Alternative Economy - Overview

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Fair trade is a relatively new concept, a popular response to corporate-centered free trade regimes such as NAFTA. Fair trade has quickly become a sort of catch-all phrase that can includes concepts like fair wages, living wages, sustainability - or simply the opposite of free trade. Within the burgeoning fair trade movement, there is a great deal of latitude regarding definitions and objectives. Especially in the US context, fair trade is often defined as a market-based approach to sustainable development that provides producers in the global South with fair prices for their products. In part because of this reliance on capitalist markets and in part because of the emphasis on prices, many activists in the global South shun the term fair trade, instead preferring to use terms like moral economy or alternative economy. As with many new concepts, alternative economy has as many definitions as practitioners. At its best, it is an alternative to capitalist markets based on genuine democracy and comprehensive empowerment. In short, the alternative economy can be one of the building blocks of a better world.

Alternative economy in a capitalist world

Fair compensation has been a common demand among all workers throughout capitalist history, from unionized industrial workers to secretaries to campesino farmers, and everyone in between. The problem arises when we try to define "fair." In absolute terms, no compensation scheme devised under the logic of capitalism is "fair." There is always a capitalist, the "owner" of either capital or the means of production, lurking behind the scenes to take his or her cut from work done by others. Whether factory owners, bankers or investors, the capitalist is always there to take part of the fruits of labor for him or herself, even though the capital s/he "owns" is really nothing more than the accumulated result of labor done previously by other workers.

In relative terms, the further a worker is from the centers of capitalism, the less fair the return for his/her work. Accountants, lawyers, technicians and other highly trained professionals who live in major urban centers, the so-called "global cities" of the modern globalized economy, can count on relatively fairer returns for their work, commensurate with their political clout, class status and capacity to manage the communication and financial infrastructures that are at the heart of the globalized neoliberal model. Unionized workers, a vanishing breed, can generally count on a fairer deal than non-unionized workers. On the other end of the spectrum, campesinos who produce agricultural products or handicrafts are marginalized in a capitalist economy. They have little clout in world markets or national political processes, and little "wealth" (as measured by the capitalist in terms of capital accumulation), and the prices of their goods in capitalist markets reflect this relative lack of power.

Capitalist production regimes hide the true social nature of production under the guise of depersonalized commodities. The only thing most consumers see is price, and they generally make decisions on whether or not to purchase a product based on price. The conditions of production are generally not a factor. Artisanry produced in cooperatives in which women members are actively involved in design, production and marketing decisions is qualitatively different than production of textiles in, for example, a maquiladora. The women in the coop are empowered and in charge, while the workers in the maquiladora are nothing more than replaceable cogs in a profit-driven machine. The social context of the cooperative opens possibilities for new relations of power and genuine democracy, while the maquiladora closes the door on these possibilities. When the conditions of production are revealed, the relationship between producer and consumer becomes real. A moral component is introduced into the market relationship that was not present before. The moral component mediates the relationship between producer and consumer in a way that is not possible under impersonal, comodified market relationships. An alternative economy model embodies many principles traditionally associated with fair trade, but goes beyond by defining a new kind of market. Exchange is no longer just about the exchange of goods for money. It is about the construction of alternative relationships that are largely outside capitalist market mechanisms. It is about the possibility of alternative power relations and more liberating political systems. It is about building direct relationships in a globalized world between producers in Chiapas and consumers in the US context with you, the intern, acting as a communication link. The alternative economy is the beginning of a process of profound change, not an end in itself. 

Production in Mexico

Most coffee in Mexico is produced by campesinos on small plots of land, generally less than five acres. Even when these growers organize in cooperatives, they have little chance to defend just prices in the context of a world market controlled by a handful of large corporations - Proctor & Gamble, Philip Morris/Kraft, Nestle, and Starbucks, to name the major players. In 2003, coffee prices fell below 50 cents a pound in international markets, well below the break-even price for Mexican farmers. In December 2004, the composite price for all coffee grades stands at about 75 cents a pound, while higher grade export-quality coffee produced in Mexico sells for around a dollar a pound. Even these prices are misleading. Most coffee producers in Mexico do not have ready access to international markets or transportation, and are forced to rely on middlemen called coyotes to buy their coffee. In Chiapas, coyotes pay 10 to 25 cents per pound!

The fair trade market pays Mexican producers a minimum of US$1.26 per pound, with a ten cent bonus for organic coffee. If the world market price goes higher, the fair trade market pays higher prices. This is a much fairer price, though still probably not a fair price, if we take into consideration the labor required to produce coffee and the fact that producers alone have to bear the results of poor harvests. Nevertheless, the difference between 10 cents a pound and $1.36 is substantial. But the more significant difference in the long term is the kind of relationships and the social context that develops from this model. Producers in Zapatista communities are organized in cooperatives that have horizontal structures. The producer is in control of production and marketing. Empowered producers are developing direct relationships with Northern cooperatives, like the coffee-buying coop of which Café Campesino is a member. The buying cooperatives are supporting fairer price structures, but more importantly in the long run, they are supporting alternative political structures and alternative market mechanisms that contain an important moral component.

Historically, women artisans in Chiapas fared worse than coffee producers. Production of artisanry is generally done in indigenous communities, whereas sales are handled by merchants in urban areas. The merchants paid a pittance for the artisanry, then marked it up handsomely in urban markets. It was not unusual for producers to receive prices that barely cover the cost of raw materials, while coyote markups in urban markets can be several hundred percent.

The Zapatista revolution changed the dynamics of artisan production. The first Zapatista revolution happened in 1991, three years before the more public uprising on January 1, 1994, and its proponents were indigenous women demanding their own autonomous social spaces. Women began to organize in cooperatives and to open different kinds of market relationships with international solidarity groups. The process has been slow and bumpy, but even in its early stages it is making a real difference in women's lives. In the Zapatista coops, women are in charge of everything from production to marketing. The organization of the production process is as important, and in the long run probably more important, than the income generated by the production process. The social organization of production impacts every aspect of life in indigenous communities. Zapatista cooperatives are constructing horizontal power relationships in which women are defining their futures in new and creative ways. The fact that the cooperatives are successful from a financial standpoint is also important, and is a statement on the viability of this alternative model. Women are constructing autonomous social spaces, developing economic alternatives and improving their standards of living. A better world really is possible. The income women receive from alternative markets is often the most important source of cash income for their families.

Transparency and public accountability

An important element in an alternative economy is a horizontal power structure, which includes full and transparent accountability. In this context, you might ask, "So how does coffee that's $1.36 per pound end up costing the consumer $10 per pound?" Shipping and storage add significantly to the cost. Coffee must be stored in climate-controlled warehouses and is only shipped to roasters when there is demand. If coffee is roasted, then stored for a long period of time, it goes bad. Coffee is shipped green and loses about one-quarter of its weight during the roasting process. The roasting, processing, grinding and bagging add to the cost, and shipping the finished product adds again.

It is interesting to note that fair trade interns earn more from a pound of coffee (about $2) than the original producers (about $1.36). The MSN also takes about $1.50 from each bag of coffee to cover the costs of shipping, product loss and administration of the internship program. The difference is not as marked in artisan production, where a $25 blouse brings about $15 for the producer and about $5 for the intern (shipping, lost or ruined artisanry, and MSN administration eat up the rest of the money). Interns also have costs - local transportation, advertising. Each intern sells a miniscule amount of coffee and artisanry in comparison to the bulk sales of producers, and the weekly earnings of an intern from coffee and artisan sales won't make anyone wealthy. The income realized by interns will most likely end up being somewhat more than minimum wage when all of their work is calculated. As proponents of an alternative economy, we certainly want interns to be compensated at a reasonable rate for their important work.

A new world based on new relationships

Relations based on the alternative economy dramatically improve the living standards of cooperative members. Ultimately, the goal is leveling of income, power and potentials. (We want to be clear that leveling does not mean equalizing or homogenizing. In the context of an alternative economy, we must maintain respect for different social contexts, different cultural values, and different decisions about use of income - building a world in which all worlds find a place, as the Zapatistas say.) It is here that we arrive at what may be the most important element in the alternative economy - the de-mystification of the product. As we discussed above, capitalist market relationships rob the producer of his/her humanity by turning the product into a commodity without history. The most important element in an alternative economy is returning this humanity. So when you set up a table of artisanry and coffee produced by Zapatista cooperatives, be sure to tell the story of a new social order behind the production process. Be sure to tell the story of women's artisan cooperatives in Oventic and coffee cooperatives in the Chiapas highlands. Be sure to tell the story of the Juntas of Good Government and the new experiences in democracy.

And then explain to folks why the articles on your table carry suggested donations instead of prices. Your relationship with the person in front of your table is not based on capitalist principles, but rather on the principles of an alternative economy that respects the uniqueness and power of both producer and consumer. And we really mean it. If someone hears the story of the Zapatista movement and then decides to walk off with a piece of artisanry without leaving a donation, we will respect that decision. We are also confident that, as we build this new economy, this won't happen very often, and when it does happen, there will be either good reasons or, eventually, consequences. In fact, when we trust people to make moral decisions, we will probably find that many people choose to leave more than the suggested donation, understanding that the amount of work that went into the production of each piece of cloth and each bag of coffee is worth more than what's generally available in a "fair trade" relationship. These funds will have positive repercussions in the Zapatista communities, improving living standards in the short term and supporting genuine alternatives to capitalism in the long term.