Free Trade Versus Fair Trade in the Global Market Economy

The problem of alleviating mass poverty, famine, diseases, discrimination, etc. in the world is today's general concern, a ‘prick of conscience' afflicting the developed countries, and certainly nobody, not even orthodox free traders, remains indifferent to these social ills. Linking free trade with fair trade is not as obvious a postulate as it seems. Paradoxically, fair traders and free traders have a lot of common ground. They are both concerned with global justice, though understand it differently, and they both care about global prosperity and the alleviation of poverty. The main differences between these camps is that they operate using different premises and find other means of solving these basic, yet mammoth, problems. Free marketeers claim that free trade is just only if all the transactions meet the condition of voluntariness (the chief component of justice in the neoclassical economy), because then at least one party of voluntary transaction benefits and no party loses (we shall explain this in greater detail in the next section). They argue that free trade distributes the goods fairly, according to the meritarian principle, i.e. to each according to merits. Moreover, free trade — as a system of voluntary exchange — maximises welfare and brings about economic growth. Thus, so the argument goes, free market mechanisms enrich everyone and are the best way to alleviate world poverty in the long run. This is the so-called ‘trickle down theory', which states that benefits from economic growth trickle down even to the least well off without any external intervention into the free market such as redistribution of wealth