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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 ethically.
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 Wal-Mart here, 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 alternative.
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.
Information about 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 production.
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).