In Happy Shoes II I argued that if the market is left to isolated consumers and companies, the prospects for ethical consumption are bleak. The primary barrier to
establishing fair trade is reliable information about production conditions, not the
ethical standards of those in the boardrooms. When individual consumers cannot
verify ethical production and when even well-meaning companies cannot prove
that they are walking the walk, the outcome is as
if we didn’t care about ethical production at all. In the absence of reliable
information ethical companies are punished; in the presence of reliable
information even scummy companies may find it worth their while to behave
So how do we get reliable information? One thing is for certain: as individual consumers we are
not going to collect that information ourselves. It costs a lot more than the
$20 premium our archetypal consumer is prepared to pay to verify factory
conditions in Bangladesh.
Free-market enthusiasts says that self
reporting and brand reputation will do the trick, because brands tell consumers what
the company stands for (essentially the Potter & Heath argument I quoted in Happy Shoes I). But brands are cheap talk: smart consumers know that
for every company claiming to stand for decency that actually does the
right thing, there’s another one mouthing the words while screwing its
employees, and that we can’t tell the difference. What a company says about
its own behaviour is inherently untrustworthy – it has too many reasons to bend the truth. That’s obviously why voluntary "codes of practice" have been
taken with such a big shovel of salt (two examples: see Charles Fishman on
or the Nike Andrew
Young affair from a few years ago).
That’s not cynicism, that’s realism.
Nevertheless, many kinds of verification bodies have appeared
to put varying degrees of teeth into the codes, from the use of professional
auditors (Ernst & Young for example) to industry self-government bodies (the Fair
Labor Association in the USA) to independent specialist groups (Verite being
an example) to bodies with roots in activism (Workers’ Rights Consortium).
Some monitor, some provide complaint-handling mechanisms as an
But there are
incentives at work for these monitoring bodies too. There are
incentives for those paid by the companies to develop a collusive
relationship over time; those acting on behalf of activist may have
incentives to exaggerate. More ambiguity and puzzlement.
And what’s more, the
variety of verifiers is matched by the variety of possible criteria for
"ethics". Ethical production is not, after all, an all-or-nothing
affair. Wages, rights, conditions, harassment, broken employment
contracts and so on are all issues that come into play.
In the face of all this complexity (which will differ from
product to product, market to market) is there anything
general that we can say? Obviously the specifics of each case are of overriding importance – and you should
look elsewhere for them – but perhaps we can get just a little something out of simplistic thinking.
production is a public good. Consumers are in a particularly bad place
when it comes to producing such public goods for a few reasons: we
cannot easily cooperate with other consumers because shopping is such
an individual act, we are a heterogeneous bunch with differing
preferences, and we live in many different places, each of which makes
it more difficult to coordinate our actions.
It is no surprise,
then, that the biggest successes of the anti-sweatshop movement came at
universities, and in particular from student activists putting pressure
on the production of university-branded goods. First, university
students are a relatively homogeneous crowd. Second, they are all
lumped together on campus, so there is a lot of peer pressure over who
wears what. Third, they can influence production not just as consumers
at the till of the university store, but as students who have a voice
in university governance. The fact that the Collegiate Licensing
Company was agent for 160 universities provides a focus for political
pressure across campuses, and one with enough clout to transmit that
pressure to the producers. So political action becomes the mechanism
for collectively expressing individual consumer preferences for ethical
Seen in this light,
rag-tag groups of black-clad, drum-pounding anarchists are performing a
role not too different to that of consumer magazines. They are
highlighting the information needed to enable consumers to make better
choices, and to help markets function better. Not a role they would
identify with, perhaps,but a useful one nonetheless.
One thing about information is that it may
cost a lot to find it out, but it can then be easily made available to
many people. The codes and practices adopted as a result of activist
pressure have been used in the wider marketplace as a way for other
consumers to identify ethically-produced goods, and giving companies
prepared to make such a commitment a chance to make money off it.
We get to free-ride off the efforts of activists but this is not, I guess, a form of free-riding they would object to.
There’s one other thing I think can be said from simple thinking about information, but I’ll save it for tomorrow (or so).