Fair Trade For All
A review of the new book by Joseph Stiglitz
The Independent, 23rd December 2005
If you're looking for a Christmas read to curl up
with in front of the fire, this is not the book. This
is a book for people - economics teachers, say, or Chancellors
of the Exchequer - whose hearts don't sink at a glossary
full of terms like "tariff binding", and "Pareto
efficiency". It is, in short, hard going, but this
is not surprising. Fair Trade for All is, after all,
a book by a Nobel-prize winning economist which sets
out to tackle that knottiest of global economic problems:
the intrinsic unfairness of the global trading framework.
What is surprising - and heartening - is that a book
like this is now considered a reasonably mainstream
A decade ago, before the Seattle street protests against
the World Trade Organisation (WTO) and long before Make
Poverty History, books like this were published by academic
publishers and read by economists and the most committed
of campaigners. Today, possibly much to his own surprise,
Joseph Stiglitz is a bestseller. Not bad for a bearded
economist whose idea of a good chapter heading is "Trade
Liberalisation and the Costs of Adjustment".
But the dryness of language and the painstaking, evidence-based
presentation favoured by Stiglitz and Andrew Charlton
should not be allowed to obscure the power of the points
they make. They set out to produce a kind of Beveridge
Report for the 21st-century economy, and to knock away
some of the shibboleths underpinning the free trade
ideology which still dominates global economic thinking.
And they largely succeed.
Not that much of what they say is actually new. The
key problem is easily grasped without a Nobel Prize:
the global trading framework which evolved over the
past 50 years has been largely stitched up by rich countries
in their own interests. Furthermore, it has been soaked
for three decades in the all-encompassing ideology of
neo-liberalism, which holds that for all countries,
at all times, the way to achieve economic growth, and
thus the betterment of the human condition, is to remove,
and to keep on removing, barriers to trade.
This "Washington Consensus" has been dominant
since the late 1970s. Unfortunately, as Stiglitz dryly
points out, "it is difficult to identify the evidentiary
source of the bullishness for unqualified trade liberalisation".
This is an economist's way of saying that the emperor
has no clothes; that trade liberalisation has become
a dogma that does not deliver. Indeed, poor countries
which have grown rich have done so by doing the opposite
of what the neoliberals told them to. "To date,"
Stiglitz writes, "not one successful developing
country has pursued a purely free market approach to
Forcing poor countries to open their markets, in fact,
often simply entrenches poverty and inequality. What
is needed, says Stiglitz, is a trading system which
focuses on poverty-reduction and fairness.
He and Charlton lay out a number of detailed ideas,
including a proposal under which all WTO members would
have to provide unfettered market access for countries
smaller and poorer than them; a commitment by developed
countries to eliminate agricultural subsidies; the integration
of environment and human-rights measures into trade
agreements; and the removal of global agreements which
favour the rich, like those on patents and intellectual
In all, they provide a workable and reasonable, if
somewhat ponderous, way to make the current system fairer.
What they don't do is live up to the claim that they
have come up with "a radical new economic model".
Stiglitz has for some time been seen as something of
a Great White Hope by those campaigning to change the
global economic model.
He is actually a cautious, fair-minded neo-Keynesian,
with some sensible ideas. Future historians may conclude
that a society in which the ultra-reasonable Joseph
Stiglitz was seen as a radical was far more in thrall
to the gods of the market than it could bring itself