Prof. Philip Booth on trade justice and Christianity

By Alex Singleton | 25 April 2005

Prof. Philip Booth (pictured) is Editorial Director of the Institute of Economic Affairs and a member of the GI's Academic Advisory Council. He spoke at a debate at St Paul's Catholic Church, Haywards Heath (England) at a meeting of Mid-Sussex Churches Together Justice and Peace Groups. This is his introduction:

Perhaps the best known economist's joke is that "if you have six economists, you will have seven points of view". It seems to me that many in the Christian community promoting discussion on so-called "trade justice" issues have lost sight of the fact that there is, in fact, another point of view.

First we must remember why poor countries are poor. They lack the basic features of good government stated lucidly in the Catholic Catechism: peace, the rule of law, the authority of law, the absence of corruption, independent judicial processes, the enforcement of contracts, basic free markets and the enforcement of property rights.

These issues should be the starting point for any discussion of poverty. The policies of the trade justice movement would make matters worse for poor countries. The Trade Justice Movement (TJM) would like them to be able to regulate trade in ways that would not be permitted under international free trade agreements. Trade regulation in the hands of governments is potentially catastrophic. It leads to the greater politicisation of economic life and has the potential to increase corruption as well as undermining economic efficiency. Ironically, regulations can often be circumvented by large multinational corporations so that trade regulation can entrench the position of the organisations the TJM hates the most.

Poor countries do not suffer because they do not regulate trade enough. On the contrary, most poor countries simply do not engage in the world economy and are not open to trade at all.

There are areas where I agree with the TJM. The West should remove constraints on free trade in agricultural and manufacturing products. It is wrong that developing countries are kept out of our markets.

The sale of retail fair trade products raises issues too. Typical fair trade contracts involve fixing the price of a product to protect the grower from falls in the market price. They encourage cooperatives and small farmers. Proponents of fair trade are too ready to put themselves on a higher moral plane. We should consider the wider impact. What happens if there is adjustment to world supply or demand and prices in one part of the market are fixed? Prices in other parts of the market must fall by more - others suffer. What happens to employees of large producers when fair trade consumption shifts away from them towards small producers? They may have no alternative employment.

Whether to buy fair trade products is a personal, prudential judgement. Clergy and Christian campaigners should not argue, as they do, that Christian teaching in this field leads you inexorably towards the policies of the Trade Justice Movement. Those of us who believe in free trade should not be made to feel as if our views are not compatible with Gospel values.

The full text can be downloaded from here (PDF).