Ethics for sale?

Benjamin Lundy, a Quaker, opened a store in Baltimore 1836 which sold only goods obtained by labor from free people. This is an early example of ethical marketing which continued up to the end of slavery in the United States in 1865.

Ethical marketing based on voluntary standards and certification has spread in a rapid pace the last decades, as a result of converging - and interacting – trends. Most notably,
- a trend towards emphasizing the market and consumer choice as important tools to accomplish ethical, economic, environmental or social goals;
- a trend of government de-regulation, which leaves more self-regulation to the industries; and
- stiff global competition which makes differentiation in the market place an essential survival strategy to escape ‘commodity hell’;

When you buy a cup of coffee for €2 the farmer gets 3-4 cents for the coffee in that cup. If you buy a cup of organic and fair trade coffee you are likely to have to cough-up €2.50 - and the farmer will get 4-5 cents. The farmer’s income will increase, perhaps with impressive 20-25 percent. Looking from another perspective, however, you spend 50 cents to increase the farmer’s income with 1 or 2 cents. This example begs the question if the market mechanism is efficient in transforming consumers’ willingness to pay for direct or indirect benefits of a product to an increase in income for producers.

We don’t have voluntary standards for social conditions for labor in Scandinavia – but there is a Food Justice Certified scheme developed in the United States now. Why? Because it is needed in the United States but not in Scandinavia. These systems mainly emerge in the space between what is well regulated by markets and by governments respectively. Whether they are results of “policy failures” or “market failures” or if they should be seen as permanent institutions is a topic for debate – a debate that is kept here.

Some sector wide commodity schemes, such as the Roundtables on sustainable Palm oil, soya and biofuels have the ambition of being “floor standards”, that is de facto a license to make business. The impact of such standards on trade is substantial. And if they are de facto compulsory, one can of course ask if they should not be subject of regulation and thereby follow the same lines of accountability both nationally and internationally. Many, in particular developing countries, see these voluntary standards as barriers to trade.

In most cases they are dictated by the strong actors in the market place. The most notable example of that is the GLOBAL GAP standard, where supermarkets dictate standards which effectively exclude millions of smallholders from the market place. The same supermarkets which market fair trade products intended to help smallholders.

In Sweden, like in most countries, governments say that it is consumer choice that will determine if farms will farm organically or not. But governments could prohibit, or impose prohibitive fees, on chemical pesticides if they so wished. They could ban factory farming, it they so wished, and if we demand that as citizens.

There are some 100,000 chemicals in use. Certainly, I didn’t make any conscious choice if my computer should be soaked in this or that flame retardant or which chemicals are in my new sofa. To have to select “environmentally friendly” products means that the government authorizes the sale of products that are harmful for the environment. I don’t think it should be a matter of consumer choice if there is Bisphenol A or not in our food.

My conclusion after working with this for some thirty years is that the market mechanism is not efficient in dealing with problems that are rooted in fundamental structures of society, the market itself and the economy. Which is why the buying of fair trade coffee never will end poverty. This was also realized by those fighting against slavery in the United States. The market for products from free labor didn’t abolish slavery. It was political action, and even a Civil War, that led to the abolition of slavery.

Our acts as consumers and our acts as citizens can be linked, and one can bear the seeds for the other one. For instance:
-For a while ethical consumers boycotted eggs from layers in cages, until there was a public ban.
-For a while environmental activists refused to buy refrigerators with CFC, or Freon, as it was called. Then governments agreed to phase it out with the Montreal protocol 1 January 1989.
-There were massive consumer and academic boycotts of South Africa for the apartheid policy. These lasted twenty years until most Western countries agreed to international sanctions.

Clearly this is not an either-or discussion. Most people, including myself, don’t want a nanny state where the government tells us in detail what to do, what to buy or not buy. It is also not a question about the market or the state only. There are many more, non market and non-state, ways of organizing our life and our food. The most apparent is of course to produce the food yourself. But new initiatives such as community supported agriculture are also based on non-market relations, even if they use some of the tools of the market, such as money.

In my view, it is a good thing to make educated and ethical consumer choices. It is not only a good thing - it is our responsibility. But in many cases it makes more sense to have those choices made politically. It is mainly the not so important things and matters for which there is a lot of disagreement that are best left to the market.

Telling consumers that they will change the world or eradicate poverty by shopping is to deceive them.

(notes for my introductory talk at the panel Ethics for sale which was part of the 11th EURsafe conference, The Ethics of Consumption: The Citizen, The Market, and The Law)

The rise of civil society?

Why are we only discussing the state and the market?

The figure tries to depict how various activities have moved from different spheres during the growth of the capitalist society (to the Left) and where they might go in an alternative development (to the Right). With the introduction of capitalism and market economy, many things were moved out from the family, local communities and civil society (the local communities, e.g. the villages, are here seen as part of civil society rather than as part of the state). The role of the state also increased initially: the state organized education, built infrastructure, health care, etc. It also regulated the family and civil society increasingly.

In the later phase of capitalism, more and more has been moved to the market; some aspects of life, like religion, have been relegated to the individual, mainly because they are no longer seen as essential for social order. Civil society organizations have been further weakened, mainly because the market has penetrated most of its space and realm and because of the attitude and values of the market economy. Individualism and competition have not been conducive for civil society.

In the future, we should strive for more activity in the local communities and civil society and less activity in the market sphere as well as in the central government. Also the private sphere should regain some of its relevance, in particular regarding food production and preparation and other household services.
(from Garden Earth)

Who gave you your property?

La propriété, c'est le vol! said French anarchist Pierre-Joseph Proudhon in his 1840 book Qu'est-ce que la propriété ? ou Recherche sur le principe du Droit et du Gouvernment (What is Property? Or, an Inquiry into the Principle of Right and of Government). This perception was not new. The famous Marquis de Sade (Yes, the same guy whose name formed sadism) said:

"Tracing the right of property back to its source, one infallibly arrives at usurpation. However, theft is only punished because it violates the right of property; but this right is itself nothing in origin but theft."

Those who are in favour of property rights to be almost unlimited and sacrosanct tend to be the same as those who wants to limit the extent of government. But they, conveniently, overlook a very fundamental fact. They have got their property from government and it is only government that can ensure their perpetuated right to the property. Before there was government, before there were laws and a state that could enforce them there was no property. And in most societies most things “belonged to” the community or the state. The root of private property is a privilege extracted from governments. This continues today where governments convert new things to goods and markets, for instance eco-system services. The market and control of such services is instituted by governments and through various processes allocated to private owners. 

Over years, different groups, with the support of the state (or being part of the state) came to take over larger and larger parts of property, such as the war lords, later becoming the respected nobles or the financiers of the state's war, the emerging capitalists of high finance. It is estimated that some 1.5 million valuable items were stolen from the Old Summer Palace in China, when ransacked by the French and the British 1860. Victor Hugo (1985) wrote:

One day two bandits entered the Summer Palace.[...] All the treasures of all our cathedrals put together could not equal this formidable and splendid museum of the Orient. It contained not only masterpieces of art, but masses of jewellery. What a great exploit, what a windfall! One of the two victors filled his pockets; when the other saw this he filled his coffers. And back they came to Europe, arm in arm, laughing away.

To stimulate the transcontinental railway building, the US federal government gave one fourth of Minnesota and Washington and a fifth of Wisconsin, Iowa, Kansas, North Dakota and Montana to the rail road companies; an area bigger than France (Lindblom 2001). It is interesting to note that a professor in the stronghold for "free market" economics acknowledge this. "Land, natural resources, and government contracts and licenses are the predominant sources of the wealth of our billionaires, and all of these factors come from the government" says Ragharam Rajan, economist in Chicago (IHT 2011), referring to billionaires of India (read also NYT).

And no doubt, enormous wealth and therefore property is generated by the American wars in Iraq and Afghanistan. How property in the collapsing Soviet Union was distributed was a crash course in how property is unequally distributed to those that are close to the power. 

It is an entirely subjective and political decision weather some should be given unique rights to land or other resources or they should be common. A government could as well declare a universal right to food as the private right to land. For those, like the author, that is raised in a fully developed capitalist market society it is almost hard to conceptualise how a world without private property could look like. Still, in many parts of the world, forests and farm land are often owned by the state or by the local community. The point is neither that private property by itself is good or bad, nor to claim that anyone with property is a thief (which would then include myself as well). It is to clarify that it is a privilege based on state sanction, and that the unique rights that property has been given has very little to do in a discussion about freedom, and even less that property rights should form a moral justification for limitation of other peoples' freedom. First when we have cleared the myth, can we discuss property in a rational way.



"Imagine no possessions, I wonder if you can" sings John Lennon in Imagine. This is probably our greatest challenge. To think outside the box.

False Choices: Cap and Trade Vs. Carbon Tax

I came across and interesting article by James Barnard Quiligan in Cosmos

In searching for answers, society is trapped in a false dichotomy: we believe that only markets and governments are capable of providing solutions for climate change, even though these institutions were never designed to internalize the costs of negative externalities like carbon emissions. There is another way to solve collective problems of this scale and jurisdiction. The emerging framework of the commons brings the monoculture of the Market State— the modern economic and governmental superstructure—into sharp focus and provides the analytical tools and predictive power to penetrate the deep dichotomies of its operations and policies. The commons illustrate, for example, how the major policy responses to global heating—cap and trade (via the private sector) and carbon taxes (via the public sector)— are more about the ideological debate on how much government regulation should be permitted in the market economy than about climate change itself.

This coincides well with my views expressed in Garden Earth:

There are others in the boat than the state and the capital

In politics, there is a traditional divide between those that think that a function shall be taken care of by the market and those that believe it should be by the state. Somewhat simplified the former are liberals and the latter socialists. One can look upon both markets and the state as social institutions to regulate relationship between people and distribution of property and products. Which institution one like the most depends perhaps on ones own situation, how it is organized and which context it is in. The same person that is very sceptical to market solutions is perhaps perfectly comfortable with her relationship to the organic farmer and found it deplorable that the government determined that organic chicken were not allowed to go out during the bird-flu scare in 2006. And the person who is against government control still applause government take-over of bankrupt banks or car-makers. One can also look at the roots of the capitalism and the state and see both of them as parasites from different epochs. The state is with this perspective a remnant of the war-lords and kings that established a Mafia style of protection. The market, as it has developed now, is an institution for capitalist exploitation. By forcing bigger and bigger parts of life into the market, capitalism can extract wealth from most parts of life and not only from the simple distribution of goods. Through political struggle, people have to some extent taken over control of the state, but that is not the case for the market. Despite all the hype about the market as a democratic institution, it is a place of very imbalanced relationships.
In form, they are very different. We, as citizens, have very little access to the state, our role is to pay taxes to finance it and regularly vote who shall rule it and therefore rule us. We sometimes interact with the state through civil action, direct contact with a politician, participation in a demonstration or writing a letter to the editor in a newspaper or a complaint (or more rarely praise) on a web site. In the markets, we on the other hand are constantly participating and in theory, we are equal with everybody else in the same market, as long as we have money to pay at least. The market can be seen as a giant social decentralized network. With this perspective, the difference between the state and the market is smaller, and it becomes even less when the state or the public sector has adopted the market terminology, management patterns and even acts as an “owner” or as a “client” to a lot of its own services which are actually taken care of by private companies. The problem with the market in this perspective is mainly that it that it favours those that are already rich and those that have better information and that those differences tend to increase over time rather than the opposite. The other problem with markets in their current shape is that they pitch people against each other through competition, something that in turn is bad for society.

State take-over of markets has in most cases been disastrous and market take-over of the state is almost as bad. Obviously, a certain balance is the best. But here we also need to look beyond markets and the state. The question is not only if a certain function shall be executed by the state or the market. By concentrating the debate around the market or the state, we tend to lose sight of the other possibilities. There are many other possibilities as we discussed earlier. There are completely voluntary associations formed to take care of a certain need, such as the need for youth to meet and dance or do sports; or to take care of a certain resource, such as cutting a meadow by scythe yearly or keeping an old foot path open. There are municipalities where the citizens in a very direct way organize most of their support needs. There are personal-cooperative day care centres, schools run by parents, homes for elderly owned and controlled by the elderly themselves; road cooperatives and irrigation communities. In Sweden there are 26,000 housing cooperatives owning in total 800,000 apartments (Bo Bättre 2009). Our voluntary organization to accomplish certain objective is very old, much older than both markets and state and is not at all limited to not for profit purposes. There is no indication that such arrangements would have been inefficient. Capitalism has, however, often worked against them simply because they limit the business opportunities and central governments have sometimes also made life difficult, or even prohibited them because they undermined the tax base and made people more independent from the state.

The state and the market - two competing institutons

In politics there is often a gap between those that want that a problem should be regulated by the state or by the market. The former are often socialist and the latter liberals, somewhat simplified. One can view both the state and the market as social institutions that regulate the relationship between people. Which institution you like the best may depend on how it is organised and which context you are in. The same person that is sceptical to market solutions may feel fully at ease and on an equal footing with the farmer from which she buys her organic veggies, and may think that it awful that the government forces him to keep her chicks inside because of bird flu or that he has to spend a lot of money to invest in a new packing shed for the veggies to comply with government regulations. And she that is against "big government" may demand that governments step in and take over bankrupt banks or support ailing car industries.Not to speak of that they often support big tax-financed repressive forces (military and police).

In shape and form the market and the state are very different. We, as citizens have very little access to the state, our role is to pay taxes and regularly cast a vote for who should rule us. The market on the other hand is a lot more participatory and at least in theory we are all equal (admittedly a bit theoretical). The market can be seen as a social network, and with that view the difference to the state is less. And it becomes even less when governments, like they increasingly do, take over the management methods and organisational principles from them market place; the language of the market place (we all heard government agencies speaking about clients and customers) and finally purchase a lot of its services in the market place.

The problem with the market is mainly that those that already have the upper hand, those with better information or better bargaining power gets a better deal most of the time and that the gaps tend to increase rather than decrease. Government take-over of markets have been disastrous most of the time, but the market take-over of government is almost as bad. The main challenge for the future lies not only in improvement of the workings of the market and improvements in democracy and finding the right balance between market and state. I believe it lies as much or more in the development of new institutions that will take over relevant parts of what is now done by either market or state.

Herein lies the real opportunity for change.