Compassionate Capitalism and the Birth of “Fair Trade”


Is it not a blessing to be sent among those who are weary, who have lingered behind after their work and have fallen down exhausted on the road, because their knees were not strong enough to carry them to the place where they should receive their wages? Should not I be glad to give a helping hand to him who tumbled into the ditch, and a staff to him who climbs the mountains?

—from Max Havelaar, Eduard Douwes Dekker’s 1860 novel about the exploitation of indigenous coffee workers in the Dutch East Indies

The modern Fair Trade movement was launched thirty years ago this month — November 15, 1988, when the Netherlands organization Solidaridad began to sell its first label, Max Havelaar coffee, in Dutch supermarkets. Similar initiatives, most of them run by religious groups or the UN and oriented towards handicrafts, had existed since mid-century, but the “Fairtrade” certification system took the concept out of its charity framework and into the mainstream marketplace. Over its three decades the movement has expanded to a dozen commodities and a worldwide marketing network, bringing increased benefits and improved working conditions to many indigenous producers and farmers — though the benefits are sometimes marginal, with many coffee workers still earning a daily wage less than the cost of a cappuccino.

The Fairtrade system has its critics and challengers — notably, the more recent Direct Trade initiative — but the movement is regarded as a consciousness-raising moment in the development of the sort of compassionate capitalism which Dekker’s novel advocated. To underscore his theme, Dekker wrote under the pen name “Mutatuli” — Latin for “I have suffered much.” He was a colonial administrator in Sumatra and other regions of the Dutch East Indies for almost twenty years, and his experiences with systematic oppression fueled a lifetime of indignation and nonconformity. Max Havelaar was widely read and highly controversial when it appeared, and if it was not “the book that killed colonialism” (the Indonesian novelist Pramoedya Ananta Toer) it inspired reforms within the Netherlands and protests internationally.

In Beyond Fair Trade: How One Small Coffee Company Helped Transform a Hillside Village in Thailand, Mark Pendergrast describes the sort of venture Dekker and his coffee-trader hero would applaud. In his earlier Uncommon Grounds Pendergrast took the macro-view, tracing the coffee trade from its tribal origins to its modern status as one of the world’s biggest and most lucrative industries. In Beyond Fair Trade Pendergrast zooms in on the Doi Chang Coffee Company, an equal partnership venture launched by Canadian businessman John M. Darch and Thailand’s Akha hill tribe, allowing them to move away from the opium trade to a more sustainable, socially responsible economic model. Similar stories of successful compassionate capitalism ventures are described in such books as Firms of Endearment and Conscious Capitalism: Liberating the Heroic Spirit of Business — the authors of the latter book now offering the Conscious Capitalism Field Guide, a practical handbook for companies which wish to buy into the “triple bottom line” model of financial-social-environmental profitability.

As with the crusading hero of the Dekker novel, described at one point as a Don Quixote tilting at windmills, some regard the concept of compassionate capitalism as delusional idealism. In Can American Capitalism Survive?: Why Greed Is Not Good, Opportunity Is Not Equal, and Fairness Won’t Make Us Poor, Pulitzer-winner Steven Pearlstein argues that the delusion is to regard traditional capitalism as still viable. That model, Pearlstein argues, has become widely impractical (the resources are going or gone), increasingly unpopular (one recent poll reports that only 42% of millennials support free market capitalism), and thoroughly unprincipled:

And even for those living better than ever, the American capitalism they experience feels more and more like a morally corrupt and corrupting system in which the prevailing ethic is every man for himself. Old-fashioned norms around loyalty, cooperation, honesty, equality, fairness and compassion no longer seem to apply in the economic sphere. As workers, as consumers and even as investors, they feel cheated, manipulated and disrespected.


Illustration: Engraving of Dutch East India ships off of Mocha, Yemen from a 1680 engraving by Olfert Dapper, via Wikipedia.