Acton Institute Powerblog

Fair Trade or Free Trade?

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Is ‘fair trade’ more fair or more just than free trade? While free trade has been increasingly maligned, The Fair Trade movement has become increasingly popular over the last several years. Many see this movement as a way to help people in the developing world and as a more just alternative to free trade. On the other hand, others argue that fair trade creates an unfair advantage that tends to harm the poor.

Dr. Victor Claar addresses this question in his popular lecture Fair Trade vs. Free Trade. In the AU Online session scheduled for Wednesday, May 9 at 6:00pm ET, Dr. Claar will lead us through an analysis and comparison of arguments for and against both fair trade and free trade. Visit the AU Online website to register.

If you want to familiarize yourself with Dr. Claar’s response to the fair trade vs. free trade question before attending the lecture on May 9, then you’re in luck! Dr. Claar is a professor of economics at Henderson State University and a frequent Acton lecturer. Most important for this discussion, though, is his most recent monograph, Fair Trade? Its Prospects as a Poverty Solution, which is a part of Acton’s Christian Social Thought Series. Dr. Claar is also coauthor of Economics in Christian Perspective: Theory, Policy and Life Choices and has written articles for Applied Economics, Public Finance Review and the Journal of Markets & Morality, among others

Michelle Hornak


  • A bigger question, and principle which may come up in the discussion, is whether benevolent market interventions are free of negative externalities.  If those externalities are wholly absorbed by the benevolent party, while pareto improvements are experienced by all other parties, is it not the prerogative of the benevolent agent to intervene in this way?  Isn’t this what Jesus did in paying the ransom for our souls?
    Milton Friedman was skeptical of this in part because any loss of welfare, however concentrated on willing parties, is a loss to the common good.
    A robust analysis of fair trade vs. free trade will have to start from a baseline which considers these problems and perhaps how a perfect fair trade program could surmount them.  Then one could demonstrate the ways which the current fair trade system fails, perhaps systematically, to address these concerns.

    • dollared

      You seem to make an assumption that existing market activities are free of external interventions and free of negative externalities.  Is that your assumption?