sound for Europe, fair trade will be increased in the less affluent countries within Europe, henceforth it works in raising awareness among consumers while expanding the benefits for more small-scale producers (for example, see Lisbon Treaty in part D).

§10. Max Havelaar Does a noble practice, such as fair trade, need a label? Morally speaking, if someone engaged in a multilateral fair activity gaining benefits in some way, is he or she to expect from the other parties at least the same fair behaviour (the principle of mutual aid in §2.3.2. or the obligation found in the principle of fairness explain much better this point from a moral point of view §3.1.). Is it necessary to establish a certification that would verify each man’s participation according to principles and rules agreed upon an initial situation? Well, if this is only for the security of fair trade movement and its continuation, this actor should be an impartial and independent party acting autonomously (See the spectator in §18). In fair trade, Max Havelaar calls itself “the label of fair trade” whilst it depends directly from FLO (fair trade labelling organization). Then, is it the same organization that establishes the rules and standards of the institution of fair trade, and the one that makes the certification and verify that the whole process is done in the right way? And further, who makes the certification for the agricultural products and crops, the social situation of producers and workers, the quality of products and respect of rules in fair trade? The golden rule for an audit is: “the accumulation of functions is forbidden”. It is not clear, then, the independent role between these organizations: who makes what? The role between Max Havelaar and FLO is not clear. For this reason, therefore, FLO has been divided in two independent structures in order to clarify the confusion of roles. FLO International (FLO) dedicated to the research and support for producers according to Max Havelaar’s principles and standards, and the new organization FLO-Cert GmbH created on September in 2003. FLO-Cert GmbH is a limited company that is responsible for inspecting and certifying producers and other supply chain actors against the fair trade standards set by FLO e.V55. FLO-Cert is to control and supervise the good practices of producers, and how the products are being made. In this way FLO-Cert has two functions:

55 FLO International e.V. is a publicly recognized, non-profit multi-stakeholder association of its member organizations. FLO e.V. has a department that sets the standards which Fair-trade producers and traders must follow. It also has a department that supports producers to achieve Fair-trade standards and that maintains basic information about Fair-trade products( 2008).



that of control and the certification of the process in a transparent manner according to ISO 65. Objectively, the distinction and autonomy is not clear enough since FLO-Cert is 100% created by FLO. According to the researcher Pierre Johnson, he emphasizes the weakness of the control system: “There are two limits to this formal separation. FLO association is the only stakeholder of FLO-Cert; and there is a constant movement of information and people among these two associations56”. Furthermore, according to FLO International each producer organization is inspected one time per year. The inspectors are free-lancers who basically live in the continent where the organization works57. They have been chosen by their capacity of analysis and impartiality after being trained by FLO’s experts. FLO uses an inspector per country with the exception of Mexico where there are two inspectors. In 2003, there were 38 inspectors working for FLO and in 2006 the number of inspectors has increased up to 54. The number of inspectors increased by an increment of 42% while the total profits of labelled products by Max Havelaar have increased 217%58 during the same period of time. These free-lance inspectors work part-time and, according to Max Havelaar France, the annual budget of control cost represents 27% of the total budget of FLO (€2 460 096). Besides these figures, how the loyalty to the fair trade movement by these free lancers be proven? An independent person from the fair trade association may have different circumstances that should influence his/her decisions. For the free lancer, if he certified the cooperative, he will guarantee his job in that country, but if he does not certify the product’s process or the organization, he risks losing one fundamental task of his job. When conflict of interests exists, do they have a code of conduct established by the association, which may be available for all in the fair trade movement, for instance, through its websites? If fair trade is based in transparency, it may be visible and public among all participants in all the processes within fair trade. According to the research on the impact of fair trade in the South, made by Pierre Johnson59, he mentioned that often the control is made through a cooperative which is to supervise the cooperative of producers (cooperatives faîtières60). That is, a cooperative that has been created with the only purpose of controlling the organization of producers. In this sense, what guarantees are there for the consumers? Normally the inspector controls these kinds of cooperatives in hotels or airports instead of going into the place where the product has been made. Despite the fact that FLO International, FLO-Cert and Max Havelaar have different juridical structure, the strict requirements for a label of fair trade needs to be an independent and autonomous institution working in a transparent fashion.

56 Jacquiau, “Le coulisses du commerce équitable”, (2006), 112. 57 Ibid. 113. According to experts from ATTAC France http://www.france.attac.org/. 58 Ibid. 14. 59 French and American Sociologist who has published several works on Social - Solidarity Economy. 60 ‘Cooperative faîtières’ are cooperatives of cooperative, which are to simplify the inspectors’ work and task. Normally they are situated out from the place of work of producers and workers. Ibid. 113.

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In addition to this certification process, there is a fee established by Max Havelaar, which sometimes the producers cannot afford. There must be an inexpensive or symbolical form of certification61.

§10.1. Max Havelaar and Multinational Companies (MNCs) Coherence in practices is indispensable to achieve success. But what is the kind of practices needed in order to be “equitable” in trade? Max Havelaar is opening new markets for fair trade products. Fair trade has passed from being a niche market to the mass market or supermarkets. The know-how is simple: having partnerships and making alliances with Multinational Companies. Indeed the fair trade movement is not an enemy of MNCs, instead it is a partnership, incredible in regard to the differences on practices and objectives. Max Havelaar has certified several products of MNCs. This issue has been quite polemical within fair trade movement. As it is known, MNCs do not have the same aims as fair trade has, and moreover, the practices within MNCs involve many moral issues that, roughly speaking, are seen as unethical practices. “Max Havelaar certifies products not companies,62”said one spokesman of Max Havelaar France, arguing in favour of the fair trade coffee for Nestlé labelled by Max Havelaar UK. Ethical business is a broader concept than that of fair trade. To say that a multinational company sells fair trade products, is not to say that this company is an ethical company or that it has only ethical practices. Max Havelaar has certificated McDonald’s coffee in Switzerland in 2003, a country that purchases the third part of world wide labelled fair trade products63. McDonalds, a multinational company that promote fast food, has become a participant on the “equitable world”. They have certified Café Aroma by Max Havelaar (Switzerland) label. The ideology of Max Havelaar Switzerland is “fair trade everywhere”. This ideology was exported into the United States on October 2005, when Oxfam America labelled the 658 McDonald fast-food restaurants in Alabama and New England as fair trade coffee. Fair trade’s definition says to change the rules and practices of the conventional international trade but becoming part of these practices of the conventional trade, such as working with MNCs is not the same! Is it then, a contradiction, having fair trade labelled products within MNCs? Another fair trade product within MNCs is Nestlé’s fair trade coffee. In October 2005, Max Havelaar certified Nescafe Partners’ Blend coffee for the English market; paradoxically, Nestlé is the most boycotted company in the same country64. Why can these MNC’s, such as Nestlé, become promoters of fair trade products, or, why Max Havelaar, the mark of fair trade, has certified these MNC’s products? From a company viewpoint it could be only ethical marketing in order to have a better image after being publicity known as unethical company, e.g. boycotts. From the fair trade viewpoint, FLO International has responded to

61 Ibid. 115-127. 62 Vincent David, external relations in Max Havelaar France Ibid 157. 63 Daniel Wermus, “La Liberté” Édition du 6 avril 2005. 64 “Neslé” in La Tribune, 6 September 2005. Ibid. 151.



this question in regard to Nestle’s fair trade labelled coffee and these questions and answers are available on FLO’s website65: “The more widely that we can persuade companies to engage with fair trade and offer products carrying the fair trade mark, the further we can extend the benefits of fair trade to greater numbers of disadvantaged producers and their families. For years NGOs and campaigners have been lobbying the four major coffee roasters (Nestlé, Kraft, Sara Lee UK and Proctor & Gamble) to commit to sourcing to fair trade standards and this is the first time that one of them has responded to UK consumer demand to offer their first product to carry the fair trade mark”. This is similar to saying that the incoherence of finding fair trade labelled products within MNCs is allowed if, and only if, it is for the benefit of the disadvantaged producer (according to the principles of justice, it must be the least advantaged group). Even so Nestlé’s certification was criticized among the Max Havelaar Network, especially the complaint from Fair Trade Italy (Max Havelaar) and CTM-Altromercado through an ‘open’ letter sent on 18 October 2005 to the Fair Trade International Associations, FINE, in which they clearly exposed the possible consequences of having MNCs as partnerships.66 If we were to apply the principle of justice in the institution of fair trade, then Max Havelaar, as being the label of fair trade movement, would acknowledge the two principles of justice. If Max Havelaar is to apply the principles of justice to Nestlé’s case, therefore, the reasoning is as follows: In the first principle, the liberty principle, Nestle has the right, even as a MNC and its “historical record” of unethical practices, to obtain the label of fair trade since Nestle as any other party in a scheme of cooperation has an equal right to liberty (the liberty to be certificated as label of fair trade) compatible to the total system of liberties for all, since Nestle is not taking more than the liberty that it is equal for the other parties, it is plausible to be certified by the fair trade institution. But in regard to the second principle -the difference principle- the greatest benefit will be for the least advantaged group namely the most disadvantaged producer; therefore every party in the institution of fair trade could be beneficiated through chain connection mentioned earlier (§2.3.). This is not a good point for the certification of Partner Blend’s coffee by Max Havelaar since the benefit (and it must be the greatest benefit according to the second part of the difference principle) is not for the poorest producers. According to the certification of Partners Blend coffee, this coffee is coming from small producer organizations in El Salvador and Ethiopia67. These countries are among the worst-off nations producing coffee, rather than Mexico or Brazil, countries with ‘better’ socio-economical situation. However, these countries are not the worst-off nations or the poorest countries producing coffee. According to economical factors68, the Gross Domestic Product (GDP) of Tanzania or Nicaragua, for example, is even worse than the GDP of Ethiopia or El Salvador respectively on each continent. Therefore, in this case, and according to the second principle of justice, social and economical inequalities are being arranged from the economical benefits of Nestlé’s certification. But these social and

65 Questions & answers about Nescafe Partners’ Blend Coffee: http://www.fairtrade.org.uk/qa071005.htm (revised on December 2006, answer n° 8.) 66 Jacquiau, (Les coulisses du commerce equitable) 155 67 Ibid. 151. 68 GDP (per capita), according to World Economic Outlook Database (April 2007) by IMF.

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economical benefits failed to be for the least disadvantaged group within fair trade movement. This is what I shall pursue through this thesis: the principles of justice ought to be applied in fair trade. Moreover, what are the benefits and how these benefits to be distributed are important questions that should be discussed among the fair trade actors. Finally, the relationship between Max Havelaar and the MNC’s is complicated since moral issues over practices within MNCs are complicated as well. Although the OECD published the guidelines for MNCs69, there is not an international law that rules them. Max Havelaar, a non-profit organization, is itself a Multinational Company working with different partners all around the world70. Its role in fair trade is absolutely important, but for the security and the fair value of fair trade, its role cannot be seen as a “monopoly”. Rather, the relationship between Max Havelaar and MNCs needs to be for the sake of fair trade. The list is long, Max Havelaar has also certificated products from Starbucks, Group Accord, Dagris71… the latter one requires special attention because it is a Multinational Company developing genetically modified cotton in West Africa and, of course, while fair trade is not against GMO, fair trade respects the environment as organic farming’s principles does, which may be the enemy of GMO.

§11. Fair Trade in France Throughout the last three years, I have seen the development of the fair trade movement in France where the legal framework for fair trade already exists. The pioneers of fair trade, as mentioned earlier, are the association Artisans du Monde (where I was a volunteer), and few years latter Andines. At the present time there are many actors in this sector: innovative enterprises, specialized fair trade boutiques, world shops, restaurants, coffee or supermarkets selling bio/equitable products, and many associations working along with developing countries. The classical products in fair trade are food and handicrafts, but in the past years there is a tendency in fashion (e.g., Ethical Fashion Show) through fair trade standards and cosmetic products and new services such as tourism and corporate investing are being developed. Furthermore, in order to develop fair trade initiatives at the national level the “Plate-forme pour le Commerce Équitable” (PFCE) was created in 1997 (but informally since 1994). The objectives of PFCE are to assure its role as an important, solid and official organization of fair trade practices, guaranteeing the affirmation of fair trade actors to promote the fair trade movement among society in general, and the support on fair trade actions within the French territory72. The PFCE was created by the participation of four associations engaged with the development of fair trade movement: SA Solidar Monde (Artisan du Monde, importing 69 Committee on International Investment and Multinational Enterprises has been published by OECD, addressed by government to MNCs 70 FLO’s network cover a large area; all national Max Havelaar: Fairtrade Austria, Max Havelaar Belgium, Transfair Canada, Max Havelaar Denmark, Max Havelaar France, TransFair Germany, Fairtrade Foundation UK, Transfair Italy, Fair Trade Mark Ireland, Fairtrade Label Japan, Transfair Minka Luxemburg, Stichting Max Havelaar Netherlands, Max Havelaar Norge, Reilun kaupan edistämisyhdistys ry Finland, Rättvisemarkt Sweden, Max Havelaar Stiftung Switzerland, Transfair USA, Comercio Justo Mexico, Fair Trade Association of Australia & New Zealand. 71 Ibid. Max Havelaar and Accord p. 135, Max Havelaar and Starbucks p.159, Max Havelaar and Dagaris p. 181. 72http://www.commercequitable.org/ (November, 2007)



organization), Aspal (Association de solidarité avec les peuples d’Amérique Latine), importing organization of Peruvian and Mexican’s products, Andines (importing organization from Colombian products among other counties), and Apas (Association des partenaires des artisans du Sahel). In 1997 the PFCE included the organization Max Havelaar France. Officially the PFCE was created with its general assembly on 19 January in 200173. So great is the impact of fair trade in France that the economist Christian Jacquiau published a book in 2006, “Les Coulissess du Comerce Équitable,74” entirely dedicated to the fair trade movement, which has been quite controversial since its publication. In this book, the economist exposes the role of Max Havelaar and other fair trade association based on facts and relevant information and he makes evident the successful narrative of fair trade throughout these years. Further, Jacquiau wrote about the “formal” history of fair trade in France. In 1970, during the civil war in Pakistan, one of the most disadvantaged nations and poorest countries in the world was born: Bangladesh. Despite the bad consequences of the war, a flood in 1971 put Bangladesh in even more terrible situation. Therefore, the priest Pierre75, well known among the French people, announces “an appeal to the French communities”. Thus, the UCOJUCO (l’union des comités de jumelage cooperation), opened the first boutique of fair trade in Paris in 1974 (See photo #4 in Annex 2). At this time the movement was still called solidarity in commerce or le commerce solidaire. It was not until 1987 when the word “equitable” was born. It was through Andines SA,76 which defines itself as an enterprise making trade in an equitable way, that the word “equitable” was sound. Actually Andines SA has the property rights over this name “commerce équitble77”. According to the president of Andines SA, Véronique Lacomme, “(they have the property rights of commerce équitable) Non pour nous l’appropier! Mais pour la protéger de l’hégémonie d’un acteur aux dents longues78…” Lacomme is also one of the founders of Minga,79 another fair trade association created in France in 1999 - an association that promotes fair trade as an universal trade: South-to-South and North-to-North fair trade. Its ‘radical’ position towards fair trade, according to some fair trade actors, puts Minga on contraposition to Max Havelaar, in the sense that FLO International and EFTA promote a North – South relationship in fair trade. I think that this interpretation of the fair trade movement is short in scope. Moreover, through this vertical interpretation North-South, the fair trade movement is thought to be a charity instrument, for example, the persistent image of rich consumers in the North and poor producers in the South condemns the former to purchasing fair goods and signing petitions and the latter to producing goods for export. 73 Ibid. 404. 74 “Le coulisses du commerce équitable: mesonges et vérités sur un petit business qui monte” May 2006. Ed. Mille et une Nuits. 75 Priest Pierre is Henri Grouès who was born in Lyon on August 5 in 1912. He became priest in 1938. 76 www.andines.com Andines SA has its juridical structure on his website. 77 Institut national de la propriété industrielle (INPI) in Paris # 3117999 by the Anonymous Enterprise “Andines” on August 24 in 2001. 78 Jacquiau, 50. 79 www.minga.net

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This particular difference in ideologies, henceforth in practices, has an interesting moral connotation. If we were to think that fair trade is charity: firstly, it will be part of supererogatory actions for individuals (§3.3.). Secondly, it goes against what the developing countries complained about several years ago - “trade not aid” - which is the ‘slogan’ of the fair trade movement (§8.1.). On the other hand, if we were to think that the fair trade movement is about justice through a social contract, then it is a positive part of our natural duties – to uphold justice (§3.2.). Moreover, for those engaged in fair trade, as individuals or organizations, it becomes an obligation through the principle of fairness (§3.1.). For individuals, this is the first moral dilemma in fair trade: whether fair trade is about justice or charity.

§11.1. National Activities within Fair Trade There have been already four (last forum April 2008) national forums of fair trade in France and many national activities such as “Quinzaine du commerce equitable” (See photo #2 Annex 2), “Repa Équitable” (See photo # 1 Annex 2), “Rue du commerce équitable”, and so on. Through these events, it is possible to see the fair trade evolution and evidently, the political movements on these initiatives. The first forum of fair trade was held in Paris, organized by Minga and the “Plaine Commune,80” with the aim to open the dialogue on fair trade issues. By this time, the national situation among fair trade actors was hostile because of the difference in thoughts of the fair trade scope: whether or not fair trade should be only North-South relationship, the sale of fair trade products into the mass market or the label of fair trade on MNC’s products. A cause of these differences, the PFCE, where Max Havelaar is member, almost did not contribute with the First Forum81.

In any cases, without too much financial support, Minga organized the 1st Forum of Fair Trade in order to open the dialogue between fair trade actors and the society. 10,000 visitors attended it and basically, the forum reached its main concerns: discussing whether fair trade

80 Ibid. 354. 81 Ibid. 356-57.



products should be sold into the supermarkets, the alliances with MNCs (e.g., Nestlé’s Partner Blend Coffee) and the role of different associations within the fair trade movement. The second forum of fair trade held in Paris was organized by several actors this time: PFCE, Minga, Solidar Monde, Max Havelaar among others, and its main workshops and conferences were about whether fair trade belongs to a niche market, presenting fair trade entrepreneurs, tourism equitable and an initial discussion on local development. At the end of the forum, a cocktail of fair trade beverages and food was offered by the organizations.

The third national forum of fair trade (See photos in Annex 2) was very different than the previous ones. It was held in Paris at “Cité des Sciences et de l’Industrie” in April 2007. Max Havelaar France, the Plat-Forme Française pour le Commerce Equitable (PFCE) and the Group SOS82 organized the 3rd National Forum. The content of the programme and the conferences were about the new challenges and strategies for fair trade, for the first time in the National Forums, they spoke about the initiatives to regulate the impact on Southern countries and, as in the 2nd Forum, to motivate newcomers, enterprises, and actors in fair trade. Another special feature was that some producers were present in the conferences: an olive oil producer from Palestine and an indigenous woman from Bolivia. The private industry forms part of the sponsorship of the forum of fair trade, as well as public institutions and parastatal enterprises: the Bank Crédit Cooperatif83, the Délégation Interministérielle à l’Innovation, à l’Experimentation Sociale et à l’Economie Social (DIIESES), Group Chéque Déjeuner84, Group La Poste, Ile-de-France85, Ministry of Foreign Affairs, specifically the General Direction on International Cooperation and Development (DGCID), the Government of Paris (Mairie de Paris), Group SNCF, radio BFM86 and the newspaper

82 Group d’économie sociale et solidaire: http://www.groupe-sos.org/ 83 Groupe bancaire coopératif: www.credit-cooperatif.coop 84 http://www.groupe-cheque-dejeuner.com/ 85 Le portail du conseil régional: www.iledefrance.fr 86 La radio de l’éco: www.radiobfm.com

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Liberation were the official partner of this event. Around 100 actors in fair trade exposed their products, concepts and ideas related with fair trade movement.

The rapid evolution of fair trade, which is visible through the three National Forums, is quite impressive. In less than three years, it changed from begin a small niche market to becoming a solid instrument of success in business within social economy. This could not have been possible with the communication and promotion made by fair trade organizations. It is evident that many of the official partners of fair trade are engaged in fair trade practices, but at the same time, it shows the political influence of this movement. In Paris, at the National Assembly, L’Élysée and the Senate the only coffee available is fair trade coffee87, with the label “Max Havelaar”!

§11.2. Political Movement, Support and Legal Framework As mentioned before, one of the objectives in the fair trade movement is to challenge the rules and the legal framework in the conventional international trade. This implies a political commitment to make these changes eventually possible. Through the last years with the evolution of fair trade, there have been several solid steps to change the legal framework. Listed chronologically, these are the changes at the national level: Since 2001, the government of Lionel Jospin decided to have a public budget designated to develop fair trade -Fonds de solidarité prioritaire (FSP). The most benefited association, Max

87 Ibid. 94



Havelaar, received 3 million euros (3€M) of the total amounts of public funds - 5,6 million euros (5,6€M). Artisans du Monde and the PFCE had their share in this budget88 as well. Through this financial support, it is possible to understand the intense marketing campaigns by Max Havelaar (its budget only for the communication was 1.9 million euros (1,9M€89)). Lionel Jospin finished his duties with the French government in April 2002. Therefore, Prime Minister Pierre Raffarin changed this amount and, since 2004, the budget of FSP is reduced to15% from 20%. Furthermore, the same Prime Minister presented the 40 propositions for the development of fair trade90. In the first chapter of this document, there is the first tentative to propose a legal framework on the European Constitution (which was rejected afterwards by the Netherlands and France) for fair trade. At the national level, with the Prime Minister Villepin, France is pioneer in the European Union to establish a law in favour of the fair trade movement. The law, n° 2005-882 published on 2 August 2005, for the small and medium enterprises has 102 articles in which the #60 establishes: I. “Le commerce équitable s’inscrit dans la stratégie nationale de développement durable”. II. “Au sein des activités du commerce, de l’artisanat et des services, le commerce équitable organize des échanges de biens et de services entre des pays développés et des producteurs désadvantagés situés das des pays en développment. Ce commerce vise à l’établissement de relations durables ayant pour effect d’assurer le progrès économique et social de ces producteurs”. I mention this point to show how the fair trade movement is defined. That is, as Max Havelaar fashion means that fair trade is a movement of charity towards small-producers in the South - this law does not promote equity between North-North and South-South countries and the sustainable development or “dévelppement durable” as stated in the point, is doubtful to be sustained since the problem of transportation has environmental impacts (§13 and §14). This argument is supported by the campaigning “Pour un commerce équitable partout! Changeons la loi!” manifested during the quinzaine du commerce équitable on April 2006 by Breizh Ha Reizh and Minga, two French fair trade associations. Lastly there was an initiative by the actors of fair trade to establish a norm or standard of fair trade. This has been published as an agreement called “Accord AC X50-340 AFNOR” and it is available in its website91 since January 2006. In brief, this is the national panorama for fair trade. Of course, there are more details to mention about fair trade and political movement - a few examples: (1) the speech given on

88 Ibid. 397. 89 Ibid. 88. 90 On May 2005, Antonie Herth presents officially “Le commerce equitable: 40 propositions pour soutenir son development”. www.ladocumentationfrancaise.fr/rapports-public/054000304/index.shtml 91 www.boutique.afnor.fr

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June 2005 by the ex-president of France, Jacques Chirac92, when he wrongly said that the “the founder of fair trade movement” was exactly the founders of Max Havelaar, (2)The Prime Minister Jean-Pierre Raffarin declares the fair trade movement to the interest of all the society93, (3) Jose Bové, candidate for the French Presidency promoting fair trade through via campesina94, and in Belgium, where (4) the ex Prime Minister, Guy Verhofstadt, collaborating to Oxfam-Magasin du Monde’s (see photo #3 in Annex 2). In the past years, fair trade has become something well known in politics and among politicians, at least in Europe, however, its applicability and a comprehensive conception of justice need to be reinforced.

§12. World Trade Organization (WTO) & Fair Trade A weak framework of the international trade is the World Trade Organization (WTO). Previously called GATT, this international organization has operated since 1994 and nowadays is far from being a just organization in the strict sense of the word. Its principles create inequalities and it is obvious in the weak functioning of this organization. Actually, its principles threaten the development of fair trade; moreover, the principles of justice are exactly contrary to those of WTO. I shall mention in two points the main conflicts between WTO and Fair Trade Movement (FTM): fair trade as free trade and the non-discrimination principle. Firstly, the term fair does appear into WTO documents but being, in this context, a synonym of free: “Ministers affirm that the establishment of the WTO ushers in a new era of global economic cooperation, reflecting the widespread desire to operate in a fairer and more open multilateral trading system for the benefit and welfare of their peoples. Ministers express their determination to resist protectionist pressures of all kinds95”. That is, trade essentially free of barriers of all kinds, which is non-discriminatory among nations. Fair trade is nothing but regulated free trade. According to the free trade ideal, fairness is a norm of conduct among nations rather than a pattern of distributive justice. Although free trade as fair trade is expressing a proper norm of conduct, the distribution of benefits is neither just nor efficient. Meaning that fairness as a proper conduct can be seen as “fair competition” or “fair price” (no dumping) among the parties, but the equitable distribution of share is not taking into account. Secondly, the non-discrimination principle is expressed by the “most favoured nation” and “national treatment” principles of the GATT. The former bans any arbitrary discrimination among products of importing countries, the latter between domestic and foreign products. In other words, the non-discrimination principle expresses the norm of formal equality: products of different traders shall be treated equally.

92 Ibid. 88. The speech of Jacques Chirac on the World Pact at l’Élysée with Kofi Annan (UN) and Tony Blair on Tuesday, July 2006. 93 «Campagne d’intérêt général » pour l’année 2003 lors de la 3ème édition de la Quinzaine du Commerce Équitable. 94José Bové is the spokesman of the international movement via campesina: http://www.viacampesina.org 95 Boda, 9. Arts 3 of the Ministers’ Declaration in the 1994 Marrakech Declaration.



Now, there are several points to distinguish within WTO principles. In applying formal equality in the free trade market, as an example between two nations: is it the same beneficial or mutually beneficial relation, if one nation has higher levels of development than the other? Formal equality always benefits those in the more favourable position more. Development theorist, such as Singer, have argued that trade between developed and “underdeveloped” (what an unethical term!) nations benefits the former ones, while has perverse effects on the economy of the latter one, because it causes dependency, uneven development, structural problem in the economy, social inequality and is based on unequal exchange96 (e.g., in NAFTA, the unequal development for Mexico in agricultural policy that causes migration, or environmental impacts…etc). The principle of non-discrimination, on the other hand, is interpreted as “product as product”; the WTO forbids discrimination between two products on the basis of process or method of production. A product may be banned if it does not meet certain health, safety or price standards, but it is not banned if the product was made by child labour, slaves or unsustainable environmental. How can such a narrow interpretation of the principle of non-discrimination belong to the framework of international trade? Why is formal equality, according to the most favoured nation, not balanced with other values such as equality of rights, solidarity, equity or justice as fairness? The WTO principles are a threat to the development of fair trade, especially because it is capable of requiring limits to be set on the labelling of fair trade products and on the amount of information provided to the consumer, and because there is a fear that it will undermine the efforts made to build a legal framework around fair trade practices. More generally, these principles hinder the process of internalization of social and environmental costs, and in some ways WTO allows unethical and even illegally practices. In other words, why did the WTO not become a global organization promoting ethical trade, with solid principles balancing all forms of development among nations and people through the practice of trading? If preferential treatment or compensatory mechanisms address at best the issue of global justice, there is, however, the necessity to adapt new methods within the framework of international trade in order to guarantee and compensate equal levels of development or, it would be even better if the process of trading helps to sustain humanity and the environment. The knowledge and content of the principles of justice are nothing if its applicability is not put into practice. People desire justice, thus the institutions are to be designed as just as possible to fulfil these desires.

§13. The Impact of Fair Trade There is little research about the impact of fair trade on the lives of producers. Whilst some producer organizations are well known for their success, such as the cooperative UCIRI97, as a rule these organizations know little of the impact of fair trade aside from the easily assessed

96 Ibid.12. 97 This is the cooperative where the co-founder of Max Havelaar, Frans van der Hoff was inspirited. Today, UCIRI works as a model cooperative, it has 120 employees working with a wage more than twice the minimal salary in Mexico. Ibid. 411. http://www.uciri.org/

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economic effects. Measuring the social, economic and environmental impacts of fair trade is especially important in that fair trade is not an end in itself; rather, it is a means to attain certain objectives98. For instance, the achievement of a sustainable environment, poverty eradication or food sovereignty are certainly human ends that can be reached through good practices in fair trade, while at the same time, these practices are good in themselves. If fair trade is to truly position itself as a sustainable alternative trading model, the movement must start to reflect on the environmental impacts resulting from the trade in its products. Being an international trading system, fair trade necessarily generates excess pollution and packing because of the transportation aspects. Here, the question of whether fair trade products are justifiable to be imported into countries where these goods are produced locally must be asked. Obvious examples are honey, flowers, orange juice or even wines. Certain flowers delivered via airfreight from Southern countries could be cultivated in the North. Honey imported from Mexico or Guatemala is produced also in other European countries. The orange juice imported from Brazil to Germany has comparable vitamin C content with the blackcurrant juice produced locally in this country. Or, fair trade wine from Chile is as good a quality as the red wine the France or Spain might have. However, the transportation of these products cause ‘unknown’, but without a doubt negative environmental impacts. The issues in the transportation of fair trade products are not yet well discussed among their associations. Fair trade as a sustainable development should start to take actions on these issues. The problem with honey, for instance, seems even more complicated. It is imported by Miel Maya Honing99 and commercialized by Maya Fair trade; the environmental impact caused by the freight is not only the problem but also, it does not promote local development within the apiculturists from Guatemala or Mexico. The honey is imported as raw material, which has less restriction that the final product and it is packed in Belgium where the aggregate value rests in the North countries instead of being part of the local development for the community in the South. If fair trade is a mean to reach certain ends, for example, poverty eradication or sustainable environment, fair trade practices must be with extreme caution, ensuring that local development or environmentally practices are being done in the right way. During the interdisciplinary course on development and cultures held at the Faculty of Social Sciences of K. U. Leuven, “Fair Trade an Illusion?” was the topic of the workshop discussed on 18th December 2006. A student posed the question about what choice should there be between local products or fair trade products. Taking the example of wine, she asked what would be the best choice for the consumer, whether to buy a fair trade wine from Southern Countries (e.g., Chile or South Africa) or the wine that is locally produced in Europe (e.g., French Wine from Bordeaux). Johan Declercq, who is the person responsible in the relationship with producers working for Max Havelaar Belgium and who was present at the workshop, explained his mission on this issue. From the viewpoint of a fair trade organization, if you were to choose between a locally manufactured good or another similar fair trade product, buy the one that has been produced locally as it is better to promote local products (it will be much better if these local products were fair trade products too!). However, if you were to buy a product from the South, buy the one that has been labelled by the organization he is working for, Max Havelaar. In the same way, with the example of 98 Fair trade and the Solidarity Economy: the challenges ahead. Summary of fair trade workshop’s activities. 99 Miel Maya Honing: http://www.maya.be/



honey, he said that as Europe produces 40% of its own consummation of honey, the best choice for consumers if they were to buy honey would be from Europe, and the second best option would be the honey that has been labelled under fair trade standards. I think that this thought is the right choice for consumers, although he did not mention anything about the environmental impacts caused through transportation of fair trade products into Europe. It is evident that the environmental impact of international fair trade provides the logical underpinnings for the development of local and regional fair trade systems. However, it is also legitimate to ask whether strategies of this type, limiting the development of fair trade networks, do not also result in limiting producer countries to the role of producing cash crops and raw materials (e.g., Mexican honey packed in Belgium).

§13.1. Fair Trade goes along with other Movements. Fair trade would be well advised to develop synergies with other alternative trade movements, notably ethical trade (§15.1.), the cooperative movement (§17.2.), fruit and vegetable basket systems and organic farming. Fair trade and ethical trade movements must forge ties, as these are complementary initiatives whose purpose is to re-balance and render more transparent trading relations between producers from the South and consumers from the North. Fair trade and ethical trade concentrate mainly on North-South trade relations, working from the premise that these are the most unequal of trading relationships. Enterprises' social responsibility or, Corporate Social Responsibility (§16.1.) is central to ethical trade, which aims to enforce respect for social and environmental standards based primarily on those laid down by the ILO. Fair trade and ethical trade are known for their contribution to sustainable development, certainly as regards to three fundamental elements: 1) the quest for internalization of the social and environmental costs of production, 2) the partnership between producers and consumers on which they are founded (applies especially to fair trade), and 3) the integration of ethical and sustainability criteria. However, ties between these two movements remain very tenuous, as the workshop members were able to observe during some of the 2005 World Social Forum (WSF) on the subject100. I shall explain further the ties between ethical trade and fair trade in part three (§15).

§14. Inequalities in Fair Trade Once we have seen that fair trade is a business in evolution, it is indeed a successful story through the last forty years. It is true that the greater benefits are not clear enough yet to determine if they are for the least advantaged group, namely, the producers or workers in Southern countries. However, how can we clarify this issue? First of all, who is the least advantaged producer, worker or group, and how is the distribution to be settled? One primary objective of fair trade is to obtain benefits for the least advantaged producers or, according to fair trade definition, to the marginalized producers or workers. On this point,

100 Fair trade and the Solidarity Economy: the challenges ahead.

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there is a lack of practical knowledge between these fair trade benefits and moreover, the real impact in Southern countries. How could it be possible for a marginalized producer get in contact with a Northern association such as Max Havelaar or any other in order to aid the objectives of producers in general? What if the producer, due to his scarcity of circumstances, is not able to ask for cooperation, or even worse, he or she has not equal access to information about fair trade networks as North countries have? If the fair trade movement is unknown within Southern countries in their local government, among their citizens, consumers, public institutions such as universities or local association; how could it be possible for the producer to have fair trade access inside his local community? At the same time, how will the consumers be informed, or how could be possible to promote consumerism awareness if fair trade is not presented in his community? There is not success in fair trade if equity is not efficiently balanced with efficiency in a universal framework. It is ironic to be promoting fair trade in order to eliminate inequalities whilst it is the same movement that promotes certain inequalities. Something has to be done to redefine fair trade; therefore I shall suggest that fairness can be achieved upon the principles of justice. Furthermore, when fair trade is defined as a commercial partnership founded on transparency, many stakeholders, especially producer groups, do not enjoy equal access to information. Communication and circulation of information between producers, distributors and consumers on the basis of true reciprocity has, since the very start of the fair trade, been considered to be a strategic challenge that the fair trade movement must continue to strive to meet. All directly concerned stakeholders must join the process of reflecting on the directions fair trade should take and not just the specialists and academics. In the same way, the participation of stakeholders from the South in the core institutions is vital for the development of the fair trade movement. This point is raised time and again by producer organizations from the South. Everyone has an equal liberty to the total system of liberties to all, said the first principle of justice, if we were to apply it, equal access to information that is shared within North associations, ought to be shared within Southern participants. Information provided to the consumer is a very important issue for the development of the fair trade movement. Increased sales of fair trade goods and campaigning for a fairer trading system both rely on the involvement of critical and responsible consumers. Not only must the movement continue its efforts to raise awareness amongst consumers, but also more generally, it must link the fair trade movement to the movements promoting ethical and responsible consumption101. The certification process in fair trade and its attendant standards — which are sometimes hard for producers to meet — could constitute entry barriers for small producers. Whereas Africa is the most marginalized continent in terms of international trade, producers from Africa are also the least numerous within the fair trade system compared to producers from other continents102. Producer organizations from the South have long demanded a greater role in the operation of fair trade bodies. It is often a matter for regret that the North dictates fair trade standards for countries of the South, and that producers from the South are required to submit to the demands of consumers from the North (e.g., unequal distribution of authority). The 101 Ibid. 102 Ibid.



question here is, to what extent does fair trade genuinely promotes equality of chances for all (as the second part of the second principles of Justice §2.1. and §2.3.)? To sum up this second part, I would say that the evolution of the fair trade movement is, as compared with mankind's evolution: youth in the North hemisphere especially in Europe, and in infancy in Southern countries. The only South country with the label of fair trade is Mexico (comercio justo mexicano103). As almost all the young people have many things to learn, fair trade too has much to learn, for example the impact in the South, its own inequalities and to challenge the legal framework. On the other hand, just as the stages of infancy need the (duty of) assistance of the “big brother”; that is, local development and fair trade initiatives ought to be promoted in the South. I think that the most distinct activities in the world have a vital philosophy behind them. The idea of fair trade is more than a paradigm if it is efficient and just; its philosophy of justice as fairness is not far to be implemented, actually I think that the collective conscience of humanity is asking for it. Chronologically, the theory of justice was read, whilst just (fair) trade was practicable around the same years. This thesis presents a fundamental application of the principles of justice in order to strengthen the fair trade movement. Furthermore, the moral gap between the academic world of philosophy and the practices of business has made its own part: business ethics is the discipline of applied ethics that came into history -chronologically around the same years too- in order to re-humanize sciences and disciplines through Ethics.

103 The label of fair trade in Mexico: http://www.comerciojusto.com.mx

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C. Part Three - Applied Ethics - Business Ethics

“ (there be) enough and as good left in common for others”

John Locke’s proviso This is the last section of this thesis in which I shall justify fair trade as being part of business ethics. Business ethics cannot be studied as an isolated area or discipline. Business ethics as part of the applied ethics its point of departure, for all purposes, is philosophy. Through philosophical reasoning it is possible to establish the guiding principles that rule business ethics, therefore, economical, sociological and/or moral psychology research is needed in order to have a comprehensive approach between business and ethics. One critical and essential question in ethics that was posed since the Greeks, precisely with Aristotle, and followed by many other philosophers (J. Rawls or A. MacIntyre only to mention two of them), was: what is the good life for man? Different approaches to answer this question; from the virtues and excellences defined by Aristotle, to MacIntyre’s definition of practices, and in between, Rawls’s reasoning of the good through the justice. Now, in business ethics more than the guiding principles that moral philosophy can teach us, there are some questions to be answered: what good, if any, could business give to society? Or what are good businesses for humanity? In an individualistic fashion, is it possible to have a good life through practices in business? All these questions concern to the discipline of Business Ethics. However, ethics is not only about good and goodness. Following my idea since the beginning within teleological theories, the theory of justice as an alternative approach for fair trade, the concept of the right came up. The good is defined independently from the right and the right is defined as that which maximizes the good. Then, if the right is prior over the good, the question in business ethics may be: what is right in business? I do think that there is not only one right way of making business since innovation is a fundamental characteristic within business ethics. For this, I shall define a broader concept than that of fair trade, the ethical trade, which is another right way to do business. I believe that the right way to do business is when ethics is applied in business. That is, a comprehensive sense of business is not only to make profits but also to purse the good for humanity. Fair trade and ethical trade do not mean exactly the same, but these concepts may converge in a near future.

§15. Ethical Trade & Fair Trade Ethical trade concerns to the protection of human rights applied to workers and producers or labour standards in general. For this, ethical trade is based on the rights enshrined in the United Nations Declaration of Human Rights and International Labour Organisation (ILO) Core Conventions, including provisions on discrimination, freedom of association and collective bargaining and child and forced labour, as well as health and safety. While fair trade is to apply similar ethical standards, it focuses in small-scale producers, of those producers marginalized from the international trade. In addition, within fair trade movement there is a certification apparatus responsible to verify rules and standards therein. Regarding the



environment, ethical trade as fair trade promotes standards to aim sustainable development. In the next table can be summarized the main differences between ethical and fair trade. ‘Traditional’ Fair Trade ‘Traditional’ Ethical Trade Classic Features * Guarantees of a

“fair” price for producers

* Long term relationships and trust

* Premium for social development

* Campaigns against conventional trade rules and practices

* Codes of labour practice to ensure decent conditions for workers in global value chains

* Buyer monitoring of supplier compliance

Parties Involved * Small-scale producers in developing countries

* Alternative trading organizations and world shops

* Medium and large scale producers

* Retailers, brands and their agents

Quality Coordination Civic (and domestic) Industrial (and market) Table 2: Comparison of ‘traditional’ fair trade and ethical trade104

According to empirical research in the UK, it shows that the method of coordination in fair trade is being made through “civic” and “domestic” basis. This means based in face-to-face relations, on trust of people, places or brands and mainly there is a group of actors to set collective principles and to structure its economic relations while ethical trade is based in an “industrial” coordination which rests on standards, norms, objectified rules and testing procedures. The UK market is one of the most developed European countries in fair trade practices, with the highest turnover on importing organization within Europe105. On the other hand, the Ethical Trading Initiative (ETI106) created in 1998 in the UK currently has 37 company members with a combined annual turnover of over 100£ billion107is promoting ethical trade through different activities within the English society. Furthermore, throughout my research I have not found a unique and official definition of ethical trade, perhaps this is due to the different worldwide views in morality. It follows to a philosophical debate whether mankind share similar moral views, this is not of course my aim here, however, it is important to ask this question –whether or not morality is universal. The first assumption on A Theory of Justice according to John Rawls is to reach a public criterion of justice, whereas all persons have access to this criterion of justice, no matter their religious,

104 Fair Trade and Ethical Trade, (2005). 105 59,556€ in Facts and Figures Europe (October 2005) p.15. 106 The website of the English organization on ethical trade: http://www.ethicaltrade.org/ (November, 2007) 107 As well as non-government and trade union organization members, Fair Trade and Ethical Trade, (2005).

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philosophical or moral beliefs, a public criterion of justice can be achieved within a well-ordered society. The task is then, beginning from one’s initial conviction toward a conception of justice; and this could be a moral conviction108. However, there is a belief of what is meant by ethical trade (in the UK), the ETI gives this provisional definition but still too vague: “in particular, some people refer to “ethical trade” as an umbrella term for all types of business practices that promote more socially and/or environmentally responsible trade”. I would assume that fair trade is a specific way of doing ethical trade in a more equitable manner, where justice is applied within trading. Justice is also applied in ethical trade but in other sense. For instance, a multinational company that makes tobacco and has code of practices for employees while it respects the ILO standards may be considered as an “ethical company” or a company with ethical standards because it gives “to each his own” within the company and it is environmentally responsible according to certain environmental norms. Nevertheless, it is not just since it is not for the benefit of those small producers of tobacco in marginalized places in the world that are excluded from the international competency which is dominated with more effective means by this multinational company. Moreover, these disadvantaged groups need more or at least, equal opportunity to the market, than those that are being beneficiated by the benefits of the multinational company. The difference is minimal and ambiguous because different definitions of justice may be applied. I refer to justice as fairness using the two principles of justice that John Rawls explained not only in the field of political philosophy, but also within moral philosophy, whereas the second principle of justice presupposes a moral notion of justice under the veil of equality of opportunity and the greatest benefits for the least advantaged group. On the other hand, I think that ethical trade fits much better in the ancient notion of justice: to each his own.

§15.1. “To each his own” (suum cuique tribuere) “According to the natural right tradition from the Roman Corpus Iuris up to Thomas Aquinas, fairness is the permanent attitude, supported with will and directed by prudence, to give each his own, especially his rights109”. The core of this definition of distributive justice is interpreted through the permanent attitude namely “fairness”, and the human distributive pattern of “to each according to his rights”. Within ethical trade the gains (or loses) of trade cannot be accumulated only in one side; the values and interest of all the stakeholders must be taken into account. Therefore, to each according to his rights, seems to be a pattern of distribution conducted through fairness, in which each stakeholder is to have a “fair” share according to each stakeholder's rights expressed through codes of practices, norms, standards and/or rules in an international framework. However, there is a problem with patterns of distribution versus human freedom as argued by Nozick’s theory (See how liberty upset patterns in Annex 3).

108 Rawls suggests the following method: one concentrates on those convictions in which one is especially confident, which one has not had reasons to doubt for some time. Rawls calls these considered judgment, fixed and settled. John Rawls his life and theory of justice p. 162 109 Business Ethics Paper N°3, p. 22.



In my opinion, fair trade goes further: there is not only a pattern of distribution but, above all, a moral commitment. What about those workers forgotten from the international market? What about those people being exploited by unethical companies based on competitive advantages such as less cost in production or less strict environmental constraint in poorer countries? Are they seen as stakeholders within the process of trading or being called “work force” or “labour power” because they are only materials and resources? Fair trade aims the benefit for these people and group of peoples. In applying justice as fairness, fair trade challenges the international rules as exactly ethical trade does, however, fair trade is based in a comprehensive definition of fairness in trade, not only as a norm of conduct in the process of trading rather on fairness for the sake of justice. And, this conception of justice is acquired through the concept of the right and a public criterion of justice among the parties. The perpetuity of fair trade can be possible when the stakeholders acknowledge the principles of justice among other principles, in the original position of a social contract. Sometimes the concepts of fair trade and ethical trade are used interchangeably, although one might argue that they represent distinct but complementary approaches to changing the way that international trade is conducted in order to benefit workers and the environment in all countries. Perhaps the most important difference is that the fair trade movement focus in on the communities and seeks to create a new development and trading paradigm, while ethical trading movement aim is to ensure that some internationally recognized labour and environmental are met in the production of goods and products110. If I assumed that these concepts could converge in the future is because this is the central core of international business ethics, to seek, explain, explore moral judgments between communities (localization) and international states (globalization). In this sense, it is accurate to say that what is right in business is the harmonization of localization and globalization of trading and businesses. I believe that this can be done through sustaining humanity because it aim to maximize the common good, as if we were to humanize business would be according to choose what is right and just in business. The fundamental argument behind sustaining humanity through business is to be socially responsible with “the other”. Also, to be responsible with the place where we live, saying, environmentally responsible. This is not so easy as to write hu-ma-ni-za-tion, virtues are needed! Natural virtues and the training of human capabilities and abilities are fundamental to succeed on the humanization of the world of business. Moral virtues such as imagination and intelligence and natural abilities that may be improved through (moral) education and training are premises to be an ethical entrepreneur in business.

§16. Humanisation of business Business ethicists might agree with the fact that one way to humanize businesses is sustaining humanistic business. However, how this ought to be done? How business ethics can be operational while being ethical at the same time? Well, humanity itself is complex and the diversity of human desires hinders the development of human progress. There is something

110 Ibid. 21.

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morally wrong within the current capitalist system. When everything became merchandise, human progress is meant as the wealth of some people of few corporations in some nations. When morality has an economic value, ethical management is only marketing for making profits. This perverse meaning of ethics is expressed by Peter Koestenbaum “to be ethical is profitable, but to be ethical because is profitable is unethical”. Certainly within business ethics, a moral commitment is needed. That is, an ethical judgment of value by morally educated people, namely in a Christian context -discernment111. I think that humanistic business is not only rational management defined by technocracy. This humanism does not motive moral attitudes and virtues although it may be very efficient in making profits in business. Business ethics as a “perfectly humanistic” performance by men or women is to be in reflective equilibrium between rational management and moral commitment, between instrumental efficiencies such as orderliness and virtues such as justice. This reflective equilibrium is obtained with a coherent system of moral convictions. Now, in order to have operational and ethical business accessible throughout the 21st century, humanization on business is required. To apply humanely practices, I believe that virtues are fundamental, therefore, I shall use two ideas to describe this process: the Socratic method and the Aristotelian principle. Before doing this, I shall clarify a different interpretation of humanism.

§16.1. Corporate Social Responsibility: a Humanistic strategy within Business Ethics?

To be sure fair trade and ethical trade are good examples of humanisation in business as they put the value of humanism as the main concern of its practices. There is a moral commitment behind these practices. Both movements aim to protect human rights and the environment. Although Corporate Social Responsibility (CSR) is characterised by rational management within big corporations, CSR is another example in modern economy. In this case, CSR is applied to multinational companies that are dealing with moral issues on daily basis. Since several decades ago some models are used within businesses, for example, the stockholder model, the social contract, the stakeholder model, corporate governance or the cognitive-developmental approach112. It may be thought that CSR is part of business ethics, but its conception from the viewpoint of business ethicists is limited by a rational and technocratic version of humanism. According to the Green Paper published by The European Commission in 2001 defines CSR as ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’. Luk Bouckaret113, an active member of the European Business Ethics Network, said that “CSR contains the credo of Business Ethics”, which is summarized in three points: 1) the need to integrate the economic, social and environmental impact in all business operations in order to create sustainable economics growth, 2) a focus on stakeholder management and manager’s accountability to all the stakeholders, and 3) a commitment to go

111 This is a process in which a person learns to discover his or her own humanising mission. 112 See Corporate Culture and Ethics. J. Van Gerwen. 113 This paper was written by Luk Bouckaert “Humanity in Business” in the European Ethics Network. Sustaining Humanity An Ethics Agenda For European Leaders Today.



over an above explicit legal requirement in order to respect the implicit social contract between business and society whereby the firm’s ‘licence to operate’ goes together with a social responsibility to create sustainable value for all its stakeholders. In this way, on the European macro level CSR is seen as an instrument to achieve the strategic goal of becoming by 2010 “the most competitive and dynamic knowledge economy in the world, capable of sustainable growth with more and better jobs and greater social cohesion’. I mention the example of CSR since it is clear the lack of ethical commitment behind this movement, even the term of ethics was avoided in the CSR’s definition; it is an example of rational humanism within business ethics. Therefore, it is unclear what kind of humanism or rational humanism is to be applied in business. Following the same author, Luk Bouckaert, he wrote: “By reducing ethics to a functional and instrumental management concept we lose something vital. We are crowding out genuine moral feelings and genuine moral commitment, substituting them for rational and technocratic ethics managements114”. Indeed, the example of CSR published on the Green Paper reduces moral feeling and moral concepts such as trust or democracy, and virtues such as integrity that complement the meaning of humanism. I cannot say whether or not is right the meaning of humanism here as an ethical instrument on business but definitely humanism means something more than rational thought.

§16.2. The Socratic Method I shall begin with the Socratic method – maieutic, ‘the art of delivery’. I believe that the first step in order to humanize human activities in general is to know oneself, and the maieutic method helps to do this. Socrates compares his work with the work of a midwife, helping others to give birth their child. This is already something very humanistic I think, it is not only to be at the service of others but most of all, help them in order to find their needs. The Socratic method idea is that the True is already inside each man’ soul, however, an external factor is needed in order to remember it or (re) know it115. Through questions and answers, dialogue in other words, is possible to achieve this aim. Ethicists utilises Socratic teachings to express different ideas within business ethics, e.g., J. Van Gerwen in “the Socratic method and the corporate virtues” or Luk Bouckaert, “the Socratic humanism and the ethics of entrepreneurship” in Humanity in Business. My reflection here is more related with the meaning of humanism in business. I like to use then, the maieutic method, which has three steps116: Socrates' starting point is to search for paradoxes and contradictions within the existing discourse in order to make people “know that they did not really know”. Secondly, after the deconstruction of the existing discourse, he introduced a positive quest for meaning. To understand the meaning we must get into contact with the meta-rational source of knowledge, which is only accessible by listening to our personal inner intuitions. That is to “know yourself”. The third step is to test our intuitive knowledge through the process of an on-going argumentative dialogue. The maieutic method certainly is useful to behave humanely as much as is possible, however it requires someone or

114 (Bouckaert, 2002). Ibid. 102. 115 Méthode socratique de recherché de la vérité, appelée ‘maïeutique’et fondée sur l’idée que l’âme connaît déjà le Vrai, mais ne peut s’en ressouvenir sans une aide extérieure. 116 Bouckaert, (Humanity in Business). Ibid. 103.

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something else in the process in order to generate this kind of introspection in order to solve our needs and to follow our true desires. Now, the central problem of this thesis is that fairness is needed in fair trade practices, equity in not yet balanced with efficiency. That is, instrumental abilities are not balanced with human excellences, namely virtues. To illustrate this: efficiency fails when “anyone’s gain is somebody’s loss and usually somebody else’s loss” and “anyone’s benefit is somebody’s cost and usually somebody else’s cost”. Let us say that chocolate is very famous in Belgium where Belgians and foreigners consume it and it is very much demanded in the market. Evidently, due to whether conditions cacao cannot be cultivated in Belgium’s land, so it is necessary to import it (as raw material) from Africa and therefore, transform it and sell it into the Belgium market. Let suppose that this is not an efficient transaction, through logic may be expressed as the statements above. It is possible to say that there are benefits for the producers since they are being paid for their work, but these wages are according to national’s wages, so their benefits are minimal compared with those of the Chocolate Company. The greater benefits are for the Chocolate Company, the problem of equity still unresolved. Furthermore, let us suppose that according to the financial manager this transaction was efficient, since the benefits of the Chocolate Company are making good profits without too much cost. Is it an efficient transaction for producers and workers in Africa? What about the environmental costs? In either case, it is a zero sum game with winners and losers. What is wrong in here? Why the wealth of the financial manager is not the same as the farmer‘s wealth while both are developing human practices? Following MacIntyre,117 “let us distinguish between the goods which are internal to practices and goods which are external to them. The goods internal to practices characteristically include various forms of excellences; the excellences involved in achievement in a variety of games and sports, the excellences involved in achievement in the science, the excellences involved in productive work, in farming or in fishing. In each of these cases we can pick what it is to be excellent, and we can see that people who achieve what it is to be excellent may or may not, depending on contingent circumstance, also achieve wealth, reputation, and power, by being excellent. But these achievement are purely incidental. Now, somebody might suggest that practices such as farming or fishing have their analogy in, for example, financial management. The farmer produces cacao, while the financial management produces money. Here, it is very important to note that high levels of skill are involved in financial management, just as they are in excellent farming. And in evaluating skill, one might speak about the financial manager as being excellent. Nonetheless, the assumption that the financial management is that one can be interested in the accumulation of money without having an eye to what the money is going to be used for; it is crucial that money is treated as if it were an end. Well, this would be all right if it was really possible for people to treat money in the way in which chess players play chess pieces: useful pieces of wood which they can use in their game in a particular way to achieve human excellence. Money is treated as having a magnetism of its own, so that money becomes the kind of thing that is treated as though it could be a human end. Now, it is not.

117 MacIntyre, (Kinesis: Graduate Journal of Philosophy).



That is to say, financial management, together with a great many other business and commercial practices, generates illusion. And by generating illusion, the skills, which are involved in the illusion, become in fact skills put to the service of false judgment and false belief. So that far from this being an area of human excellence, it is an area in which people are systematically deceived. But of course, it is not only an area in which people are systematically deceived; it is also an area in which people are systematically corrupted. Farmers can become corrupted by not developing those capacities which make them excellent as farmers. Financial managers can become corrupted by developing precisely those capacities which make them excellent as financial managers”. This analogy can exemplify the problem with the world of business activities, and the quest for humanisation of business. Firstly, the financial manager faces the problem of illusion on his abilities, as long as he realizes that his work is unworthy and meaningless. That is, only gaining profits from the farmer’s work while not compensating the cost of the environment or giving any social benefits to the community of producers. Here, the financial manager can do something more than the ability of making money for his company; being just in fairly sharing the benefits with the farmers. With this, the financial manager is looking into his excellences not as a manager, but as a human, he develops the virtue of justice when he is to equalize the benefits. He sees that the farmers are happier because they are fulfilling their needs and desires and having wealth through farming with a fair share. The man realizes his true self through his human virtues rather than his instrumental abilities in the role of financial manager. This process belongs to maieutic method since there is a deconstruction for the rational discourse of the financial manager “I am making money, but my work is meaningless, it is unworthy”, therefore he found a quest of meaning through his inner intuitions of virtues, as being a just man. And finally, through the dialogue with the farmer, he found out what he was looking for: achieving wealth and good reputation by being excellent financial manager but most of all, a just man in that particular situation.

§16.3. The Aristotelian Principle118 Besides this fictitious example, I would like consider what we really need in order to humanize business. They are virtuous men or women, leaders in entrepreneurship with a broad imagination who are responsible for innovation in the world of business. This paradigm starts from the central insight derived from the Aristotelian ethics: ‘ethics is a part of politics’. These people live virtuously, not because they fear being caught after trespassing or they expect to gain an extra profit, but because they find an internal reward in the practice itself, realising simultaneously the good for society and a personal satisfaction by performing well119. Therefore, I am substituting the statesman in an Aristotelian context for the businessman in our modern times, that is, to say, “the most virtuous people make the most significant contributions to business120”. For instance, back in 1976, “The Body Shop” with

118 Rawls, (TJ), 424. The Aristotelian principle runs as follows: other things equal, human begins enjoy the exercise of their realized capacities (their innate or trained abilities) and this enjoyment increases the more the capacity is realized, or the greater its complexity. 119 Van Gerwen, 66. 120 Aristotle’s suggestion is that wealth and honor be distributed according to virtue. The most virtuous people make the most significant contributions to the life of the city, so they have the right to the greatest honors. (Of

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Anita Roddick shows that ‘businesses have the power to do good’, her imagination and self-determination revolutionized the world of business. As a leader in maximizing the good within businesses, she has motivated several movements, actually the fair trade movement itself started around the same time. At the moment, she still is an activist promoting among other things, the trade justice movement,121and motivating more virtuous people into the world of business. How can the Aristotelian principle improve humanisation in business? I use the Aristotelian principles, defined by Rawls in A Theory of Justice, as a model of virtues with two distinct features. The first one is that the Aristotelian principle is a basic principle of motivation. The second one is that the Aristotelian principle contains a variant of the principle of inclusiveness (§6). The former feature ensures the reasons of virtuous (ethical) entrepreneurs to go into the world of business. The latter one is fundamental in order to achieve the most important aims when doing business. Business cannot be reduced to a set of strategic aims e.g., competitiveness, financial management or production of better products. Dr. John Verstraeten, following Peter Block, supports this argument with this statement: “Those who think that people strive only for money have given up hope that something more is even possible122”. Business ethics is a comprehensive discipline in order to achieve the most important aims, and in addition, it attains other objectives. The idea is that the Aristotelian principle is a natural fact with broad features of human desires and needs, whereas human begins exercise and develop their capabilities and abilities, which are to be fit in a rational plan of life (§5, §7). I assume that there is equilibrium among natural talents and training, and that is among virtues and instrumental efficiencies. If it is thought that business ethics needs leaders and ethical entrepreneurs in order to sustain humanity in business, the question is: what kind of leaders and what is an ethical entrepreneur? They are, using the Aristotelian approach, virtuous people with imagination and creativity, capable of innovation and making new ways of doing things in business. Entrepreneurship in this context has been defined as the ontological skill of disclosing new way of being123, creating a moral space for human capabilities and abilities. The plea in respect of ethical entrepreneurship is aimed at ensuring that business ethics becomes part of a company’s core business. Ethical entrepreneurship, in a nutshell, amounts to the achievement of ethical goals through entrepreneurship.124Therefore, ethical entrepreneurs or good entrepreneurs are those people who have a vision within business as a mean to achieve human ends, and that is, as being excellent on discovering one’s self. In this way, the account for the principle of inclusiveness is that the ethical entrepreneur allows for the encouragements and satisfaction of all the aims or interests of his plan and for the encouragement and satisfaction of some further aims or interests in addition. As long as the entrepreneur obtains good reputation (or satisfaction, honour, well-being…) through its

course, at that time women, working man and slaves do not have freedom to fully exercise all the virtues, my plea here is according to the principles of justice -fair equality of opportunity.) 121 Trade Justice Movement’s website: http://www.tjm.org.uk/ (on January, 2008) 122 Verstaeten, Johan. In “Business Leaders to Humanize the World of Business”. 123 Bouckaert, (Humanity in Business). This definition is from C. Spinosa, F. Flores and H.L. Dreyfus (inspirited by Heidegger) in their book Disclosing New Worlds (1997). 124 Wempe, Johan. In Ethical Entrepreneurship and Fair Trade.



noble and innovative practices of maximizing the good for society, there is a companion effect through the basic principle of motivation (within the Aristotelian principle) that sustains new leaders and ethical entrepreneurs in order to humanize business.

§17. On Justification: A Theory of Justice & Fair Trade What is all this about? Why a theory of justice could improve fair trade movement? My approach came from intuition, which has been influenced by my empirical life. Throughout my experiences -living and working along with Southern people and until recently following my studies within North societies- I believe that justice, and especially John Rawls’s Theory of Justice ought to be considered within the movement of fair trade, since issues of modern global justice are entailed with the market economy. The common ground is the common sense for moral development through fair trade. But, furthermore, what would be a reasonable answer to all the injustices made by the wild capitalism? As MacIntyre expressed “ (we) have to find a way to live with dilemmas, conflicts and insoluble problems of a radically imperfect social world125”. Are young liberals - creative leaders with imagination as the only scope - to reform the economical order through business? I think that here there is one possible and reasonable answer within business ethics: make fair trade balancing justice with efficiency. Through this part, I would like to sketch the hypothetical situation within the social contract in which, the parties would agree to the principles of justice. In justice as fairness the parties agree with a conception of the right and that of justice. There is another concept that they ought to agree with, that of moral development. It is necessary for the parties to have and to share a sense of justice where moral sentiments and natural attitudes are compatible with it. As fair trade is a global agreement with different circumstances -from South to North and North to South people- this may be problematic but not impossible. Human nature shares similar pattern of moral behaviour, nevertheless moral education is needed in order to have moral development. In order to explain this, the principles of moral psychology would be acknowledged. I think that through the practices of fair trade, there is a moral education implicit in it, at least to a certain degree of morality. That is, dignity for the producers in making their work as meaningful as possible and, to raise awareness and consciousness for the consumers.

§17.1. The Principles of Moral Psychology126 Taken for granted that these principles represent tendencies and are effective, other things equal, they can be rendered as follows:

125 MacIntyre, (Why are the problems of Business Ethics Insoluble?), 101. 126 Rawls. (TJ), 490-491.

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First law: given that family institutions are just, and that the parents love the child and manifestly express their love by caring for his good, then the child, recognizing their evident love of him, comes to love them. Second law: given that a person’s capacity for fellow feeling has been realized by acquiring attachment in accordance with the first law, and given that a social arrangement is just and publicly know by all to be just, then this person develops ties of friendly feeling and trust toward others in the association as they with evident intention comply with their duties and obligations, and live up to the ideals of their station. Third Law: given that a person’s capacity for fellow feeling has been realized by his forming attachments in accordance with the first two laws, and given that a society’s institutions are just and are publicly known by all to be just, then this person acquires the corresponding sense of justice as he (or she) recognizes that he (or she) and those for whom he (or she) care are the beneficiaries of these arrangements. The principles of moral psychology have a place for a conception of justice; and different formulations of these principles result when different conceptions are used. Thus some view of justice enters into the explanation of the development of the corresponding sentiment; hypotheses about this psychological process incorporate moral notions even if these are understood only as part of the psychological theory. After all, the sense of justice is a settled disposition to adopt and to want to act form the moral point of view insofar at least as the principle of justice define it127. Therefore, fair trade movement is, as the principles of justice are, part of a moral choice. Moral development is a reasonable evolution for individuals acquiring the principles of justice within fair trade practices. How is the moral development for the parties within fair trade?

§17.2. Moral Development for Producers Producers mainly in Southern countries are organised in cooperatives; being one in a cooperative (or “el ser cooperante” in Spanish) in the South is, as compared with the North, a responsible and active citizen, so to say. Most of the principles (or values) within the cooperatives are based in what I earlier mentioned as natural duties (3.2.). The principle of mutual aid and the principle of mutual respect are primary principles within the cooperative systems. These individuals regard each other as equal and free persons (namely ‘members’ in the cooperative system). The cooperatives are democratic organizations which golden rule is “one person, one vote” at the time they have to take decisions within the general assembly. In this sense, the practices of cooperation are of mutually advantage for all the members. The cooperative as an institution is basically just, or as just as is possible; hence their members develop a sense of justice through cooperation. And, according to the principles of moral psychology the members of each cooperative acquire a sense of justice through the results of the practices of cooperation. The ties of friendship and trust are important values for all the members of the cooperative; these feelings are even stronger when the members have ties of

127 Ibid.



culture such as the language, ethnicity or customs. This is a distinct characteristic among indigenous people working as producers in small communities in the South. I definitely believe that moral development is possible for producers when the fair trade movement dignifies producer’s work. That is, the producer develops his excellences as being a good producer. But, moreover, the producers have a meaningful work in which, and I follow Nozick on this, they develop their self-esteem according to social psychological law. Meaningful work includes (1) an opportunity to exercise one’s talents and capacities, to face challenges and situations that require independent initiative and self-direction, (2) in an activity thought to be of worth to the individual involved (3) in which he understands the role his activity plays in the achievement of some overall goal and (4) such that sometimes, in deciding upon his activity, he has to take into account something about the larger process he acts. Nozick explains how being ordered or subordinated without any democratically principle, unselected by you, lowers your self-esteem and make you feel inferior128. Furthermore, if the fair trade movement is to promote equity within international trade, its evolution challenges the development of consumers in the South. Normally it is thought of Southern countries as only the producers, but this is mistaken. It is contradictory to be promoting equity and justice while the consumers in the South are excluded from fair trade movement. Through fair trade, the consumers in the South can achieve moral development as consumers in the North do; increasing awareness for consumers is a primary objective within fair trade. Moreover, this consciousness in responsible consuming is to benefit other moral issues in Southern countries e.g., discrimination towards indigenous people and native people. Due to the lack of awareness of consumers in the South, sometimes they do not even known that better quality products are possible, in certain products such as coffee, cacao or tea, which are produced in their own countries.

§17.3. Moral Development for Consumers In the context of fair trade, the ethics of responsibility applies especially to the North, where consumers are being asked to become aware of their interdependence with Southern producers and their ability to exercise their purchasing power in order to influence the living and working conditions of these people. The intention is to have a universal ethics of responsibility that could be possible as long as fair trade is understood as global movement where consumers in the South will participate in the fair trade movement. This means that citizen-consumers in the North (and through fair trade evolution citizen-consumers in the South too) are responsible for the consequences of their acts, intentional or unintentional, planned or unplanned, just as they are responsible for not having acted when they had the chance: they cannot hide behind the knowledge of their own impotence or ignorance, or behind the duty to obey129. Moreover, it is necessary to understand consumer’s attitudes and beliefs in the North. Empirical research in Europe (specifically in Belgium) shows that older, higher educated and higher income consumers appear to be the obvious socio- demographic target group for fair- 128 Nozick, 246-47. 129 Fair trade and the Solidarity Economy: the challenges ahead.

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trade products (a target which is only reachable in certain cities in Southern countries). At the same time, the research shows that the first reason for consumers to purchase fair trade products is to give a fair price to farmers in developing countries, the second reason, for the safeness and honesty in the production process and last reason was, for the dignity and autonomy of the producers. On the other hand, the reasons not to buy fair trade products were: not enough information and high prices130 (See table 3). Consumer’s main reasons to buy or not to buy fair-trade products: Reason % of Respondents TO BUY A Fair Price to Farmers in

Developing Countries Safe and Honest Production Process Retention of Dignity and Autonomy

63 56 52

NOT TO BUY Not Enough Information Price is Too High

50 44

Table 3: Belgian consumers: fair trade beliefs, attitudes and buying behaviour.

It is interesting to note that consumers are buying fair trade products in order to be ‘perfectly’ fair in the distribution of the shares on the commercialization of ‘X’ product, and this may be an act done through a natural duty, that is, to uphold justice. However, this research does not show the intentions of the consumers, whether the consumer buys fair trade products because it is a duty or because it is a beneficent act e.g., charity actions. Both actions are good acts (good defined by a rational plan of life §5) but with different outcomes within the fair trade movement. The consumers buying fair trade products because it is rational to give a fair price to the farmers in developing countries (according to the survey) may be seen as a supererogatory act i.e., as one (act) which a person does for the sake of another’s good even though the proviso that nullifies the natural duty is satisfied. Therefore, buying fair trade products are good actions131. Let us suppose that for each person there is a rational plan of life that determinates his good (§5). A person’s good is exemplified by a successful execution of a rational plan of life. The goodness of each act done by the consumers’ choice is followed by the third conception of ethics, a person’s moral worth. It is not to say that he is a good person because he is buying fair trade products, but in the role of consumers, the consumers have a moral development that is being formed through the pursuit of good actions. Thus, it is evident that there is a moral worth in being a good consumer. At the same time, fair trade is to increase awareness among consumers (ethics of responsibility); a

130 Fair-trade beliefs, attitudes and buying behaviour of Belgian consumers (2006) 131 Rawls (TJ), 438. In the sense of benevolent action, as a good act performed for the sake of another person’s good.



good consumer may be one that does responsible consumerism. Until here, I have exemplified the role of leaders in ethical entrepreneurship who are the people responsible to promote humanisation in business ethics (§16.3.). I argued earlier that fair trade is a trend to develop humanely practices in business ethics (§15, §16). Furthermore, I mentioned above that the moral development of producers and consumers can be developed, to some degree, when both groups participate in fair trade practices. Therefore is time to sketch the original position in fair trade.

§18. Fair Trade in the Original Position The hypothetical situation takes place in the global village. There is neither an ideal theory nor a non-ideal theory as Rawls’ Theory of Justice is divided. For this, I shall use one interpretation of Rawls’ Theory of Justice making one simple social contract in fair trade. There is a simple reason for doing this: in engaging in a social practice, equality is for all people. I refer to the third kind of equality according to Rawls132, that of moral persons being entitled to equal justice. Moral persons have two features: they are capable of having (and are assumed to have) a conception of their good (as expressed by a rational plan of life §5); and second, they are capable of having (and are assumed to acquire) a sense of justice. The parties have a normally effective desire to apply and to act upon the principles of justice. The sense of justice can be acquired through the principle of moral psychology (§17) or moral development (§17.2, §17.3). (As The Law of Peoples’ concepts) People from a well-ordered society (ideal theory) and people from a burdened society (non-ideal theory) are seen as equal and free human beings (the Kantian interpretation). There is no distinction among them since, in the original position, each man has an equal right and equal liberty compatible with the total system of liberties for all and, all primary goods have fair equality of opportunity for all. The hypothetical situation does not apply to states or nations but only to people. In this situation, the institution of fair trade is to acquire the two principles of justice, and the individuals - consumers, producers and the actors of fair trade - must agree with the principles of justice. Thus, this procedure, viewed from the institution of fair trade, belongs to a state of pure procedural justice (§1.2). The veil of ignorance (§4.3) is a special feature of Rawls’ original position; it is to nullify particular knowledge and information among the parties. He applies the veil of ignorance to the parties in order to exclude the arbitrary contingencies that hinder a conception of justice. Now, the insight of the veil of ignorance goes as follows: “I do not know anything, the only things that I might know are available to you with exactly the same content133”. That is, being in an equal status quo another person with free and transparent access to information, and to be ready to act. The Kantian interpretation clearly explains this situation. Kant’s notion of autonomy is to believe that a person is acting autonomously when the principles of his action are chosen by him as the most adequate possible expression of his nature as a free and equal rational being. 132 Ibid. 504. 133 Italic made by me.

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The principles he acts upon are not adopted because of his social position or natural endowments, or in view of the particular kind of society in which he lives or the specific things that he happens to want. To act on such principles is to act heteronomously. Now the veil of ignorance deprives the person in the original position of the knowledge that would enable them to choose heteronomous principles134. It seems impossible to apply the veil of ignorance in the original situation among the parties establishing a social contract in fair trade. But the principles of justice are the object of rational choice, as in Kant’s idea that moral principles are the object of rational choice. These maxims or principles define the moral law that men can rationally will to govern their conduct in an ethical commonwealth. Now, in the original position, a consumer living in Brussels or Paris has a similar rational way of seeing the world as the individual working for the organization created in one of these countries (Oxfam-Magasin du Monde in Belgium or Artisans du Monde in France). They share a similar vision of the world. The other party is the producer in the South working all his life with the earth, animals, nature and so on - sometimes these producers are indigenous people and evidently, they have another vision of the world, the same world but with different perspective. I would say that they act fairly according to the law of nature. Not precisely a rational choice, but they act upon moral principles all the same135. Acting according to the law of nature, these societies in the South share a moral conduct that may be seen as a rational choice for others. I would like to suggest that the set of principles for Southern societies, such as the indigenous people, have a natural justification that may be compatible with the rational choice of individuals in the North: for instance, moral behaviour as self-respect of its cultural identity or the principle of mutual-aid within their activities. It does not matter how the reasoning has been made, as social status or natural endowments indeed influence it, the essential point is that we need an argument showing what free and equal persons would choose, and these principles must be applicable in practice as the principles of justice acquired in fair trade. That is not to distinguish consumer as consumer or producer as producer but, instead, people as people. This is expressed by Sidgwick, as he remarks that nothing in Kant’s ethics is more striking than the idea that a man realizes his true self when he acts from the moral law, whereas if he permits his actions to be determined by sensuous desires or contingent aims, he becomes subject to the law of nature136. Rawls thinks of the original position as the point of view from which noumental selves see the world. The parties qua noumental selves have a complete freedom to choose whatever principles they wish; but they also have a desire to express their nature as rational and equal members of the intelligible realm with precisely this liberty to choose, that is, as beings who can look at the world in this way and express this perspective in their life as members of society137.

134 Ibid. 252.

135 To mention only one example as living according to the natural law, e.g., harmony with domestic animals. In my experience working with indigenous people -maya-tzotzil- in the South of Mexico, I could not find any reasonable explication to their tradition of burying its sheep when they die. Moreover, the distinct thing is that they never eat their meat; the sheep are considered members of the family. The indigenous people only use its wool to make tissues as part of the tradition. 136 Ibid. 254. 137 Ibid. 255.



Therefore, in the original position, in order to establish a social contract of fair trade, the parties, through will and reason, must be regarded as free and equal rational begins, with no concern as to their sex, race, nationality, socio-economical position, natural endowments or any particular information - only general knowledge is available for them. Hence, the veil of ignorance is a philosophical reflection that allows seeing each person as an equal and free rational being. In the fair trade movement there are only three parties: producers, actors and consumers. They are divided into the Northern people (consumers, possible producers), the Southern people (producers and possible consumers) and an impartial spectator as being a perfect altruist (any possible actor of fair trade). The institution of fair trade agrees with the two principles of justice (§2): In fair trade all the parties are to have an equal right to the most extensive total system of equal basic liberties compatible with a similar system of liberties for all. The fair trade movement is to arrange social and economical inequalities so that they are both 1) to the greatest benefit of the least advantaged and, 2) attached to position and offices open to all under condition of fair equality of opportunity. The principles of justice acknowledged by the parties in this situation shall guarantee justice as fairness in the fair trade movement. Therefore, assuming the other principles acquired by fair trade, this movement is engaged to equalize efficiency with equity. The conception of fair trade runs as follows: the fair trade movement is a socio-economical activity based in respect, dignity and justice; it is an alternative way to trade products from the South hemisphere to the North hemisphere and vice versa. Fair trade allows South-to-South and North-to-North commerce in order to promote local development and sustainable development. Fair trade dignifies workers and producers, paying them fair wages according either to ILO standards or national standards depending on the better case. The fair trade movement produces meaningful work for its participants. Fair trade is an instrument that needs general cooperation based in mutual aid and trust, especially by its actors. It distinguishes between better-off societies to assist worse-off societies and this could not be possible without the conscious awareness of consumers, actively promoting fair trade practices sustained by fair trade actors. Moreover, fair trade dignifies business and its participants creating innovative financial tools such as micro credits for local communities. Fair trade’s primary objective is to be engaged in local development that will be the key in order to work out a sustainable development. In this way, the fair trade movement highlights its contribution to business ethics. Fair trade challenges the legal framework proposing stricter rules according to ethical practices; therefore it is a political movement for changing the rule of law and to make free trade a more equitable and fairer trade. Fair trade is, then, only a means that serves for reducing poverty and sustaining food sovereignty as essential ends or development goals as defined by the United Nations working with the poorest groups in the global economy.

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Fair trade associations, organisations and all fair trade actors (excluding producers and consumers) are playing the role of the spectator - an impartial and independent role. They must be convinced of their role as being indifferent of other aims. These actors assure the success of fair trade as a common good for the parties, and thus, for the global society. An impartial and rational spectator is a person who takes up a general perspective: he assumes a position where his own interests are not at stake; he possesses relevant information and the power of reasoning. So he is situated equally responsive and sympathetic to the desires and satisfactions of everyone affected by the social system. For this, the spectator is playing the role that would be compared with the classical principle of utility: “the greater net balance of happiness with which to sympathize, the more a perfect altruist achieves his desires138”. Looking ahead, they are encouraged to create the World Ethical Trade Organisation (WETO) promoting fair trade practices, ethical trade, and, most of all, business ethics. WETO is thought of as a business that has the power of maximizing the good through, for example, the fair trade movement. As long as fair trade develops in its evolution, the first principle of justice ensures that all the parties engaged in the original position have equal liberties, for example, freedom of association and freedom of information through transparency. The second principle of justice in fair trade will develop the impact of fair trade in the South. In this way, not only producers and workers will have the access to fair trade products but also the consumers in Southern nations. Therefore, equity and fairness in fair trade is possible. Otherwise, it will be an unequal development within our global village.

D. Justice in Fair Trade Justice is excluded from the current market economy; socialist critics from protagonists of the free market economy have accepted this139. It is obvious that there are not just prices or just wages within the demand and offer in the market economy. The economical order is measured by production and more production, controlled by oligopolies accumulating capital where fair rules are far to be adapted. While the economy operates in a free market fashion, the accumulation of capital raises inequalities. This is a blind process. These inequalities are not only visible in the market economy. Growth accentuates the gap between those who control investment decisions and those whose lives are shaped by these investments; between those who possess important technical skills and the unskilled workers, and it is the same case for the employed and the seasonally unemployed. These inequalities and injustices are two constants in the current market economy. What ought to be done? It is out of our scope to have a radical change in the economical system, although it is possible to modify it from within the system. Fair trade, however radical, presents to us, a new economical, social and political paradigm in the 21st Century. Fair trade is not free trade, as it is wrongly interpreted by WTO, fair trade is a modus operandi that changes the rules of the conventional international trade. In contrast with the

138 Ibid. 189. 139 MacIntyre, (Why are the problems of Business Ethics Insoluble?) 100.



market economy, fair trade aims to respect human rights and the environment. Fair trade, among other movements such as CSR and ethical trade, are part of the modern economy in the 21st century within business ethics. The synthesis of this thesis, or more exactly, the idea throughout this paper, is to apply justice in fair trade, justice as fairness as expressed in Rawls’ A Theory of Justice. Social practices of fair trade can have positive impacts on the social and economical inequalities for the less advantaged in the market economy. In presenting the principles of justice in the fair trade movement, I am suggesting an ethical transformation of the current market economy: a change of mind has been made and its success has been proven. Therefore it is up to the citizens to support the fair trade movement. Moreover, fair trade has to be redefined in order to assure an equal development of benefits, values and moral education guaranteeing equal liberties for all, equality of opportunity and greater equity in the international trade. This movement, supported by the difference principle, has the priority to establish a better situation for the least advantaged groups, giving them access to the market economy. In this way, assuming the framework of a fair trade institution acquiring the two principles of justice, equal liberty is required and fair equality of opportunity. The difference principle allows for the higher expectations of those better situated to be just if, and only if, they work as part of a scheme of cooperation, which improves the expectations of the least advantaged member of fair trade movement. However, taking the principles of justice for granted within the fair trade movement, visible changes are for the future, but the decisions must be taken in present time. Thus, it will indeed affect our own future. Scarcity of resources is seen as irremediable; undoubtedly this is an appeal for sustainable development not only to the environment but also, and to as much of an extent, to humanity. In making fair trade, applying the principles of justice as other principles established in the fair trade movement, efficiency in the market is to be balanced with justice. It is precisely through imagination that this ethical transformation in the system may be possible, the role of imagination within business ethics is essential to look for a meaning, and this work is a single proof of it.

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E. Provisional Conclusions In the first part of the thesis, my aim was entirely dedicated to give a broad description of A Theory of Justice written by John Rawls. For those readers that have enjoyed this theory, certainly it is difficult to imagine this moral and political philosophy in the field of economics, namely, the fair trade movement. However, my essential thought within this theory is that never throughout history in regard to distributive justice has there been written, or discussed, such an empathic principle: “the difference principle”. But, the most striking quality is how John Rawls conceived it, through a practical reasoning of the right and the good, achieving rightness and goodness with the conception of justice (as fairness) is possible to assist the one who needs the most. To be sure, Rawls’ Theory of Justice is so broad in many senses, that I only chose the main features in order to make plausible my claim of applying its two principles of justice within fair trade. I would say that the most important feature is to understand the idea of justice as fairness through a social contract, which is pursued in the original position with a state of pure procedural justice. Hence, its principles are acquired through the rational choice of the parties who see each other as free and equal rational beings. In this way the fair trade movement comes as a noble practice that also tries to assist the ones who need the most while satisfying the desire of consumers. Within a blind and wild market economy, this paradigm came into history proclaiming that virtues are also important in economics, e.g., justice. The fair trade evolution, which I earlier argued, is moving forward - going straight ahead in order to reach equity. In September 2006, the first Africa Fair Trade Symposium was held (in Benin, West Africa), in February 2007 the Second Latin America Meeting of Fair Trade and Solidarity-based Economy was held in La Havana, Cuba. In October of the same year, the first Asian Forum for Solidarity Economy held in Manila, Philippines was held140. In addition, the legal framework in Europe is supporting fair trade. Recently the Treaty of Lisbon states: In its relations with the wider world, the Union shall uphold and promote its values and interests and contribute to the protection of its citizens. It shall contribute to peace, security, the sustainable development of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the protection of human rights, in particular the rights of the child, as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter141. I believe that changes are being made; my proposition within this thesis is about hope, which can be achieved rationally with justice as fairness in the framework of fair trade. Lastly, the emphasis of using the philosophical approach of a moral theory on the subject of fair trade is to argue that business ethics is workable if, and only if, there is a culture of virtues within it. This implies a comprehensive conception of humanisation, moral development and a

140 http://fairtrade.socioeco.org/en/index.php (revised on 5 January 2008) 141 Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community. Article 2 (5). http://www.consilium.europa.eu/uedocs/cmsUpload/cg00014.en07.pdf (Revised on 24th, November 2007).



free space for developing human capacities and abilities. Assuming that throughout this thesis I tried to make this problem evident, therefore to apply fairness within fair trade in order to expand the practices of business ethics in the world of business, I leave two open questions: What is the evolution of Business Ethics regarding its thorough work of humanisation in business? Therefore, shall we ask: Are the virtues the touchstone that will define businesses tomorrow?

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la.org/index.html> (December 2008).

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Annex 1 A Theory of Justice (1971) has three parts, in which there are nine chapters and, in total 87 points (§#). My –brief- summary basically consists of chapter I, II, III and IV, which was the theoretical part. In part two -Institutions-, I did not use the chapter IV “Equal Liberty”, only few points such as the notion of the ‘Rule of Law’ (§ 38), and ‘the Kantian interpretation of Justice as Fairness’ (§40). I did not mention neither the chapter V “Distributive Shares”, nor the chapter VI “Duty and Obligation”. In part three – Ends-, I used some conceptions of chapter VII “Goodness as Rationality” such as the definition of ‘Good for Plans of Life’ (§63), ‘Deliberative Rationality’ (§64), and ‘the Aristotelian Principle’ (§65). In chapter VII, “the Sense of Justice”, I used ‘the Principles of Moral Psychology’ (§75) and some ideas of ‘the Basis of Equality’ (§77). In the last chapter IX, “the Good of Justice”, I did not mention any of its points. The Theory of the Good is presented in the third part of the theory. Rawls divides the theory of the good, in the thin and the full theory. The conception of the good has three stages: (Rawls, TJ) “I suppose the definition to have three stages as follows (for simplicity these stages are formulated using the concept of goodness rather than that of better than):

1. A is a good X if and only if A has the properties (to a higher degree than the average or standard X) which it is rational to want in an X, given what X’s are used for, or expected to do, and the like (whichever rider is appropriate);

2. A is good X for K (where K is some person) if and only if A has the properties which it is rational for K to want in an X, given K’s circumstances, abilities and plan of life (his system of aims), and therefore in view of what he intends to do with an X, or whatever;

3. The same as 2 but adding a clause to the effect that K’s plan of life, or that part of it relevant in the present instance, is itself rational. What rationality means in the case of plans has yet to be determined and will be discussed later on. But according to the definition, once we establish that an object has the properties that it is rational for someone with a rational plan of life to want, and then we have shown that it is good for him (human goods).

Now this moral neutrality of the definition of good is exactly what we should expect. The concept of rationality by itself is not an adequate basis for the concept of right; and in contract theory the latter is derived in another way. Moreover, to construct the conception of moral goodness, the principles of right and justice must be introduced” Page (404). Furthermore, I would say what John Rawls mentions to be the scope of A Theory of Justice:



“The scope of our inquiry is limited in two ways: I shall not consider the justice of institutions and social practices generally. There is no reason to suppose ahead of time that the principles satisfactory for the basic structure hold for all cases. These principles may not work for the rules and practices of private associations or for those of less comprehensive social groups…the fairness of voluntary cooperative arrangements or procedures for making contractual agreements. The other limitation on our discussion is that for the most part I examine the principles of justice that would regulate a well-ordered society.” However the fair trade movement is a social practice and some of its associations are private, the intuitionist idea of fair trade is that it already implies a conception of justice, in which it tries to assist small-scale producers working with the worst conditions. Thus, I applied the principles of justice in order to reinforce fairness within the framework of fair trade practices. Moreover, fair trade is a global movement where not only well-ordered societies are cooperating, but burdened societies as well. In this way, fair trade works for a comprehensive conception of justice.

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Annex 2

Photo 1: Repa équitable Paris 9ème.

Photo 2: Quinzaine du Commerce Équitable, Paris 9ème.



Photo#3: Le premier ministre Guy Verhofstadt au milieu des grappes pour la pub Oxfam Fair Trade.

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Photo #4. First Fair Trade Shop: “Artisans du Monde” on 20 Rue Rochechouart à Paris. The next photos were taken on the 3rd Forum of Fair Trade in Paris, France (April 2007).



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Annex 3

Nozick’s Argument Within the libertarianism Nozick objects this: in order to institute any distributional profile, one must override already existing property rights, and after this thoroughgoing intervention, further redistributive interventions will be needed in order to preserve the desired distributional profile142. That may be possible through a historical conception of justice. According to such a conception, the justice of a distribution depends not on the extent to which it approximates some ideal profile, but rather on whether it evolved in a morally acceptable way. Secondly, Nozick in his own extreme laissez-faire believes that every member of society should receive the value of his or her contribution. Hayek supports this argument143: “Our objection is against all attempts to impress upon society a deliberately chosen pattern of distribution, whether it be an order of equality or inequality”. This is because we cannot know enough about each person’s situation to distribute to each according to his moral merit or person’s actions and services to others. However, he (Hayek) as Nozick conclude that in a free (capitalist) society there will be distribution in accordance with value rather than moral merits and that is, in accordance with the perceived value of a person’s action and services to others. It is followed by the problem of cooperation among the talented and the untalented person, meaning that “the untalented get the design that is best for them, while the talented must put up with this design even if they could do much better on their own (excluding the untalented144)”. In other words, Nozick asks: how much do people benefit from social cooperation, as compared to their individual holding in a non-cooperative scheme? How much does each individual gain from general social cooperation, as compared, not with no cooperation, but with more limited cooperation? Nozick says that on no cross-cooperation, the members of both groups gain from the internal cooperation within their respective group and have larger shares than they would if there were no social cooperation at all. General cooperation will be of more benefit to the better or to the worse endowed if (to pick a simple criterion) the mean incremental gain from general cooperation (when compared with limited internal intra-group cooperation) is greater in one group than it is in the other. The problem that Nozick claims, despite the Rawls’ classificatory terminology, is about the unclear cleavage between the natural endowments of people to determine which group would form. Basically, those less well endowed (worse) gain more than the better endowed do form the scheme of general cooperation. Thirdly significant criticism of Rawls has to do with a misleading formulation that Rawls has given of the difference principle. However, Rawls’s public criterion of justice focuses exclusively on the distribution of social primary good while disregarding all information about natural endowments, moreover, Rawls replies that endowments are morally arbitrary and undeserved. Furthermore Nozick explains how liberty upsets patterns saying that any pattering either is unstable or is satisfied by the entitlement system, e.g., the entrepreneur in a socialist society or the Wilt Chamberlan example. Therefore, Nozick formulates this principle based entirely on individual freedom: “from each as they choose, to each as

142 Thomas Pogges: John Rawls: his life and theory of justice, p. 178. 143 Anarchy, State, and Utopia. Chapter 7 On Distributive Justice – p.155. 144 John Rawls: his life and theory of justice, p. 182.



they are chosen145”. From each according to what he chooses to do, to each according to what he makes for himself (perhaps with the contracted aid of others) and what others choose to do for him and choose to give him of what they have been given previously (under this maxim) and haven’t yet expended or transferred. Basically, Nozick presents the entitlement theory in three major topics, the subject of justice in holding consists: 1) the principle of justice in Acquisition, 2) the principle of justice in Transfer, and 3) The rectification of injustice in Holding. Nozick dilemma of Rawls’s Theory of Justice146

Nozick argues that the three principle of justice (in acquisition, transfer and rectification) that underline this process, having this process as their subject matter, are themselves process principles rather than end-state principles of distributive justice. They specify an ongoing process, without fixing how it is to turn out, without providing some external patterned criterion it must meet. Rawls’ theory arrives at a process P for generating principles of justice. This process P involves people in the original position agreeing to principles of justice behind a veil of ignorance. According to Rawls, any principles emerging from this process P will be the principles of justice. But this process P for generating principles of justice cannot, we already have argued, itself generates process principles as the fundamental principles of justice. P must generate end-states or end-result principles.

Even though the difference principle, in Rawls’ theory, is to apply to an ongoing

and continuing institutional process (one that includes derived entitlements based upon institutional expectation under the principle, and derived elements of pure procedural justice and so on), it is and end-result principle (but not a current time-slice principle). The difference principle fixes how the ongoing process is to turn out and provides an external patterned criterion it must meet; any process is rejected which fails to meet the test of the criterion. The mere fact that a principle regulates an ongoing institutional process does not make it a process principle. If it did, the utilitarian principle would also be a process principle, rather than the end-result principle it is. The structure of Rawls’ theory thus presents a dilemma. If processes are so great, Rawls’s theory is defective because it is incapable of yielding process principle of justice. If processes are not so great then insufficient support has been provided for the principles yielded by Rawls’ process P for arriving at principles. Contract arguments embody the assumption that anything that emerges from a certain process is just. Upon the force of this fundamental assumption rests the force of a contract argument. Surely then no contract argument should be structured so as to preclude process principles being the fundamental principles of distributive justice by which to judge the institution of a society; no contract argument should be structured as the assumptions upon which it rests. If processes are good enough to found a theory upon, they are good enough to be the possible result of the theory. One can’t have it both ways.

145 Ibid. 160. 146 Nozick, (Anarchy, State, and Utopia) p. 208-210.

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We should note that the difference principle is an especially strong kind of patterned end-state principle. Let us say that a principle of distribution is organic if an unjust distribution, according to the principle, can be gotten from one the principle deems just, by deleting (in imagination) some persons and the distributive shares. Organic principles focus on features dependent upon the overall pattern. In contrast, patterned principles of the form “to each according to his score on a particular natural dimension D” are not organic principles. If a distribution satisfies this principle, it will continue to do so when some people and their holdings are deleted, for this deletion will not affect the ratios of their scores along the dimension D. These unchanged rations will continue to be the same and will continue to satisfy the principle. The difference principle is organic. If the least well-off group and their holdings are deleted from a situation, there is no guarantee that the resulting situation and distribution will maximize the position of the new least well-off group. Perhaps that new bottom group could have more if the top group had even less (though there was no way to transfer from the top group to the previous bottom group*) *The difference principle thus creates two conflict of interest: between those at the top and those at the bottom; and between those in the middle and those at the bottom, for it those at bottom were gone the difference principle might apply to improve he position of those in the middle, who would become the new bottom group whose position is to be maximized. Principles of distribution of the form “to each according to his score on natural dimension D” violate thus this condition, and therefore (let us say) are non-aggregative. For though, within each group of all ratios of shares match ratios of scores on D, they needn’t match between the group*. The entitlement principle of justice in holding satisfies both the deletion and the addition condition; the entitlement principle is non organic and aggregative. *Let the second group have individuals who score half as much on D and have shares twice as large as the corresponding individuals in the fist group, where in the fist group the ratios between any two individuals’ shares and their score on D are the same. It follows that within the second group, the ratio of any two individuals’ shares will be the same as the ratio of their scores. Yet between groups this identity of ratios will not hold.

Documents

MAAE's Thesis Fairness in Fair Trade