Hi Guys,
I don't know if it is even appropriate to put this thing here. It so doesn't suit the tone and ways of my blog. But this is one piece of academic writing I put in a lot of effort into. I like what I am saying. I hope you like it too.
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All’s fair in love, war and recession – the state of ethical Fair Trade consumption during economic recession.
Consumption – symbolism and ethics
Consumption forms the basis of the present day world economy. As Bauman (1998, p12) argues, “economic growth, the main modern measure of things being normal and in good order, the main index of a society working as it should, is seen in the consumer society as dependent not so much on the ‘productive strength of the nation’ as on the zest and vigour of its consumers.”
While McCracken (1990) describes consumption as a thoroughly cultural phenomenon, he argues that any study on consumption should take into account the ways in which consumer goods and services are created, bought and used. Consumption has evolved from being the simplistic process of “selection, purchase, use, maintenance, repair and disposal of any product or service” (Campbell, 1995, p102), to a more sophisticated process involving lifestyle choices, modern identities and identity politics (Jackson, 1999).
Consumption transcends further ‘as a set of social, cultural and economic practices together with the associated ideology of consumerism has served to legitimate capitalism in the eyes of millions of ordinary people’ (Bocock, 1993, p2). Miles (1998) notes that “while consumption is an act, consumerism is a way of life…Consumerism can be defined as the psycho-social expression of the intersection between the structural and the individual within the real of consumption. The consuming experience is psycho-social in the sense that it represents a bridge that links the individual and the society.” Extending this to the next level, the link between the individual and the society can be seen as involving ethics too. Ethical and responsible consumer behaviour has been an issue of large scale discussion in academia and a growing body of research has proliferated around the ethical consumer (Connoly et al, 2006; Doane, 2001; Shaw and Clarke, 1999).
Ethics of Fair Trade
Strong (1996) argues that ethical consumerism incorporates all the principles of environmental consumerism as well as ‘buyer behaviour that reflects a concern with the problems of the Third World, where producers are paid low wages and live in poor conditions simply to produce cheap products for western consumers and profits of multinational companies’ (emphasis mine). Therefore, it can be argued that the Fair Trade brand exemplifies this definition in its vision, mission and values. As Nicholls (2005, p25) has noted, “Fair Trade aims to alleviate extreme poverty through trade; to empower smallholder farmers and farm workers to use trade relationships as a means of enhancing their social capital; and to support the wider campaign for global trade reform and trade justice.”
According to Raynolds (2002) the growth of ethical consumerism provides the main driver behind the development of a Fair Trade market (Connoly et al, 2006). Fair Trade essentially uses consumerism in support of the producers of the third world and better living conditions for them through fair wages and sustained trade relationships. Thus, buying Fair Trade can be established squarely as an ethical consumption practice, in support of Third World farmers.
Consumers clearly are supportive of Fair Trade– The Swedish spent 72,830,302 Euros in 2008 growing at a rate of 75%. Fair Trade products recorded total yearly sales of 2,894,711,217 Euros in the same period (The Fair Trade Foundation, 2009).
The classical Fair Trade theory has its origins in Adam Smith’s and David Richardo’s theory of comparative advantage. Supporters of Free Trade insist that the unfettered movement of goods, services and finance between countries offers the most efficient model of transactional business (Nicholls et al., 2005).
Fair Trade addresses its objectives of free and fair trade in support of Third World farmers through a market-driven commercial model, rather than by charity or a developmental aid mechanism (Nicholls, 2005, p25). Fair Trade, precisely because it works ‘in and against the market’ (Brown, 1993, p. 156), operates from the pragmatic and moral implications of the capitalist market (Varul, 2009). Fair Trade standards require that the produces be paid a minimum price for their product, regardless of how low the market price goes (Nicholls et al., 2005, p41). Thus, the main contribution by a consumer towards a moral cause is paying the price premium for “Fair” Trade.
Ethics or ethical imagery?
The symbolic aspects of consumption practices as much as the needs and functions of the product. As Brinkmann and Peattie (2008, p29) argue, “It is difficult to disentangle consumer motives between an ethically driven desire to be responsible, and more selfishly orientated desires to feel and to be perceived by others to be socially responsible.” Using this definition, buyers of Fair Trade can be categorised as – people who support Fair Trade for ‘status’ or ‘image’ reasons and those who are ethically driven. Those who purchase Fair Trade products in order to be seen by others as socially responsible place more importance to the impact of such purchase on their identity than the cause they support through such purchase. On the other hand, those who are ethically driven tend to have more knowledge about the products and the cause they support. Their purchase decision is influenced more by the ethical concerns of the products than the benefit of an ethical identity it brings along.
What makes ethical consumption and buying Fair Trade an issue to reckon with now is the drastic change in the state of the present day global economy. With a 1.9% decline in GDP in the first quarter of 2009 (Kollewe, 2009), the UK is faced with one of the worst recessions of the post-war era. Recession is causing major changes in patterns of spending, consumption, travel, recreation etc. Inflow of money has reduced largely, affecting the outflow of money from the hands of consumers. Within this context, ethical consumption through consumer support of Fair Trade brand may be at risk.
Ethical buying versus buying an ethical image
For many consumers, the Fair Trade label is a factor in purchase decision. In a study by Pelsmacker et al (2005), it was noted that aspects of brand and flavour came before Fair Trade label in factors that influence consumers’ purchase decision. Along with brand, flavour etc., perception of being ethical also plays an influential role in consumer purchase decsion. Shaw and Shiu (2002) have shown that, when analysing drivers for ethical consumer behaviour, it is crucial to take into account both ‘ethical obligation’ (i.e. the fact that people usually want to do what is right) and ‘self-identities’ (i.e. the fact that people usually try to act in accordance with the image they have of themselves) (Varul, 2009). Fair Trade consumers engage in the construction, affirmation and communication of ethical selves, and such ‘ethical selving’ (ibid).
Previous research in consumer self-identity by Shaw et al. (2000) observes that the role of self-identity and ethical obligation were particularly pertinent in ethical consumer decision-making. In reference to Fair Trade coffee they state, ‘while many consumers acting in a rational self-motivated manner may select coffee on the basis of factors such as price and taste, those concerned about ethical issues may be guided by a sense of obligation to others and identification with ethical issues, where concerns such as providing a fair price for Fair Trade producers take priority’ (p. 889). Identity, therefore, was suggested to be an important antecedent to the purchase of Fair Trade products (Connolly et al., 2006).
Luxury of image buying in recession
One of the immediate reactions by individuals to recession is cutting unnecessary costs. Masters (2009) notes that “The study by Norwich Union revealed that forty four percent of those surveyed said they now set themselves a budget, whilst a third said they have stopped relying on credit. Over a third (35%), meanwhile, has resolved to pay off their debts, and a fifth of respondents said they have increased the amount they save since the recession began” (Masters, 2009).
In addition, Duncan (2008) observes “The number of people out of work has already risen in each of the past five months, with last month’s increase the sharpest monthly rise since December 1992…and the UK was set to suffer a consumer-led economic slowdown stretching well into next year as families’ spending dropped at a “much faster” rate than it previously had factored in”. In the US, luxury shoppers are trimming costs by bringing lunch to work from home, rather than eating out” (Barbaro and Uchitelle, 2008).
(Credit) crunch on ethics
Nicholls (2002) argues that the most significant influence on growth of Fair Trade has been the emergence of ethical consumerism and mass market associated with it. Fair trade networks support and are supported by raising concerns amongst Western consumers over global ethics and the rise of ethical consumption practices where the social relations embodied in particular commodities increasingly shape product choices (Raynolds, 2002). Fair Trade thus, rests on the shoulders of ethical consumerism. As Miles (1998) argues, “consumerism is ubiquitous and ephemeral. Everyday life in the developed world appears, at least at a common sense level, to be dominated by our relationship with consumer goods.” Measuring Fair Trade on that basis, Fair Trade thrives on ubiquitous consumerism, thus making it freely available and very commonly known. But as consumerism is ephemeral too, in times of economic turbulence, Fair Trade suffers a set back.
Consumerism is one of the causes of the current economic recession, which might be a result of irresponsible lending behaviour of banks (Kamm, 2009, European Commission, 2009). A secondary cause might be consumerism.
The credit crunch and the anticipated change of lifestyle from credit-based to savings-based opens us to a myriad of issues related to ethical consumerism. In times of recession, consumers might refrain from buying expensive products which are more symbolic than functional, more luxury than necessity. Where Fair Trade is seen as symbolic consumption at a price premium, consumers create an image of being ethical through buying Fair Trade products. With the recession leaving no place for luxury, symbolic consumption practices are also bound to take a beating, so is Fair Trade.
Self-sustenance versus supporting the other
Cost-cutting
One of the main consequences of a recession is the decline in the disposable income in the hands of the consumer. The causes and consequences of recession form a vicious circle containing but not limited to a decline in disposable income, spending, consumption and production. In the present recession, consumption has fallen considerably. There is a decline in personal consumption, predominantly in the US and the UK, among other nations.
On the other hand, what makes Fair Trade “fair” is the price premium attached to the products for a better living of farmers in the Third World countries. In essence, Fair Trade means buying products from farmers in developing countries on terms that are relatively more favourable than commercial terms and marketing them in developed countries at an ethical premium (Bird and Hughes 1997) (emphasis mine).
Fair Trade sales growth declines
Even in recession, Fair Trade has reported a growth of 22% in sales worldwide in the year 2008 (The Fair Trade foundation, 2009). As Pelsmacker (2005) argues “while the expansion of Fair Trade consumption is impressive, it must be contextualized within aggregate patterns of rapidly rising rates of consumption for all products and most ethical products have captured only modest market shares of less than 1%.”
This impressive growth, when seen in context of the performance of Fair Trade in the last few years, tells a different story. Fair Trade in 2007 grew at around 47% (The Fair Trade foundation, 2008), bringing the growth down by more than half that of the previous year. This decline in growth can be seen directly related to the effects of recession as the growth in the previous years has been steadily increasing at 40% in 2006, 33% in 2005 (The Fair Trade foundation, 2007, The Fair Trade foundation, 2006). This indeed is the first time that Fair Trade consumption is facing negative growth.
Conclusion
Consumption patterns have been directly impacted by the recession, while ethics rather indirectly. Whether the consumer is buying Fair Trade for image purposes or in support of an ethical cause, there are indications that there is (and in all probability there will continue to be) a reduction in Fair Trade consumption. While image buyers might cut down consumption when symbolism becomes a luxury, the ethically driven consumers may do so as a result of reducing disposable incomes.
When recession causes a negative impact on the disposable incomes of image buyers, they are more likely to give up Fair Trade consumption in order to save money for other (presumably conspicuous) ‘image’ shopping habits. When the inflow of money reduces during recession, consumers, in all likelihood will make choices that allow them to minimise spending. As Fair Trade charges an ethical premium and have cheaper alternatives, consumers might choose the latter over Fair Trade to gain the cost advantage.
Those who are ethically driven and support Fair Trade genuinely for the cause it represents might also be prone to the negative effect on recession on their ethical consumption. In recession, these consumers could be faced with a conflict of supporting someone else’s quality of life against their own. As recession leaves consumers with lesser money to spend, it is well expected that one will look to satisfy one’s needs before standing up in support of another’s. This might in all possibility cause a dent in their ethical consumption habits.
One way or another, it can be expected that there will be a decline in Fair Trade consumption across the globe. Recession is evidently having an impact on most aspects of common man’s life and consumption is no exception. Ethical conception is more vulnerable as it involves a strong ethical drive and the ability to pay the price premium, which are both declining in a recession.
Bibliography
Books
Bauman, Zygmunt., 1998, Work, consumerism and the new poor, Buckingham: open university press.
Bocock, R., 1993, Consumption, London: Routledge.
Campbell, C., 1995, The Sociology of consumption, in D. Miller (ed.), Acknowledging Consumption: A review of new studies, London: Routledge, p96-126.
Doane, Deborah. 2001. Taking Flight: The Rapid Growth of Ethical Consumerism. London: New Economics Foundation.
Lee, J. Martyn., 1993, Consumer culture reborn, London: Routledge.
McCracken, G., 1990, Culture and consumption, Bloomington, IN: Indiana University Press.
Miles, Steven., 1998, Consumerism – as a way of life, London: Sage Publications.
Nicholls, A. and Opal, C., 2005, Fair Trade: Market-driven ethical consumption, London: Sage Publications.
Journals
Brinkmann, J. & Peattie, K. (2008) Consumer ethics research: reframing the debate about consumption for good, Electronic Journal of Business Ethics and Organization Studies, 13, 22–31.
Connoly, J. and Shaw D., 2006, Identifying fair trade in consumption choice, Journal of Strategic Marketing, 14 (4), p353-368.
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Electronic sources
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Northedge, Richard., 2009, Recession is excuse for companies to ignore community conscience, Available at http://www.independent.co.uk/news/business/analysis-and-features/recession-is-excuse-for-companies-to-ignore-community-conscience-1704578.html, accessed on 11 June 2009.
The Fair Trade foundation, 2006, Worldwide Sales of Fairtrade Products Rise By A Third As Fairtrade Sales In The UK Reach £200m, Available at http://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2006/june_2006/worldwide_sales_of_fairtrade_products_rise_by_a_third_as_fairtrade_sales_in_the_uk_reach_200m.aspx, accessed on 11 June 2009.
The Fair Trade foundation, 2007, 7 Million Farming Families Worldwide Benefit as Global Fairtrade Sales Increase By 40% and UK Awareness Of The Fairtrade Mark Rises To 57%, 10 August, Available at http://www.fairtrade.org.uk/press_office/press_releases_and_statements/archive_2007/aug_2007/global_fairtrade_sales_increase_by_40_benefiting_14_million_farmers_worldwide.aspx, accessed on 11 June 2009.
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