Combating poverty in a market driven world

This was the topic discussed at a conference in Mumbai that I attended last week, along with about 200 international delegates. Amongst the varied arguments that were put forward, all pulling in different directions, the free market argument was brought up again and again. Will economic growth bring prosperity to the greatest number of people:‘a rising tide will raise all boats’?

I thought I’d stick to the analogy of the rising tide and look at the case of very small producers.

‘A rising tide will raise all boats’ assumes that everyone has a boat.

Small producers don’t have a boat; in this case a boat means access to markets and information on them. As Claribel David from the World Fair Trade Organisation explained, small producers have little or no land, huge price competition, exploitative middlemen, little or no access to credit and poor technology. In short they are in the water, without a boat… or a lifejacket… and they can’t swim. Economic theories proposed by academics don’t have a grasp of the reality on the ground; they take the bird’s eye view, when sometimes it is the worm’s eye view that we need.

As Josantony Joseph, an Advisor to the Indian Commissioner on Food Security, explained in what we’ve seen to date, market liberalization doesn’t seem to help the poor. It only helps people if they have already reached a ‘take off point’, for example you can see that the Indian middle class have an increased standard of life now since India’s economic boom, but yet still 77% of people in India live on less than 16 rupees a day (about 13p… not a lot… the equivalent of 3 cups of chai).

So how does Fair Trade fit in with this analogy? Fair Trade is a lifeboat? No, Fair Trade is trying to do something more than a rescue mission. Perhaps instead Fair Trade is a build your own boat kit, complete with instructions and information (that are much better than your usual flat pack info), and with an onboard navigation system.

If Fair Trade can help overcome some of the disadvantages that small producers face then it gives people the chance to benefit from the market driven world, that is unless Nick Hildyard from The Corner House (UK) is right and in the end turbo capitalism will cause a giant tsunami...?!