Fair Trade phenomenon – limits of neoclassical and chances of heterodox economics

Anna Horodecka,Magdalena Śliwińska

doi:10.33119/kszpp.2019.3.1

Abstract

Contemporary research exploring the Fair Trade movement does not provide a clear answer whether the overall impact of Fair Trade is positive or negative and what are the real motives of Fair Trade consumers. In the paper we investigate whether the assumptions of selected heterodox schools (feminist, ecological and humanist) fit better to the reality of the Fair Trade movement than those of the neoclassical theory. Although ‘better fitness’ does not necessarily mean ‘better explanation’, the mismatch with reality may constitute an obstacle in identifying a crucial aspect of the researched phenomenon (i.e. Fair Trade), harming explanation of its existence and development.

Highlights

After WWII in the USA and Western Europe there appeared first initiatives aiming at helping the poorest producers from the Global South through including them into the international trade exchange
That is why the aim of this paper is to investigate whether the assumptions of heterodox economics fit better to the reality of the Fair Trade movement than those of the neoclassical theory
In order to respond to this question, we have chosen a methodology that is based on the comparison of the basic assumptions made within neoclassical and heterodox economics with goals, assumptions and the essence of the Fair Trade movement

Summary

Introduction

After WWII in the USA and Western Europe there appeared first initiatives aiming at helping the poorest producers from the Global South through including them into the international trade exchange. At the same time it seems not reasonable to assume something completely contradictory to the basic characteristics of the analysed reality, because it may result in preventing the identification of important causal relationships and characteristics, which may be important for explaining a phenomenon that is relatively new and extremely complex Adding to this argument the observation that basing on standard theories we cannot explain the existence, development and consequences of this phenomenon in a satisfactory way, here opens the question whether there are some other theories which base on different assumptions that better fit to the reality of Fair Trade. The standard theory (for instance the neoclassical one) is based on assumptions resulting from its concept of human nature – homo oeconomicus, whereas different heterodox denominations result from other anthropological assumptions These affect their way of defining the values assumed to economic agents – like utility maximisation or efficiency in the case of standard economics (axiological foundations of the theory).

Objectives

Findings

Methods