Liberty & Power: Group Blog
O’Neill concludes that"[p]erhaps more than any other area of life, science develops through a self-corrective process. In demanding that something be corrected from on high, and before being fully submitted for public consideration, the 38 scientists complaining to WAG have violated the very spirit of their vocation. They have behaved less like scientists, and more like Stalinists."
The theory of spontaneous order first developed in the Scottish Enlightenment, especially by Adam, Smith, is the only theory rooted in the social sciences that has enriched the natural sciences. It provides the fundamental logic behind both ecological science and the theory of evolution - that order can arise “spontaneously” from independent actions channeled through impersonal systems of negative and positive feedback. Feedback in the market is via the price system. Feedback in nature is through successful or unsuccessful reproduction. In the human world ideas reproduce, develop or die. In nature organisms reproduce, develop or die. This isomorphic similarity is also the key to identifying the problems in harmonizing these orders.
There is a fundamental disconnect between feedback in human society and in the natural world because ideas reproduce, develop, or die at a much faster rate than human generations. Therefore human society changes much more quickly than the human genome. In the case of the market, human time preferences as reflected in the rate of interest gives the temporal reference for purely economic activity. Organisms that reproduce and adapt very rapidly can ‘keep up’ with human society – bacteria being the most successful. Slower natural processes are often at a serious adaptive disadvantage.
Now factor in the issue of scale. The human world has recently begun creating waste products that do not recycle easily into the biological community or deposit themselves harmlessly into the natural world (for example, as pottery shards did for thousands of years). When the scale of this waste production was small, it was not an issue. But as the scale has increased the potential for problems has grown accordingly. Global warming issue are one of several such cases.
Both biological processes and ideas liberate power and creativity. In the short run ideas liberate much more power and energy, in the long run biological processes provide the essential foundation for society to give ideas such power. We are dominant in the short run – nature in the long run. Hence over the long run it is vital that ideas not inadvertently undermine the biological support for their societies. Some societies succeed at this, some fail. Julian Simon was not always right – as the Anasazi and early civilizations of the Tigris and Euphrates could confirm.
Much of what is best about markets arises from their systemic characteristics – impersonal coordinating properties – rather than from a simple individualistic model of free exchange. This point is hardly denied by methodological individualism, but for less sophisticated interpretations of it this point is obscured. Individual exchanges generate the market system which then loops back to transform the context of further exchanges, and so on indefinitely. Markets would arise under any system of voluntary instrumental or partially instrumental exchange. At their most abstract level they are as impersonal as an ecology or evolution.
Harmonizing society and nature must occur in part at an equally impersonal level. Eliminating waste is the basic requirement, which means eliminating the capacity of people to leave significant negative externalities in their wake. Major negative externalities created by individuals are easy. Very small ones created by individuals that add up because there are many individuals are much more difficult to deal with. The language of property rights can easily encompass the problem – but institutions to make property right enforcement practical in this latter case are more difficult.
To give what I hope is a completely noncontroversial example, Missoula, Montana long had homes heated by wood stoves and fireplaces. But the city is located in a valley subject to winter temperature inversions. When Missoula was small this was not an issue. As it grew winter smoke trapped by the inversions made the air increasingly unpleasant to all and hazardous to some. Finally wood stoves and fireplaces were banned in new housing. Only an idiot would say this was unjust.
The logic underlying global warming is akin to this issue, but on a global scale. The same is true for other nonpoint pollution problems.
It seems to me most libertarians and other classical liberals are wedded to thinking of everything in terms of a state vs. market dichotomy, and so are reduced to denying these kinds of problems are significant because traditional market models are unable to deal very well with them. But institutions rooted in civil society may be able to address a great many of these issues (see Peter Barnes’ wonderful Capitalism 3.0 – start in the positive second part so you don’t get defensive with his critique of corporations in the first part). And for anyone who sees government as legitimately enforcing property rights, using its power to reduce negative externalities that cannot be reduced through traditional means of tort and injunction seems to me no theoretical obstacle at all. The practical issues are interesting – but can be creatively addressed only once someone is able to acknowledge a problem exists.
The irrational deniers of the growing judgment of the scientific community are reduced to alliances with fundamentalist lunatics like Sen. Inhofe because if they take the judgment of most scientists seriously they will have to rethink their fondly held beliefs. Like the Pope and Jupiter’s moons – theory trumps evidence no matter how otherwise persuasive that evidence may be. This attitude constitutes the greatest threat to the long term viability of many classical liberal insights in understanding the world. Ironically, they have chosen an evolutionary dead end rather than being open to new adaptation. It is a great pity because insights rooted in classical liberalism are desperately needed today.
Three ships ( the Susan Constant, Godspeed, & Discovery ) left London on the 20th Dec 1606. They reached their first landing-spot in North America on the 26th April 1607; they named the spot, Cape Henry. On the 14th May 1607, colonists from the ships landed at Jamestown Island where they constructed what would turn out to be the first permanent English settlement in North America. -- Initially, the settlers distributed all their outputs equally amongst themselves, with the usual disastrous results. They survived through cultivating a cross-bred type of sweeter tobacco, which they exported to England. But as they cultivated more land, they clashed with the local American tribes…
A number of key strands of US history happen to pass through Jamestown. It had the first colonial legislature, which first met on 30th July 1619. (The Mayflower Compact was signed almost 16 months later.) Jamestown remained the colonial capital to 1698, when the legislature moved to Williamsburg. -- In 1619, too, the first -- coerced -- Africans arrived, brought by a ?Dutch trader. But they were indentured servants, not slaves, & so eventually became free. (Slavery developed only later in the 17th century.) -- There was a fort on the site of Jamestown during the American Revolution & a Confederate fort during the US Civil War.
David T. Beito
To bring out the main points, I quote & rearrange:- “ Two Melbourne academics have lodged formal complaints against Oxfam Australia ” with the Australian Competition and Consumer Commission, asking it “ to investigate Oxfam ”. They say Oxfam “ is guilty of misleading or deceptive conduct under the Trade Practices Act.” This relates to “Fairtrade coffee…promoted as helping to lift Third World producers out of poverty […] sold at a premium to people concerned about Third World poverty.”
But reports allege that “coffee producers in poor nations are charged $3200 to become certified Fairtrade providers. The producers' costs are therefore higher than on the open market.” And according to “the Financial Times [8 September 2006], Fairtrade coffee beans were ‘picked by workers paid below minimum wage’…workers received the equivalent of $3 a day.”
“In order to lodge the complaint [one of the academics] purchased a 250g pack of Fairtrade organic decaf ground coffee from the online Oxfam shop.” In his letter to the chairman of the ACCC he wrote: “We purchased this product in good faith, with the aim of lifting people out of poverty while enjoying our favourite brew. ” But “there was evidence that Fairtrade products could do more harm than good for coffee producers in undeveloped nations.”
However: “Oxfam's Neil Bowker rejected criticism of the Fairtrade coffee project…: ‘It's all audited and monitored, from beginning to end, and we've got no doubts about the effectiveness.’ ”
From various parts of the Oxfam Australia FairTrade Coffee website:
As Oxfam see it, poor coffee-growers face the following problems:
A. Low & highly unstable prices:
“World coffee prices have improved recently which has provided some relief for small-scale, family farmers and coffee farm workers. But […] prices have not increased dramatically so coffee farmers still have little left after covering their costs.”
“Current higher prices will lead to increased production and send prices falling again.”
“…the price could return to previous low levels at any moment […]This instability is a huge problem for farmers.”
“…the coffee market [does not] guarantee long-term stability for those at the bottom of the supply chain.”
B. “ Other problems ”:
Eg “getting….products to market, dealing with greedy middlemen and accessing finance.”
The usual suspects have gained massively:
“While coffee-growing communities and entire economies have been suffering, the major coffee companies have been making huge profits from the drop in prices. [NB, No data given, because unnecessary to do so.] Kraft, Nestle, Proctor and Gamble and Sara Lee are among the world’s biggest coffee companies, buying almost half the world’s coffee every year.”
And Oxfam tackle the problems:
“Paying farmers and workers a fair price for their work”
“…a certification and labelling system to ensure…that the benefits…get back to the farmer…”
“The higher price paid to farmers in the Fairtrade scheme means that they have effectively doubled their earnings over the past decade, compared to non-Fairtrade farmers who have been left struggling. ”
I. Some facts: Under the Fairtrade system, coffee growers have to join producers’ organisations. It is the latter who are paid the Fairtrade price, not the farmers. The associations first deduct their costs; what remains is given to the farmers. These costs: borrowing the money to buy the coffee; sorting, grading & processing the beans; marketing the beans. Association officers have neither the experience nor the efficiency of ‘greedy middlemen’, so these costs are high. So farmers don’t get the so-called ‘fair’ price. Indeed, some prefer to sell to the domestic market, rather than to the Fairtrade export organisation. (And see further on price.)
So ‘Fairtrade’, for the farmer, is the offer of a parallel system which is mostly more costly than ‘greedy middlemen’. For Oxfam, however, it provides a good selling ploy.
II. The Fairtrade price for coffee is $US 1.24 a lb. This is well above the market price. It is just below the average (composite) price of $US 1.28, in the years 1980-89. But during those years there were export ‘quotas’, i.e., official limits on the amounts entering the international markets. Such ‘quotas’ disappeared on the 4th July 1989. In the following years, 1990-2006, the average price was around 89 cents (US) a lb.
Thus the Fairtrade floor price is some 39% higher than this average. The consequence? Oversupply of Fairtrade coffee. So Fairtrade buys only a fraction of the coffee produced by its farmers’ associations. These poor farmers sell the bulk of their output at market prices to ordinary, ‘greedy middlemen’. In other words, the bulk of these coffee growers' incomes are derived from the standard market price for coffee.
Thus the poor farmers who join these associations (1) face higher marketing costs (2) sell only a tiny part of their output to Fairtrade. And so it’s not surprising that the umbrella organisation in the West is now charging each producer association for supplying it a Fairtrade certificate. This will reduce further the excess supply of coffee being offered to Fairtrade.
And neither do the seasonal workers who pick the coffee beans get the official minimum wage. Only the association employees do so.
In sum: Fairtrade farmers' associations have higher costs -- covered by the Fairtrade price..
For more see Jeremy Weber, ‘Fair trade coffee enthusiasts should keep track of reality’, CATO Journal 27/1 (Winter 2007)