A Band-Aid Solution to Economic Development: The False Promise of 'Fair Trade'

The process of economic development elicits many thoughts, analyses, speculations, suggestions, descriptions, prescriptions, and conclusions. Nevertheless, it invokes an imagined reality that is fundamentally progressive. It entails a commitment to the idea that we as human beings, in order to maximize our human potential, can, and should, try to change the world for the better. That is, it should be an attempt to reduce vast inequalities, social injustices, and hegemonic forces that intrinsically develop extensive imbalances of rights, privileges, and responsibilities across the world's population, and moreover deny many a condition of life regarded as materially, culturally, spiritually, and symbolically superior.

This paper is an exploration of the role of fair trade as an effective developmental initiative in promoting economic self-sufficiency for marginalized producers of the periphery. From Sen and Nussbaum's 'capabilities approach' for evaluating human well-being, I focus on the foundation, structure, and influence of fair trade as an alternative development model and analyze the model within the UNICEF empowerment framework. The UNICEF framework is based on the premise that empowerment involves five levels: 1) Welfare, 2) Access, 3) Conscientization, 4) Participation, and 5) Control. From this discussion, I conclude that, in the long run, fair trade fails to be a sustainable substitute for the neoliberal orthodoxy that currently dominates the institutional mechanisms addressing global poverty.

Read the rest here.

Neoliberal Theory of Society

Neoliberalism has been one of the most discussed topics of the 21st century. In many respects, the concept has been used as a ubiquitous catchphrase conveying a sense fundamental transformation of various dimensions of social life. It is espoused that given the intensification of integration, through the proliferation of capital mobility and the aggrandizement of transnational corporations (TNC’s), countries are forced into ‘prisoner’s dilemma’ type situations in which the capacity for progressive reform along Keynesian lines is limited, if nonexistent. The assumption is that the capacity is strained to  sustain welfare-state institutions. This culturally hegemonic social construction is nothing but an ideological mask; the foregone conclusion is a self-fulfilling mythology. An excellent paper that expounds this is Simon Clarke's 'The Neoliberal Theory of Society" (see here).

In general, neoliberals contend that financial liberalization and privatization guarantee the most efficient utilization of capital by freeing up the market mechanism for long term sustainable growth, bringing convergence in development across countries.  Through the Washington Consensus and the institutionalization of neoliberal economic doctrine via the co-ordination of the World Bank, IMF and the US treasury department, measures across the globe, however, has resulted in the majority of the world’s population being denied the human right of commanding the productive resources necessary for sustaining adequate standards of living. Social outcomes like distributive justice, gender equity, basic access to socially acceptable housing, nutritious food, education, freedom from poverty and discrimination, and social inclusion have been far from reached. 

Neoliberalism propels governments to adopt policies aimed at maintaining credibility in financial markets for the attraction and retainment of short-term capital. The recipe for disaster is fiscal restraint, tight monetary policy, and the protection of high interest rates to prevent inflationary pressures from undermining the value of real return on financial assets. Macroeconomic policy is supposed to be designed in such a way that the interests of those who own financial assets (wealthy households) are prioritized over those who are forced to sell their labor power for sustenance.  As a result, the trigger threat of capital fight significantly limits the space for attention to social welfare to be embedded. 

Interestingly, given already present gender inequalities in labour markets and unequal power relationships within the household, neoliberalism forces women to assume greater responsibilities in cushioning families from economic insecurity, which has had the unintended consequence of pushing them into the informal sector of employment, maximizing susceptibility to egregious labor rights violations and physical abuse.

In response to the widespread social dislocation caused by neoliberal dogma, the Post-Washington consensus has initiated a new outlook under the rubric of ‘New Institutional Economics' (NIE).  NIE  proposes the wider role of government to guarantee the conditions for markets to in fact work as they supposedly should through the promotion of market-friendly civil societies and the encouraging of a democratic political culture. The Post-Washington consensus, like the Washington consensus, however, still promotes highly regressive macroeconomic policy. The only real difference is the facilitation of appropriate assessments, and the proliferation of that pathetic euphemism 'social capital', rather than forced upon structural adjustments, such that the institutions that do support free trade, liberalization, and deregulation are implanted such that disproportionate effects on the poor do not egregiously materialize. In the final instance, however, this is just window-washing. 

For an excellent paper by Ben Fine (see here).

The Overton Window for game changing exotic energy technologies

Political scientists invoke something called the Overton Window to describe the range of possible political conversations. Forget for the moment that the political right is trying to control this window.

I want to discuss a different 'Overton Window,' one which involves the possible conversations around truly radical, even exotic, energy sources. A small group of economists, including me, believe that much of what is to be understood in growth and development has a large energy component. So possibilities to radically change the supply and cost of energy causes great consternation. But moving the conversation window even a tiny bit will have great benefits.

Geographically for me, it is truly ironic that in 1989 Professors Pons and Fleischman were tarred and feathered and ridden out of town on a rail over their forced, though admittedly premature, assertion at a University of Utah press conference of low energy nuclear reactions, a.k.a. cold fusion, in their laboratory.

Well, some two decades later several very serious, very credible, scientists have come out of the closet in support of the so-called FP discovery. Scientists from MIT, NASA, and, especially, the US Naval Research and Development arm (SPAWAR), based in San Diego. If you have an open mind, some scientific aptitude, and a life-changing hour, try this. If you want to discuss it, I can follow some of it and guide you, especially around the implications of the high-energy neutron depositions. This is very good and careful science.

Further, at least a half dozen known commercial ventures are underway, one of which (Broullin) received $2 million in venture funding this week. Another, the Andrea Rossi E-Cat project, reports just this week self-sustaining 600C output from their current reactor. The implications of this, if supportable, are profound in two senses: self sustaining implies both electricity output and infinite over-unity possibilities.

Now this sounds all very speculative and even specious, and you may question why it even appears on an Econ blog. Fairly simple in an Overton way: as my research and dissertation leads me to believe there is no more important component of an economy than its energy availability and consumption, these discoveries are game changers, and Economists should try to understand, discuss, and even model the implications. I will leave it there for the moment.

So, if true, we are on the cusp of a radical energy transition. One which 'fixes' global warming and changes all of our Economic growth models. Not a bad time to be an economist. Or a human. Put away your tars, feathers, and rails.