The Institutionalization of Fair Trade: More Than Just a Degraded Form Of

Journal of Business Ethics (2009) 86:63–79 Ó Springer 2008 DOI 10.1007/s10551-008-9758-4 The Institutionalization of Fair Trade: Corinne Gendron More than Just a Degraded Form Ve´ronique Bisaillon of Social Action Ana Isabel Otero Rance ABSTRACT. The context of economic globalization has can be characterized as a clash between a ‘‘radical, militant’’ contributed to the emergence of a new form of social action pole and a ‘‘softer, more commercial’’ one. However, it is which has spread into the economic sphere in the form of the not the actual institutionalization of fair trade which is being new social economic movements. The emblematic figure of debated among fair trade actors on either side of the fence, this new generation of social movements is fair trade, which but rather the challenges inherent in finding an economic influences the economy towards political or social ends. institutionalization acceptable to social economic move- Having emerged from multiple alternative trade practices, ments. Therefore the institutionalization process of fair trade fair trade has gradually become institutionalized since the should not be seen as mere degradation of social action, but professionalization of World Shops, the arrival of fair trade rather as typical of the institutionalization process of new products in the food industry, and the establishment of an social economic movements. If we need to worry about the official ‘‘fair trade’’ label. With the strength that this institu- highjacking and alteration of the fair trade movement by the tionalization has generated, fair trade can now be considered dominant economic system, the opposite is no less likely, as a real trade system that questions, as much as it renews, the new social economic movements contribute to an ethical traditional economic system. In parallel, this transformation restructuring of markets. has exacerbated the tensions within the movement, which KEY WORDS: fair trade, globalization, institutionalization, new social economic movements, new social This article is translated from the French by Annelies Hodge and movements, social action reviewed by Claire Valade. Corinne Gendron is a professor in the Department of Organi- ABBREVIATIONS: ATO: Alternative Trade Organi- zation and Human Resource Management within the School zation; EFTA: European Fair Trade Association; FLO: Fair of Management Science at l’Universite´ du Que´bec a` Montreál Labelling Organization – International; FSC: Forestry (UQAM). She has headed the research chair in Social Stewardship Council; FTO: Fair Trade Organisatie or Fair Responsibility and Sustainable Development Centre Trade Organizations; IFAT: International Federation of (CRSDD) since 2004, directing several research programmes Alternative Trade; ISO: International Organization for on sustainable development, corporate social responsibility, Standardization; FINE: informal umbrella of FLO, IFAT, globalization, new social economic movements, and fair trade. NEWS!, EFTA; ILO: International Labour Organization; Ve´ronique Bisaillon is a Master’s student in the Environmental MCC: Mennonite Central Committee; NEWS!: Network Science institute at l’Universite´ du Que´bec a` Montreál of European World Shops; SAI: Social Accountability (UQAM). She is currently writing a thesis about fair trade International; SERRV: Sales Exchange for Refugee and sustainable development while working as the Social Rehabilitation and Vocation; UCIRI: Unioń de Com- Responsibility and Sustainable Development Centre unidades Indı´genas de la Regioń del Istmo; UNCTAD: (CRSDD) co-ordinator. United Nations Conference for Trade and Development Ana Isabel Otero Rance is a PhD student in Political Science at l’Universite´ du Que´bec a` Montreál (UQAM). She has been working as a researcher at the Social Responsibility and Sustainable Development Centre (CRSDD) since January Introduction 2004. Her research focuses on fair trade as a development alternative, the conventional international trade system, and Since the turn of the millennium, the fair trade the influence of the new economic and social movements. movement has left its marginal beginnings behind, 64 Corinne Gendron et al. gaining an increasingly important notoriety despite we reflect on the recent evolution of the movement the fact that its market share remains modest. and the question it raises: does the institutionaliza- Concurrently, it is experiencing tensions that are tion of fair trade correspond to a degraded form of crystallized around an initial perspective, called social action, a weakened form of the movements’ ‘‘radical and militant’’, and a second one, perceived demands? To respond to this, we propose beginning to be ‘‘softer and more commercial’’. These tensions with an understanding of the nature of social are more and more apparent as the movement has movements and the phenomenon of their institu- become institutionalized or formalized through a tionalization. We then reveal the concrete forms that common definition, common criteria, and, above the institutionalization of the fair trade movement all, a distribution strategy which is now symbolic of has assumed over the last decades and the challenges the two clashing perspectives. Some fear that the it faces. In the last section of this article, we reflect transformative potential of the fair trade movement on the institutionalization of fair trade and of new could be weakened through this institutionalization social economic movements in general, and how as it is progressively cut from its roots and simulta- they manifest their transformative potential in neously ‘‘contaminated’’ by an economic or com- advanced capitalist societies. Finally we conclude that mercial logic. it is not the institutionalization of fair trade as such Though this portrait may appear overdrawn, it that causes problems for the actors of the movement, does summarize the many contradictory positions in but rather the mode of institutionalization. By proving the fair trade movement which, according to some, to be more economic than political, this mode is is at the point of bursting. However, by placing fair typical of other social mobilizations which charac- trade within the larger context of the new social terize the era of globalization, and is not less able to mobilizations, and the transformations that they are cause important social transformations. causing, which are manifesting themselves in the era of globalization, the existing conflict at the centre of the movement can be transcended such that the From charity to a parallel commercial ‘‘militant’’ and ‘‘commercial’’ poles are seen in a system complementary way. The institutionalization of social movements took Many authors trace the origins of fair trade to craft new forms in the era of globalization by systemati- boutiques which appeared in the United States, the cally resorting to economic methods of pressure. United Kingdom, and the Netherlands in the middle ‘‘Political institutionalization’’ has been superseded of the 20th century.1 These initiatives not only came by what could be defined as ‘‘economic institu- from political movements of solidarity known as the tionalization’’ – a formalization of demands in the ‘‘solidarity trade’’ (IFAT, 2003), but also from economic system. This type of institutionalization is development organizations known as ‘‘develop- typical of movements that we call social economic, mental trade’’ (IFAT, 2003), corresponding to the of which fair trade is one of the best known, and early history of a social movement that has multiple requires a new look at the process of social trans- origins. formation in advanced capitalist societies. In this In effect, fair trade resulted from a serendipitous article, we demonstrate that, while this transforma- convergence of different local initiatives in alterna- tion is creating well-founded fears, the process of the tive commerce. Firstly, although it has not always institutionalization of fair trade does not have to be been acknowledged, fair trade has an incontestable interpreted as a simple degradation of social action relationship with the co-operative movement, initially instigated by activists, but rather can be which has its roots in nineteenth century Italy and interpreted as typical of the mode in which new the United Kingdom (IFAT, 2003) and with social economic movements are institutionalized. hundreds of later initiatives like those raised by Low The argument is built in four stages. First of all, and Davenport (2005).2 This movement aims to we will trace the plural origins of fair trade, which develop a co-operative economy that is integrated offers an interesting and often neglected exploration from the production to the distribution of products of the current tensions within the movement. Next, (IFAT, 2003): The Institutionalization of Fair Trade 65 The conceptual bases of fair trade are well understood wished to find outlets for the products of excluded under the umbrella of social projects put in place by countries (Renard, 2003; Malservisi and Faubert- the pioneers of the cooperative movement. The Mailloux, 2000). founders of the Rochdale Equitable Pioneer Society Finally towards the end of the 1960s, international had already developed the principle of eliminating the development agencies and religious organizations excessive profit of intermediaries. They also wished to initiated a ‘‘developmental trade’’, which consisted transform the nature of commercial relations into a of assisting Southern producers in production and

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