Entrepreneurship, Power and Defiance:

The Globalisation of the Fair Trade Movement

Anna Hutchens

A thesis submitted for the degree of

Doctor of Philosophy at
The Australian National University

31 May 2007
Declaration

This thesis is an account of research undertaken between March 2004 and May 2007 at The
Research School of Social Sciences, Regulatory Institutions Network, The Australian
National University, Canberra, Australia.

Except where acknowledged in the customary manner, the material presented in

this thesis is, to the best of my knowledge, original and has not been submitted in
whole or part for a degree in any university.

Anna Hutchens
31 May 2007

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Acknowledgements

Three people encouraged me to embark on this Ph.D.: my Honours Supervisor, Dr. Alastair
Greig, Annie Bartlett at the ANU Academic Skills Leaming Centre, and my dearest of
friends, my mum. Without their encouragement and faith in my ability, this thesis would
not have been written.
Many others since have offered encouragement, patience, support and interest, to whom I
am eternally grateful. First and foremost, I would like to thank my Supervisor, Professor
Peter Drahos. Peter's committed, respectful and enthusiastic style of supervision was
particularly valued. I am grateful for his expert guidance, rapid turnaround time with
chapters, critical mind, and wealth of scholarly knowledge. My own intellectual
development has flourished under his tutelage.
I would also like to thank my other panel members, Dr. Sasha Courville (until 2005),
Professor Valerie Braithwaite and Dr. Jennifer Wood. My thanks to Sasha for encouraging
me to pursue my research interest in fair trade, and for her enthusiasm, strategic thinking
and planning. I am very grateful to Val for her ability to traverse interdisciplinary ideas in
the most eloquent of ways. It has no doubt helped me to give legs to this thesis by enabling
me to articulate conceptually the complex social dynamics I had met in the field. To Jen I
am also grateful for playing the 'devil's advocate' to a number of ideas in the thesis, for her
time, sharp mind, and detailed comments, all of which made possible further refinement of
the argument.
My thanks and gratitude to Cecily Stewart who is a plus in anyone's life and certainly has
been in mine. Cecily's zest for life and ability to tum crises and tedium into a laughing
matter have been much appreciated and much needed, particularly in the latter stages of the
Ph.D. I am grateful for her friendship, emotional support and administrative miracle-
making. I would like to also thank Jin Ho, RegNet's master of all things technological,
who saved my life, and a few chapters, in the course of my program. His highly efficient
service with my data collection and equipment needs ensured the technical side of this
project went as smoothly as possible.

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I am indebted to the CGKD team , and to the Regulatory Institutions Network, for creating a
highly stimulating, collegiate and supportive intellectual environment, within which this
work took shape and was nurtured. I wish them all every success in the future. I gratefully
acknowledge The Australian National University for the Ph.D. Scholarship that made this
endeavor financially possible.

A significant part of this thesis involved the fieldwork across Europe and the US , and I am
especially grateful to those who made the empirical leg of the project both possible and
valuable: Sasha Courville for her guidance and referrals; Anja Osterhaus, Coordinator of
the International Fair Trade Advocacy Office, who, via email from Brussels, assisted in my
preparation (and met with me whilst on maternity leave with her then-newborn child);
David and Amy Chin-Atkins, Cornelia Mon nier and Catherine Dobbin, for their hospitality
and companionship during my time overseas. I owe particular thanks to several
respondents who repeatedly gave their time and head space to this proje ct to assist me to
tell the detailed, highly dynamic, empirical story contained herewith: Carol Wills, Jonathan
Rosenthal, Rudi Dalvai, Pauline Tiffen, Matt Earley, Franz Vand erHo ff Boer sma and
Martina Meckel. Factual errors and limitations in interpretation rema in my responsibility. I
would also like to extend gratitude to J eroen Douglas, Herm an uit de Bosch, Sophi
Tranchell and Albert Tucker for sharing their very inspiring stories and perspectives on
100% fair trade bran d companies.
In closing I would like to thank my family and friends who made this challenging and
exhausting undertaking a bearable and worthwhile experience: Sarah Gollan, an inspiration
and very dear friend from the day we bega n our Ph.D. prog ram together at RegN et, Tali
Gal, Edwina Thompson, Judy Hemming, Linda Hort , Man dy Nearhos, Helen McC artne y
and Polly Realf; my brother, Alex Hutchens, for his strength, wisd om and desire to help. I
am grateful for his love and support from afar, together with that of his fiancee, Kate
MacGinley. Finally, and most significantly, I wish to thank my parents, Graham and Diane
Hutchens, two truly remarkable and admirable human beings. Because of them both I have
been able to complete this Ph.D. in an especially supportive environment. I thank them
both for their strategic thinking, logistic and moral support, and values of integrity,
persistence and hard work. I thank Dad for his detailed editing feedback and the many
hours it involved. If I've sweated, stressed and toiled for more hours than I can reme mber

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with this thesis, Mum has been right by my side at any hour, and lightened my load
considerably. No words can express my gratitude to her for getting me through these three
years; the endless 'debrief time, the many walks, laughs and quirky motivatio nal
reminders. Her wisdom and life philosophy, extraordinary kindness, and ability to love
unconditionally, have sustained me no end. This thesis is dedicated to her.

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Abstract

This thesis is concerned with theorising power. Historically, power has been understood as
'power over', a tool of domination that uses force to crush resistance. More contemporary
literatures have broadened the concept of 'power over' to show its 'hidden' and 'invisible '
dimensions and their significance in producing 'power over'. In general, however, the
theme of agency and its potential to change 'power over' remains under-developed in the
social science literature. Proponents of an emerging 'post-libe ral' critique conceptualise
power as 'empowe rment' and seek a theorisation of agency and power that better reflects
how social actors exercise agency to bring about change. To this agenda Braithwa ite's
conceptual framework of 'defiance ' contributes a typology of individual psychologies for
defying institutional and structural constraints. A radical expression of defiance, 'game-
playing', is of particular interest in the thesis. The game-player is an entrepreneur of
norms, similar to Schumpe ter's entrepreneur who triggers 'gales of creative destruction' to
transform markets. Evolutionary economists do not explain agency and power in market
evolution.

The thesis examines how power and agency operate in the process of market evolution
through an empirical analysis of the fair trade movement. It focuses on the role of various
actors and the parallel evolution in the movemen t's governance institutions and shows that
social actors exhibit significant capacities to exercise agency in the process of change.
Modem 'power over' is shown to be neither immutable nor inevitably recreated in new
discourses, while the potential for agency, by contrast, has been severely underestimated.
The thesis elaborates game-playing to explain empowerment processes at the levels of
collective action and transnational structure. The thesis argues that the 'game-pl ayer'
exploits the world of networked governance to free structures from their institutional
anchors to form new structures. Agency thereby gains a temporary triumph over structure.
The implication is that structures are 'free': they can be changed because they are
constantly re-created. Central to this social process are game-players and game-playing,
terms in which the micro-processes of market transformation can be understood. The
micro-processes explicated in the thesis offer to social scientific scholarship a more
sophisticated theoretical account of agency and power in social change.
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Table of Contents

Declarati on 11

Acknowl edgemen ts 111

Abstract Vl

List of Dia grains ..................................................................................................................... x

List of Figures Xll

List of Xlll

INTROD UCTION

CHAPTE R 1: 'Game-pl aying': Rethinkin g Power and Empowe rment 18

'Power Over': a legacy and its limitation s 18

Moving beyond 'power over': agency and empower ment 21
'Power with' 25
'Power to' ...................................................................................................................... ... 27
'Power within' .................................................................................................................. 28
Pushing the Empowem 1ent Agenda: 'Defiance ' and entrepren eurship of norms ............ 30
The Revolutio nary Entrepren eur ...................................................................................... 31
Defiance ........................................................................................................................... 34
'Defiance Groups': Social Connecti ons for Collectiv e Agency ...................................... 38
Interconn ected Defiance Groups: new circuits of power for transnatio nal structural
cha11ge .................................................................................................... ............... .... .. .. ... 42
Expandin g the bounds of Empower ment: the lens of Defiance ....................................... 45
Outline and Organisa tion of the Thesis ............................................................................ 48

CHAPTE R 2: 'Power Over' as Global Power in World Markets ................................. ...... 50

A Modem History of the Global Coffee Market.. ...................................................... ...... 50

Market Structure and the role of the Modem Corporation: Power Over Producer s, Profits
a11d Prices ................................................................................................................... .... .. 53
The brand-ba sed nature of global business ...................................................................... 61
The Economi cs of Trade Marks (TMs) ....................................................................... .... . 69
The Psycholo gy of Trade Marks ..................................................................................... . 71
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 Intel lectu al Prop erty Righ ts and Trad e Mark s ........................ 76
Conc lusio n 1

CHA PTE R 3: The Histo ry of Fair Trad e

Fair Trad e in Cont ext: econ omic theor y and deve lopm ent prax is
Fair Trad e as Polit ical Activ ism and 'Alte rnati ve Trad e'
Insti tutio nal Deve lopm ent (1
Main strea ming Fair Trad e (200 0 - )
Conc lusio n 104

CHA PTE R 4: Meth odol ogy ...... ........................... .............. ................................................. 105

Meth odol ogy: An anthr opol ogica l study of a uniq ue glob al regu lator y comm unity ...... 105
Field work meth od .... ....... ................................. ............................. .................. ................ 107
Data Orga nisat ion and Anal ysis 112

CHA PTE R 5: Netw orkin g Netw orks for Scale 115

Netw orks: their conte mpor ary relev ance to socia l actio n and powe r ............................. 115
Noda lly-c oord inate d netw orks: from infon natio n to actio n ........................................... 118
Netw orkin g netw orks: reali sing scale ............................................................................. 121
Gam e-Pla yers' Inno vatio ns in liber ating indiv idual and colle ctive powe r.. .............. ..... 131
Netw ork 'N etwo rkers ': fair trade miss ionar ies in the cultu ral econ omy ........................ 13 5
Conc ludin g Com ment s .................................................................................................... 142

CHA PTE R 6: Resi stors ....................................................................................................... 146

Cons olida ting inno vatio n and the polit ics of know ledg e ................................................ 14 7
Insti tutin g Orth odox y: Gove rnan ce and Fund ing ........................................................... 157
Gove rnan ce ..................................................................................................................... 158
Fund ing ........................................................................................................................... 160
Main strea ming the Statu s Quo? The value chain and the Fairt rade 'Bus iness Mod el' .. 167
Dupi ng FLO to destr oy F airtra de .................................................................................... 172
The Sym bioti c Danc e of Resi stors and Gam e-Pla yers ................................................... 180
Conc ludin g Com ment s .................................................................................................... 183

CHA PTE R 7: Gam e-pla yers 186

A Cast of Uniq ue Char acter s: Gam e-pla yers and the 'Pow er With in' ........................... 187
The Inno vatio n Cont inuu m: polit ical evolu tion in econ omic chan ge ............................. 209
Socia l conn ectio ns: the powe r to mate rialis e ideas and creat e scale .............................. 218
Conc ludin g Com ment s .................................................................................................... 221

CHA PTE R 8: Gove rnan ce as 'Crea tive Dest ructi on'

Stati c Adap tatio n: relie ving selec tion press ure via instit ution al ortho doxy ..... .............. 227
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 FLO 's Institutional Evolution ........................................................................................ 230
Governing 'mar ket transformation': deliberative networks and the 'peop le's science' 23 7
IFAT 's Institutional Governance ................................................................................... 239
IFAT 's Model ................................................................................................................ 247
Mobilising deliberative networks 'with in' and 'with out': forcing (institutional) 'crea tive
destruction' ............................................................................................................ ..... ... . 252
The political state of fair trade today ......................................................................... .... 253
Concluding Comments ................................................................................................... 261

CONCLUSION: Game-playing: the key to global empowerment 263

Appendix A 276

Bibliography ....................................... ................................................................................ 279

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 List of Diagrams
Diagram 1.1: Conceptual Model of Empowerment.
Diagram 2.1: Coffee Distribution System ............... .... ...... ....................... ............ ................. 55
Diagram 2.2: Distribution of a dollar spent on roasted ground coffee in the US supermarket
during the 1990s
Diagram 2.3: The trade mark as a vehicle for control in world markets in the post-industrial
context .................... .. ............................................................................................... .. ...... ...... ~ 1
Diagram 3.1: Fairtrade coffee supply chain.
Diagram 3.2: FLO Organisational Structure at 2004 /05.
Diagram 3 .3: IF AT Organisational Structure.
Diagram 5.1: Netw orkin g networks to mobilise the resident resources, know ledge and
capacity of netw ork members. 119
Diagram 5.2: A superstructural node netw orkin g networks to itsel f for scale. 122
Diagram 5 .3: Conceptual Mod el of Emp ower ment 124
Diagram 5.4: LWR as a superstructural node. 126
Diagram 5.5: LWR: both a superstructural node and a nond escri pt node within the larger
networked structure ......... ... ....................... .............................. .. .......................................... 126
Diagram 5.6: The cumulative and continuous nature of the proc ess of netw orkin g networks.
128
Diagram 5.7: One-to-many model of gaining mark et share .............. .................... ........... .. 142
Diagram 6.1: Mixe d Democratically-Elected Boar d of Max Have laar Initiatives befo re
1992 ................................................................................................................................... .. 148
Diagram 6.2: FLO Governance Structure at 2004 .................................................... ... ....... 150
Diagram 6.3: IF AT and FLO at opposite ends of a fair trade ideological spectrum ....... ... 151
Diagram 6.4: Micr ocos m of fair trade mov emen t's broa der ideological spec trum within
FLO. 155
Diagram 6.5: Three key funding streams within FLO. 161
Diagram 6.6: Illustration of the coffee value-chain upon whic h the Fairtrade certification
system depends for scale ........................... ..... .. ............................... ..... ................ ............... 169

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Diagram 6.7: Percentage of Nest le's total volume of coffee certified as Fairtrade ........... 176
Diagram 6.8: Present - or future - exploitation of FLO 's system by MN Cs to maintain
continuity in conventional mark et structures ..................................................................... 179
Diag ram 6.9: Fair trade pioneers ' means of by-passing MNC s' mark et powe r in FLO 's
system: the introduction of fair trade bran d companies ...................... ............. .................. 181
Diag ram 7 .1: Agro Fair corporate governance structure ....... ... .. ...... ....... .... .................. .. ... 192
Diag ram 7.2: Kuyichi corporate governance structure ............ .. ...... .... ................. ..... ........ 194
Diag ram 7 .3: Cafedirect corporate governance structure .................... ..... ... ...... ................ 195
Diag ram 7.4: Divi ne Chocolate Ltd. corporate governance structure . .... ...... ... ..... ............ 196
Diag ram 7 .5: CTM Altromercato corporate governance structure .................................... 198
Diag ram 7.6: Equal Exch ange governance structure ......................................................... 200
Diag ram 7. 7: The different approaches to pursuing change adopted by the resistors and the
game-players ...................................................................................................................... 214
Diag ram 7.8: Fair trade pion eers' means of by-passing MNC s' mark et powe r in FLO 's
system: the introduction of fair trade bran d companies. 214
Diag ram 7 .9: Cont inuu m of innovation. 216
Diag ram 7 .10: Conceptual Mod el of Empowerment. 219
Diag ram 8.1: FLO Governance Structure at 2004/05. 230
Diag ram 8.2: IFAT Governance Structure. 241
Diag ram 8.3: IFAT Registration process of FTOs. 250

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List of Figures
Figure 6.1: Current variety of Fairtrade certified product labels ........................................ 149
Figure 8.1: IF AT Fair Trade Organisational (FTO) Mark. ................................................. 248

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List of Tables
Table 1.1: Sum mary of two prim ary perspectives on powe r in the social sciences ............. 3 0
Table 2.1: Differences in profit marg in amon g beverage bran d companies ........................ 57
Table 2.2: Impo rtanc e of advertising to majo r coffee bran d comp anies in the US coffee
mark et (in fiscal terms) ........................................................................................................ 65
Table 2.3: The econ omic functions of trade marks .... ....... .. ........ .................................. ....... 71
Table 3.1: Mark et grow th ofFa irtra de prod uct categories from 2004 to 2005 .................. 100
Table 8.1: Com parat ive retail value of Cafe direc t and Nest le in the UK market. ............. 262

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INT ROD UCT ION

This thesis seeks to make a contribution to the problem of theorising power. This is an
important time to be examining such a problem, given both the opportunities and
challenges that different actors face in causing large-scale effects in a networked world. As
social theorists observe, in this networked environment it seems that a handful of actors
(wealthy nations, global corporations and state bureaucracies) deftly manipulate global
politics, global media networks and markets at the expense of billions who are excluded
from, and unable to influence, these networks of powe r that appear to matt er (see Castells,
2000; Braithwaite & Drahos, 2000).

The way in which we think about powe r in contemporary times rests largely on a history of
thought preoccupied with struggle, control, and force (for a longer discussion, see Chapter
1
1) • This conceptualisation of power, described as 'pow er over ', has been attached to the
coercive strategies of a sovereign state and the state 's mon opol y over the legitimate use of
force (see Hobbes, 1991). From this view, pow er is an instrument of domination, enabling
one actor or a set of actors to carry out their will irrespective of resistance (Weber, 1978:
53), or make others do something against their own will (Dahl, 1961).

Mod em social scientists have challenged this prevailing view of pow er ('me ta-po wer'
analysis) for failing to capture the complex nature of mod em pow er and the way it is
exercised (see Foucault, 1977; Lukes, 1974; Clegg, 1989; Bach rach & Baratz, 1970). In
their critique, numerous scholars have argued that 'pow er over ' is not only or always
visibly demonstrable and tied to decision-making processes. It can function as a 'hidd en
powe r' which determines who gains access to the decision-making table and what gets on
the agenda. Furthermore, it can manifest as an internalised, 'invi sible ' powe r that
circumscribes and influences the bounds of individual thought and imagination (see also
Gramsci, 1971; Lukes, 1974; Tow nsen d et al., 1999; Kabeer, 1994; VeneKlasen & Miller,
2002; Gaventa, 2006a).

1
A pre-eminent and influential schol ar of this school, Hobb es ' notion of powe r as an 'instru ment of
domin ation' has left an indelible mark on the study of powe r in sociology and global politics (see Clegg,
1989; Lukes, 1974; see for exam ple Dahl, 1961).
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For Foucault (1979, 1980) the all-pervasiveness of 'pow er over ' relates directly to the
construction of subjective discourses. Discourses are not value-free but rather constitute an
act of power; discourse powe r is enmeshed in the production of knowledge regimes which
define the boundaries of 'truth ' (social reality) and the field of possible social action (e.g.
what is possible/impossible or good/bad). The efficacy of dominant discourse is a form of
'pow er over' (in its multiple forms noted above) to which all contribute to producing;
individuals internalise the values, norms and beliefs that are embedded in bodies of
knowledge and use them to regulate the self and others. In other words, the norms and
belie f systems that hold currency in society are perpetuated by individual subscription to, or
'enro lmen t' in, those discourses (see Latour, 1986).

It is in the nature by which discourses gain consequence - through individual and collective
internalisation and adherence - that Foucault simultaneously saw the possibility for
hegemonic discourses to be changed. If social actors give powe r to prevailing norms by
subscribing to them, social actors have the potential to weaken and change those norms by
resisting them. 'Posi tive powe r' - the individual capacity for 'resis tance ' (agency) - is
foreign to the lexicon of traditional 'pow er over ' scholars. Though Fouc ault' s proposition
has important implications for understanding power, and indeed agency, Foucault hims elf
neglected the potential for agency and its exercise in the process of social change; he was
preoccupied with the way in which mod em regimes of knowledge /pow er 'cons titute
dom inati on', or 'the dynamic of acting upon othe rs', and succeed in disciplining 'the whole
social body ' (see Simons, 1995: 82; Townsend et al., 1999: 30).

Hence, while critiques of 'pow er over ' have broadened the concept of power, attention
within the social sciences has turned to the notion of positive powe r in order to address the
under-developed concept of agency in the process of social change (see Simons, 1995;
O'M alley, 1996; Townsend et al., 1999; Eyben et al. , 2006). From this view , powe r is
conceptualised as a capacity to bring about change and thus a form of empo werm ent (see
Chapter 1). Proponents of this view do not use 'emp ower men t' in value-free terms.
Conventionally, empowerment has been portrayed and conceived in its liberal
interpretation: as realised by human agents through the marketplace, and underpinned by
principles of individualism, competition and bargaining. Those pursuing a theorisation of

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positive power are explicitly 'post-liberal' in their orientation (see Mouffe, 1997;
Townsend et al., 1999; O'Malley , 1996); they criticise a liberal interpretation of
empowerment-as-market participation for overlooking the importance of power m
institutions for explaining how markets work (see Townsend et al., 1999: 24-5). Instead,
an emerging post-liberal literature on power draws attention to the positive, collaborative
and cooperative nature of power. It enquires into how groups and individuals exercise
power to gain liberation from the institutions and structures that constrain them, not for the
purpose of controlling others, but rather to secure greater control over their own lives.

At the same time as highlighting the importance of power in the functioning of markets,
this incipient literature has not questioned how markets do produce (post-liberal)
empowerment. Evolutionary economists tell us that markets do transform, and are
transformed by a rare class of actor - the entrepreneur (Schumpeter, 1934). So, how do we
explain empirically how a community of 46,000 small-scale Ghanaian cocoa farmers has
come to establish, and own 4 7 per cent of the shares in, an increasingly successful
chocolate brand company in the UK market? And, how is it that these small-scale, isolated
farmers receive above-market prices for their cocoa, a social premium for community
project investment, as well as profits from the brand equity? Further, how is their
profitable business model able to compete with the market's dominant brands - Nestle,
Mars and Cadbury? This example suggests anything but the triumph of prevailing market
discourse, or even empowerment in a liberal sense of simply inserting Ghanaian cocoa
farmers into conventional global market structures and subjecting them to the power
relationships embedded in them.

Another profound example of a business model demonstrating reversed power relations in

international business is in the global banana industry. The global banana market is
controlled by an oligopoly made up of Chiquita, Dole and Del Monte. Against the
contextual backdrop of Northern ownership and control of entire global supply chain
structures (production, supply, trading, distribution and market price), there is a small-scale
fanner-owned fruit company, AgroFair, which sells its bananas (and other fruits) under the
Oke label across Europe. Competing successfully in a corporatised market, AgroFair 's
farmers hold 50 per cent of the shares in the company and receive 100 per cent of profits

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for their own community and business development. The farmers also control the decision-
making of an increasing number of AgroFair's international operations - including
2
conventionally 'Northern' competences like marketing .

How do actors transform markets in ways that appear to structurally empower traditionally
weak actors? For Schumpeter (1934), it is entrepreneurship that evolves capitalism, and
overturns accepted patterns and principles with 'new combinations' (innovation) in the
pattern of production (see Schumpeter, 1949). Entrepreneurship has a revolutionary
potential and is conceived of as the crucial spark for igniting change and revolutionising
norms and patterned behaviour in ways that make existing market structures obsolete.
Schumpeter (1943) distinguished entrepreneurs' innovations from mere inventions with the
idea that entrepreneurs come up with 'new combinations' in the pattern or composite parts
of production. In his mind, entrepreneurs innovate, not through mere invention, but by
introducing new means of production, new forms of organisation and new products that
will change the way in which society functions and make existing ideas, technologies,
skills, infrastructure and so on appear 'old' and obsolete. Given the suggested ability of the
entrepreneur to transform traditional regimes of market knowledge/power in concentrated
markets, the entrepreneur appears to display a significant degree, and unique exercise, of
agency and positive power. How do these forces operate in the context of evolution?

Schumpeter and other evolutionary economists do not explain the operation of power and
agency in the process of market transformation nor how it evolves in keeping with the
dynamic and complex nature of evolutionary processes (see Chapters 6-8). In fact,
Schumpeter and others treat entrepreneurship and market evolutionary processes more
generally as a natural and spontaneously occurring phenomenon (see Nelson & Winter,
1982; Hayek, 1960). This obscures, indeed mystifies, the concept of agency and micro-
processes of change. The thesis aims to make a valuable contribution here: it integrates the
constitutive phases of market evolution with a detailed theoretical account of agency and
power. Significantly, the thesis is concerned with a novel and unique type of
entrepreneurship: entrepreneurship of market norms to transform the normative basis of

2
For fu1iher analysis of these companies and their unique corporate governance structures, see Chapter 7; see
also Nicholls & Opal, 2005.
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markets and existing market processes, values and relationships (see Chapter 1). This type
of entrepreneurship seeks to transform the regulatory environment.

Braithwa ite's (forthcoming) framework of 'defiance ' offers a useful path forward for
understanding how positive power and agency operate in the context of entrepreneurship of
norms. Entrepreneurship of norms, or what Braithwaite describes as 'game-pl aying', is one
type of individual 'defiance ' (see below). Defiance describes the psychology of defying
social structures and institutional constraints. For Braithwaite (forthcoming), defiance
refers to an attitude or set of behaviours adopted by individuals when they consciously
question or discredit outright the rules set by an authority or a set of established norms.
The intention of acting in defiance is to communicate one's rejection of the system and to
achieve institutional change; individuals use 'defiance ' as an attitudinal and behavioural
means of reconciling the incongruence. Defiance is thus a micro response of individuals to
macro social conditions that are harmful to, or destructive of, qualities that are important
for individuals' self-definition or self-worth (Braithwaite, forthcoming).

Recent interdisciplinary scholarship has promoted concepts such as 'indigeno us

governance' and 'situated knowledg es' in an attempt to highlight the potential for, and
diversity in, social actors' negotiation of power in their lives (see respectively O'Malley ,
1996; Nygren, 1999)3. Braithwa ite's lens of defiance is a means of extending this incipient
agenda that belabours the role of agency in power relations, by probing the nuances of how
agency is exercised and expressed by different social actors who seek change.
Braithwa ite's intention is to explore the diverse psychology of freedom-seeking agents who
are engaged in defying the institutions and structures that constrain them.

To this end, Braithwa ite's (forthcoming) conceptual framework comprises various classes
of actor, or 'motivati onal postures' , conceptual categories that serve as refined lenses for
viewing the complex and dynamic social topography. Each attempts to influence the social

3
' Indigenous governanc e' is a form of governance that arises from, and operates among, the everyday
'people' rather than an imposed, top-down form of government (O 'Malley, 1996: 313). 'Situated
knowledges ' refers to an analytical orientation that assumes social actors' representations of the world will be
highly diverse and fluid, and thus overlooked by clear-cut conceptual categories (Nygren, 1999) (see Chapter
1).
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environment with unique behavioural traits or strategies. Of the different types of defiance,
'game-playing' is the most radical expression of defiance: game-players attempt to
transcend regulatory constraints in 'imag inati ve' and 'bold ' ways. The game-player is an
entrepreneur of norms, creating new models/regimes to achieve their goal of radical
change. 'Resi stanc e' is a more conservative agenda: resistors seek to institutionalise
models into existing capitalist institutions (with which resistors identify) by selling the
4
models of others to institutional actors and thereby capitalise on the spread of the model .

Resistors do not create new models themselves. Rather, they are model reformers.
Braithwaite' s 'resis tors' do not aim to change the system or institutional actors'
motivations, but simply convince these actors to incorporate alternative models into
existing routines and processes.

A symbiotic relationship exists betw een Brai thwa ite's game-players and resistors (see
Braithwaite, 1998; see Chapters 6-8): game-players prov ide vision and create radical
models in an evolutionary process of learning (see Chapters 7 and 8) whilst resistors
implement and consolidate more politically-feasible versions of the model in existing
institutions. Braithwaite' s resistors transport the game -play er's radical models from the
periphery and institutionalise them in the centre to make mon ey out of the proliferation of
the model. In the process of wedg ing models into existing capitalist institutions,
Braithwaite' s resistors do deals, negotiate, and make compromises with, institutional
actors, serving to modify the model and limit prospects for stimulating change to those
structures. In this way, Brai thwa ite' s 'resis tors' and 'gam e-pla yers' embo dy the two types
of liberty Berlin (1958) described in his seminal essay 'Two Concepts of Libe rt/: positive
and negative liberty6. Resistors play within the rules of convention which is a negative type

4
A striking similarity can be drawn betwe en Val Braith waite 's (f01ihcoming) resistors and John Braith waite 's
(1994) 'mode l mercenaries'. As John Braithwaite (1994) explains, the motivations of model mercenaries are
rooted in their structural location in capitalist market institutions. Their role in the process of model diffusion
is to transpo1i radical models from the periph ery and institutionalise them in the centre for the purpose of
'cashing in' on the propagation of the model. As he describes them, mode l mercenaries 'do the hard sell ' and
'execute model imple menta tion'. Chapter 7 shows the likeness betwe en model mercenaries motivations and
strategy with that of the resistors conceptualised in the thesis.
5
Berlin's (1958) essay 'Two Concepts of Liber ty' was revised and expan ded to become part of his well-
known work Four Essay s on Liberty.
6
According to Berlin (1958), negative freedom refers to the absence of constraints on social actors ' possible
field of action. For example, an individual is more 'nega tively free' to the extent that fewer opportunities for
-6-
of freedom involving the preservation of existing individual liberties and the absence of
interference with these liberties (Berlin, 1958). Contrasting this , 'ga me -pla yer s' ma ke up
their own rules, creating and constituting models wh ich off er new kinds of freedom
(positive liberty) that enable themselves and others to do new things and access new
capacities.

Braithwaite' s psychological framework of defiance offers an opp ortu nity to add nuance to
our understanding of pow er by pro vid ing a typ olo gy of different dimensions of age ncy and
how each exercises itse lf in an attempt to brin g about institutional and structural change.
The thesis seeks to integrate an analysis of pow er to explain the micro-foundations of
market transformation as triggered by Bra ithw aite 's 'ga me -pl aye r' (an entrepreneur of
norms). In its attempt to elaborate these pro ces sua l micro foundations in ma rke t
transformations (which theorists of entrepreneurship suc h as Sch um pet er (1934) have not
explained), the thesis contributes to theorising social change by rev eal ing some of the
processes in markets that have not bee n ana lys ed nor their implications for new kinds of
positive freedom considered.

In so doing, the thesis contributes not only to ma kin g advances in kno wle dge abo ut pow er
but also to making advances in bro ade r sociological questions to do with structure and
agency; the degree to wh ich social actors influence the structures the y inh abi t in an iterative
7
process of interaction and influence . By refining our und ers tan din g of how age ncy and
pow er operate in the process of change, the thesis furthers a dee per und ers tan din g of how
individuals interact wit h social structures and the dynamics and out com es these multiple
iterative relationships pro duc e (see Bev ir & Rhodes, 2005: 4-5). Dra win g on Bra ithw aite 's
(forthcoming) framework of defiance to explore suc h diversity, the cardinal pur pos e of this
thesis is to reveal the greater com ple xity in the interrelationship bet wee n structure and
agency that contemporary scholars seek to understand. The driving ide a of the thesis is that
a class of actor (the 'ga me -pl aye r') exploits the wo rld of net wo rke d governance to free

possible action are interfered with. Conversely, positive freedom or liberty refers to the con cept of self-
mastery and the capacity to determine one 's life and destiny.
7
Giddens (1984) has played a significant role in shifting the idea of agency and structure as mutually
exclusive processes to one of an iterative relationship, which he terms 'stru ctur atio n'.
-7-
 structures from their present institutional anchors, the result bei ng the formation of new
structures. In so doing, agency gains a temporary triumph over structure (see Conclu sion).

In the process of theory construction for this thesis, schools of thought within the social,
political and social psychological disciplines that were a stai iing poi nt, but not a directive,
for the thesis were those that dealt with the influence of groups tha t are change-agents and
their influence over time (see for example Latour, 1986; Arendt, 1958; Mo sco vic i et al. ,
1994), and the way in which, or means by which, these effects are thought to be significant
in shifting the pow er structure, particularly within the transnational con tex t of
contemporary social structures (see especially Young, 2004). It is from these ideas and
more recent scholarship in networked and nodal governance that a con cep tua l scheme for
game-playing was bui lt as an aid for thinking about how pow er operates in the con tex t of
game-playing at the collective and transnational levels of action (see for exa mp le Burris et
al., 2005; see Chapter 1). This conceptualisation of how pow er is pro duc ed revolves
around networks and strategic processes of 'en rol me nt' (Latour, 1986) for the pur pos e of
causing large-scale effects (see especially Cha pte r 5).

Starting the pro jec t with an awareness of the overall findings of these literatures, in this
particular circumstance I saw little virtue in seeking to pro ve or disprove differing schools
of thought on pow er introduced above. Since Bra ithw aite 's elaboration of an analytical
framework of defiance is the first ma jor wo rk on defiance defined in the terms she uses, the
opportunity was particularly ripe for contributing to social scientific scholarship a new and
much-needed und ers tan din g of defiance and its implications for social change . The
opportunity pro vid ed by a fresh analytical lens enabled the dev elo pm ent of a set of
theoretical principles concerned with the interaction bet wee n different types of individual
posture and existing pow er structures in relation to current theories of power. The se
principles were inductively arrived at from an in-depth empirical case study, and serve to
build on, and prospectively to advance, current thinking about pow er in the social sciences.
The opportunity also existed to contribute an in-depth empirical analysis of how game-
playing operates at collective and transnational levels not only to elaborate and com ple me nt
Braithwaite's (forthcoming) psychological-level analysis of defiance, but also to explain
how strategic micro action causes large-scale outcomes.

-8-
Research Focus: The Fair Trade Movement
The thesis looked to the international fair trade movement for empirical insight into the
operation of agency and power in the process of market transformation. The fair trade
movement represents an active movement comprised of actors (individual and
organisational) with diverse outlooks, behaviours and roles vis-a-vis the pursuit of the
mov emen t's mission. The analytical framework developed to explain these social
dynamics derived from an analysis of this complex field. It employs two categories from
Braithwaite's (forthcoming) framework of defiance (namely 'resis tance ' and 'gam e-
playing')8.

To make an in-depth analysis of the mov emen t's historical evolution possible, a focus on
Europe (and to a lesser extent, the US) was important. Europe was the initial laboratory for
novel business model experimentation built on the radical political thinking of grassroots
networks and thus where fair trade activism in the market first began to ferment.
Furthermore and since then, fair trade 's most established organisations, networks and
important industry innovations have emerged from this region (see Chapter 3). In the last
20 years in particular, fair trade in Europe - and undoubtedly worldwide - has undergone
rapid development and growth. Organisational networks have been established and
institutions have been built and consolidated, their Constitutions and structures have
evolved and changed (and are continuing to change at the time of writing) (see Chapters 3,
6 and 8). The US has also been a long-standing home to fair traders since the mid twentieth
century, and more recently (since 1998) to Fairtrade labelled products and significant
coalitions and networks (see Chapters 3 and 5).

This case is of particular analytical value because the movement is currently undergoing a
significant penetration of markets primarily through the uptake of Fairtrade products by
mainstream retail outlets (see Chapter 3; see also Krier, 2005; FLO 2005b; Nicholls &
Opal, 2005). Furthermore it is gaining significant attention and commitment from political

8
It is widely understood that the fair trade movement is a broad one. There is no definitive view, in fact
finding two views that coincide is a challenge. Given the time and resource constraints of the Ph.D. progr am,
it was simply not possible to collect a dataset that reflected all of these views. This thesis is based on the
empirical data that were collected under these circumstances. The analysis is not complete in this sense, but
its findings are valid relative to the specific data that were at hand.
-9-
 institutions and po lic y-m ak ers for its co ntr ibu tio n to ca pa cit y-b uil din g an d de ve lop me nt
through trade in po or co un tri es (N ich oll s & Op al, 2005).

Three additional rea son s for this case stu dy hig hli gh t its de sir ab ilit y for an aly sin g iss ue s of
power, ag en cy an d change. Th e first relates to bro ad er tra ns for ma tio ns in go ve rna nc e,
encompassing the flo uri shi ng of no n-s tat e actors in ma rke t go ve rna nc e wh ere ma rke ts ha ve
failed to pro vid e 'pu bli c go od s'. Fa irt rad e ce rti fic ati on ha s be en loc ate d co nc ep tua lly an d
practically am on g a ran ge of NG O- ba sed sch em es tha t ha ve em erg ed in the las t 15 ye ars in
an attempt to address the pe rni cio us effects of a glo ba l 'fr ee ma rke t' (se e esp ec ial ly
Cashore, 2004; Me idi ng er 20 02 , 20 01 a, 20 01 b, 1996; mo re bro ad ly, see Sc ott , 2004)9. In
this co nte xt we find a res hu ffl ing of tra dit ion al rel ati on sh ips an d roles in the go ve rna nc e of
global pro ble ms su ch as thi rd wo rld po ve rty or en vir on me nta l de gra da tio n, as ne w sets of
actors en ga ge in go ve rna nc e of po liti ca l pro ce sse s pre vio us ly ass um ed by , an d ex pe cte d of,
institutional actors (see for ex am ple Ca sh ore , 20 04 ; Co urv ille , 20 03 ) 10
. Inh ere ntl y, the
changing face of go ve rna nc e inv olv es ch an gin g po we r rel ati on sh ips be tw ee n mu lti ple
actors vy ing for influence.

Fairtrade cer tif ica tio n is ne ve rth ele ss dis tin cti ve am on g oth er sch em es. Th is is the sec on d
wa y in wh ich the ca se stu dy is of va lue for an aly sin g po we r in the pro ce ss of ma rke t
transformation. It is un iqu e am on g oth er sch em es be ca us e of its explicit development
function (Courville, 2003; Lo w & Da ve np ort , 2005). Ba sed on the aim to em po we r sm all -
scale pro du ce rs - dis ad va nta ge d an d vu lne rab le ma rke t act ors - a de ve lop me nta l fun cti on is
ne ces sar y wi thi n Fa irt rad e cer tif ica tio n. Th is inv olv es the pro vis ion of su pp ort for sm all -
producers to ga in access to, an d bu ild ca pa cit y in, int ern ati on al ma rke ts, as we ll as

9
Ctmently there are eight NGOs that have established and operate certification, labelling and accreditation
jnitiatives, including the Fairtrade Labelling Organisations International (FLO), the Forest Stewardship
Council (FSC), the Marine Stewardship Council (MSC), the Marine Aquarium Council (MAC), the
International Federation of Organic Agriculture Movements (IFOAM), the International Organic
Accreditation Service (IOAS), Social Accountability International (SAI) and the Rainforest Alliance (RA).
Together, they are represented by the International Social and Enviromnental Accreditation and Labelling
Alliance (ISEAL) (see www.isealalliance.org).
10
In relation to the expansion ofl oca l level community and non-profit associations taking responsibility for
the oversight or provision of community needs unmet by the market, Karl Polanyi 's (1944) notion of 'the
double movement' suggests that the emergence of all manner of non-state and community associations to
counter the logic of market expansion into social relationships occurs because the pure economic meaning vis-
a-vis the social value of social relationships is found wanting, hence the need for the expansion and
flourishing of social relationships (see Barker, 1999: 13).
- 10 -
 11
favourable trad ing term s and con diti ons for pro duc ers • Thi s uni que feature refl ects an
atte mp t to tack le the his tori call y stru ctu red ine qui ty in the dis trib utio n of ma rke t wea lth and
pow er wh ich oth er cer tifi cat ion sys tem s do not do.

Rel ated ly, Fai1irade cer tifi cat ion is uni que am ong oth er sch em es sin ce it is onl y a too l use d
in a bro ade r con tex t of an alternative tra din g system, wh ich inv olv es a diff ere nt app lica tion
of fair trad e to cer tifi cat ion in the form of diff ere nt dis trib utio n cha nne l con figu rati ons
12
(Be zen con & Blili, 200 6) . The re is no equ iva len t to this sys tem in oth er cer tifi cati on
sch em es. Fai r trad e orig ina ted wit h Alt ern ativ e Tra de Org ani sati ons (AT Os) (no w Fai r
Tra de Org ani sati ons (FT Os) ) tha t wer e set up for the exp lici t pur pos e of trad ing on fair
trad e term s wit h pro duc er org ani sati ons and ma rke ting pro duc ers ' goo ds to con sum ers (see
13
esp eci ally Cha pte r 7; Tal lon tire , 2000; Tif fen & Zad ek, 199 8) . Thi s alte rna tive trad e and
dist ribu tion rou te was par ticu larl y nec ess ary bec aus e of the ear ly unp opu lari ty of fair trad e
wit h con ven tion al trad ers and reta iler s, and tod ay, in spit e of Fai rtra de cer tifi cati on, it
rem ain s a prim ary and alte rna tive trad e rou te tha t byp ass es esta blis hed or ver tica lly-
org ani sed trad e stru ctu res (see Cha pte rs 3 and 7; see also Bez enc on & Bli li, 200 6) 14
. An
analysis of the cer tifi cat ion sys tem alo ne wo uld neg lec t the se imp orta nt acto rs wh o
con trib ute sig nifi can t dyn am ics, inst itut ion s and role s in the fair trad e ind ust ry (see
Cha pte rs 3, 7 and 8) and inte rac t wit h dom ina nt ma rke t acto rs in a dist inc t wa y (see
Cha pte r 7). Inv olv ing FTO s in the cas e stu dy has ena ble d the dev elo pm ent of a mo re
com ple te and com ple x pic ture of fair trad e bot h in his tori cal and com me rcia l terms.

The thir d feature tha t ma kes this case stu dy sig nifi can t for ana lys ing pow er is the fair trad e
mo vem ent 's uni que acti vism , cam pai gni ng, pop ula r edu cat ion and adv oca cy wo rk tha t

11
Imp orta nt way s in whi ch prod ucer s are supp orte d to acce ss mar kets is thro ugh orga nisa tion al capa city -
buil ding of thei r prod uce r orga nisa tion s and mar keti ng of thei r prod ucts in con sum er cou ntrie s.
12
For mor e info rma tion and exam ples of thes e alte rnat ive trad ers, see ww w.if at.o rg and som e of its regi ona l
platfon11S in Eur ope , www .efta fair trad e.or g, Afri ca, http ://ca tgen .com /cof ta/E N/, Asia,
http: //ca tgen .com /aft f/EN /, and Lati n Ame1ica http: //ww w.if at-la .org/.
13
A deta iled desc ript ion of the uniq ue role of Alte rnat ive Tra de Org anis atio ns (AT Os) can be found at
www .ifat .org ; also Tiff en & Zad ek, 1998; Nic holl s & Opa l, 200 5.
14
Glo bal corp orat ions dom inat e these stru ctur es and are refe rred to as 'ma rket gate -kee pers ' sinc e they exer t
sign ifica nt infl uen ce ove r othe r mar ket acto rs' access - and the con ditio ns of that acce ss - to mar kets (see
Cha pter 2). This tern1 was rece ntly attri bute d to glob al reta ilers who se size and pow er in the con tem pora ry
glob al mar ketp lace , whi ch ofte n acts as an obst acle to dev elop ing cou ntri es' acce ss to con sum er mar kets , is
caus e for con cern with in dev elop men t poli cy circles (UN DP, 200 5: 142-3).
- 11 -
 blends social marketing, mark et-bu ildin g and collective actio n in nove l ways (see Chap ter
5; see also Gold ing & Peattie, 2005; Nich olls & Opal, 2005). Thes e activities have
culminated in nove l phen omen a such as 'Fair Trad e Tow ns', 'Fair Trad e
Schools/U niver sities ' and 'Fair Trad e Fortn ight' (see Chap ter 3 and 5). Thes e are
intriguing cultural deve lopm ents, the analy sis of whic h is made poss ible by the use of this
15
case study (see espe cially Chap ter 5) .

While the fair trade mov emen t can be defin ed as a 'soci al mov emen t', the litera ture on
16
social move ment s will not be addr essed in this thesis . This decis ion supp orts the aim of
the thesis - to chart new territory in unde rstan ding the game -play er and the act of game -
playing and, thereby, contr ibute to a diffe rent goal of enha ncing our unde rstan ding of
agency and power. Give n this inten tion, the analytical relev ance of fair trade as a 'soci al
move ment ' recedes. Indeed, Brait hwai te categ orise s socia l mov emen ts as but one
expression of defiance (along with prote sts, muti nies or strikes) that enga ges in 'over t
oppositional act[ s] to discr edit or unde rmin e regu lator y prac tices ' (Bra ithw aite,
f01ihcoming). Brait hwai te's refin ed analy tical fram ewor k enab les a conc eptua l focus on,
and theoretical elabo ratio n of, a class of actor and type of beha viou r (the 'gam e-pla yer' and
the act of game -play ing) withi n social mov emen ts and socia l instit ution s more generally.

More significantly, this focus conc urs with emer gent scho larsh ip that seeks to mov e beyo nd
the bleak pred ictio ns that social theor ising has tende d to posit of socia l mov emen ts that
seek change. For instance, it is well unde rstoo d that inno vatio ns enab ling indiv idual s and
groups to deviate from well- trodd en paths can have their traje ctory of succ ess term inate d
and hijacked by instit ution al actors who 'emu late' them (Mos covic i et al., 1994), turni ng
the innovations of yeste ryear into the shac kles of the future (Bra ithw aite, forth comi ng).
Social and polit ical theorists also offer 'scan t hope ' that social mov emen ts can achie ve
change at a local level when the prob lems , actors and forces they addr ess are incre asing ly

15
There is no such equivalent with the other certification schemes mentioned earlier.
16
I acknowledge that social movements - or more contemporarily 'new social move ments ' and 'globa l social
movements ' - are considered to be relevant 'actor s' in world politics and society more generally. This area of
social research continues to receive significant attention (see Tilly, 2004; Tarro w, 1994; Kendall, 2005 ;
Cohen, 2000 ; Greig , 2003; see for example Wapn er, 1995; Keck & Sikki nk, 1998; Scholte, 2000; Braithwaite
& Drahos, 2000).

- 12 -
global in nat ure (Barker, 1999: 17). Thi s the sis does not sug ges t tha t fair trad e is imm une
to capture (see Nic hol ls & Op al, 200 5) - resistors, for ins tan ce, are par ticu larl y sus cep tibl e
(see Cha pte r 6). Wh at it does sug ges t is tha t suc h a pre dic tion is spu riou s - and flaw ed - in
the con tex t of gam e-p lay ing (see Cha pte rs 7 and 8).

In short, Bra ithw aite 's (fo rthc om ing ) def ian ce fram ewo rk offers nua nce d cate gor ies for
analysis of diff ere nt soc ial mo vem ent act ors ' actions and min dse ts tha t are larg ely
une xpl ore d wit hin the soc ial scie nce s and, usi ng this fram ewo rk, wh ere one can hop e to
gain new ins igh t abo ut the sco pe for, and me ans of, age ncy and soc ial cha nge . The the sis
thus utilises this rich cas e stu dy to ask wh at the puz zlin g suc ces s of the fair trad e mo vem ent
can tell us abo ut the pro ble m of pow er. The dat a gat her ed to ans wer this que stio n ind ica te
a set of ind uct ive ly dra wn the ore tica l prin cip les wh ich hel p to inc rea se our kno wle dge of
wh y age ncy is able to shif t stru ctu re wh en the rev ers e is nor ma lly true. Un der stan din g this
in turn adds to exi stin g kno wle dge abo ut pow er a mo re refi ned und ers tan din g of the mic ro-
pro ces ses and con diti ons und er wh ich ma rke t tran sfo rma tion can be ach iev ed.

Organisation of the Thesis

The four em piri cal cha pte rs of the thesis are stru ctu red by the evo luti on of the fair trad e
mo vem ent . Eac h em piri cal cha pte r ana lyse s a par t of the dyn am ic of def ian ce mim ick ed in
ma rke t evo luti ona ry pro ces ses for the pur pos e of dev elo pin g a mo re com ple te and
em piri cal ly-a ccu rate und ers tan din g of age ncy wit hin exi stin g ma rke t pow er structures. The
first, Cha pte r 5, exa min es the mo vem ent 's gro win g ma rke t size, wh ich , giv en the
mo vem ent 's per enn ial lac k of fina nci al res our ces , has use d soc ial res our ces to pro duc e
ext rao rdin ary results. Thi s cha pte r exa min es how soc ial acto rs cau se larg e-s cal e ma rke t
out com es. Cha pte r 6 ana lyse s the em erg enc e of the Fai rtra de cer tifi cat ion sys tem and tho se
wh o hav e em erg ed to gov ern and adm inis ter it. It inv esti gat es how pow er and age ncy
operate in the inst itut ion al seq uen ce of static ada pta tion . Cha pte r 7 exa min es sev era l of the
mo vem ent 's pio nee rs, som e of wh om bui lt the Fai rtra de cer tifi cat ion sys tem , and all of
wh om hav e con tinu ed to inn ova te in rad ical com me rcia l fair trad e bus ine sse s. The se dat a
are use d to exp lore how pow er and age ncy ope rate in the con tex t of gam e-p lay ing . Cha pte r
8 investigates the em erg ing ins titu tion al evo luti on in fair trad e gov ern anc e for the future of
fair trade (FL O and IF AT ) wh ich offers ins igh t into how gam e-p lay ers force cha nge in the

- 13 -
institutional env iron me nt. A final dis cus sio n cha pte r wea ves tog eth er the em piri cal
findings from wh ich the con clu sion s of the the sis are drawn. The ent ire form at of the
chapters follows thus:

Chapter 1: Game-playing: rethinking pow er and empowerment

This cha pte r crit ical ly eva lua tes exi stin g the orie s of pow er wh ich see k to exp lain the
interplay bet wee n, and rela tive infl uen ce of, age ncy and stru ctu re in infl uen cin g the flow of
events in mo dem times. Thi s inv olv es a crit ical rev iew of the dom ina nt not ion of pow er in
the twentieth cen tury ('po we r ove r'), of its critics, and of the em erg ing tren d in pos t-li ber al
thought tha t enriches the con cep t of pow er. The pur pos e of this cha pte r is to hig hlig ht
those aspects of soc ial scie ntif ic sch ola rsh ip tha t do not suf fici ent ly exp lain the dyn am ics
between age ncy and stru ctu re ide ntif ied by the em piri cal analysis. The cha pte r also poi nts
to the ind icat ive em piri cal findings tha t hel p to dev elo p a con cep tua l fram ewo rk for gam e-
playing at the lev el of col lect ive acti on and tran sna tion al structure.

Chapter 2: The Global Bra nde d Market: Corporate 'Power Ov er' as 'Global Po we r'
A pre vai ling focus in trad itio nal sch ola rsh ip on pow er is on 'po we r ove r', a coe rciv e typ e
of pow er exe rcis ed for the pur pos e of dom ina tion . Thi s cha pte r sho ws how in the pos t-
industrial com ple x, 'po we r ove r' has bec om e glo bal pow er thro ugh priv ate ow ner shi p of
abstract obj ects in wo rld ma rke ts (se e Dra hos , 1996). A psy cho log ica l the ory of the ima ge
explains how the ima ge - and the refo re the bra nd - wo rks to infl uen ce the con sum er.
Ad ded to this is a the ory of abs trac t obj ects and inte llec tua l pro per ty (Dr aho s, 1996) wh ich
explains how the ima ge (the bra nd) is the sub jec t of exc lus ive pro prie tori al con trol .
Ap ply ing the se two the ore tica l pla nks in the con tex t of the glo bal cof fee ma rke t, this
chapter offers an em piri cal illu stra tion of how 'po we r ove r' wo rks at the glo bal lev el in the
post-industrial context.

Chapter 3: The History of Fai r Trade

Chapter 3 charts the con tem por ary his tory of the fair trad e mo vem ent wit hin this
entrenched pow er stru ctu re in the glo bal ma rke t. Com me nci ng brie fly wit h a dis cus sio n of
free trad e theory, the cha pte r poi nts to the rea son s for the em erg enc e of fair trade. The
chapter spans the thre e key dev elo pm ent al pha ses of the mo vem ent tha t dov eta il in the

- 14 -
mov emen t's current contours: 'political activism'; 'institution building '; and
'mainstreaming'. The intention of this chapter is to provide an overarching introduction to
the fair trade movement and its various parts and players that have challenged, and continue
to challenge, entrenched powe r structures in international business and trade.

Chapter 4: Methodology
This chapter explains the methodological framework and meth od employed in approaching
and conducting the empirical research. It also gives a reflective account of my fieldwork
experience throughout Europe and the United States. This chapter serves the role of
bridging the theoretical and contextual literature on the one hand and the empirical data and
analysis presented in Chapters 5-8 on the other hand.

Chapter 5: Networking Networks for Scale

The fair trade mov emen t's grassroots or social network character and basis is a defining
and significant one. In a networked world, this character has also been its key to expanding
the market for fair trade by social means. Within the conceptual framework of networked
and nodal governance (see Burris et al., 2005), this chapter examines how this social
movement has gained scale. These empirical data add to this body of literature with the
insight that, for the purpose of gaining scale, social actors do not build networks. Rather,
they network existing networks together to set in train widening circles of enrolment.

Chapter 6: Resistors
The rapid expansion of fair trade in the last two decades has been enabled in part by the
emergence and growth of the Fairtrade certification system. The certification system has
undergone increasing expansion and consolidation through a growing number of National
Initiatives (Nls) that administer the Fairtrade label in their respective consumer markets, an
administration coordinated by the Fair Trade Labelling Organisations International (FLO).
From an evolutionary account, market consolidation is accompanied by an organisational
desire for market stability - to the detriment of continued market evolution. This chapter
examines the Nls and FLO through the lens of defiance to illuminate how powe r and
agency operate in the institutional sequence of static adaptation.

- 15 -
Chapter 7: Game-Players
This chapter investigates the mo vem ent 's FTO 'pio nee rs', who set up the original Fairtrade
certification system (now administered by FLO and the Nls ), and have since gone on to
innovate in more radical fair trade models. These actors are the mo vem ent 's entrepreneurs,
or in defiance terms, game-players (entrepreneurs of norms). This chapter investigates a
number of the mo vem ent 's key pioneers and the innovative models they have built.
Through the lens of game-playing, this enquiry facilitates an understanding of the wa y in
which pow er and agency operate in the game-playing context (entrepreneurship of norms);
and by doing so, it offers insight into elements of the entrepreneur that Schumpeter (1934)
did not elucidate, namely , how this class of actor triggers ma rke t evolution.

Chapter 8: Governance as 'Creative De stru ctio n'

This chapter analyses the current evolution in the fair trade governance institutions - IF AT
and FLO - to understand how the game-players are addressing the institutionalisation of the
Fairtrade certification system. The purpose of this chapter is to examine how game-players
alter the institutional selection pressures that 'sel ect ' one market 'spe cie s' over another.
For evolutionary economists, selection processes and pressures are value-free and 'na tur al',
which overlooks the influence of institutional pow er relations and the hum an element
behind market processes. By showing how game-players not only innovate in business but
also lead 'deliberative net wo rks ' to force the pace of market evolution (to transform
selection pressures), the chapter offers insight into the central role of net wo rke d politics for
understanding market evolutionary processes. This reveals additional micro-foundations in
the process of 'creative destruction'.

Conclusion: Ga me- pla yin g - the key to glo bal emp owe rme nt
This chapter brings together the theoretically-grounded insights from the empirical chapters
to do with agency and structure, and their implications for understanding pow er in a
networked world. The thesis thus aspires to offer exciting new findings as a contribution to
our understanding of agency and pow er in the process of social change. It articulates the
attributes and principles of game-playing to explain wh y game-players are so pot ent in the
process of social change: they bui ld new structures and institutions by freeing existing ones
from their institutional moorings. The chapter argues that by focusing on game-playing and

- 16 -
the game-player in the process of market change, one can see that agency is neither
mysterious nor natural; rather, market evolution is brought about through specific human
action and strategic social processes. An explication of these micro-processes of change
highlights greater potential for, and diversity in, individual agency than existing social
scientific literature on power tends to reflect. Indeed, structures can be recast as 'free
structures'. Free structures allow traditionally 'weak' actors greater freedom to achieve
change because those structures are subject to constant human creation. The micro-
processes explicated in this chapter offer to social scientific scholarship a more nuanced
theoretical account of agency and power in social change.

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CHAPTER 1: 'Game-playing': Reth inki ng Pow er and Emp owe rme nt

For social scientists, the exerc ise of powe r has tradi tiona lly been an instr umen t of
domination, invo lving coercion, strug gle and force. This view of powe r - as 'pow er over '
- prevailed in the socia l scien ces in the twen tieth centu ry (Cleg g, 1989; Luke s, 1974).
More recen t scho larsh ip has adva nced our unde rstan ding of how pow er is exerc ised in the
mode m worl d (see espe cially Fouc ault, 1977, 1979). In contr ast to the tradi tiona l 'pow er
over' perspective, conte mpor ary socia l scien tific thou ght creat es spac e for indiv idual
agency (Fou cault 's notio n of 'resis tance ') but until recen tly the deve lopm ent of theor y in
the area has lagged. This emer gent resea rch agen da now ques tions how subje cts exerc ise
agency posit ively to achie ve empo werm ent (see O'M alley , 1996; O'M alley et al., 1997;
Tow nsen d et al., 1999; Row lands , 1995, 1997; Bevi r & Rhod es, 2005 ; Eybe n et al., 2006 ).
Brait hwai te's (fort hcom ing) conc eptua l fram ewor k of 'defi ance ' exten ds this incip ient
intellectual prog ram with a typo logy of indiv idual psyc holo gies and beha viou rs for defy ing
institutional and struc tural constraints. Elab orati ng Brai thwa ite's psyc holo gical fram ewor k
to the level of colle ctive action and trans natio nal struc ture, this chap ter offer s a conc eptua l
scheme for unde rstan ding how posit ive powe r and agen cy oper ate in the conte xt of a
radical expr essio n of defia nce, name ly game -play ing. The chap ter conc ludes with an
outline of the focus of the thesis.

'Power Over': a legacy and its limitations

According to Stew ard Cleg g (1989: 22), twen tieth centu ry thou ght on powe r has been
grounded in a notio n of 'hum an agen cy' that is 'expr essed throu gh caus al relat ions
measurable in term s of mech anist ic indic ators '. A long -stan ding devo tee of this linea ge,
Dahl (1961) refle cts this idea: 'A has powe r over B to the exten t that A can get B to do
something that B woul d not other wise do'. Web er (1978: 53) likew ise sugg ested this notio n
of powe r, as 'the prob abili ty that one actor with in a socia l relat ionsh ip will be in a posit ion
to carry out his own will desp ite resis tance ', or to put it anoth er way, 'the powe r of one
person or grou p to get anoth er perso n or grou p to do some thing again st their will'
(Townsend et al. , 1999: 26; Row lands , 1995, 1997; see for exam ple Dahl , 1961). This
traditional view cons truct s powe r as a 'prod uct of confl icts betw een actor s to deter mine
who wins and who loses on key, clear ly recog nised issue s in ... clear ly estab lishe d decis ion-

- 18 -
 ma kin g are nas ' (Ga ven ta & Cor nw all, 2001: 70). ' Pow er ove r' is loc ate d in dec isio n-
ma kin g pro ces ses , con flic t and force , and is zer o-s um by nature. As Row lan ds (1995: 101)
observes, 'po we r ove r' sug ges ts imp lici tly a finite res our ce in wh ich 'the mo re pow er one
per son has, the less the oth er has '. 'Po we r ove r' is thu s an 'ins trum ent of dom ina tion '
17
(Ro wla nds , 1995: 101) .

Wh ile still pre dom ina nt, this con stru ctio n of pow er has rec eiv ed crit icis m. In his sig nal
wo rk Power: A Rad ica l View, Ste ven Luk es (19 74) def ine s 'po we r ove r' as onl y one
dim ens ion of power. Nu me rou s the oris ts hav e con cur red , ma kin g imp orta nt con trib utio ns
not onl y to exp and ing our vie w of the exe rcis e of 'po we r ove r' (see Fou cau lt, 1977; Luk es,
1974; Clegg, 1989), but also to inc orp ora ting the not ion of pow er as a for m of
'em pow erm ent ' and thu s as pos itiv e (see Tow nse nd et al., 1999; Row lan ds, 1995, 1997;
1998; Eyb en et al., 200 6; Sim ons , 1995; O'M alle y, 1996). Wi th res pec t to the for me r
con trib utio n, 'po we r ove r' ana lysi s neg lec ts a vie w of 'hid den pow er'. 'Po we r ove r' is
trad itio nal ly ass oci ate d wit h visibility, spe cifi call y, visibility in dec isio n-m aki ng pro ces ses
(Lukes, 1974; Cle gg, 1989). Critics arg ue tha t pow er is mo re sub tle and diff use , tak ing
pla ce any wh ere , not jus t in ove rt pow er pla ys at the dec isio n-m aki ng tab le (see also
Bac hra ch & Bar atz, 1970). Ind eed , 'hid den pow er' det erm ine s wh o is at the dec isio n-
ma kin g table, wh at is on the age nda (Ve neK lase n & Mil ler, 200 2) as wel l as wh o gets to
define, and ma ke dec isio ns about, age nda issu es (see Gav ent a, 1993). As Gav ent a and
Cor nw all (2001: 70) des crib e, 'if cer tain voi ces are abs ent in the deb ate, the ir non -
par tici pat ion is inte rpr ete d as the ir ow n apa thy or ine ffic acy, not as a pro ces s of exc lus ion
from the pol itic al pro ces s'. 'Po we r ove r' is thu s we ak on analysis of the distribution of
pow er bet wee n social gro ups , por tray ing pow er and pow erle ssn ess as static rela tion al

17
' Power ove r' underlines realist thought in international relations. For realist theorists such as Carr (1946),
Morgenthau (1948), Gilpin (2001) and Kra sner (2001 ), the world is anarchic, and relies upo n a heg emo n to
provide stability in world order. The hegemon today, the US (in the nineteenth century, the UK), is able to
exert utmost influence over other state actors and act in isolation from them to achieve its objectives (these
objectives being tied to national security). Yet it will also defect and cooperate whe n its self-interest depends
on doing so in order to achieve its desired outcomes (based on the 'pris one r's dile mm a' theory). For an
alternative perspective focused on post-hegemony and international cooperation, see Keohane (1984) and
Keohane & Nye (2000). This conceptualisation of pow er can also be found in several strands of feminist
theory, principally phenomenological, radical, socialist and poststructuralist feminist theories (see Allen,
2005).
- 19 -
states , and the powe rless as helpl ess victi ms (Har tsock , 1990; Starh awk, 1987 ; Row lands ,
1995: 101).

In addition to 'hidd en pow er', 'invi sible pow er' plays a signi fican t role in creat ing social
order, as a resul t of whic h visib le conf lict is not even nece ssary for powe rful actors to
dominate subo rdina tes (see Luke s, 1974; Tow nsen d et al., 1999; Kabe er, 1994;
VeneKlasen & Mille r, 2002 ). Critics argue that the twen tieth -cent ury 'pow er over '
perspective ignor es the subtl e and invis ible oper ation of 'pow er over ' within the self. As
Lukes desc ribed it, 'the most effec tive and insid ious use of powe r is to prev ent. .. conf lict
arising in the first place ' (Luk es, cited in Tow nsen d et al., 1999: 27). Invis ible pow er
manifests as an acce ptanc e of, or belie f in, one's subo rdina te posit ion and a denia l of the
problems one faces in one's envir onme nt; it shap es the ideol ogica l boun darie s of indiv idual
and group beliefs, want s, inter ests and ident ity. In this conte xt, 'pow er over ' is an
internalised oppr essio n of both the oppr essor and the oppr essed beca use it circu mscr ibes
the boun ds of indiv idual thou ght and imag inati on (see also Luke s, 1974; Tow nsen d et al.,
1999; Kabeer, 1994; Vene Klas en & Mille r, 2002 ). As Kabe er (199 4) sugg ests, at a very
pragmatic level indiv idual s:
... subs cribe to acco unts of socia l reali ty whic h deny that. .. inequ alitie s exist or else
assert that they are due to indiv idual misf ortun e rathe r than socia l justi ce ... it
preve nts confl icts betw een domi nant and subo rdina te grou ps ... by shap ing want s,
need s and prefe rence s in such a way that both acce pt their role in the exist ing
order. .. both [groups] ... are unaw are of their oppr essiv e impl icati ons or incap able of
imag ining alter nativ e ways of 'bein g and doin g'.

In addition to both the 'oppr esso rs' and the 'oppr essed ' conf ormi ng to their respe ctive
roles , as Vene Klas en and Mill er (2002: 45) poin t out, 'in the abse nce of alter nativ e mod els
and relat ionsh ips, peop le repea t the powe r over patte rn in their perso nal relat ionsh ips,
communities and instit ution s ... [they] imita te the oppr essor '. A long -stan ding prop onen t of
'invis ible powe r', Gram sci (197 1) emph asise d its role in main taini ng socia l orde r with his
theory of hege mon y - the indiv idual inter nalis ation of rulin g ideas. Fouc ault (197 7)
theorised the same proc ess in term s of the comm ingli ng of powe r and know ledge and their
operation in the form of' disco urse' .

- 20 -
Fouc ault ' s subs eque nt emph asis on micr o-po litics - a 'micr o-ph ysics ' of pow er (1977: 26)
- has repre sente d a signi fican t contr ibuti on to the histo ry of ideas abou t the localised,
capillary- or netw ork-l ike natur e of mod em pow er (see for exam ple Allen , 2003 ; Lukes,
2005 ; McL aren , 2002 ; McN ay, 1992; McW horte r, 1999; Sawi cki, 1991). Fouc ault 's
(1977) critique of macr o 'pow er over ' theor ies ('me ta-po wer' analy sis) high light ed the
attac hmen t of powe r to the coerc ive strate gies of a sove reign state. He argu ed that mod em
powe r is a force cons truct ing subje ctive disco urses , throu gh whic h powe r - deriv ed from
the autho rity of that disco urse (truth) - can flow throu ghou t the socia l body .

Henc e in mod em socie ty, the tradi tiona l Hobb esian view that the essen tial tool of
gove rnan ce invo lves the state 's mon opol y over the legit imat e use of force beco mes
obsolete. Inste ad, the essen tial tool of conte mpo rary gove rnan ce invo lves the abili ty to
mono polis e the cons truct ion and evolu tion of disco urse (see Chap ter 2). Disc ourse pow er
is enme shed in the prod uctio n of syste ms of know ledg e whic h defin e the boun darie s of
truth and throu gh this, the poss ible field of indiv idual action. Indiv idual s beco me comp licit
in the contr ol of their own beha viou r by inter nalis ing disco urses and adhe ring to the
beha viou ral norm s embe dded with in them , thus settin g up the powe r relat ions that oper ate
in socie ty (Fou cault , 1977). View ed this way, Fouc ault (197 8, cited in Alle n, 2005 : 6)
desc ribed powe r as ' ... every wher e, not beca use it embr aces every thing , but beca use it
come s from ever ywhe re' . Fouc ault presu ppos es here that pow er is prod uced by wide sprea d
parti cipation, much like Lato ur's (198 6) notio n of powe r as 'enro lmen t' (Wo od &
Shea ring, 2007: 9) (see below ). To have 'pow er' or be 'pow erful ' , socia l actors must build
cons titue ncies for parti cular subje ctivi ties, by mean s of 'an inten se activ ity of enro lling ,
conv incin g and enlis ting' (ibid.: 9). In this light , 'stro ng' actor s in mod em socie ty are
those with a capa city to enro l other s (Bra ithw aite & Drah os, 2000 ) .

Moving beyo nd 'pow er over ': agency and empowerment

Fouc ault ' s influ entia l theor y abou t pow er also diver ged from the 'pow er over ' assum ption
that the use of force crush es all resis tance to domi natio n. Fouc ault view ed powe r as
fund amen tally posit ive or cons tituti ve wher eby powe r and resis tance ' creat e cond ition s of
poss ibilit y for each other (Sim ons, 1995: 81 ). This alter nativ e prop ositi on - the idea of
powe r as posit ive and the capa city for indiv idual agen cy with in pow er struc tures - was

- 21 -
prem ised on two theor etica l assum ption s. First , that wher ever there is powe r there is
resistance - an indiv idual capa city to respo nd to the influ ence of powe r; powe r is a resou rce
that 'endo ws subje cts with some capa cities requ ired to be agen ts, even when it is
oppr essiv e' (Fou cault , cited in Simo ns, 1995: 81). Seco ndly , for Fouc ault, pow er relat ions
refer to 'the mean s by whic h indiv idual s try to cond uct, to deter mine , the beha viou r of
other s' and thus relat ions of powe r 'do not solid ify into state s of comp lete dom inati on'. As
Simons (1995: 82) descr ibes, the 'reca lcitra nt actio ns of free subje cts resis ting attem pts to
direct their cond uct are a nece ssary cond ition for the exerc ise of pow er'.

In spite of his theor y abou t the fund amen tally posit ive and cons tituti ve natur e of pow er and
the poten tial for agen cy (as 'resis tance '), Fouc ault portr ayed mod em regim es of
powe r/kno wled ge as 'tool s of repre ssion ', frequ ently trium phan t in disci plini ng socia l
behaviour. His theor ising abou t mod em powe r was cons eque ntly more deter mini stic than
was appro priat e, creat ing 'a sense of entra pmen t' for subje cts of pow er (see O'M alley ,
1996; O'M alley et al., 1997: 510; Simo ns, 1995: 83; Tow nsen d et al., 1999 ; Benh abib,
1992; Benh abib et al., 1995 ; McN ay, 1992 ). As Simo ns obse rves, 'Fou caul t's optim istic
assertions abou t the poss ibilit y of resis tance are unco nvin cing in comp ariso n with his
portrayals of dom inati on'. Fem inist theor ists such as Tow nsen d et al. (199 9) likew ise
criticise Fouc ault for marg inali sing and unde r-the orisi ng agen cy for whic h his own theor y
created space. As Haii sock (199 0) sugg ests, Fouc ault' s epist emol ogica l fram e can be
criticised for main taini ng the worl dview of the 'colo nizer ' inste ad of the 'colo nized ' (see
also Frase r, 1989: 29; Mou ffe, 1997 ).

These cons terna tions abou t Fouc ault' s marg inali satio n of agen cy in his theor y abou t powe r
have led a num ber of conte mpor ary theor ists from vario us disci pline s to pay centr al
attention to agen cy, analy sing how relat ively powe rless grou ps chan ge, and even trans form ,
their lives. As a conc ept locat ed in our very unde rstan ding of powe r, the notio n of
'emp ower ment ' is a conte sted one. Conv entio nally , the term has been close ly linke d to the
domi nant cultu re of Wes tern liber al capit alism (Row lands , 1995 ; May o & Craig , 1995;
Onyx & Bent on, 1995). From this persp ectiv e, empo werm ent is achie ved throu gh mark ets:
enterprise equa ls empo werm ent. Espe ciall y in a deve lopm ent conte xt, the notio n of
'emp ower ment ' is imbu ed with a heav y focus on indiv idual econ omic empo werm ent writ

- 22 -
large in the 'deve lopm ent-a s-We stern isatio n' regim e expo rted by Wes tern liber al
demo craci es to deve lopin g coun tries (Row lands , 1998: 12; see also Hulm e & Turn er 1990).
This is an instr umen talist 's view of empo werm ent: empo weri ng the 'wea k' is a strate gic
mean s to a certa in end (nam ely the cons olida tion and expa nsion of Wes tern liber al
capit alism ) (Row lands , 1995).

Give n the impo rtanc e of powe r in instit ution s for deter mini ng how mark ets oper ate, a
liberal view inade quate ly expla ins how mark ets deliv er genu ine empo werm ent (see for
exam ple Bhag wati, 2005 ). As Row lands (199 5) obse rves, a liber al view of empo werm ent
is prob lema tic beca use it does not invo lve a struc tural chan ge in powe r relat ions. It does
not invo lve givin g the disad vanta ged or poor colle ctive polit ical decis ion-m aking influ ence
and control. Rath er, it obsc ures struc tural inequ alitie s (Tow nsen d et al., 1999: 21);
empo werm ent is 'give n' or 'dele gated ' to a perso n or grou p and can just as easil y be taken
away from them .

A post- liber al theor isatio n of empo werm ent rejec ts this liber al inter preta tion to envis age
empo werm ent in struc tural ly-m eanin gful (i.e. non- liber al) term s (see Tow nsen d et al.,
1999: 30; Eybe n et al., 2006 ; Cham bers, 1997; Nels on & Wrig ht, 1995; Hart sock , 1990;
Hulm e & Turn er, 1990; Alco ff, 1990; Benh abib, 1992; Held , 1993; Allen , 2003 ).
Emp hasis is place d on a conc eptua lisati on of powe r as critic al awar enes s, orga nisat ion,
coop erati on and delib erati on, rathe r than the liber al tenet s of indiv idual ism, barg ainin g and
18
comp etitio n (see Eybe n et al., 2006 : 8; Tow nsen d et al., 1999: 102; Mou ffe, 1997 ) .

O'M alley (1996: 312) for exam ple takes Fouc ault' s negle cted idea abou t resis tance as a
'posi tive and prod uctiv e' resou rce to make poss ible an inves tigat ion of 'form s of rule' that
are dissi mila r to 'the outco mes of incre asing ly refin ed or adap ted liber alism '. Simi larly,
Tow nsen d et al. (1999: 23) deriv e their cons cious ly 'post liber al' fram ewor k from
Fouc auldi an think ing to atten d to the issue of powe r that (neo )libe ralis m obsc ures. As they
describe:
Neol ibera lism spea ks of 'emp ower men t', but with refer ence to the elect oral right s
of the indiv idual in the natio n state ... not empo werm ent of the comm unity or the
group, let alone a right to critic al awar eness . Postl ibera ls ... unde rstan d powe r as

18
Their sociology and political science forebears include theorists such as Bruno Latour (1986), Hannah
Arendt (1958), Talcott Parsons (1969), Paolo Freire (1996) and Isaiah Berlin (1958).
- 23 -
 dispersed throughout hum an society. The micr omec hanis ms of powe r at the local
level produce local criticisms which, if organized politically, develop into strategies
to resist the mechanisms of powe r (Tow nsen d et al., 1999: 24).

This post-liberal perspective recasts the conc ept of empo werm ent as 'a force exerted by an
individual or grou p' (Townsend et al., 1999: 30), as a 'capa city to prod uce chan ge' (Miller,
1982), and an 'affe cting and transforming pow er but not a controlling pow er' (Hoagland,
1988). In this context, as Alsop (cited in Chambers, 2006: 100) describes, empo werm ent
refers to 'enha ncin g an indiv idual 's or grou p's capacity to make purp osive choices and
transform that choice into desired actions and outc omes '. In such a readi ng - wher e
Foucault's belie f in 'pow er from belo w' is given central theoretical attention - dom inant
regimes are capable of being destabilised by, and subject to, a 'tran sform ation al' and
19
'indigenous' politics (O'M alley , 1996) . Not only is this latter alternative know ledge
regime possible for 'subj ects' of powe r to prom ote and use to bring abou t change, but it
20
also exhibits decided heterogeneity, comp rised as it is of mult iple 'situa ted know ledg es'
(Nygren, 1999: 282) (see Chapters 6 and 8).

In essence, the emergent post-liberal mov emen t in theorising empo werm ent reflects an
evolution in the sociological quandary of agen cy and structure - the extent to whic h
individuals make meaningful choices with in the confines of social structures.
Traditionally, agency and structure have been portr ayed in dicho tomo us terms, wher e either
human freedom prevails and is unrestricted by social structures (hum anism /libe ralis m) or
structures determine social actor s' circumstances and opportunities
(structuralism/Marxism). Giddens (1984) dislodged this debate from its impasse with the
idea that agency and structure have an iterative or mutually-constitutive relationship
whereby the notion of structure refers to a 'set of rules and resources integral to the cond uct

19
As O'Ma lley (1996: 313) describes, indigenous governance refers to 'form s of government that arise in,
and are endemic to, the everyday lives of subjects'. It is unlike liberal governance that imposes governance
'from without'. In this sense, indigenous governance is also an endogenous governance system.
20
'Situated knowledges' refers to an analytical orientation that assumes social actors' representations of the
world will be highly divers e and fluid, and thus overlooked by sharply defined conceptual categories (such as
'Western science' versus the 'peop le's science', 'mode rnity' versus 'tradi tion' or ' local' versus 'globa l').
Portrayed in such a way, 'totalising theories' that construct crude boundaries between local and dominant
discourses become inadequate for enhancing social scientists' knowledge about those they study and their
influence upon the discourses that permeate their lives (Nygren, 1999).
- 24 -
 21
of indiv idual and collective actors ' . From this persp ectiv e, peop le act on the basis of their
know ledge of pre-e xistin g structures, and, in so acting, repro duce those struc tures . In this
sense, struc tures are not stand -alon e forms, but rathe r are imbu ed in socia l interaction:
structures are not static states, but mutu ally- cons tituti ve processes.

Socia l structures thus form the back drop cond ition s for indiv idual actio ns by prese nting
actors with options, whic h are both enab ling and cons train ing. Whe n cons train ts - value s,
norm s, rules and so on - are univ ersal and in place for a long time they tend to go
unno ticed , leadi ng to the dura bility of tradi tion (Bev ir & Rhod es, 2005 ; Brait hwai te,
forthcoming). At the same time , as Bevi r and Rhod es (2005: 4) poin t out recen tly with
22
their conc ept of 'situa ted agen cy' , it cann ot be assu med that all indiv idual s are simil arly
affec ted by, or even recog nise, the influ ence of 'trad ition ' and inher ited rules , norm s or
values:
We can acce pt that peop le alwa ys set out again st the back grou nd of a socia l
disco urse or tradi tion and still think of them as agen ts who can act and reaso n in
nove l ways to mod ify this back grou nd ... Whe n we defe nd the capa city for
agen cy ... we do so recog nisin g that it alwa ys occu rs with in a socia l conte xt that
influ ence s it. Agen cy is not auton omou s. It is 'situa ted'.

This evolu tion in think ing abou t the relat ionsh ip betw een agen cy and struc ture unde rpins
post- liber al ideas in theor ising pow er in the sense that these ideas emph asise the capa city
for agen cy and its diver sity in the conte xt of struc tural and insti tutio nal cons train ts. Post-
liberal scho lars offer three prim ary form s of empo werm ent that indiv idual and colle ctive
expr essio ns of agen cy can prod uce: 'pow er with ', 'pow er to' and 'pow er with in'.

'Power with '

The 'pow er with ' is a form of empo werm ent that descr ibes 'the capa city to achie ve with
others what one could not do alon e'. 'Pow er with ' conn otes a coop erati ve relat ionsh ip in
whic h indiv idual s work toget her to 'mult ipl[y ] indiv idual talents and know ledg e
(Ven eKla sen & Mill er, 2002: 45). As Gave nta (2006a: 24) desc ribes , 'pow er with ' mean s

21
Struct ures comp rise and includ e the roles of differ ent institu tions; surrou nding physi cal struct ures; the use
of resou rces ; and alloca ted routin es, all of which fonn the histor ical given s for indivi dual action and
reflection.
22
' Situat ed agenc y' portra ys agenc y as, on the one hand, conte xtuali sed by social actors ' backg round (i.e. the
social backg round influe nces indivi dual belief s and subjec tivitie s), and on the other hand, a mean ingfu l and
novel capac ity for actors to modif y, even transf orm, their social backg round (Bevi r & Rhod es , 2005: 4-5).
- 25 -
'the synergy which can emerge through partnerships and collaboration with others, or
through processes of collective action and alliance building'. 'Pow er with ' thus relates to a
group-oriented concept which Zapata (cited in Townsend et al., 1999: 150-163) sees as
'active at many levels, in joint projects, in the village, in the region, in the country and in
the world'. Follett (1942) likewise proposed that 'pow er with ' is a collective ability
derived from reciprocal relationships among group members.

The idea of reciprocal and cooperative relationships runs counter to the 'pow er over '
assumption that, in a competitive global capitalist economy, humans will seek to
dominate/ out-compete or annihilate others to maximise their personal gain. 'Pow er with '
assumes a positive-sum outcome whereby everybody gains from the operation and exercise
of power. Within the context of a 'competitive worl d', Townsend et al. (1999: 31) make
the observation that 'pow er with ' is largely 'dism issed as an impractical socialist ideal'.
Using the terms 'associational' power ('pow er with ') and 'instr umen tal' powe r ('pow er
over'), Allen (2003: 51-2) differentiates the cooperative and collaborative nature of 'pow er
with' from the contrasting competitiveness of 'pow er over ':
... whereas the former [associational power] rests upon enablement and tends to
stress the possibility of collective, integrative action, the latter term [instrumental
power] refers to an instrumental ability to gain at the expense of another. Where
one sees the possibility of collaboration, the other sees the potential for domination.

Hulme and Turner (1990) make a similar observation:

Those who assume that powe r has only a distributive dimension ['pow er over '], and
thus regard it as having a fixed volume, see little possibility for cooperative action
and anticipate that existing powerholders will resist or co-opt any organisational
initiative ... The generative dimension of powe r ['pow er with '] points to the
possibility that all members of a society or other social unit may benefit from an
increase in its powe r if the increments in pow er are broadly shared within the
group ... this suggests an alternative to the economist's concept of economic man,
based on individualism, selfishness and competitiveness.

The suggestion here is that 'pow er with ' is based on increasing the number of people
involved in cooperation to generate greater power. This is the 'infin ite' nature of pow er
emphasised in post-liberal theorising about pow er (see also Eyben et al., 2006; Rowlands ,
1995). Latour (1986) takes a radical stance with this idea. In his influential article, The
Powers of Asso ciati on, Latour (1986) questions the guiding assumption in the social

- 26 -
sciences that power is a tangible 'possessi on ' of a person or institution. Latour (1986)
argues that if nobody obeys an order, the person who issues it has no influence or power;
the person or group 'in charge' is not powerful. As Latour phrases it: ' ... power is the
consequence, not the cause, of collective action'. Or to put it another way, power can only
be attributed to a person ex post facto , and the power is one born from collective action. In
her early work on power in The Human Condition, Hannah Arendt (1958 , cited in Allen,
2003: 53) stressed this idea:
Power corresponds to the human ability not just to act but to act in concert. Power
is never the property of an individual; it belongs to a group and remains in existence
so long as the group keeps together. When we say of somebod y that he is in power,
we actually refer to his being empower ed by a certain number of people to act in
their name. The moment the group, from which the power originated to begin with
disappears, 'his power' also vanishes.

A Latourian and Arendtian perspective on power adds insight into what sustains power
over time: collective action. The implication of this way of thinking about power is that
exercising power to cause effects becomes an intense process of enrolment. This turns on
its head an underpinning assumption of a 'power over' perspecti ve, that power can be
hoarded or that a 'powerfu l' person exerts 'power over' others. Latour (1986) and Arendt
(1958) in this way debunk structuralist ideas of power through their explanation of what
constitutes the 'power' of a person/institution/group and thus how the putative power of the
'powerfu l' can quickly 'vanish'. Dominan t institutions, actors and groups are ultimatel y
reliant on the power gained from many others supporting them or their set of beliefs and
practices.

'Power to '
Another type of empower ment is the 'power to'. This power is a form of agency and
purposiv e choice (Chambers, 2006: 100). It is an additional capacity or ability, ' the
capacity to empower or transform oneself and others' (Allen, 2005: 8). The 'power to ',
according to Townsen d et al. (1999: 33), involves 'accessin g a full range of human ability
and potential '. 'Power to' is the strength and ability to act, to build new capacities and
skills in order to 'build a future different from that mapped out by custom '. For
VeneKla sen and Miller (2002: 45), this form of power 'refers to the unique potential of
every person to shape his or her life and world'. The capacity to act and relate in new ways

- 27 -
 and do new things implicitly challenges status quo relations and roles. As Za pa ta ( cited in
Townsend et al., 1999: 163) suggests, the 'p ow er to ' refers to 'th e po w er to change
relationships in the direction the individual [or group] w is he s'.

'Power within '

The ability to free up alternative discourses and imaginativeness involves a third di m en sio n
of power. Em po w er m en t theorists describe it as 'p ow er w ith in ' and vi ew it as a
'precondition for ac tio n' (Gaventa, 2006a: 24). 'P ow er w ith in ' manifests as a form of
internal strength, a 'co nf id en ce ' , se lf-awareness and sense of identity. A cc or di ng to M os er
(cited in To w ns en d et al., 1999: 30), this po w er 'is central to em po w er m en t. .. [as it] seeks
to identify po w er less in terms of domination over others ... and m or e in terms of the
capacity ... to increase ... . se lf-reliance and internal str en gt h' (see also Hartsock, 1990;
Hoagland, 1988). The 'p ow er w ith in ' contrasts 'in vi sib le po w er ', the latter be in g a type of
'tyranny we exercise ov er ou rs el ve s' (T ow ns en d et al., 1999). Indeed, 'p ow er w ith in ' is
the product of the defeat of 'p ow er ov er ' internal to the se lf and involves the growth of self-
esteem (Zapata, cited in To w ns en d et al., 1999).

Encouraging 'p ow er w ith in ' can le ad to br oa de r social change, bu t it is de pe nd en t on

awareness-raising and education to enable people to critically evaluate the norms, beliefs,
attitudes and values they ho ld to be true. In this way, social m ov em en ts an d m in or ity
groups can be seen to have long pl ay ed the role of encouraging the de ve lo pm en t of 'p ow er
within' for br oa de r social change to occur 23
. As Crano (cited in M os co vi ci et al., 1994: 18)
suggests:

23
In co nte mp ora ry so cie ty, bu sin ess /m ark eti ng the ori sts ha ve dr aw n att en tio n to a no ve l wa y in wh ich
social gro up s/o rga nis ati on s are ch all en gin g 'ru lin g ide as ' to sh ift so cie tal va lue s, att itu de s an d be ha vio ur:
' social marke tin g ' (se e Go ldi ng & Pe att ie, 20 05 : 160). As a me an s of inf lue nc ing so cia l thi nk ing in
progressi ve wa ys , so cia l ma rk eti ng dra ws on co mm erc ial ma rk eti ng pr inc ipl es for the pu rp os e of ' ch an gin g
be ha vio ur to inc rea se the we llb ein g of ind ivi du als an d/o r so cie ty' an d to pr om ote a so cia l aim or 'pr op os iti on '
(Golding & Pe att ie, 20 05 : 160) , to be ne fit the br oa de r co lle cti ve/so cie ty (A nd rea sen , cit ed in Go ldi ng &
Pe attie, 20 05 : 160) . As Yo un g an d W elf or d (ci ted in Ni ch oll s & Op al, 20 05 : 166) ob ser ve , the re is ov erl ap
be tw ee n ' ma rk eti ng , ed uc ati on an d ca mp aig nin g' in so cia l ma rk eti ng wh ich co nte mp or ary so cia l mo ve me nt
work de mo ns tra tes well. Pe att ie an d Pe att ie ( cit ed in Go ldi ng & Pe att ie, 20 05 : 160) co ns ide r tha t so cia l
ma rke tin g sti mu lat es a 'ba ttl e' of ide as be tw ee n a so cie ty- en ha nc ing me ssa ge an d a co mm erc ial ly- en ha nc ing
pro po sit ion up on wh ich co rpo rat ion s de pe nd (su ch as the tob ac co ind us try ma rk eti ng sm ok ing as de sir ab le
versu s an ti- sm ok ing ed uc ati on al ca mp aig ns ). Fm ihe rm or e, the so cie ty- en ha nc ing me ssa ge fee ds int o cu ltu ral
debate be tw ee n co mp eti ng so cia l/c ult ura l ide as tha t de riv e fro m su ch so ur ce s as the fam ily un it or pe er
- 28 -
 ... by its very exist ence , a mino rity trans gress es group norm s, there by sugg estin g
alter nativ e ways of think ing ... the mino rity cause s cogn itive conf lict mere ly by
maki ng its posit ion know n. The conf lict. .. can prov oke peop le to re-ex amin e their
belie fs and actio ns ... and such re-ex amin ation may resul t in attitu de and behaviou r
chan ge ...

Libe ratio n from 'invi sible pow er' and the grow th of 'pow er with in' thus reqm res
awar enes s-rai sing and educ ation to deve lop critic al awar enes s of the cons train ts pose d by
4
exist ing instit ution s and struc tures (Freire, 1996)2 . It enab les perso nal recog nitio n 'that
one is not helpl ess, not the sourc e of all one's prob lems , that one is restr icted in part by the
structures outsi de ones elf (Tow nsen d et al., 1999). The conc ept of an indiv idual and
colle ctive capa city to adop t beha viou rs and belie fs that signi fican tly diver ge from tradi tion
aligns with the idea that socia l actors poss ess capa cities to refle ct on, rejec t and trans form
the disco urses that they have inher ited (see Bevi r & Rhod es, 2005: 4-5). Whil e femi nists in
this post- liber al orien tatio n disti ngui sh 'pow er with ', 'pow er to' and 'pow er with in' as
diffe rent forms and level s of empo werm ent, they recog nise that these categ ories are
inter conn ected , 'over lapp ing' proc esses of capa city- build ing whic h build on one anoth er
(Tow nsen d et al., 1999: 26). As scho lars from other disci pline s such as Cham bers (2006:
100) sugg est, 'pow er with ' and 'pow er with in' comb ine as 'pow er to influ ence and
chan ge ... pow er over '. Prop onen ts of these ideas see these forms of pow er as enab ling the
reali satio n of great er freed om to chan ge exist ing struc tural and instit ution al cons train ts.
The follo wing table show s the exten t of exist ing pow er theor ising , divid ed roug hly into two
stories of powe r: 'pow er over ' (pow er as dom inati on) and 'emp ower men t' (pow er as a
capa city cond ucive to socia l chan ge).

pressure. This contemporary illustration shows the importance and relevance of stimulating a process of
questioning accepted norms /traditions for social change.
24
The idea of popular education was popularised by Paulo Freire (1996) in Latin America in his work with
the poorer classes, viewing them as holding the key to their own liberation once having learned of the status
quo nonns and patterns maintaining their oppression.
- 29 -
 Conceptualisation Form Definition Outcome/Quality
of Power
Domination 'Power The power of an institution, group or Disempowering,
Over ' individual to carry out their wi ll despite instrumental, zero-sum,
resistance, or to get others to act against private gain, exclusive,
their will. 'Power over' operates as a passive
visible power in conflict, decision-making
and coercion; as hidden power and as
invisible power (tyranny over the self).
Empowerm ent 'Power The power to achieve with others Empowering,
With' what one could not achieve alone collaborative and
cooperative, mutual
gain, inclusive
'Power The power to act or do something whether Enabling, a capacity,
to' as a group or as an individual empowering, agentic,
inclusive,
trans formative
'Power Self-empowerment Creative, self-
within' confidence, self-
awareness, a source of
internal strength

Table 1.1: Smmnary of two primary perspectives on power in the social sciences.

Pushing the Empowerment Agenda: 'Defiance' and entrepreneurship of norms

At this intellechial juncture, a community of post-liberal scholars concurs that the concept
of agency in the literature on power remains seriously under-developed. This
acknowledgement provides a platform and orientation for what this thesis seeks to explain:
how traditionally 'weak' social actors use markets to achieve empowerment. Two
particular presuppositions from which this enquiry proceeds are: (a) that the operation of
markets is significantly determined by the exercise of institutional power; and (b) that, as
evolutionary economists believe, markets do transform and the transformation is triggered
by specific actors, namely entrepreneurs (Schumpeter, 1934, 1943). The thesis is
particularly interested in post-liberal empowerment in a way that integrates an analysis of
power into the process of market transformation.

To explore further the under-developed concept of agency in social scientific scholarship,

the chapter first turns to consider the role of entrepreneurship in triggering market
evolution. Attention is briefly drawn to the inadequacy of evolutionary economists'
explanation of the entrepreneur's ability to transform market structures (see Chapters 6, 7
and 8). It is here that Braithwaite's (forthcoming) conceptual framework of ' defiance ' 1s
- 30 -
introduced, and particular attention is paid to the defiance category termed 'gam e-playing ' :
the game-player is an entrepreneur of norms for the purpose of transforming dominant
institutions and structures. As will be shown, it is through this unique actor that we can
probe the nature of powe r and agency involved in causing market transformation . The
subsequent sections elaborate the concept of game-playing and develop the conceptual
framework of powe r employed in the thesis. The thesis question is then outlined.

The Revolutionary Entrepreneur

A prominent theorist in evolutionary economics, Schumpeter ( 1934) viewed
25
entrepreneurship as the cause of revolutionary change in the marketplace . For
Schumpeter, the entrepreneurial act involves materialising 'new comb inati ons'
(innovations) in enterprise including: the introduction of a new good or new quality of
good; the introduction of a new meth od of production; the opening of a new market; the
conquest of a new source of supply; and the creation of new organisational systems within
an industry through structural adjustments (Schumpeter, 6
1949: 63-84)2 . 'New
combinations' can therefore have structural implications: innovation - the exploitation of
new knowledge (Harper, 1996) - disrupts stable mark et structures in 'sudd en' and
'disc ontin uous ' ways, overturning settled patterns and relationships instead of reaffirming
them (Goyder, 1998: 13). In short, entrepreneurs can stimulate revolutionary change by
exploiting new discourses to replace accepted practice. They are the cause of 'gale s of

25
Of all the key mode m economists, only Schumpeter focused his energies on entrepreneurship and the
entrepreneur's impact on capitalism (Drucker, 1985: 13). Leading contemporary economists studying
entrepreneurship and innovation include Howard Stevenson (2006, 1991, 1986) and Peter Drucker (1985).
The study of entrepreneurship is divided into two primary camps (see Berger, 1991). The former, from the
school of economics, views entrepreneurship as a variable dependent on economic factors - as a response to
exogenous forces. This camp proposes that entrepreneurial activities will occur spontaneously when
economic conditions are favourable. They emphasise the crucial role of the availability of capital, access to
markets, labour supply, raw materials and technology. Social scientists other than economists view
entrepreneurship as a variable deeply embedded in culture (see for instance Weber, 1958), simultaneously
produced by and productive of it. The unique psychological attributes of the class of actor referred to as
entrepreneurs also fits within this latter camp (Berger, 1991: 20; for a key work on the psychology of the
entrepreneur, see McClelland & Winter, 1964).
26
Macmillan et al. (2000: 93-7) observe that entrepreneurs create 'radic al' and 'revol utionary '
reconfigurations of markets which can force existing business models, reliant on 'business-as-usual'
structures, to become obsolete. Radical reconfigurations involve the creation of a new business model, which
renders obsolete conventional business models now of unacceptable or lesser valued attributes.
Revolutionary reconfigurations reshape current business models entirely, delivering a product or service with
'completely new and different attributes'.
- 31 -
creative destr uctio n' that brea k up mark et conc entra tion and mov e the econ omy forward:
capitalism is depe nden t on entre pren eursh ip in orde r to evolv e (Sch umpe ter, 1934).

Important in Schu mpet er' s idea of the entre pren eur is the evide nt indiv idual capa city to
eschew and revo lutio nise tradi tiona l ways of being , doin g and thinking. Whil e econ omic
change pivot s on this indiv idual capa city in a Schu mpet erian worl d, Schu mpet er did not
examine its causes and preco nditi ons, only its effec ts (Bink s & Vale , 1990). How does the
entrepreneur trium ph over 'pow er over ' in conc entra ted mark ets or even see the poss ibilit y
of alternatives to it (see for exam ple Chap ter 2)? Schu mpet er only hinte d at the
entre pren eur's evide nt capa city for critic al refle ction on, and rejec tion of, mark et norm s, let
alone his/h er capa city to annih ilate it in the real world. Schu mpet er coine d the term
'hori zon' to indic ate that the entre pren eur poss esses a broa d 'rang e of choi ce' with in whic h
he/she 'mov es freel y' and make s the 'deci sion for a cour se of actio n'. For Schu mpet er, the
effect of this cogn itive and beha viou ral freed om on mark ets was profo und. As he
described:
... there is [a] kind of chan ge ... whic h arises from with in the syste m, and this kind of
chan ge is the caus e of so man y impo rtant econ omic phen omen a that it seem s
wort hwhi le to build a theor y for it, and ... to isola te it from all other factors of
chan ge .... what we are abou t to cons ider is the kind of chan ge arisin g from with in
the syste m whic h so displ aces its equil ibriu m poin t that the new one cann ot be
reach ed from the old one by infin itesim al steps ... (Sch umpe ter, cited in Bink s &
Vale, 1990: 23-4).

Implied in this passa ge is the capa city for the indiv idual entre pren eur to caus e large -scal e
change throu gh markets. Subs eque nt econ omic theor ising abou t this uniq ue socia l actor
has not led to socia l psyc holo gical or socio -poli tical insig ht into the myst eriou s agen cy and
powe r in entre pren eursh ip whic h rend ers exist ing ideas , techn olog ies and skills obso lete
and rapid ly repla ces them with new mark et instit ution s and structures. For Mac milla n et al.
(2000: 94) for insta nce, entre pren eursh ip 'disru pts the rules of the gam e', a proc ess whic h
leads to 'brea king down the barri ers that caus e the curre nt mark et to be struc tured as it is'.
For Robe rt and Weis s (1988: 5), inno vatio n is an offensive, not a defensive, weap on in the
process of change. Telli ng desc riptio ns thou gh these are, evolu tiona ry econ omis ts tend to
neglect the role of powe r in deter mini ng the 'rule s of the gam e' and struc turin g mark ets as
between those busin ess mode ls that prev ail, and those that are weak (see Chap ter 8). In
fact, evolu tiona ry econ omis ts liken inno vatio n to the Darw inian notio n of gene tic varia tion
- 32 -
 and vie w the ma rke t as a va lue -fr ee me ch an ism for sel ec tin g the 'fit tes t' am on g co mp eti ng
species (see Ne lso n & W int er, 1982). Se lec tio n me ch an ism s 'fa vo ur on e va rie ty ov er
another, fro m wh ich on e species is eli mi na ted an d the oth er pre va ils ba sed on its
ad ap tab ilit y'. Inn ov ati on (ge ne tic va ria tio n) is a so urc e of sel ec tio n pre ssu re, in res po ns e to
wh ich we ak er spe cie s ad op t the co mp ara tiv ely su pe rio r traits of the 'fit tes t' sp ec ies
(Casson, 1990: xvii; Fo ste r & Me tca lfe , 20 01 : 1-2).

Th e co ns eq ue nc e is tha t it is no t cle ar ho w po we r op era tes in the co nte xt of

en tre pre ne urs hip su ch tha t the en tre pre ne ur is ca pa ble no t on ly of cre ati ng thr ivi ng bu sin ess
inn ov ati on s, bu t also of tri gg eri ng tra ns for ma tio n to ex ist ing ma rke t str uc tur es an d
ins titu tio ns wi th tho se bu sin ess mo de ls. No r is it cle ar ho w an d wh y the en tre pre ne ur is
co ns tra ine d by po we r in the ma rke t su ch tha t his /he r inn ov ati on s are de em ed 'w ea k' in, or
ev en eli mi na ted from, the ma rke tpl ac e. Th is the sis see ks to ma ke a sig nif ica nt co ntr ibu tio n
here: it ex pli ca tes ho w ma rke ts tra ns for m in a wa y wh ich int eg rat es the co nc ep t of po we r.
In fact, these qu est ion s ab ou t po we r in ma rke ts are all the mo re sig nif ica nt sin ce the the sis
is int ere ste d in a un iqu e kin d of en tre pre ne urs hip . En tre pre ne urs are tra dit ion all y
co nc eiv ed of as inn ov ati ng in new pr od uc ts an d do ing so within ca pit ali st ma rke t
ins titu tio ns for the pu rpo se of pr ofi t (see Bi nk s & Va le, 1990: 24 ). Th e en tre pre ne urs hip in
qu est ion he re is as an ex pre ssi on of ag en cy an d po sit ive po we r vis-a-vis the pre va ili ng
reg im e of ne oli be ral dis co urs e: en tre pre ne urs hip of norms for the pu rpo se of rec on sti tut ing
ma rke ts to tra ns for m the ir no rm ati ve ba sis an d em be d dif fer en t va lue s an d pro ce sse s.

As is dis cu sse d be low , this type of en tre pre ne urs hip is em bo die d in Br ait hw ait e's no tio n of
'ga me -pl ay ing '. First, Br ait hw ait e's so cia l ps yc ho log ica l fra me wo rk of 'de fia nc e' is
int rod uc ed , wh ich offers a typ olo gy of dif fer en t dim en sio ns of ex pre ssi ng an d ex erc isi ng
agency. On e of the ca teg ori es of de fia nc e, the 'ga me -pl ay er' , is the n dis cu sse d in mo re
detail, an d in co ntr ast to the 're sis tor '. Th e ps yc ho log y an d str ate gie s of ga me -pl ay ing are
ela bo rat ed at the co lle cti ve an d tra ns na tio na l lev el to aid a co nc ep tua lis ati on of ho w po we r
operates at the se lev els an d to pro be the so cio -po liti ca l sig nif ica nc e an d po ten tia liti es of
ga me -pl ay ing in the pro ce ss of so cia l ch an ge .

- 33 -
 Defiance
'D ef ia nc e' is a te rm B ra it hw ai te (f or th co m in g) us es to de sc ri be th e ps yc ho lo gy of de fy in g
social st ru ct ur es an d in st itu tio na l co ns tr ai nt s. A cc or di ng to B ra it hw ai te (f or th co m in g) ,
defiance re fe rs to an attitude or be ha vi ou r us ed by so ci al ac to rs to si gn al to se lf an d ot he rs
that 'th ey are ei th er kn ow in gl y de pa rt in g fr om a pr es cr ib ed pa th , or ar e in th e pr oc es s of
questioning the pa th la id ou t fo r th em by an au th or it y' . D ef ia nc e is a pa rt ic ul ar ou tl oo k on
the w or ld th at m ay be ex pr es se d th ro ug h w or ds or ac tio ns , so m et im es bo th . D ef ia nc e is
deliberative: in di vi du al s ha ve th ou gh t ab ou t th ei r po si ti on an d in te nd to co nv ey th e
message th at th ey re je ct bl in d ac ce pt an ce an d su bs er vi en ce to ru le s or au th or ity . D ef ia nc e
is a rational an d he al th y re sp on se th at an y in di vi du al is ca pa bl e of m ak in g to th e de m an ds
of society; it do es no t re fe r to ab no rm al or pa th ol og ic al ps yc ho lo gi ca l st at e or be ha vi ou r.
As B ra ith w ai te (f or th co m in g) ob se rv es , w he n in st itu tio ns ce as e to se rv e ci tiz en s w el l an d
when th ey do m in at e in di vi du al liv es to th e po in t w he re th ey ca us e di st re ss or de st ru ct io n,
defiance by so ci al ac to rs is ne ce ss ar y fo r fo rg in g a pa th to in st itu tio na l ch an ge .

Defiance is th us a he al th y m ic ro re sp on se of in di vi du al s to m ac ro so ci al co nd it io ns th at are
harmful to, or de st ru ct iv e of, qu al iti es th at are im po rt an t fo r in di vi du al s' se lf -d ef in iti on or
self-worth. B ra it hw ai te 's fr am ew or k pr om ot es a pr o- ag en cy lin e of an al yt ic al en qu ir y in
which in di vi du al s' se ar ch fo r fr ee do m lie s at th e ce nt re of he r co nc ep tu al fr am ew or k. A s
noted earlier, de sp ite le av in g ro om fo r ag en cy in m od em re gi m es of kn ow le dg e/ po w er ,
Foucault di d no t pr ov id e an ex pl ic it or nu an ce d th eo re tic al ac co un t of 're si st an ce ' (a ge nc y) .
In this co nt ex t, 'd ef ia nc e' su pp or ts an em br yo ni c re se ar ch ag en da th at is in pu rs ui t of a
more so ph is tic at ed th eo re tic al ac co un t of ho w ag en cy an d po w er op er at e an d in te ra ct in th e
process of ch an ge (s ee es pe ci al ly O 'M al le y, 1996; N yg re n, 1999; se e al so B ev ir & R ho de s,
2005: 4-5).

Indeed , a va ri et y of ty pe s of de fi an ce ex is ts , w hi ch B ra it hw ai te (f or th co m in g) ca lls
'm ot iv at io na l po st ur es '. In di vi du al s as su m e po st ur es (co ns tit ut iv e of m ot iv at io n, at tit ud es ,
behaviours an d so on) w he n th ey ha ve re as on to ex pr es s th ei r be li ef in th e dy sf un ct io na l
nature an d im pa ct of ex is tin g in st itu tio ns an d st ru ct ur es on th ei r so ci al en vi ro nm en t. T he se
'p os tu re s' in cl ud e (b ut ar e no t li m it ed to) 're si st an ce ' an d 'g am e- pl ay in g' . In B ra it hw ai te 's
research (f or th co m in g; se e also B ra it hw ai te , 19 98 ) 're si st an ce ' in vo lv es ac tiv e de fi an ce ,

- 34 -
and resistors want their criticism s heard and want to play a part in changing the system for
the better. Resistors challenge regulatio ns and regulator y administr ators, yet not by
creating new norms or rules. Rather, resistors work to inject the new ideas of others into
the system (see below). In order to do so, resistors are forced to acknowle dge and engage
with the norms and constraints posed by institutio nal actors' worldvie w. The resistanc e
posture achieves only limited and incremen tal gains, consonan t in this way with Berlin's
(1958) notion of 'negative ' liberty which prevents interferen ce with an individua l or
27
group's existing liberties but does not expand them or enable new capabiliti es . This was
the extent of agency that Foucault appeared to suggest in his over-emp hasis on the ability
of modem regimes to discipline social actors (see above).

Braithwa ite's 'game player' embodies a more radical form of agency than the resistor;
game-pla ying is a more 'imagina tive' and 'bold' expressio n and practice of positive power.
It involves defying or transcend ing regulator y constraints through 'moving around or
redefinin g the rules' (Braithw aite, forthcoming). This response involves 'keen engagem ent
with the regulator y code', and 'using the code to dismantle or change the regulator y
system'. Game players innovate where there is an absence ofrecogn ition of authority, they
think 'outside the square' rather than acknowle dge, let alone work within, the confines of
convention. The 'game-pl aying' category denotes a creative and visionary individua l
engaged in seeking transform ation of their regulator y environm ent. Braithwa ite' s
(forthcoming) game-pla ying construct parallels Berlin's concept of 'positive liberty': self-
28
mastery and self-dete rmination . Furtherm ore, this category resemble s the qualities
29
attributed to the 'entrepre neurial mindset' (see Chapter 7). Schumpe ter's (1934)
entrepreneur, as Cauthom (1989: 15) articulates, 'is rendered by the notion of a creative,
conventio n-defying individua l entrepren eur, making innovativ e decisions ... in the face of a
hostile, or at the least a passively resistant, environm ent'. The game-pla yer personifi es this
portrait in his/her attempt to transform market nonns. Chapter 7 draws on the

27
According to Berlin (1958), actors who seek 'negative ' freedom aim to preserve the existing range or field
of action available to them and to prevent fmiher restrictions to that range.
28
By contrast with negative liberty, 'positive liberty' is an attempt to expand one's capacities and liberties by
seeking a broader field of action that existing instih1tions frustrate (Berlin, 1958).
29
The 'entrepreneurial mindset' is the name Macmillan et al. (2000: 2-3) give to their book on entrepreneurial
thinking and behaviour, in which they attempt to define the characteristic ' mindset' of the entrepreneur.
- 35 -
entrepreneurship literature to develop the psycholo gy and nature of game-pla ying
(entrepreneurship of norms) in greater detail.

On the one hand, then, resistance and game-pla ying occupy opposite ends of a spectrum of
agency - one is conservat ive, the other radical (though these two categorie s are by no
means rigid or homogen eous (see Chapter 6)). Game-pla ying is a complete ly different
mindset from resistance , or in Schumpe terian terms, game-pla ying denotes a broader
'horizon' (perceive d range of available choices and behaviou rs) than is character istic of
resistance. Resistanc e does not lead to genuine structural change. This is not because
attempts to change prevailin g discourse s are futile. Rather, individua ls are endowed with
different 'horizons ' or degrees of 'situated agency' (Bevir & Rhodes, 2005: 4).
Consequently, actors perceive, and interact differentl y with, existing structures , causing
different effects. As Berlin's (1958) categorie s of negative and positive liberty imply,
different degrees of agency motivate social actors to push the boundari es of constrain t to
different extents. Game-pla ying involves not only the rejection of norms and institutio nal
structures but also the creation of new structures liberated from their institutio nal moorings .
In this regard, and as this thesis aims to show, game-pla ying appears to hold the potential
for agency and empower ment of both self and others by freeing structure s from their
traditional institutio nal anchors, producin g new structures and institutio ns (see Chapter 8).

On the other hand, resistance and game-pla ying share a symbioti c existence in the context
of social movemen t politics (see Braithwa ite, 1998). The motivatio n underpin ning
30
resistance lies in the resistors' structural location in capitalist market institutio ns .

Resistors seek to institutio nalise alternativ e models or regimes into those capitalist
institutions rather than transform those institutio ns themselv es. Resistors do the 'hard sell
and execute model implemen tation', transport ing game-pla yers' radical models from the
periphery (see Chapter 5) and institutio nalise them in the centre to make money out of the

30
A striking similarity can be drawn between Val Braithwait e's (forthcoming) resistors and John
Braithwaite's (1994) 'model mercenarie s' . As John Braithwaite (1994) explains, the motivations of model
mercenaries' are rooted in their structural location in capitalist market institutions. Their role in the process of
model diffusion is to transport radical models from the periphery and institutionalise them in the centre for the
purpose of 'cashing in' on the propagation of the model. As he describes them, model mercenaries 'do the
hard sell' and 'execute model implement ation'. Chapter 7 shows the likeness between model mercenarie s'
motivations and strategy with that of the resistors conceptualised in the thesis.

- 36 -
propagati on of the model (see Chapter 6). In other words, resistors seek to capitalise on the
normativ e entrepren eurship of the 'game-pl ayers' in social movemen t politics (see Chapters
6-8), turning game-pla yers' 'toeholds into footholds '.

In the process of institutio nalisation , resistors seek engagem ent with conventio nal actors,
negotiatin g with and making comprom ises for their worldvie w, leading to resistors' capture
(see Ayres & Braithwa ite, 1992) and the modifica tion of game-pla yers' radical models (see
Chapter 6). Resistors do not aim to change these institutio nal actors' motivatio ns, but
simply to convince those actors of the attractive ness (political, economic , cultural or
otherwise ) of the model in question and to incorpora te these into existing institutio nal
processes and structure d patterns of behaviou r. Resistors play within the rules, a negative
type of freedom which preserves the existing range or field of action available to actors by
preventin g further restrictio ns to that range (Berlin, 1958). Game-pla yers by contrast make
up or invent rules as a means of enabling the expansio n of new capacitie s or liberties which
are frustrated by existing institutio ns. While resistors work within existing market
institutio ns and structures (see Chapter 6), game-pla yers seek to transform its normativ e
basis (see Chapters 7 and 8).

With an analytica l typology of different dimensio ns of expressin g agency and strategies for
its exercise, Braithwa ite's (forthcom ing) defiance framewo rk offers greater conceptu al
sophistic ation with which to probe the array of individua l psycholo gies and behaviou r for
challengi ng institutio nal and structural constraints. This framewo rk thus provides the
opportun ity to understan d more deeply and processu ally how, and to what extent, different
social actors exercise agency and influence social structures. 'Game-pl aying' is of
particula r interest in this thesis, and conceive d of as more radical than its 'resistanc e'
counterpa rt (see Chapter 7). Explainin g how power operates in the game-pla ying context
contribut es theoretica l knowledg e about power in the process of market evolution . The
game-pla yer is akin to Schumpe ter' s entrepren eur, but innovates for the specific purpose of
transform ing the normativ e basis of market structures (see Chapter 7). Schumpe ter (1934)
neglected to tease out the entrepren eur's sociologi cal significan ce as a social actor
interactin g with social structures in such a way as to annihilate existing market structures
and institutions. Beyond the level of individua l psycholo gy with which Braithwa ite deals,

- 37 -
 there are two levels of game -play ing that are of signi fican ce in the proc ess of caus ing large-
scale change throu gh markets. Thes e are the level s of agen cy (prim arily collective agen cy)
and structure (transnational structure) and are discu ssed in tum below . Thro ugh this
elaboration a conc eptua l mod el of empo werm ent is deve loped to illust rate and expla in how
game-playing operates at these levels (see Diag ram 1.1 ).

'Defian ce Groups': Social Connections for Collective Agen cy

Game-players are cogn izant of the inter secti on betw een colle ctive agen cy and structure,
whereby colle ctive actio n spaw ns new struc tural patte rns. Inde ed, defia nce is
acknowledged to be more susta ined and threa tenin g to socia l orde r when it is supp orted by
others and is socia lly orga nised (Tajfel, 1978). Gam e-pla yers have a worl dvie w that sees
the potential for powe r as resid ing in 'soci al conn ectio ns' betw een other wise disco nnec ted
social actors.

The term 'soci al conn ectio ns' is one coine d by Iris Mari on Youn g (200 4) who sugg ests that
social actors can enga ge in the proc ess of socia l chan ge in diffe rent ways and at diffe rent
levels of the socia l struc ture. Whil e agen cy and struc ture are tradi tiona lly view ed with in
the conte xt of natio nal boun darie s, You ng's (200 4) recen t re-co ncep tuali satio n of the two
within transnational struc tures offers a parti cular ly usefu l fram ewor k for the purp oses of
this thesis. Youn g addre sses the prob lem of how trans natio nal struc tural injus tice is
produced with in globa l cons umpt ion, trade and prod uctio n proc esses . For Youn g, the
normative conc ern abou t struc tural injus tice is not to do with the fact that socia l struc tures
constrain actors (since struc tures both cons train and enab le) but rathe r 'the way they
constrain and enable, and the cons eque nces these have for indiv idual s' oppo rtuni ties'.
Considering how these cons train ts may be mitig ated, Youn g (200 4) argu es that:
Mos t of us contr ibute to a great er or lesse r degr ee to the prod uctio n and
repro ducti on of struc tural injus tice preci sely beca use we follo w the acce pted norm s
and expe cted rules and conv entio ns of the comm uniti es and instit ution s in whic h we
act.

Youn g's desc riptio n of the relat ionsh ip betw een agen cy and struc ture on a trans natio nal
level unde rpins the 'soci al conn ectio ns' mod el she deve lops to cons ider how indiv idual and
collective respo nsibi lity and agen cy can be effec tivel y harn essed to tackl e trans natio nal

- 38 -
 31
structural injustice . Young suggests that structural injustice persists because of what
amounts to 'invisible pow er' (see above): the absence of questioning and challenging the
status quo. Bra ithw aite 's 'de fian ce' framework becomes important here given Yo ung 's
suggestion that structural inequity is maintained because there is an absence of defiance
('w e follow accepted norms and expected rules and conventions'). Fro m Yo ung 's
perspective, because all individuals participate 'in the diverse institutional processes that
produce structural injustice' (many of which 'ex ten d bey ond nation-state boundaries to
include globally dispersed per son s'), all hav e a responsibility to recorrect processes of
32
structural injustice . Notwithstanding individual responsibility for the creation and
perpetuation of transnational structural injustices, Young (2004) argues that our different
social positions denote different capacities to influence change processes; not . everyone
shares equal responsibility for the injustice bei ng caused. As Yo ung (2004: 32)
emphasises, responsibility in this context mu st be discharged through collective action:
... millions of agents contribute by our actions in particular institutional contexts to
the processes that produce unjust outcomes ... responsibility consists of changing the
institutions and processes so that their outcomes will be less unjust. No ne of us can
do this on our own . .. The structural processes can be altered only if ma ny actors in
diverse social positions wo rk together to intervene in the m to produce different
33
outcomes .

31
A social connections model counters a liability model ofre spo nsib ility . A liability model of responsibility
draws on legal reasoning to apportion guilt or fault for harms done. Particular agents (whether individual or a
collective entity such as a corporation) are assigned responsibility because their actions can be proved to be
causally connected to the circumstances/harms for which responsibility is sought. Within the context of
global structures such as the global apparel industry, millions of actors are directly and indirectly involved in
the production and reproduction of these injustices, and those who benefit most may be only indirectly
engaged in the processes of injustice. This is a limitation to the liability model, which assumes a relatively
direct link between perpetrator and victim.
32
Young (2004) distinguishes different social actors/ groups in their responsibility in terms of varied levels of
power/influence, privilege, interest and collective ability. In relation to power, You ng (2004: 3 8) notes that
different social positions typically infer 'different degrees of potential or actual pow er or influence over the
processes that produces the outcomes'. Given the interests invested in maintaining the status quo, Young
envisages external pressure being required to influence change. This relates to privilege in the sense that
where structural injustices exist, 'these usually produce not only victims of injustice, but persons who acquire
relative privileges by virtue of the structures' (Young, 2004: 39). This point likewise draws in the third
element, the difference in interests between individuals and organisations in the continuation or the
transformation of structures producing unjust outcomes. Finally, at points where interests, pow er and
influence do coalesce, Young (2004) perceives that it is potentially easier to influence social change
processes. Given these factors, Young (2004) does not assume in a social connections model that there will
not be struggle or conflict of interest, merely that a social connections model conceptualises the complexity of
responsibility in the production and reproduction of structural injustices and the means by which action at all
levels may be taken to change them.
33
Conceptualising socially-structured actors as possessing different capacities to influence change processe s,
Young (2004) therefore envisages 'different kinds of issues and directions for action by various agents' within
structural processes and relations. A Bourdieuian conceptualisation of ' fields ' (social, political, economic,
- 39 -
 While Yo ung 's inte rest is in con cep tua lisi ng 'res pon sib ilit y' for the pro duc tion and
rectification of stru ctu ral inju stic e across bor der s, this the sis elab ora tes on the 'soc ial
connections' mo del to con cep tua lise how gam e-p lay ing ope rate s in a com ple x net wo rke d
world at the level of col lect ive age ncy and tran sna tion al structure. Do es def ian ce -
specifically gam e-p lay ing (ent rep ren eur shi p in nor ms) - ena ble (tra nsn atio nal ) stru ctu ral
change if, imp lici t in Yo ung 's acc oun t, cha nge is pre ven ted bec aus e of its abs enc e? In
order to exp lore this ide a further, it is nec ess ary to elab ora te on Bra ithw aite 's (fo rthc om ing )
conceptual cat ego ry of gam e-p lay ing at the col lect ive and tran sna tion al level.

Yo ung 's 'soc ial con nec tion s' mo del is a use ful star ting poi nt for con cep tua lisi ng how
game-players nav iga te and har nes s pow er stra teg ica lly in com ple x sys tem s to cau se effects.
34
Mo dem gov em anc e inv olv es far mo re tha n the exi sten ce of a sov ere ign stat e (see Ros e &
Miller, 1992; Scott, 200 4; Sla ugh ter, 1997; Rho des , 1997). Rat her , gov ern anc e refe rs to a
phenomenon tha t is dee ply com ple x and net wo rke d in the pro duc tion of out com es, mu ch
more so tha n reg ula tory and soc io-l ega l the orie s acc om mo dat e (Bu rris et al., 200 5;
Castells, 1996, 200 0; see for exa mp le Hay ek, 1960)3 5
. In this con tex t of mu ltip le actors,
levels and me cha nis ms, con cep tua lisi ng how pow er is com ma nde d, dist ribu ted , con stit ute d
and pro duc ed bec om es far mo re cha llen gin g an exercise. Bur ris et al. (2005: 32)
eloquently des crib e this dile mm a in term s of con tem por ary sch ola rs wan ting to 'cli ng to the
old [theoretical] mo del s, wo rkin g eve r har der to fit the phe nom ena we obs erv e into the
forms of the pas t'.

Yo ung 's soc ial con nec tion s mo del refl ects this sea rch for mo re em piri cal ly acc ura te too ls
for exp lain ing the mic ro- pro ces ses of how ord er and out com es are pro duc ed in mo dem
society. He r mo del con cep tua lise s stru ctu ral pro ces ses and pro ces ses of cha nge in this stat e

cultural) is a useful way of thinking about the different spatial locations in whi ch chan ge proc esse s may be
enacted or pow er exer cise d by actors of different social position. Indeed, realising mut uall y beneficial global
structural processes and outc ome s betw een citizens, prod ucer s and con sum ers dispersed transnationally is
particularly relevant whe re nation-states may inhibit individual and collective purs uit of change, or may be
ineffective, inadequate or not the only channels by whi ch such goals may be achieved.
34
Governance is taken here to mea n the influence on and man age men t of the ' flow of eve nts' (see Burris et
al., 2005 ; Park er & Bra ithw aite , 2003; Wo od & She arin g, 2007: 6).
35
Analysing the mar ket as a basis for und erst and ing how orde r is prod uce d out of the tacit and diffuse
knowledge and dispersed action of man y mar ket agents, Hay ek (1960) argu ed that cent rally -pla nne d, top-
down control of markets was highly undesirable. In his view , this type of gov erna nce frustrated and
interfered with the mar ket' s own capacity to prod uce 'spo ntan eou s orde r' .
- 40 -
 of com ple xity and dyn am ism and is for this rea son a use ful fram ewo rk for con sid erin g how
gam e-p lay ing affects ma rke ts in stru ctu rall y-s ign ific ant terms. Mo re tha n this, the
con cep tua l mo del dep icte d bel ow in Dia gra m 1.1 is an ind uct ive ly-b ase d con cep tua l mo del
of how gam e-p lay ing ope rate s at the col lec tive and tran sna tion al level; the soc ial
con nec tion s mo del is the gam e-p lay er's par adi gm (see Cha pte rs 5-8).

At the level of col lect ive age ncy , this mo del exp lica tes gam e-p lay ers ' wo rldv iew of pow er
as dist inc tly Lat our ian , inte rpr etin g pow er as an out com e of col lec tive act ion (or in
Yo ung 's term ino log y, as an out com e pro duc ed by 'soc ial con nec tion s' bet wee n gro up
me mb ers) . Gam e-p lay ers ma ke new soc ial con nec tion s obt ain abl e for soc ial actors and
gro ups thro ugh inn ova tion . Inn ova tion des tab ilis es org ani sati ona l and kno wle dge
hie rarc hie s (see Ach rol & Ko tler , 1999; Sch um pet er, 193 4) and gam e-p lay ers exp loit the
opp ortu niti es affo rde d by net wo rks to exp and new mo del s of soc ial and eco nom ic
org ani sati on (see Dia gra m 1.1) (se e Cha pte rs 5, 7 and 8)3 6
. Gam e-p lay ers ' inn ova tion s
ma ke new soc ial con nec tion pos sib le. Bas ed on Lat our ' s ins igh t tha t pow er is the pro duc t
of col lect ive acti on/ sup por t, inn ova tive mo del s can gen era te pow er (in term s of free dom
and new cap acit ies for acto rs) if suf fici ent num ber s of peo ple link up wit h or 'bu y into ' the
model.

By inn ova ting in new mo del s of org ani sati on tha t bui ld new brid ges bet we en soc ial actors
and foster new col lect ivit ies of action, gro up me mb ers tap the ir col lec tive kno wle dge and
capacities as wel l as gai n new cap abi litie s. In the con cep tua l mo del bel ow , the se gro ups of
ind ivid ual s are refe rred to as 'de fian ce gro ups '. Def ian ce gro ups pro duc e pow er thro ugh
col lect ive act ion (see Dia gra m 1. 1; Cha pte rs 5, 7 and 8). Fro m a Hay eki an (19 60)
per spe ctiv e, suc h gro ups con trib ute infl uen ce or val ue by wa y of con cen trat ing the diff use d
kno wle dge and cap aci ty res idin g in ma ny dec ent rali sed sites of acti vity and dec isio n-
ma kin g. Wh en coo rdin ate d and facilitated, this con cen trat ion of con tex tua l res our ces and
'wi sdo m' (Br aith wai te, 2004: 308 ) is ena blin g and enh anc ing .

36
Numerous authors, Castells (1996, 2000) in particular, have observed the global networking of information
which emphasises the value of diffused and decentralised nature of knowledge , capacities and resources, and
its own system of order, over that of the managerial competence attributed to yesteryear central planning of
contextual complexity (see Braithwaite, 2004: 305-9; Rhodes, 1997; Slaughter, 1997). In a world of
networked governance, strong business models and nations are those that take advantage of networked
arrangements of governance and organisation .
- 41 -
 The notion that mobilising localised knowledge and capacities is of ben efit to the entire
network is analogous to Put nam 's (2000) idea of social capital as a valuable resource
37
generated by and accessible to networked individuals . For Shearing and Wo od (2003)
and Burris et al. (2005), these localised sources of knowledge are 'no des ' along networks
that both conceptually and practically are more important than networks themselves for
explaining the augmentation of diffused knowledge and resources and how outcomes are
thereby effected. The mo del developed here adds to these ideas an und ers tan din g of the
entrepreneurial actors (game-players) who deploy net wo rke d governance arrangements
strategically as a means of pro duc ing pow er to cause effects. In short, coordinated group
action becomes a source or powerhouse of new capacities and strengths from wh ich
members benefit. This reciprocal nature of the pow er generated by gam e-p lay ing bec om es
important at the structural level (see below). Indeed, this mo de of organisation can liberate
new knowledge systems (see Chapter 8) wh ich in tum can challenge dom ina nt discourses
(see Gaventa, 1993; Chapter 8).

Interconnected Def ian ce Groups: new circuits ofpow er for transnational stru ctu ral cha nge
These multiple social connections bet wee n disparate defiance groups, the pow er from
whose action coalesces at the transnational level, manifests in the form of new 'cir cui ts' of
power from wh ich new pow er flows forth (see Dia gra m 1. 1). There is nothing inh ere ntly
powerful about the circuit (the innovation that makes the connections possible). Lat our
(1986) and Han nah Are ndt (1958) have conceptualised these me cha nic s of pow er
generation - the extent to wh ich pow er can be exercised for some pur pos e is directly
proportional to the num ber of actors enrolled into the composition (Latour, 1986).

For the purposes of the social connections mo del elaborated here, new pow er is pro duc ed
only if ma ny peo ple hoo k up - and continue to hoo k up - to form and exp and new
circuitries of power. In order for defiance groups to bring about the possibility of social
change at the structural level, game-players - and those groups their innovations enrol -
have to activate these connections bet wee n people that are ma de possible by the ir
innovation. Otherwise, the model itse lf is ineffectual for activating new pow er flows. This

37
Social capital describes 'the collective value of all social networks and the inclinations that arise from these
networks to do things for each other' (Putnam, 2000).
- 42 -
 poi nt is important: the se 'cir cui ts' do not pre sup pos e pow er but the circuits do pre sup pos e
peo ple plu ggi ng into them; 'plu ggi ng in' to con nec t and act con cer ted ly wit h others
generates power. Thi s essential pro ces s of gro ups mim ick ing or 'mo del ling ' (Br aith wai te,
1994) others by 'plu ggi ng in' to (supporting) the mo del is a rec ogn ised stra teg y by wh ich
mic ro- act ion causes ma cro cha nge (see also Bra ithw aite & Dra hos , 2000; Bra ithw aite ,
2004). 'Po we r' does not pre ced e or cau se ma cro -dif fus ion (Latour, 1986). In this way ,
coo rdin atin g and con cen trat ing ma ny collectivities (def ian ce groups) tog eth er thro ugh
enr olm ent in sup por ting the mo del is tan tam oun t to cha nne llin g dis per sed poc ket s of pow er
to ma teri alis e new circuitries of pow er at the tran sna tion al levei3 8
.

The social con nec tion s con cep t ada pte d her e sho ws how gam e-p lay ers initiate stru ctu ral
cha nge pro ces ses . By cre atin g alte rna tive soc ial mo del s and pra ctic es, gam e-p lay ers ena ble
new rela tion ship con figu rati ons for mu ltip le actors to par tici pat e in and exp and for soc ial
cha nge (see Dia gra m 1. 1). Lin ked together, dis per sed def ian ce groups (gr oup s loc ate d in
ma ny geo gra phi c spa ces ) form a new circ uitr y of pow er at the transnational lev el to create
new structural pro ces ses , wh ich I refe r to as 'int erc onn ect ed def ian ce gro ups '.

Thi s structural or ma cro dim ens ion to the infl uen ce and ope rati on of gam e-p lay ing em erg es
wh en gam e-p lay ers eng age a multiplicity of groups to par tici pat e in sup por ting new
tran sna tion al relations. Thr oug h the ir inn ova tive mo del s, gam e-p lay ers ena ble new social
com1ections. Gra nov ette r's (1973) the ory of 'the stre ngt h of we ak ties ' is a use ful
con cep tua lisa tion for how the ope rati on of gam e-p lay ing at the col lec tive and tran sna tion al
level has a dou ble effect: it mo bili ses capacities and kno wle dge and har nes ses the m at the
tran sna tion al lev el to pro duc e out com es and new pow er flows, wh ich , in tum , ben efit the
my riad of gro ups tha t col lec tive ly pro duc e it. 'W eak ties ' link tog eth er wid ely disp erse d,
het ero gen ous gro ups (ge ogr aph ica lly or culturally). Lin ked at the ma cro lev el by game-
pla yer s' mo del s, the y co- pro duc e the se tran sna tion al circuitries of pow er as a res ult of the
mo bili sati on and val ida tion of the ir group res our ces and cap aci ty (see Cha pte rs 5 and 8).
Fro m a Put nam ian (2000) per spe ctiv e, het ero gen eou s typ es of con nec tion s pos ses s

38
From a Hayekian (1960) perspective, this transnational level circuitry of pow er (interconnected defiance
groups) is the ordering prod uce d by coordination of the diffused knowledge and capacity located at and
generated by the collection action level (defiance groups).
- 43 -
 'bridging social capit al' in the sense that they are cond ucive and open to the sprea d and
39
percolation of ideas and oppo rtuni ties .

In essence, at the level of trans natio nal structure, inter conn ected defiance groups bring
together individuals to parti cipa te in defying structures that make a difference to
collectivities and foste r new structural patterns. Inter conn ected parti cipat ion in an
alternative structure and set of instit ution al proc esses has glob al/tra nsna tiona l effects. The
elaboration of the social conn ectio ns mod el (above) enab les us to conc eptua lise how game -
playing operates at the collective and trans natio nal level and prod uces pow er at both these
levels. Diag ram 1.1 illustrates the conc eptua l mod el of empo werm ent theor ised above.
This theorisation elaborates the conc ept of game -play ing to aid a conc eptua lisati on of how
power operates in this conte xt in orde r to prod uce mark et trans form ation . At the colle ctive
level, individuals and groups come toget her to act and relate in new ways made poss ible by
game-players' innovations. Grou p powe r is the result. Conn ected with dispe rsed others in
new sets of institutions who are enga ged in enac ting the same proc ess of parti cipat ion
(interconnected defia nce groups), a new circu itry of powe r is gene rated by their colle ctive
action, setting in train new struc tural patte rns that gene rate effects on exist ing structures:

39
Putnam' s (2000) notion of social capital has been extrapolated to the level of interconnected communities
(see Nicholls & Opal, 2005: 174). While the social capital construct was developed to explain national level
phenomena, its extrapolation to a broader arena of networked arrangements that transcend national boundaries
is possible, wherein the collective activity and connection betwe en a cmmn unity benefits not only that
c01mnunity but another more distant community ( or set of communities) as well (ibid. , 2005: 174).
- 44 -
 DE FIA NC E

~ ~
Pow er is
-- -- -- -- -
SOC IAL CO NN ECT ION S
~
an - (CO LLE CTI VE LEV EL: DE FIA NC E GR OU PS)
outc orne

NE W CIR CU ITR Y OF POW ER

(TR AN SNA TIO NA L LEV EL: INT ERC ON NE CTE D DE FIA NC E GR OU PS)

Gro ups / indi vidu als plu gge d into new circ uitr y pro duc e pow ers
('po wer with ' , 'pow er to', 'pow er with in ', 'pow er ove r' stru ctur es )
and crea te new stru ctur es

Diagram 1.1: Conceptual Model of Empowerment.

Expanding the bounds of Empowerment: the lens of Defiance

This thesis takes prim ary inte res t in gam e-p lay ing as it ma nife sts def ian ce in a form tha t
brin gs abo ut rad ical cha nge and leads to the cre atio n of new institutions and structures at
the tran sna tion al level. Wh ile not exp lici tly addressed, the issu e of pow er und ers cor es the
above con cep tua lisa tion of the free dom and pow er in gam e-p lay ing , and the gam e-p lay er's
structural significance. Sch um pet er (19 34) did not off er an exp lan atio n of the
ent rep ren eur 's cap aci ty to exe rcis e cog niti ve and beh avi our al free dom in soc io-p olit ica l
terms. The thesis add ress es this deficiency. A def ian ce fram ewo rk offers the opp ortu nity
for ins igh t into the pot ent ial for age ncy as wel l as the beh avi our al strategies tha t sup por t its
realisation. The con cep tua l sch em e of gam e-p lay ing at collective and tran sna tion al levels
above aims to esta blis h the bui ldin g blo cks for a the ory of how pow er ope rate s in ma rke ts
in ways and forms tha t brin g abo ut cha nge (see Cha pte rs 5-8). The ind uct ive app roa ch to
the ory bui ldin g I ado pt thro ugh out the dat a chapters con trib ute s the ele me nts for a
gro und ed the ory of the pro ces s by wh ich gam e-p lay ing triggers tran sfo rma tion in the
nor ma tive basis of exi stin g ma rke t structures and institutions to ena ble col lect ive and
tran sna tion al em pow erm ent (see Conclusion).

- 45 -
 The thesis seeks to exp lain how def ian ce (sp ecif ical ly gam e-p lay ing ) adds to our
understanding of age ncy and pow er in the pro ces s of soc ial change. It asks why has agency
been able to shi ft structure wh en the reverse is nor ma lly true? The thesis use s the
surprisi ng success of the fair trade mo vem ent to pro be this theoretical puz zle to do with
agency and pow er in the pro ces s of ma rke t evo luti on. Fou r sub -qu esti ons help to stru ctu re
the data chapters and pro vid e the bui ldin g blo cks for ans wer ing this larg er the ore tica l
question:
1. How do social actors cause larg e-s cal e ma rke t out com es? (Ch apt er 5)
2. How does pow er and age ncy operate in the inst itut ion al seq uen ce of static ada pta tion ?
(Chapter 6)
3. How does pow er and age ncy ope rate in the con tex t of ent rep ren eur shi p (of nor ms) ?
(Chapter 7)
4. How does the ent rep ren eur (of nor ms) cha nge the ins titu tion al env iron me nt? (Ch apt er 8)

The thesis aims to contribute a mo re sop his tica ted the ory of pow er usi ng an ind uct ive
approach to analysis. Thi s app roa ch is bas ed on an in-d ept h em piri cal ana lysi s of the fair
trade mo vem ent , for wh ich rea son the cat ego ries of pow er use d in the thesis ('po we r ove r',
'power wit h', 'po we r to' , 'po we r wit hin ', and 'po we r bey ond ') car ry me ani ngs spe cifi c to
this analysis. The following def init ion s of pow er wil l be use d (see Cha pte rs 5-8 and
Conclusion).

'Power Ove r'

'Power ove r' refers to a pro ces s by wh ich a per son , org ani sati on or gro up restricts the
options, abilities and capacities of others thro ugh cer tain me cha nis ms. The se var iou s
mechanisms inc lud e 'po we r ove r' in its vis ible , hid den or inv isib le forms. 'Po we r ove r' is
exercised thro ugh con trol , ma nip ula tion , exc lus ion or inv alid atio n of others , wh eth er via
knowledge pro duc tion , info rma tion , scale, or leg al ow ner ship . 'Po we r ove r' is act iva ted
when actors or org ani sati ons exp loit the ins trum ent s of 'po we r ove r' to pro tec t the ir
influence and control ove r out com es and thus pre ser ve the sta tus quo. The se me cha nis ms
deny or sub ver t the inc lus ion of we ake r actors and sha ring of reso urc es of pow er - the
political processes of dec isio n-m aki ng and res our ce- ow ner shi p - wit h them.

- 46 -
 'Power wit h'
'Po we r wit h' refers to a pro ces s by wh ich ind ivid ual peo ple , org ani sati ons and groups
together create cap aci ty in ord er to brin g abo ut cer tain obj ecti ves and pro ces ses wh ich are
collectively sha red and beneficial. Thi s is a gro up- cen tred and pro ces s-o rien ted concept.
'Po we r wit h' is gen era ted by inte rco nne cte d soc ial uni ts (families, wo rkp lac es, schools,
businesses, universities, com mu niti es) , con nec tion s wh ich are esta blis hed on the bas is of
tools imb ued with, or cre ated for the pur pos e of nur turi ng and exp and ing , a sup por ted
philosophy. The se tools inc lud e web site s, trad e ma rks , bus ine sse s, ma rke ts, local activities,
events or practices. 'Po we r wit h' is swi tch ed on wh en ind ivid ual s, gro ups and/or
org ani sati on eng age in hab itua l sup por t of these too ls (see 'po we r to') .

'Power to'
'Po we r to' refers to the per for ma nce of an act ion or actions thro ugh wh ich ind ivid ual s,
groups and /or org ani sati ons gain new capacities, skills and abilities to cau se effects. It is a
con cep t of an infinite nature, and occ urs at ind ivid ual , col lec tive and inte rco nne cte d levels
of action. The 'po we r to' is act iva ted wh en mo del s are cre ate d by gam e-p lay ers and the n
activated by social net wo rks tha t sup por t the exp ans ion of tho se mo del s. The y are des ign ed
to ben efit diverse groups, affi rmi ng group val ues and bui ldin g group cap aci ties to effe ct
change. Exe rcis ing 'po we r to' is em pow erin g; it is an ave nue for new beh avi our s and way s
of thin kin g tha t lead to cha nge (see 'po we r wit hin ').

'Power wit hin '

'Po we r wit hin ' refers to a uni que psy cho log ica l out loo k and set of beh avi our s em bod ied in
the gam e-p lay er (an ent rep ren eur of norms). 'Po we r wit hin ' is an inte rna l pow er or
strength and an acute critical awa ren ess of dom ina nt soc ial stru ctu res and ins titu tion al
constraints. Wh ilst an ind ivid ual pow er, in this thesis the gam e-p lay er's 'po we r wit hin ' is
exe rcis ed for distinctly collective and pro -so cia l ends. Tha t is, gam e-p lay ers exe rcis e
'po we r wit hin ' (ma nife st in creativity, vision, per sist enc e and det erm ina tion ) to em pow er
tho se wh o are dis adv ant age d by dom ina nt ma rke t pow er structures. 'Po we r wit hin '
involves mo re than the reje ctio n of the aut hor ity of the sta tus quo. In par ticu lar it involv es
exploiting, or inn ova ting in, alte rna tive dis cou rse s tha t unl eas h new rules, nor ms ,

- 47 -
 institutions and stru ctu res and des tab ilis e 'po we r ove r' in its visi ble , hid den and inv isib le

forms.

'Power Bey ond '

'Po wer bey ond ' refers to the col lect ive act of exe rcis ing 'po we r ove r' exi stin g stru ctu res
and institutions. 'Po we r bey ond ' is set in trai n by exe rcis ing 'po we r wit h' and 'po we r to '
on a larg e-sc ale ove r tim e, 'po we r wit h' and 'po we r to' pro duc e a cum ula tive pow er in the
form of new stru ctu ral pat tern s. The 'po we r bey ond ' is the effe ct of creating new
structures and inst itut ion s wh ich no one can cre ate alo ne, and which cannot be cre ate d by
or through existing institutional constraints and interests. 'Po we r bey ond ' is act iva ted by
materialising alte rna tive bus ine sse s, com mu nity/so cial pra ctic es, bra nds , inst itut ion s and
markets tha t are of col lect ive ben efit and service. Ma teri alis atio n of the se out lets of
em pow erm ent occ urs thro ugh exp and ing circ les of enr olm ent (CO E). Thi s con cep t is
infinite in its nat ure and des crib es a cre ativ e and exp erim ent al soc ial pro ces s wit h new
structural pro ces ses , rela tion s and forms of org ani sati on. 'Po we r bey ond ' is dep end ent on
the exe rcis e of 'po we r wit h', 'po we r to' and 'po we r wit hin '. Wi tho ut the m, the exe rcis e of
'po wer bey ond ' or ('po we r ove r' exi stin g stru ctu res and inst itut ion s) is pro trac ted and
jeo par dise d in its rea lisa tion .

Outline and Organisation of the Thesis

Having crit ical ly rev iew ed the lite ratu re on pow er, and offe red a con cep tua l fram ewo rk for
thinking abo ut pow er in the con tex t of def ian ce in Cha pte r 1, in Cha pte r 2 I aim to sho w
and exp lain the bra nd- bas ed nat ure of glo bal bus ine ss in a pos t-in dus tria l eco nom y, and
how 'po we r ove r' has bec om e glo bal pow er thro ugh priv ate ow ner shi p of inte llec tua l
property in wo rld ma rke ts. Set in this con tex t, Cha pte r 3 out line s the em erg enc e and
con tem por ary his tory of the fair trad e mo vem ent in its atte mp t to tran sfo rm wo rld ma rke ts
for the pur pos e of em pow erin g its mo st dis adv ant age d and ma rgin alis ed sub ject s. Cha pte r
4 outlines the me tho dol ogi cal fram ewo rk and me tho d use d for con duc ting the em piri cal
research of the fair trad e mo vem ent . The foll ow ing fou r cha pte rs (Ch apt ers 5-8 ) tell the
story of the fair trad e mo vem ent thro ugh the len s of defiance. An ana lysi s of the gro win g
success of the fair trad e mo vem ent is use d to pro be how soc ial acto rs cau se larg e-s cal e
ma rke t out com es (Ch apt er 5); an inv esti gat ion of the inc rea sin g con sol ida tion of the

- 48 -
Fairtrade certification system examines how power and agency operate in the institutional
sequence of static adaptation (Chapter 6); an analysis of the fair trade mo vem ent 's pioneers
and their radical business models provides answers to how power and agency operate in the
context of game-playing (Chapter 7); and an examination of the current evolution in the fair
trade governance institutions (IF AT and FLO) is used to explain how game-playing
transforms the institutional environment (Chapter 8). Hence, each of the four chapters
presents a cluster of data that all together form the building blocks for the achievement of
the broader aim of the thesis: to explain how agency is victorious over structure, and to
show how a defiance framework enhances our understanding of power and agency in this
process. The Conclusion summarises the findings from these chapters and discusses their
implications for understanding pow er in the context of social change.

- 49 -
 CHAPTER 2: 'Power Ov er' as Global Po we r in World Markets

A key theme in the history of ideas about pow er is 'po we r ove r' (see Cha pte r 1; Lukes,
1974; Clegg 1989). 'Po we r ove r' involves the 'abi lity to get one per son or group to get
another person or group to do something against their wil l' (Lukes, 1974). In a pos t-
industrial economy (Toffler, 1980; Drucker, 1969; Bell, 1978), traditional state-based
'power ove r' (Hobbes, 1991) has bee n replaced by corporate hegemony, and the bra nd (an
image of the trade mark) is the pre -em ine nt source of corporate power. The trade ma rk
itself (an abstract object) embodies a set of legal rights of ownership, rights wh ich have
recently bee n deepened and globalised (Drahos, 2002; Bel lma n et al., 2005). The pur pos e
of this chapter is to show how 'po we r ove r' bec om es global pow er wh en bas ed on the
ownership of abstract objects in world markets (see Drahos, 1996); ownership of abstract
objects is a tool for domination. This argument rests on two key pillars. A psy cho log ica l
theory of the image explains how the image - and therefore the bra nd - wo rks to influence
consumers' subjectivity. Ad ded to this is a the ory of abstract objects and intellectual
property (Drahos, 1996) which explains how the ima ge (the brand) is the subject of
exclusive proprietorial control. Applying these two theoretical planks in the context of the
global coffee market, this chapter offers an empirical illustration of how 'po we r ove r'
works at the global level.

The first section of this Chapter traces the mo dem his tory of the global coffee ma rke t as a
vignette of pow er relations bet wee n producers, manufacturers and consumers in global
commodity markets. The second section considers the birt h of the post-industrial ma rke t
and its brand-based nature. Exa mp les from the coffee ind ust ry illustrate this. An analysis
of the economic, legal and psychological perspectives of trade ma rks then offers an
understanding of how bra nd corporations exercise global pow er in wo rld markets.

A Modern History of the Global Coffee Market

Until 1989, the coffee market was ma nag ed und er the International Coffee Ag ree me nt
(ICA). The ICA was designed to maintain relative ma rke t stability and hig h prices: a stable

- 50 -
 40
price ran ge was set in pla ce , and pro duc er and con sum er nat ion s tog eth er set quotas for
pro duc ing countries to ma inta in stable sup ply levels. Unless the pric e of coffee ros e abo ve
this range, in wh ich case pro duc ing countries wer e per mit ted to inc rea se the ir sup ply levels,
pro duc ing countries kep t wit hin the ir fair sha re of pro duc tion levels (Ox fam , 2002: 17).
Un til its col lap se at the end of the 1980s, the ICA cre ate d fav our abl e con diti ons for
pro duc ing countries in the coffee trad e (Talbot, 1997 a: 71 ). The ICA was in fact an
am ica ble arra nge me nt for the ma jor ma rke t stak eho lde rs involved: it ena ble d pro duc er
countries to org ani se col lec tive ly at the inte rna tion al level and thus sec ure hig her exp ort
inc om es from coffee; it fac ilita ted con sum er cou ntri es' 'som ew hat dis gui sed ' pro vis ion of
eco nom ic assistance to stra teg ic Thi rd Wo rld allies; and it stab ilis ed bot h sup plie s and
prices of cof fee as wel l as ena ble d hea lthy pro fits for mu ltin atio nal cof fee com pan ies .

Ye t in 1989 pol itic al con diti ons cha nge d con sid era bly and the ICA was abolished. It has
bee n wri tten tha t the dem ise of the ICA was sym bol ic of the dem ise of an old era in the
cof fee ma rke t and the birt h of a 'mo dem era ' und erp inn ed by the free ma rke t (Di cum &
Luttinger, 1999: 95). It was no coi nci den ce tha t the ICA dis sol ved sim ulta neo usl y wit h the
collapse of the Sov iet Un ion (W ild, 2005: 3). Wh en the ICA dis ban ded , the Sov iet Un ion
had col lap sed , mu ltin atio nal cor por atio ns (M N Cs )41 had gai ned con trol ove r key ma rke ts,
and laissez-faire eco nom ics was bei ng wid ely em bra ced (Talbot, 1997 a: 71 ). The final
straw for the ICA was the irre con cila ble dis agr eem ent s bet wee n the ICA ' s me mb ers and
pre ssu re from the the n Rea gan adm inis trat ion for trad e libe rali sati on (Fa irtr ade Fou nda tion ,
2002: 7; Ren kem a, 2002: 59-60).

Imm edi ate ly after the col lap se of the ICA , the pric e of cof fee fell to its low est poi nt in
his tory - and wel l bel ow pro duc ers ' cos t of pro duc tion - rem ain ing the re for the foll ow ing
five years. Sig nifi can t pric e vol atil ity in the now der egu late d cof fee ma rke t has onl y
exa cer bat ed pro duc ers ' low returns. For ins tan ce in 1994/5 and 1997, cof fee pric es
inc rea sed sha rply as a res ult of frosts in Bra zil (the wo rld 's larg est cof fee pro duc er),
ser vin g to stim ula te cof fee pro duc tion am ong st farmers wo rldw ide . Thi s inc rea se

40
This price range was between $US1.20 /lb. to $US1.40 /lb.
41
The tenns multinational corporation (MNC) and transnational corporation (TNC) were used in an
interchangeable fashion in the literature and by respondents . Bot h tenn s refer to a corporation that deals in at
least two countries. Hereafter the term MN C will be used in the thesis.
- 51 -
 mushroomed during the 1990s when Viet nam beca me a leadi ng coffee expo rter (seco nd
2
only to Brazil)4 . The mass ive over supp ly created by these conc urren t events devalued the
43
two types of coffee bean available, robu sta and arabica coffee . For instance, in 1999 high
quality coffee selling for $US 1.60/poun d drop ped to only 48 cents by 2002 (Fairtrade
Foundation, 2002: 16), and by 2002, the inter natio nal mark et price for coffee had drop ped
to its lowest levels in three decades. Simultaneously, prod ucin g nations were unde r
pressure to accept Wor ld Bank loan conditions to restructure their econ omie s, and as a
consequence of doin g so, expo sed prev iousl y prote cted coffee prod ucers to international
market fluctuations (Fairtrade Foundation, 2002: 7-8; Oxfa m, 2002: 18).

The cumulative consequences of the all-time low in the price of coffee have been seve re
and long-lasting. Acco rding to one estimate, in the six years betw een 1994 and 2001 coffee
producing countries lost arou nd $US 32 billion. Equa lly revealing, a repo rt estimates that
whereas a decade ago prod ucing countries recei ved $US 10 billio n from a $US 30 billio n
world market, these countries colle ctive ly recei ve less than $US 6 billio n from a mark et
4
now doubled in its value (Oxfam, 2002: 20; see also Renk ema, 2002: 59)4 . This loss is
significant as coffee is prod uced in over 60 countries, empl oyin g more than 20 milli on
farmers and up to 100 milli on worl dwid e in the industry. As one of the most valua ble
primary commodities in global trade (seco nd only to oil), it is a significant sourc e of
45
foreign exchange and a vital comm odity for natio nal econ omie s . This is parti cular ly the
case with coffee - coffee prod uctio n has histo rical ly been more profi table for deve lopin g
countries, and the profits from it bette r redistributed, than other agricultural goods such as
tobacco, sugar, cotton, oranges, cocoa, bana nas and tea.

42
Loans from the government and from the World Bank (1995 and 2000) facilitated the rapid development of
Vietnam's coffee sector (now producing 10 per cent of the world 's coffee).
43
Some have observed that the oversupply of coffee on the world market is the single worst circumstance to
have occun ed. Because the price has drastically depreciated and farmers are receiving less than enough to
cover their production costs, the rational response has been to produ ce even more coffee to make extra
income from higher volumes. Other developments have comp ounde d this, such as technology which makes
produce more resilient to disease and insects (FLO, 2005a).
44
The volatility of the marke t can also be attributed to futures markets and speculative marke t activity in the
world coffee market, wherein close to 90 per cent of trading in coffee comprises 'pape r deals ' betwe en
Northern traders and the remaining 10 per cent is made up of the real c01runodity itself (Fairtrade Foundation,
2002 : 1O; Oxfam 2002).
45
For instance, 80 per cent of Burun di's foreign exchange is derived from coffee, around 50 per cent for
Ethiopia and Ugan da, and significant also for Rwanda, Nicar agua, Honduras and El Salvador. Nor are these
the largest producers of coffee (Fairtrade Foundation, 2002: 6).
- 52 -
 Market Structure and the role of the Modern Corporation: Pow er Over Producers, Profits
and Prices
The se wid er eco nom ic factors aside, the par ticu larl y une qua l trad ing rela tion s tha t
characterise the glo bal cof fee ma rke t hav e exa cer bat ed pro duc ers ' har dsh ip dur ing this
pos t-IC A per iod and had the ir ow n del eter iou s imp act on pro duc ers . Sin ce the 1970s, a
sma ll num ber (3-4) of MN Cs has com e to dom ina te ove r 80 per cen t of glo bal con sum ptio n
(Talbot, 1997b: 119). In 1992, onl y four mu ltin atio nal com pan ies con trol led 70 per cen t of
the global cof fee ma rke t, inc lud ing Sar a Lee Cor por atio n (US A), Pro cto r & Gam ble
(US A), Nes tle (Sw itze rlan d) and Kra ft Foo ds Inc. (US A) (Hu dso n & Hu dso n, 2003: 2).

Inc rea sin g con cen trat ion has bro ugh t abo ut an ext rem e pow er imb ala nce in the rela tion shi p
bet wee n the se com pan ies and sma ll-s cal e pro duc ers . Thi s is typ ica l of 'bu yer -dr ive n'
6
global sup ply cha ins (Gereffi, 1994, 1999)4 , wh ich are cha rac teri sed by a glo bal poo l of
pro duc ers, hei ght ene d com pet itio n bet wee n the m, and stre ngt hen ed bar gai nin g pow er of the
47
rela tive ly few glo bal cor por ate buy ers . Thi s typ e of net wo rk stru ctu re pla ys and has
pla yed a def inin g role in det erm inin g poo rer cou ntri es' dev elo pm ent pro spe cts (Ge reff i,
1994).

Indeed, wh ilst glo bal imp orte rs, roa ster s and reta iler s hav e little inv olv em ent in act ual
pro duc tion , the y hav e an eno rmo us imp act on inte rna tion al cof fee pric es and buy ing
pra ctic es by virt ue of the ir she er size and buy ing pow er (see Gre en, 2005)4 8
. The ir
cap aci ty to drive dow n pro duc tion pric es and kee p the m low was now her e mo re app are nt
tha n in the pos t-IC A con tex t wh ere the sus tain ed cof fee pric e cra sh fail ed to tran slat e into
low er retail cof fee pric es for con sum ers (M oris set, 1997); bet wee n 1975 and 1993 the

46
A com mod ity chai n refe rs to a who le rang e of acti vitie s invo lved in the desi gn, prod ucti on and mar keti ng
of a prod uct (Ge reff i, 1994). Ger effi (199 4, 199 9) defi nes 'buy er-d rive n' sup ply chai ns as inte rnat iona l supp ly
chai ns in whi ch larg e reta ilers , mar kete rs and bran ded man ufac ture rs are cent ral, dom inan t acto rs in
esta blis hing dece ntra lised prod ucti on netw orks in exp orti ng cou ntri es (pri mar ily dev elop ing cou ntrie s).
The se fore ign buy ers dict ate prod uct spec ifica tion s to a glob al netw ork of con trac tors /pro duc ers. Buy er-
driv en chai ns typi fy labo ur-i nten sive indu strie s such as garm ents , agri cult ure, toys and foot wea r. This pow er
stru ctur e con tras ts 'pro duc er-d rive n' chai ns whi ch are coo rdin ated by larg e tran snat iona l man ufac ture rs and
pred omi nate in capi tal- and tech nolo gy- inte nsiv e indu strie s such as the auto mob ile and airli ne indu strie s.
47
In the case of glob al supp ly chai ns in the coff ee mar ket, eve n indu stria l coff ee prod ucer s, typi call y the allie s
of MN Cs for mee ting mas s-vo lum e dem and , hav e face d fierc e com peti tion with each othe r on pric e (Dic um
& Lutt inge r, 1999).
48
The se are char acte risti c way s in whi ch larg e mul tina tion al corp orat ions are able to esta blis h mon opo ly
stre ngth in the glob al mar ketp lace (He ydo n, 1978).
- 53 -
 world market price for coffee dropped by 18 per cent but the consumer price increased by
240 per cent (ibid., 1997). These figures clearly demonstrate the disadvantage that the
development of buyer-driven supply chains has caused for developing countries involved in
the coffee industry. Coffee farmers received roughly $US 12 billion in export income from
coffee at the end of the 1980s, yet by 2003, despite increasing their export volumes,
received only $US5.5 billion (UNDP, 2005: 140). During this time, retail coffee sales
mushroomed from $US30 billion to $US80 billion (ibid.: 140).

As these figures suggest, most of the value generated by world coffee sales is captured by
market actors outside the producing country who control retailing and brand marketing
(Oxfam, 2004: 34). Between 1998 and 2000 for instance, a jar of instant coffee at UK2.60
pounds brought only 18 pence in income back to farmers, and UKl .75 pounds for a cafe
cappuccino offered farmers around 5 pence. 'Valu e' distribution places producers at even
greater disadvantage in global supply chains (V orley, 2003: 4 7) because of their lack of
ownership of the 'high -prof it' steps in the chain (Oxfam, 2004: 34)4 9
. While the structure
of the coffee market value chain can vary significantly in terms of the financial return and
conditions for producers, it is typically characterised by many steps of value-adding - as
many as 150 (Slob in F.I.N.E., 2006: 128). This includes not only growing the coffee
beans, but also picking, processing, sorting, grading, exporting, shipping, distribution,
roasting, redistribution, transportation, packaging, brewing and drinking (see diagram
below). Diagram 2.1 shows the multiplicity of routes and relationships that a grow er's
coffee beans can follow to reach a consumer's coffee cup.

49
Furth ermor e, gover nmen t tariffs protec ting proce ssing indus tries in wealt hy count ries create strong
disincentives and banie rs to devel oping count ry produ cers to expor ting proce ssed goods (Oste rhaus in
F.I.N.E., 2006 : 45).
- 54 -
 Dri nke r

Retail Outlet Restaurant/ Cafe

n
0
::::s
Distributor (/J
~
ss·
CfQ

Ro ast er z
p)
..--t-
5·
::::s

Pri vat e Ex por ter

""'O
""i
0
~
0
Int erm edi ary s·
CfQ
Co op/ Tra der /Ag ent
z
p)
..--t-
5·
::::s

Mi ll
Gr ow er Gr ow er
Dia gra m 2.1: Coffee Dis trib uti on Sy ste m (ad apt ed from Dic um & Luttinger, 1999: 107).

At each step in this co mp lex ch ain , va lue is added. It is the co ns um er wh o ins ert s the va lue
at the po int of pu rch ase . Mu lti ple steps ca n oc cu r at the on e po int , su ch as Ne stl e bu yin g,
roasting, grinding, bre wi ng , fre ez e-d ryi ng an d pa ck ag ing the co ffe e (D icu m & Lu ttin ge r,
1999: 110). Th e va lue , rea lis ed thr ou gh the co ns um er pu rch ase , is all oc ate d am on g the
dif fer en t po int s ac co rdi ng to wh at tha t po int adds to the fin ish ed pro du ct. Ea ch po int
jos tle s wi th others in the att em pt to sec ure a gre ate r sh are of the va lue -ad din g tha t oc cu rs
thr ou gh ou t the chain. Th e mo re po int s in a ch ain , the less ea ch po int rec eiv es. Fo r this
reason, inc rea sin g pro po rti on s of the va lue ch ain ha ve be en ap pro pri ate d by tra ns na tio na l
coffee roa ste rs/ bra nd s su ch as Ne stl e an d Sa ra Le e (Talbot, 19 97 b ), a de ve lop me nt
ind ep en de nt of the po st- IC A pri ce cra sh wh ich ha s ca us ed a gra du al de cli ne in inc om e
earnings for de ve lop ing co un tri es (D icu m & Lu ttin ge r, 1999: 112). 'A s the co ffe e
pro du ce rs att em pte d to ga in co ntr ol of the pro ce ssi ng sta ge s of the ch ain wi th hig he r va lue
ad de d', ob ser ve s Ta lbo t (1997b: 124), 'th e tra ns na tio na l co rpo rat ion s att em pte d to low er

- 55 -
production costs by locating plants closer to the sources of their raw materials ' . Diagram
2.2 shows the concentration of value in branding, distribution and retail.

Farm Lab our 8c

Retail Store 11 c
Paid to Gro wer Sc
Val ue add ed
in produ cing coun try 3c

Tran spor t 6c

Val ue Add ed
in cons umin g coun try
(incl udes roasting, grindin g,
pack aging , trucking) 67 C

Diagram 2.2: Dist ribu tion of a doll ar spen t on roas ted grou nd coffee in the US supe rma rket duri ng the 1990s
(adapted from Dic um & Lutt inge r, 1999: 109).

As Diagram 2.2 shows, retail, distribution and branding are all 'hig h-p rof it' steps of the
global supply chain from which producers are excluded. It is difficult to ascertain the exact
profit margins each of the global coffee roasters makes since they are all conglomerates
(i.e. these companies own other brands in the same and other beverage and food sectors).
Nonetheless, Talbot (1997a) has estimated that the share of the total retail price that goes to
these companies is around 25 per cent, a significant profit telling of the extreme economic
inequality in the coffee chain. Other estimates suggest that the profits accrued by MN Cs in
the coffee industry have surpassed all other food and beverage brands. Examples include
Nestle's estimated 30 per cent profit margin and Sara Lee 's 17 per cent margin ma de from
coffee during this time versus the profit margins of other beverage companies , such as
Heineken 's 12 per cent profit margin , Da nno n's dairy and yoghurts 11 per cent profit
margin, or even Sara Lee 's own meats bra nd at 10 per cent profit and breads at 5.5 per cent

- 56 -
 (Oxf am, 2002: 26)5°. Thes e profi t marg in diffe rence s betw een the comp anies - and
betw een a comp any's vario us prod ucts - are show n in Tabl e 2.1.

30

17

12 □ Sara Lee (breads)

■ Sara Lee (meats)
11
□ Dannon (yoghurt & milk)
10 □ Heineken (beer)
■ Sara Lee (coffee)
5.5
□ Nestle (coffee)

0%

Table 2.1: Differences in profit margin among beverage brand companies .

By contr ast with the high ly conc entra ted, high -prof it steps of roast ing and distr ibuti on are
51
the milli ons of smal l-sca le coffe e prod ucers who prod uce 50 per cent of the worl d 's
coffe e supply. The profi t that coffe e prod ucers make varie s acco rding to diffe rent
prod uctio n costs betw een coun tries and other factors inclu ding inter est rates , labou r and
land price s (Di cum & Lutti nger, 1999: 106), as well as the quali ty and thus value of the
bean (i.e. arabi ca or robu sta) (Slob in F.I.N .E., 2006: 131). Thes e varia bles aside, the pie
chart show n earli er illust rated the syste mati cally low value alloc ated to prod ucers , in
keep ing with the owne rship of value in buye r-dri ven supp ly chains. This owne rship
struc ture clear ly does not work in the best finan cial inter ests of prod ucers .

More over, other than value -retu rn, num erou s obsta cles affec t farm ers at their end of the
supp ly chain in the glob al coffe e mark et, not only in acce ssing the mark et, but in seek ing to
make a stabl e livin g from doin g so. A prim ary hurd le is farm ers' socia l isola tion,
acce ntuat ed by poor local infra struc ture and socia l servi ces such as trans port and

50
These figures are close estimates, as it is difficult to extract the figures for sales and profits made by each
particular drink under the one brand company (Oxfam, 2002).
51
Those with less than five hectares of land.
- 57 -
 52
communications . This isolates farmers from im po rta nt inf orm ati on on current ma rke t
prices, trends and quality demands. Ha vin g little kn ow led ge of ma rke t prices, little access
to transport to reach sel ler s' ma rke ts and few me an s to access pro ce ssi ng eq uip me nt pri or
to market sales (where va lue -ad din g to co ffe e be an s occurs), far me rs' ba rga ini ng po sit ion is
weak.

Intermediaries (referred to as coyotes) are oft en the on ly actors in a co ffe e far me r's local
area, either ha vin g the resources to tra ns po rt crops to pro ce ssi ng plants, or ex erc isi ng
control of local loa n and financial services an d access (H ud so n & Hu ds on , 2003). This
gives coyotes enormous po we r an d ad va nta ge ov er pro du ce rs at the loc al level wh o req uir e
financial support and ma rke t access. Fa rm ers ' de sp era tio n for mo ne y im me dia tel y
following harvests (w he n the prices drop thr ou gh ple nti ful ma rke t supplies) forces the m to
accept the low prices offered by loc al traders, irrespective of the qu ali ty of the ir bean.
Disadvantaged producers find it ex tre me ly dif fic ult to pro du ce qu ali ty be an s be ca us e of the
expense involved in doing so, and be ca us e the y lac k the tec hn ica l kn ow -ho w req uir ed
(Oxfam, 2002; Fairtrade Foundation, 2002).

While existing wi sd om suggests that str ug gli ng coffee pro du ce rs sh ou ld div ers ify into oth er
production activities so as to les sen their de pe nd en cy on coffee, su ch 'w isd om ' has be en
unrealistic for sm all -ho lde r pro du ce rs for tw o pri ma ry reasons. First, loc al ec on om ic
activity has stagnated due to the lac k of inc om e in co ffe e-g row ing regions, ma kin g it ha rd
for farmers to sell the ir pro du ce to loc al markets. Secondly, alternative agricultural
commodities such as cotton and su ga r are oft en he av ily su bs idi sed in global co mm od ity
markets, causing an ov erp rod uc tio n of ch ea ply pri ce d co mm od iti es to flood bo th
international and local markets and un de rcu t sm all -pr od uc ers ' pri ce s (see Osterhaus in
3
F.I.N.E., 2006: 30, 37-8)5 .

52
Limited government public expenditure, encouraged by international institutions such as the Wo rld Ba nk,
has been a primary cause of this.
53
According to an Ox fam report , in 2000 the US gov ern me nt's subsidisation of its agricultural industries
totaled $US245 billion, and the impo1i tariffs which we alth y countries suc h as the US and EU impose on
poorer countiies to protect their own agricultural industries costs developing nations roughly $US43 billion a
year (Oxfam, 2002: 37).
- 58 -
 The social and cultural impacts of these structural economic relations have been
deleterious, with long-term, intergenerational impact on families and communities.
Farmers' inability to repay loans and to pay high rates of interest make their economic
situation even more precarious, forcing them to sell their assets or land (if they actually
own it) in order to feed their families. Ma ny farmers and their families have ultimately
been forced off their land through the loss in income and uncertainty of their economic
future (Oxfam, 2002). Without sustainable incomes and financial security, farmers have
been unable to feed their families, or gain access to (or afford) health care services and
54
essential drugs . Unable to pay for school fees, children are often taken out of, or sent
away from, school. No r can families buy clothing or pay for basic necessities. Poverty,
hunger and malnutrition have reached severe levels in coffee-growing regions 55
.

With growing economic desperation, crime and theft have increased, and some farmers
have turned to dangerous yet lucrative commodity trades such as coca 56
which has
contributed to the incidence of violence, assault, suicide, guerilla activity and rape in local
areas (Oxfam, 2002: 12; Fairtrade Foundation, 2002: 15). Others have resorted to selling
their furniture, taking on extra employment where available, and sending children to live
with extended family members. Wo me n are mo st exposed to the problems created by
social unrest and economic disaster. They go without medical treatment to prioritise
children's medical expenses, often work in the field with children while their husband
works in other regions, and are responsible for caring for sick children and possibly elderly
family members (Oxfam, 2002).

This dire situation in the coffee industry is equally harsh, if not worse, for seasonal
workers, who are vulnerable to unstable and exploitative working conditions and contracts.
They are prevented from collective bargaining, their labour rights are typically
unrecognised (with or without official national labour laws), and they often inhabit
boarding-houses in slum-like conditions. Again, wo me n are mo st exploited in these

54
Essential drugs are critical in these underdeveloped regions suffering from outbreaks of HIV/AIDS and
malaria .
55
The rate of UN emergency programs has increased throughout Central America and other regions affected
by these wider economic conditions (Fai1irade Foundation, 2002).
56
Coca is the colloquial term given to the shrub erythroxylon coca. Chewing the dried leaves of this shrub
has a stimulating effect. The plant is also a source of cocaine and some alkaloids that are extracted and sold.
- 59 -
 economic circumstances; typically pai d less than me n for identical forms of labour, victims
of sexual harassment, and facing em plo ym ent discrimination if pregnant. Wo rke rs'
contracts are often non-existent, and their wages, overtime pay and social security
payments are often precarious or non-existent (Oxfam, 2004).

Through the illustration of the historical development of the mo dem global coffee ma rke t
and its structure we see how, in addition to laissez-faire political ma nag em ent , global
buyer-driven supply chains cause pernicious effects on the livelihoods of small-scale
commodity producers in developing countries (see Robbins, 2003; Bar ratt Brown, 1993;
Ransom, 2002). On the one hand, this example reflects the con tem por ary global
commodity crisis in the steep decline in wo rld prices ove r the last several decades for those
agricultural commodities upo n wh ich developing country economies desperately dep end
7
(UNDP, 2005: 118)5 . On the other hand, and in tandem, it exhibits bra nd ma nuf act ure rs'
increasing profitability and ma rke t pow er through their ownership of the value in the
commodity-chain: the brand. These trends are demonstrable in other com mo dity markets
such as cocoa. Since 2003, cocoa producers wo rldw ide have seen the wo rld ma rke t price
for their beans fall by 50 per cent despite an increasingly valuable con sum er ma rke t wh ich
58
topped 3 million tonnes in the same yea r . Acc ord ing to a recent article in The Economist
(April 4, 2007), global chocolate sales 'am oun t to some $75 billion a year, [yet] growers
capture only a tiny fraction of this amount: around $4 billion a yea r from the sale of coc oa
beans'. In rec ent years the US and UK chocolate markets have bee n val ued at roughly
$US13 billion and UK3.9 bill ion pounds per yea r respectively (Global Exchange, 2005;
Divine Chocolate Ltd., 2005). Coc oa producers have seen little of the evi den t profitability
in the ma rke t by comparison wit h the few global corporations that ow n the largest
chocolate brands in the UK and US markets: Nestle, M& M/ Ma rs and Cad bur y-S chw epp es
(see Ransom, 2002). As Tickle (2004) highlights, this is because the value of chocolate in
the 'dev elo ped wo rld' resides with the brand. As in the case of coffee production, coc oa
producers in developing country markets do not capture bra nd value in traditional buyer-
driven supply chains.

57
The UN DP' s 2005 Human Dev elop men t Report documents that between 1997 and 2001 there was a 53 per
cent fall in real terms in the combined price index for all commodities (UNDP, 2005: 118).
58
Globally, cocoa farmers have experienced increased exposure to such world market fluctuations since the
global cocoa market was liberalised in the 1990s (except in Ghana).
- 60 -
 Their concentration is of course only one hal f of the story of how brand corporations
control markets and extract the most value from the coffee chain. Part of the reason wh y
brand companies have been able to 'tak e the lion 's share' of profits despite a massive drop
in world coffee prices is because of con sum ers ' lack of information about the price
discrepancy and attraction to the 'bra nd' (Oxfam, 2001: 26; see below). The social costs
borne by producers are not reflected in consumer or world market prices, nor are consumers
provided with information about these costs and conditions in making their purchasing
decisions. Such costs are referred to as 'ex tern alit ies' , or in lay ma n's terms, 'som eon e
else 's problems'. Externalities refer to the 'eff ect of a transaction ... on a third party who
has not consented to or played any role in the carrying out of that transaction' (see Pigou,
9
1935)5 . Externalities are assumed to be inevitable, indeed necessary, consequences of
business activity to achieve a corporation's sole mission or legal du ty- the maximisation of
shareholder value (see Bakan, 2004).

The other hal f of the story of bra nd corporations' control and pow er leads us to consider
why and how the bra nd itse lf has become so fundamental to value-accumulation and
market influence in contemporary world markets. This has not always been the case
(Chandler, 1964; Chandler et al., 1968). Rather, product differentiation has become a sine
qua non for successful competition in post-industrial consumer markets (ibid., 1968).

The brand-based nature of global business

The late nineteenth and early twentieth century (1897-1902) was a crucial time in the
history of the US corporation and witnessed the rapid centralisation of control and
coordination of national production and distribution 60
. Industrial economic historian,
Alfred Chandler, has described this period as 'the first and most significant merger
movement in American history' (Chandler et al., 1968: 270; see also Ewen in Barsamian,
2000; Bakan, 2004). Prior to 1880, the US industrial market was rather unspectacular in
scale as a result of decentralised and uncoordinated decision-making spread across
thousands of small, localised firms. Factory production, the backbone of industrial

59
Third paiiies include the environment, workers and/or a community.
60
More generally, US industrialisation peaked in the peri od prior to 1890 until 1913, bringing the nation
status as both a global leader in manufacturing and source of one-third of the wor ld's goods (Chandler et al. ,
1968: 270).
- 61 -
 enterprise , was owne d and mana ged by many different indiv idual manu factu rers (Cha ndler
et al., 1968). The pioneers of the emer ging era of giant industrial enterprise (du Pont ,
General Motors, Jerse y Standard and Sears , Roeb uck) deve loped business mode ls simil ar to
that of the US railroad business of the 1850s whic h prov ided a template for large-scale
administrative and financial organisation. Upon centralised, hiera rchic al and bure aucra tic
structures of mana geme nt and administration, these pion eers exec uted strategies of
accumulation and scale that enab led these industrial giants to rise to powe r quick ly (see
Chandler, 1962) and beco me the pred omin ant business mod el by the late twen tieth centu ry
(Fligstein , 1985). Inde ed, the large industrial enterprises that subs eque ntly came to shape
the mod em corporate era trans form ed the small family firm and comm ande d great authority
in the national econ omy thereafter:
In 1880 nearl y all manu factu ring firms only manu factu red their finished goods
through wholesalers, some time s as comm issio n agents and at other times as jobb ers
who took title to the goods. By the first years of the twen tieth century, howe ver,
many Ame rican industries were dom inate d by enterprises that had creat ed their own
distributing organizations, some time s including even retailing outlets, and had
formed their own purc hasin g systems. Ofte n they had begu n to control their
supplies of semifinished and raw materials. The large industrial firm thus beca me a
prim ary agen t for large-scale distribution as well as large-scale prod uctio n and,
indeed, beca me a critical link betw een the two (Cha ndler et al. , 1968: 272).

This rich description details how the proc ess of verti cal-i ntegr ation and admi nistr ative
centralisation conc entra ted powe r and capital in the hands of only a few companies. The
process of expa nsion and concentration in industrial enterprise was helpe d along , ironi cally,
by US antitrust law (Chandler et al., 1968: 278-9) and other laws gove rning US enterprise
61
more generally . Acco rding to Chan dler et al. (1968: 278-9), 'para doxi cally, antitrust
legislation and its interpretation by the courts whic h made comb inati ons of smal l units
illegal but perm itted the formation of large cons olida ted oper ating comp anies , actua lly
encouraged the swift growth of big business in Ame rican manu factu ring and distribution ' .
In the automobile industry, for exam ple, in late 1908 Gene ral Moto rs bega n to acquire
capital stocks of its competitors until it owne d, or largely contr olled, by late 1909 more

61
According to Bakan (2004), in a short perio d of time, the 'corpo ration ' was transforme d from an
insignificant entity with limite d liability to one accor ded freedoms of incorp oration, the legal right and duty to
operate in the economy, and legal status as a 'perso n'.
- 62 -
tha n 20 com pet ing aut om obi le com pan ies and acc ess ory firms , inc lud ing Bui ck, Cad illa c,
Old smo bile , and Oak lan d (Ch and ler, 1964: 53-4)

The se cha nge s in the stru ctu re and sca le of eco nom ic ent erp rise in Am eric a wer e refl ect ed
in its nat ion al cof fee ma rke t. Un til the end of the nin ete ent h cen tury , the ma jori ty of
con sum ers wer e drin kin g cof fee in cof fee hou ses or doi ng the ir ow n roa stin g wit hin the ir
ow n hom es. The flav our of the cof fee - bou ght fro m loc al grocers - was eith er 'ex cel len t'
or 'fou l and sus pec t' (Di cum & Lut ting er, 1999: 122), and the sub stan ce was ofte n
acc om pan ied by unp lea san t sur pris es suc h as dirt, drie d blo od or figs (ibid. , 122). In
res pon se to the inc ons iste nt and ofte ntim es dub iou s qua lity of coffee, a num ber of U.S -
bas ed ent rep ren eur s beg an to esta blis h bra nds pre mis ed on pro duc t qua lity and con sist enc y.
Joh n Arb uck le did jus t this in 1865, ma rke ting a new com me rcia l pac kag e of gro und ,
roa sted cof fee and the reb y cre atin g a wid er con sum er bas e for cof fee tha n the num ber the n
freq uen ting his roa stin g facility. Arb uck le, alo ng wit h em erg ing com pet itor s suc h as Hil ls
Bros, Ma xw ell Ho use , and Fol ger s, con tinu ed to dev elo p his pro duc t bas ed on con sist enc y
and con ven ien ce.

It too k onl y unt il the 192 0s bef ore cof fee bec am e a 'un ive rsa l bev era ge' wit h 'de mo cra tic
app eal '. In kee pin g wit h this per son a of cof fee as bei ng of uni ver sal tast e cam e inc rea sin g
hom oge nis atio n and tec hni fica tion of cof fee itself, alo ng wit h the larg er tren ds of
con sol ida tion in the cof fee ma rke t and em bra ce of tec hno log y in pro duc tion . As Tal bot
(1997b: 119) wri tes, 'ins tan t cof fee was on the cut ting -ed ge of the "du rab le foo ds"
intr odu ced into the US ma rke t dur ing the 1950s ... alo ng wit h oth er new con ven ien ce foods
like froz en ora nge -jui ce con cen trat e, Bir dse ye fro zen veg eta ble s and "TV din ner s" '. Fro m
the 194 0s thro ugh to the 196 0s and bey ond , cof fee enj oye d a rap id upt ake in the ma rke ts of
Sw itze rlan d, Fra nce , Au stra lia, Ne w Zea lan d, Can ada and Japan.

The cap ital -int ens ive nat ure of ma nuf act urin g ins tan t cof fee qui ckl y led to ma rke t
con cen trat ion . In the ir exp ans ion in the US , reg ion al roa ster s dev elo ped into nat ion al
enterprises, driv ing out sma ller com pet itor s. Nat ion al com pan ies wer e the mse lve s the n
bou ght out by eve n larg er con glo me rate s. In the yea r 1962-3 , Dic um and Lut ting er (1999:
130) not e, Am eric ans con sum ed clo se to 40 gal lon s of cof fee each, a con sum ptio n zen ith

- 63 -
 reached in a ye ar m ar ke d fu rth er by a 'b uy in g sp re e' am on g co ng lo m er at es of la rg e co ffe e
companies an d th ei r in cr ea sin g po lit ic al in flu en ce th ro ug h the N at io na l Co ffe e A ss oc ia tio n
(NCA).

The gr ow th of the US co ffe e m ar ke t an d its co ns ol id at io n also ill us tra te s ho w Ch an dl er 's

corporate giants he lp ed to m ov e th e co un try 's ec on om y m or e ge ne ra lly to w ar d a po st-
industrial era. Th at is, th e cr ea tio n of ol ig op ol ist ic m ar ke ts re qu ire d, ergo, ne w fo rm s of
oligopolistic co m pe tit io n (s ee Ch an dl er , 1964; Ch an dl er et al., 1968). Th e co nt ro l of m as s-
production an d m as s- di str ib ut io n am on g a fe w la rg e co ng lo m er at e en te rp ris es th er ef or e
thrust a ne w pr io rit y an d pa ra di gm on to th e Ch an dl er ia n co rp or at io n to co m pe te no t on ly on
price bu t also - an d in cr ea sin gl y - on 'p ro du ct di ffe re nt ia tio n th ro ug h ad ve rti sin g, tra de
names an d sty lin g' (C ha nd le r et al., 1968: 27 6) . If al l go od s w er e la rg el y si m ila r in
appearance an d fu nc tio n, su cc es sf ul pr od uc ts in th e fu tu re w ou ld ne ed to po ss es s a
differentiating fe at ur e th at w ou ld m ak e a pr od uc t sta nd ou t as di ffe re nt fro m th e re st in th e
mind of the co ns um er . M ar ke tin g qu ic kl y be ca m e m or e sig ni fic an t to th e m od em
corporation th an pr od uc tio n (s ee for ex am pl e Ch an dl er , 1964: 13). A s Ch an dl er (ibid., 13)
described in the ca se of th e U S au to m ob ile in du str y, 'th e un de rly in g m ar ke t pr ob le m w as
no lo ng er to sell an in di vi du al hi s first ca r bu t to ge t th e m an w ho al re ad y ow ne d on e to bu y
a new ca r'.

Enter the brand: ol ig op ol ist ic co m pe tit io n be ca m e pr ed ic at ed on br an d ad ve rti sin g to

convince the co ns um er to over-consume. Th e su bs eq ue nt sh ift fro m m ar ke tin g ge ne ric
goods to m ar ke tin g br an d- ba se d pr od uc ts be ga n as a re su lt, an d ha s sin ce al te re d th e
content an d pu rp os e of ad ve rti sin g ov er th e la st ce nt ur y (s ee G ar dn er & Le vy , 19 55 ). Ea rly
thinking on th e br an d em ph as ise d its ps yc ho -s oc ia l im po rta nc e in m od em so ci et y ( se e
Gardner & Le vy , 1955). U sin g the ne w sp ap er as an ex am pl e, G ar dn er an d Le vy (1 95 5)
highlighted the 'co m pl ex sy ste m of va lu es ' an d m en ta l im ag es in th e m in d of th e co ns um er
that co nv er ge in de ci di ng w hi ch pa pe r to bu y. W ith so m uc h ch oi ce , th e 'te ch ni ca l' factors
of co m pe tin g pr od uc ts ha ve be co m e la rg el y irr el ev an t in co nt ra st to th e 'o ve ra ll sta tu s (an d
sales) of the br an d' . Th is ca pt ur es we ll ho w th e ps yc ho lo gi ca l re le va nc e of th e br an d to
individual be ha vi ou r bo re so ci ol og ic al sig ni fic an ce , in th at on e's ch oi ce of br an d w as a
means of lo ca tin g the in di vi du al in th e so ci al str uc tu re (s ee be lo w) . Te lli ng of th e

- 64 -
 sociological significance of the bra nd was a deep shift in self-identification and the
fundaments of co mm un ity in the emergent US co ns um er culture in the post-industrial
context, from close-knit geographically-proximate 'ir on ' bo nd s to we ak er 'go ssa me r' -like
social ties predicated on bra nd use and identification (Boors tin, 197 4).

The coffee industry offers illustration of an economic evolution that bro ug ht the bra nd to
the he art of corporate survival and identity, and established its capacity to un de rpi n social
relations. Coffee companies developed into profitable assets for pa ren t companies,
competing aggressively wi th other ma rke t players pri ma ril y on advertising, rat he r tha n on
pricing (Table 2.2 illustrates the importance of advertising to ma jor US-coffee companies
and pa ren t companies in this market). W ith a focus on advertising and ma rke tin g of
brands, the pro du ct its elf be ca me of peripheral importance to the brand. As Di cu m and
Luttinger (1999) describe, competition be tw ee n these ma jor coffee co mp an ies too k the
'ne ar exclusive form of advertising in a saturated market. The result was tha t the US coffee
ma rke t 'be ca me a pa rod y of a functioning free ma rk et' '. By co mp eti ng only on advertising
and reducing the quality of the coffee by us ing ever-cheaper and harsher-tasting coffee
beans, this race to the bo tto m on quality was short-sighted. Price spikes in the mid- to late-
1970s and a growing concern in the US over the effect of coffee co ns um pti on on hu ma n
health saw co ns um er de ma nd drop away from the ma ss- ma rke t for coffee, a ma rke t wh ich
ha d reached its he yd ay in the early 1960s (D icu m & Luttinger, 1999).

Co mp an y Level of Expenditure on Advertising (1996)

Sta rbu cks $2 mil lio n
Ch ock Ful l o' Nu ts $3 mil lio n
Ne stle $16 mil lio n
Co lom bia n Co ffe e Fed era tio n $18 mil lio n
Oth ers $75 mil lio n
Pro cte r & Ga mb le $95 mil lio n
Phi llip Mo rris $13 5 mil lio n

Tab le 2.2: Im por tan ce of adv ert isin g to ma jor cof fee bra nd com pan ies in the US cof fee ma rke t (in fiscal
ten ns) .

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By the ear ly 1990s, cof fee con sum ptio n beg an to lev el out. Ma ss-m ark ete d cof fee bra nds
offered by tran sna tion al com pan ies suc h as Pro cte r & Gam ble or Nes tle or Kra ft beg an to
be seen as bra nds ass oci ate d wit h gen eric hou seh old pro duc ts - low -pr ice d, poo r qua lity
coffee, a 'ub iqu itou s stap le' and 'un exc itin g drin k for fog ies' tha t ma de 'no cul tura l
stat eme nt at all' (Di cum & Lut ting er, 1999: 144). The tren d tow ard s ma kin g a 'sta tem ent '
through the bra nd was pro nou nce d in the cas e of cof fee bra nd com pan ies. Thi s shif t
captured a gro win g dis affe ctio n wit h inc rea sed com me rcia lisa tion and ma ss-m ark et
com mo difi cati on wh ich , am ong oth er thin gs, squ eez ed out loc al bus ine sse s and farm er
markets wel l kno wn to loc al com mu niti es and rep ute d for the ir qua lity pro duc e and
individual cha rac ter (ibid., 144). Con sum ers had ide ntif ied a 'lac k' am ids t ma ss-m ark ets of
hom oge neo us goo ds - an ind ivid ual ity, aut hen tici ty and uni que nes s tha t had acc om pan ied
smaller, mo re loc alis ed bus ine sse s wit hin com mu niti es or reg ion s. Com me rcia l ma rke ters
selling ma ss-m ark et cof fee res pon ded by aba ndo nin g adv erti sem ent s of ma ss-p rod uce d
mer cha ndi se and hom oge neo us goo ds for ma ss-c ons um er ma rke ts to sma ller 'seg me nte d'
markets. The seg me nte d ma rke ts bec am e mo re het ero gen eou s and 'mu ch mo re sub tle' ,
disp lay ing sen siti vity to con sum ers ' live s as bei ng 'les s coo kie -cu tter ' tha n hom oge neo us
ma ss-m ark et pro duc ts and the ir ma nuf act ure rs pre sum ed (De an, 200 4: 361 ).

Pro vok ed by this 'lac k' in the ma rke t was the sma ll, ind epe nde nt 'spe cia lty cof fee ' roa stin g
ind ustr y in the US wh ose cou nte r-co rpo rati sm, foc us on qua lity cof fee bea ns and
ind ivid ual ity evo ked the 'ex otic air' of the 196 0s 'co ffee sho p sce ne of poe try, dru gs and
alternative cul ture ' (Di cum & Lut ting er, 1999: 144). A the n-s ma ll Sta rbu cks com pan y led
this ind ust ry wh ich rec ast cof fee as a pro duc t offe ring a mo re aut hen tic life styl e and
alternative set of soc ial val ues to the ma ins trea m ma ss-m ark et nor m. Sta rbu cks tap ped the
eme rgin g con sum er cul ture in the US in wh ich soc ial rela tion s wer e bec om ing clu ster ed
around con sum ptio n (see Boo rsti n, 197 4). As Sta rbu cks ow ner , Ho wa rd Sch ultz ,
described:

Am eric ans are so hun gry for a com mu nity tha t som e of our cus tom ers beg an
gat her ing in our stor es, ma kin g app oin tme nts wit h friends, hol din g me etin gs,
stri kin g up con ver sati ons wit h oth er reg ula rs .... Peo ple don 't jus t dro p by to pic k up
a hal f-p oun d of dec af on the ir wa y to the sup erm ark et. .. the y com e for the
atm osp her e and the cam ara der ie (cit ed in Dic um & Lut ting er, 1999: 152).

- 66 -
Illustrated here is the increased cultural significance of brands such as Starbucks in the lives
of consumers. Inevitably, the trend in a post-industrial market towards marketing the brand
as a symbol of social values and self-identity has promoted the brand to further levels of
significance in consumers' lives, reasons for whic h are discussed below. Advertising today
is a multi-billion dollar industry for bran d companies, and the brand itsel f the raison d'etr e
of the mod em corporation. Put together, as Naom i Klein (2000) writes, the bran d has
become 'the core meaning of the mod em corporation, [and] advertising is one vehicle ... to
convey that meaning to the worl d'. For instance, contemporary marketing research
explores how to improve consumer loyalty to brands by exploiting 'marketplace
communities' and 'bran d communities' (see McA lexan der et al., 2002). Senior marketing
analysts refer to the holy-grail of mod em advertising no longer as gaining 'mar ket share '
but gaining 'shar e of mind ' (Solomon, 2003). In other words, advertisers' objective in
striving to extend the meaning and role of brands in the lives of consumers is to ensure
continued market share and profitability in a saturated market (see Solomon, 2003; Dean,
2004; McAlexander et al., 2002).

Building consumer loyalty in future will involve greater penetration of social spaces -
turning social spaces (and spaces for socialising) into 'bran ded' ones (see Solomon, 2003;
Dean, 2004). Solomon (2003) refers to this as the era of 'cons umer spac e' or 'bran ding '
(Klein, 2000). In this context, the space is redefined as a branded experience - the bran d is
the experience. The aim in this next phase of marketing is to build a brand identity that
consumers identify with in a way which dissociates the brand from the product and so
promotes the bran d as the product itsel f (Solomon, 2003; Dean, 2004; Klein, 2000;
Hamilton, 2003). Such an abstraction involves 'satu ratin g' cons umer s' home, work and
cultural spaces with the brand logo, and engineering an 'idea lised version of reality'
projected by a particular company (Disneyworld and Niketown being examples) (see
Solomon, 2003; Dean, 2004).

The need for such pervasive influence and presence in cons umer s' lives for greater market
share is something of a puzzle when one considers that competition has been curtailed and
suppressed by the process of increasing market concentration. Takeovers are not unique to
consumer capitalism in the twenty-first century but take their cue from the significant

- 67 -
corporate con cen trat ion and con sol ida tion in the ear ly twe ntie th cen tury from wh ich the
first ind ustr ial gia nts aro se (see Cha ndl er, 196 2, 1964; Cha ndl er et al., 1968). Ho wev er,
increasing con cen trat ion and mo nop oly stre ngt h in con tem por ary glo bal ma rke ts are
processes res pon sib le for bun dlin g mu ltip le bra nds fro m diff ere nt ma rke ts und er a
dim inis hin g num ber of con glo me rate ent erp rise s. Thi s is a pre vai ling bus ine ss stra teg y tha t
Klein (2000: 160) term s 'bu ndl ing ', 'bra nd ext ens ion s', 'me rge rs' or 'syn erg y'. The se
terms refe r to par ent com pan ies' ow nin g and cro ss-p rom otin g a gro win g mu ltip lici ty of
other com pet ing bra nd com pan ies. As a resu lt, the dist inc tion s bet wee n sec tors and
industries 'blu r', so tha t bra nd pro duc ts and serv ices suc h as me dia , mu sic, ent erta inm ent ,
and com put er sof twa re are ow ned by the one glo bal cor por atio n. In the US cof fee ma rke t
for inst anc e, 'the larg est cof fee bra nd in the cou ntry is ow ned by a soa p com pan y, wh ile its
ma jor com pet itor is ow ned by a com bin ed cer eal and che ese com pan y tha t is ow ned by a
cigarette com pan y' (Di cum & Lut ting er, 1999: 128).

Sta rbu cks ' bra nd- bas ed stra teg y for ma rke t sha re exe mp lifi es the 'bra nd ext ens ion ' era.
Hav ing shr ugg ed off its uni que ind epe nde nt spe cia lty cof fee roa ster ima ge, Sta rbu cks
deploys sim ilar tact ics and stra teg ies to oth er glo bal cor por atio ns to gai n inc rea sin g ma rke t
share wo rldw ide . The com pan y's 'tric ks of the trad e' inc lud e 'co -br and ing wit h the big
boys ... Pep siC o, An heu ser -Bu sch , Un ited Air line s, Ma rrio tt, and Bar nes & No ble ' (pa ren t
com pan ies of con ven ien ce foo d and bev era ges ; bee rs; inte rna tion al car rier s; hos pita lity ; and
online and reta il boo ks, mu sic and me dia resp ecti vel y), agg res siv ely buy ing out sma ller
ind epe nde nt caf e stor es - or the ir bui ldin gs - in ord er to dom ina te con sum ers ' cho ice of
coffee. Suc h stra teg ies are stan dar d bus ine ss pra ctic e for Sta rbu cks ' sta ff wit h bac kgr oun ds
in mu ltin atio nal s suc h as 7-E lev en, Mc Do nal ds, Bur ger Kin g and Nik e (Di cum &
Luttinger, 1999: 154-5). Sho uld Sta rbu cks ' ma rke t sha re con tinu e to rise in the futu re the
com pan y ma y itse lf be bou ght out by one of the se larg er MN Cs.

Given the evi den t prim acy of the bra nd in mo dem glo bal ma rke ts, pre cise ly how doe s the
bra nd fun ctio n as a me cha nis m for con trol in a pos t-in dus tria l ma rke t env iron me nt? The
answer to this que stio n lies in the link bet wee n bra nds and trad e ma rks . Beh ind the bra nd
image tha t con sum ers rec ogn ise lies a clu ster of leg al righ ts of ow ner shi p refe rred to as
intellectual pro per ty righ ts (IPRs). IPR s are unl ike con ven tion al pro per ty righ ts (see

- 68 -
 Dra hos , 200 5) in the sen se tha t the y refe r to abstract or inta ngi ble forms of pro per ty
2
ow ner ship (see Bra ithw aite & Dra hos , 2000: 39-40)6 . Bra nds fall wit hin the cat ego ry of
IPR s kno wn as trad e ma rks . The bra nd is the ima ge of the trad e ma rk (the abs trac t object)
and the sub jec t of the exc lus ive pro prie tori al righ ts hel d by the trad e ma rk ow ner . The
analysis tha t follows of eco nom ic, psy cho log ica l and leg al per spe ctiv es of trad e ma rks
exp lain s how 'po we r ove r' is effe cte d in wo rld ma rke ts thro ugh exc lus ive pro prie tori al
con trol and ow ner shi p of the abs trac t object.

The Economics of Trade Marks (TMs)

Eco nom ic the ory ass um es tha t con sum ers ben efit in a com pet itiv e eco nom y by bei ng abl e
to cho ose am ong a wid e arra y of goo ds and serv ices in term s of qua lity and pric e. In ord er
to be able to cho ose rati ona lly bet we en a giv en ran ge of pro duc ts or serv ices (i.e. ma xim ise
util ity bas ed on the ava ilab le info rma tion ), con sum ers nee d to kno w the rele van t
diff ere nce s bet we en eac h pro duc t or ser vic e on offer. Tra de ma rks (TM s) ope rate for
con sum ers as sign s of the trad e sou rce from wh ich the goo d or ser vic e has der ive d or is
63
con nec ted in som e wa y . A 'sig n' inc lud es 'an y letter, wo rd, nam e, sign atu re, num era l,
device, bra nd, hea din g, label, tick et, asp ect of pac kag ing , sha pe, colour, sou nd or sce nt'
(Ri cke tso n & Ric har dso n, 200 5: 987). In a glo bal sys tem of pro duc tion and trade, trad e
ma rks are tho ugh t to be all the mo re imp orta nt bec aus e con sum ers hav e little, if any,
info rma tion abo ut the ofte n dis tan t and mu ltip le pro duc ers of the goo ds and serv ices the y
buy , wh ich cre ates and exa cer bat es sig nifi can t info rma tion asy mm etri es bet we en pro duc ers
and con sum ers. Tra de ma rks atte mp t to sol ve this pro ble m; as van Cae neg em (2003: 706 )
sug ges ts, 'tra de ma rks ena ble a pro duc er to com mu nic ate dire ctly and effi cie ntly wit h the
ulti ma te con sum er in the pre sen ce of sup ply cha in com ple xity '.

A furt her wel l-es tab lish ed eco nom ic jus tifi cat ion for trad e ma rks is put for war d by Lan des
and Pos ner (1987: 265 ) wh o arg ue tha t trad e ma rks red uce con sum ers ' sea rch -co st in the

62
According to Drahos (2005: 139) the differences between standard property rights and IPRs are to do with
the object to which those rights pertain. For intellectual property rights, the object ofIP R protection is
information of some kind.
63
This is referred to as the 'orig in function' of trade marks (Cornish & Llewelyn, 2003). For instance, a trade
mark in Australian law is defined as ' ... a sign used , or intended to be used, to distinguish goods or services
dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by
another pers on'.
- 69 -
 context of a range of choice and goods which cannot be tested prior to purchase; trade
marks provide consumers with the ability to quickly differentiate bet wee n a num ber of
available goods. Because of the time-cost involved in understanding the differences
between competing products, consumers thus often decide bet we en different brands on the
basis of trust in a particular brand.

64
The search-cost function of trade marks pivots on the goodwill that consumers associate
with a brand, linking goods and services with a range of personal expectations about
quality. These expectations are formed by advertising, rec om me nda tion or from previous
65
experience/knowledge . As Murphy (1987: 3) observes, 'the bra nd ... acts as a credible
guarantee for that product or service allowing the consumer clearly to identify and specify
products which genuinely offer 'ad ded val ue' '. The importance of goodwill in con sum er
decision-making cannot be understated. Consumers frequently choose brands with well-
known or established reputations over unk now n brands (see Economides, 1988). For
proponents of the search-cost argument such as Landes and Pos ner (1987), the goodwill
attached to trade marks and the ma rk's legal protection creates an incentive for businesses
to produce consistently high quality goods and services wit h protection against low er
quality imitations. From this perspective, trade marks have an ex ante dimension - a strong
brand reputation enables companies to anticipate profits.

This relates to a further role attributed to trade marks: they protect the asset value of brands
into which MNCs invest millions of dollars to promote. Bra nd advertising and pro mo tion
is a multi-billion dollar industry, thus the bra nd (trade mark) is a pin nac le of corporate
investment. That investment value is one which consumers and shareholders often -
consciously or unconsciously - consider in their own spending and investment decisions,
and is thus worthy of protection from imitation or defamation 66
.

64
In cmmnerce, 'goo dwi ll' refers to an intangible, sellable asse t whi ch is prod uce d by the repu tatio n of a
company and /or its supe rior cust ome r relations. It is thus a form of com peti tive adv anta ge. This intangible
quality can and shou ld be dist ingu ishe d from a com pan y's tang ible assets (e.g. stock).
65
This is referred to as the quality and gua rant ee function of trad e mar ks (Co mis h & Llew elyn , 2003: 587).
66
This is the inve stm ent and adv ertis ing function that trad e mar ks prov ide (Co mis h & Llew elyn , 2003: 587).
- 70 -
 Function of Trade Mark
Origin Function
Quality/Guarantee Function
Investment/Advertising
Function
Definition
TMs operate for consumers as signs of the trade source from which the
good or service has derived or is in some way connected.
TMs enable consumers to link goods and services with a range of personal
expectations about quality, expectations which are guaranteed based on
advertising, recommendation or prior experience.
TMs protect the asset value of goodwill which MNC s invest millions to
promote. This asset value is also one which consumers and shareholders
often consider in their own spend ing and investment decisions.

Table 2.3 : The economic functions of trade marks.

In short, the econ omic s of trade mark s tells us that the laws prote cting trade mark s are
nece ssary in a capit alist mark et econ omy to enable cons umer s to relia bly disti ngui sh
betw een a good or service - and discern its sourc e and quali ty - on the basis of a prod uct
mark. Yet this utilitarian story abou t trade mark s does not accu ratel y or comp letel y
describe the way in whic h trade mark s - or rathe r bran ds - are used in econ omic praxis.
This is no more clearly seen than when cons ideri ng the psyc holo gy of the imag e, ergo the
brand.

The Psyc hology of Trade Marks

Whe n cons umer s purc hase a prod uct, they look for a bran d, not a trade mark. The bran d is
the imag e of the trade mark whic h itsel f is an abstract entity. In one sense, then , trade
mark s appe ar to have noth ing to do with bran d consumption. In anoth er sense, they have
every thing to do with it. This is beca use of the direct and inten tiona l role that owne rs of
well- know n bran ds play in creating cons umer attac hmen ts to their brand. The psyc ho-
emot ional basis of this strate gy sits at odds with abov e-me ntion ed econ omic theories of the
cons umer and the actual function of trade marks.

Psyc holo gists have long unde rstoo d the influ ence of the imag e - and there fore the bran d -
over individuals (see Forre ster, 2000). In the conte mpo rary adve rtisin g culture, cons umer s
are belie ved to be influ ence d to buy certain bran ds at a subc onsc ious level rathe r than at the
level of conscious decis ion-m aking base d on factu al prod uct infor mati on (see Jung, 2006).
This ' influence ' derives from natur al psyc holo gical proc esses invo lved in learn ing refle x-

- 71 -
 67
responses to stimuli around us, or what psychologists term 'classical con diti oni ng' : a
stimulus that previously elicited no response, elicits a res pon se - in a reflex-like ma nne r -
after it has bee n accompanied numerous times with a stimulus that already elicits a
8
response (Gray, 1999)6 .

Classical conditioning underscores mo dem advertising. In advertisements, wh eth er on

posters , television, films, websites, radio or in newspapers, advertisers pai r their com pan y's
particular products with scenes or evocative images that already elicit certain subliminal
psychological responses or emotions, or hon e in on ina deq uat ely me t emotional needs of
individuals in contemporary society. Wh en this sequence is seen or heard numerous times
(i.e. through repetitive advertising), consumers develop unconscious reflex-responses
between states elicited by the advertisement and the product, eventually in the absence of
the original stimulus (the advertisement):
Wh en bee r and car advertisers pai r their products wit h scenes of beautiful people
having wonderful times, they are trying to get you to drool wit h pleasure, like
Pav lov 's dogs, wh ene ver you see their products ... The advertisers wan t us to
salivate, wa g our tails, and run out and buy their products. Ap par ent ly it works; if it
did n't, they wo uld n't continue spending mo ney on suc h ads (Gray, 1999: 107, 518).

In the ma rke ting of ma rga rine ... the con sum er does not buy som eth ing to spread on
bre ad but a concatenation of feelings associated with ide aliz ed family
relationships ... In a wo rld of social disintegration, mo dem consumers have a
powerful nee d for family warmth, and hum ans , jus t like Pav lov 's dogs, ma ke
unconscious associations. Un me t emotional needs and unconscious association are
the twi n psychological pillars of the ma rke ting society (Hamilton, 2003: 84-85).

Illuminated by these examples is the psy cho log y of the ima ge inv olv ed directly in, and
exploited by, bra nd advertising. A security com pan y uses images of a guard dog in its

67
Classical conditioning was pion eere d in the wor k ofl van Pav lov ( 1849-193 6). John Wat son later tested
classical conditioning in terms of the ability to condition hum an emotional responses to certain stimuli, which
he subsequently prov ed (Gray, 1999).
68
Classical conditioning is different from operant conditioning, the other type of learned hum an response to
which psychologists refer. By contrast with classical conditioning and the behaviour whi ch it produces,
operant conditioning describes 'the process by whi ch the consequences of a response increase or decrease the
likelihood that the response will occur aga in' (Gray, 1999: 100). An operant response is taken to mea n those
behaviours or responses to the environment around us that are instrumental in causing an effect. We push a
door to make it open, or pick up a telephone to answer the call. An example of operant conditioning is where
a child only ever receives attention from a parent whe n the child has done something wro ng and is scolded
(i.e. negative attention): the child is more likely to behave badly in order to get that attention, since he or she
receives no attention whe n behaving well.
- 72 -
 advertising rathe r than the secu rity syste m or locki ng device whic h the comp any wishes to
sell beca use the imag e of a dog conjures in cons umer s' mind s stron g emot ional assoc iatio ns
with safety and secu rity in one's hom e envir onme nt, wher eas a functional instr umen t like a
lock or a light does not (see Ham ilton , 2003). This is beca use the hum an brain make s
unco nscio us associations betw een stimu li in our socio -cult ural envir onm ent and objects or
experiences whic h we alrea dy view with a posit ive or nega tive attitude (Gray, 1999).
Thes e are new stimuli to whic h we attac h stron g unco nscio us emot ions.

From a psyc holo gical view poin t, indiv idual s are influ ence d by the mani pulat ive adve rtisin g
strategies empl oyed by comp anies whos e bran ded goods woul d be not nearl y as valua ble if
adve rtisin g func tione d in the value -free mann er assu med by econ omis ts. Econ omis ts tend
to assume, for example, that cons umer s buy what they buy beca use it is what they want , not
beca use it is all that is available or is all that they can afford. Cons umer beha viou r tells a
different story: cons umer s pay a lot more than they need to, or more than they can afford, in
orde r to have a parti cular bran d that is desirable to them or their peer grou p (see Scito vsky ,
9
1976)6 . Van Caen egem (2003: 705) desc ribes this in the follo wing way:
... brands or trade mark s ... in reality, do not infor m the ratio nally max1m1zmg
consumer, but rathe r influ ence the emot ional ly-dr iven cons umer by enab ling
'perc eptio n adve rtisin g'. The bran d or mark is mani pulat ed by its owne r, shrew d
perce ption adve rtisin g imbu es the bran d, and by assoc iatio n the prod uct, with
prop ertie s the cons umer imag ines to be desirable. This allow s the trade -mar k owne r
to set a high er price for the mark ed goods, gene ratin g high er returns. The cons umer
is prep ared to pay more, not beca use she discerns, via the bran d or mark , the high er
quali ty of the unde rlyin g goods, but beca use the goods are rend ered subje ctive ly
more desirable by their assoc iatio n with a heav ily prom oted bran d or mark ...

By playi ng with these proc esses of unco nscio us assoc iatio n in indiv idual s' mind s by
conn ectin g evocative imag es and scen es with a bran ded prod uct, mark eters are able to gain
control over cons umer s and manu factu re indiv idual want s and need s, leavi ng cons umer s
unaw are of why they are buyi ng a parti cular bran d, or why they are maki ng a purc hase at
all (Hamilton, 2003). As van Caen egem (2003: 705) poin ts out, this enables corp orati ons
to comm and a prem ium for the prod uct beca use of the aura of desir abili ty that the
comp any's mark eting strate gy contrives, not beca use of the prod uct's actual uniq uene ss.

69
Consumers also get what they want to the exten t that what they want can be mass- produ ced (Scito vsky,
1976).
- 73 -
The brand allows the com pan y to seg me nt the ma rke t, to con vin ce the con sum er that there
is no substitute for the com pan y's pro duc t and that it is wo rth pay ing extra. This covert
means of influencing how consumers thin k and beh ave illustrates 'po we r ove r' at work.
The utilitarian pur pos e of a pro duc t has bec om e irrelevant in ma rke ting and few marketers
assume that a pro duc t's utility is the basis of con sum ers ' com pul sio n to buy a par ticu lar
brand. We re this the case, advertisements wo uld be hig hly factual in content. Acc ord ing ly,
consumer beh avi our bea rs little res em bla nce to the rational actor mo del und erp inn ing the
economic arg um ent tha t trade marks are nec ess ary to pro vid e rele van t con sum er
information (i.e. factual information) abo ut a product. As Gar dne r and Lev y (1955) hav e
observed:
Som etim es the notions peo ple hav e about a bra nd do not eve n see m ver y sen sib le or
relevant to those wh o kno w wh at the pro duc t is 'rea lly' like, but the y all contribute
to the customers deciding wh eth er or not the bra nd is the one for me.

The fact that con sum ptio n is hig hly em otio nal - or em otio nal ly driven - is har nes sed by the
advertising industry for ma rke ting pow er (O' Sha ugh nes sy et al., 2002). A key em otio nal
trigger wh ich advertisements 'set off is the gap bet wee n one 's rea lity and des ired state
(ibid., 2002). As one ma rke ting ana lys t encourages, 'co nsu me rs vie w bra nds as hav ing
personalities and pre fer those ma rke ting offerings that are sim ilar to how the y see
themselves or to the type of per son the y wan t to bec om e' (So lom on, 2003: 26). Con sum ers
buy certain bra nds to ide ntif y themselves wit h and esp ous e the sam e set of values tha t
advertisers wo rk to associate wit h the bra nd image. In so doing, ind ivid ual ide ntit y - or
one's des ired identity - bec om es atta che d to a brand. The 'psy cho log ica l hol d' ove r
consumers that Gar dne r and Lev y (1955) describe the bra nd as pos ses sin g is ulti ma tely not
a happenstance or nat ura lly- occ urr ing process. The adv erti sin g ind ust ry is con stan tly
working to pro duc e and rep rod uce the com pel ling attraction of their bra nds ove r
consumers, ma rke ting analysts con ced ing that 'sus tain ing a com pet itiv e advantage on the
basis of pro duc t differentiation often is an exhausting race to a constantly shifting finish
line' (M cAl exa nde r et al., 2002: 51 ). Ham ilto n (2003: 82-3) describes this in the following
way:
... the task of the advertising ind ust ry is to unc ove r the com ple x set of feelings
associated wit h par ticu lar products and to design ma rke ting campaigns to appeal to
those feelings ... All aspects of hum an psy cho log y- our fears, our sources of shame,
our sexuality, our spiritual yearnings - are a treasure hou se to be plu nde red in the
search for a com me rcia l edge.
- 74 -
Ha mil ton 's observation highlights how economic theory does not satisfactorily reflect both
the more complex factors involved in consumer decision-making and the intended
manipulation of the consumer for profit. This is not simply a pro ble m regarding the
economics of tra de marks. The seminal role of brand companies ' advertising strategies in
building social significance into the brand and subsequently commanding high returns
challenges the fundamental economic principle of consumer sovereignty. Wh ile in theory it
is assumed that consumers have pre-existing desires and wants in the market, in practice,
one finds con sum ers ' wants bei ng created and reaffirmed by the advertising industry (see
Scitovsky, 197 6). 'Th e [free] market is supposed to reflect individual cho ice s' , observes
Chomsky (cited in Bakan, 2004 ), but these choices are 'car efu lly constructed choice[ s]' by
the advertising industry. Co nsu me r preferences are not generated 'ou tsid e of the sys tem '
(Hamilton, 2003: 65) and to the extent that they emerge within and are reinforced by the
system, advertising ultimately distorts how individuals relate to and understand themselves
and others. McAlexander et al.' s (2002) concept of 'bra nd com mu niti es' not ed earlier
captures the social identification and status we gain from discerning bra nd consumption and
affiliation. As Hamilton (2003: 81) describes:
... to acquire a place in the social structure, each per son mu st express a particular set
of values ... Expressing a set of values shows others who you see you rse lf to
be ... Wh en consumers are at the poi nt of making a purchase, they are subliminally
asking themselves two questions: Wh o am I? Wh o do I want to be?

The economic justification for trade ma rk protection as fulfilling a basic and value-free
function becomes problematic from this perspective since economic theory misses how , in
practice, companies exploit brands as tools of manipulation for profit-maximisation.
Advertising strategies enable corporations to influence con sum er markets with the bra nd
image. No t least, this strategy serves the purpose of influencing the marketplace in another
way - to inhibit competition (see Economides, 1988; Bain, 1956). Ma kin g the economic
view of trade marks even more problematic is a legal perspective of trade marks which
illuminates the global pro por tion s of the pow er that well-known brands have come to
possess. This shows how bra nd owners wield additional 'po we r over' in markets through
brand ownership because of the trade ma rk rights that underpin it.

- 75 -
 Intellectual Property Rig hts and Trade Marks
The aim of inte llec tua l pro per ty law is to pro tec t 'app lica tion s of ideas and info rma tion tha t
are of com me rcia l val ue' , exa mp les bei ng cop yrig ht, pat ent s and trad e ma rks (Co mis h and
70
Llewelyn, 2003: 6) . As sub ject s of IPR s, ide as and info rma tion are the bre ad and but ter
71
of the mo dem kno wle dge eco nom y . Pro ble ma tica lly, bec aus e the se abs trac t obj ects
(intangible forms of pro per ty) are sub jec t to exc lus ive pro prie tori al con trol (Dr aho s,
72
1996) , info rma tion ma rke ts pos e dist inc t cha llen ges for a kno wle dge eco nom y (Dr aho s,
2005: 140). Leg al sch ola rs ack now led ge the 'neg ativ e cha rac teri stic ' of inte llec tua l
property law wh ich is det rim ent al to inn ova tion and its pub lic util isat ion : IPR s leg ally
empower one acto r to stop others, suc h as new ma rke t ent ran ts or use rs of inn ova tion , to do
certain things. In the case of pat ent s for exa mp le, this inc lud es eve n a thir d par ty wh o,
unaware of the first par ty's inn ova tion , ma kes a sim ulta neo us and ide ntic al ·inn ova tion or
discovery (see Co mis h and Lle wel yn, 2003).

While trade ma rks 'do not ow e the ir exi sten ce to som e act of inv ent ion , dis cov ery or
novelty' (Gr aha m & Peroff, 1987: 33) (un like cop yrig ht and pat ent s) the y non eth ele ss
function mu ch like oth er forms of IPR s by obs truc ting ma rke t com pet itio n. In fact, the
'mo nop oly nat ure ' of IP Rs (Dr aho s, 2005: 14 7) is am plif ied in the cas e of trad e ma rks ,
causing gre ater 'im pac t across ind ust ry' tha n oth er forms of IPR s (Co mis h and Lle wel yn,
2003). This am plif icat ion com es bac k to the 'go odw ill' (the inta ngi ble attr ibu te or aur a of a
brand) tha t con sum ers attr ibu te to par ticu lar bra nds . Ind eed , trad e ma rk righ ts ser ve the
purpose of allo win g trad e ma rk ow ner s to dis ting uis h the mse lve s as off erin g goo d
quality/value in the min d of con sum ers (Co mis h & Lle wel yn, 200 3: 587 ). Eco nom ide s
(1988) war ned of the ant i-co mp etit ive con seq uen ces of suc h leg al em pow erm ent : the
established rep uta tion of kno wn trad e ma rks (bra nds ) effe ctiv ely blo cks ma rke t ent ry to
new unk now n bra nds . Ear lier sup por t for this vie w is fou nd in the wo rk of ins titu tion al
economist Joe Bai n (1956: 216 ) on the cha rac teri stic s and con seq uen ces of bar rier s to new

70
According to Drahos (2005), the num ber of IPRs is growing constantly.
71
Peter Drncker (1969) coined the term 'kno wle dge eco nom y' to highlight a fundamental shift from an
economy driven by industrialisation in the twentieth century to knowledge, information and creativity/ideas as
the productive elements in a mod em economy (see also Tof fler, 1980). In a knowledge eco nom y, high value
enterprise deals in the production, management and distribution of intellectual products and services . This
work is the preserve of the 'kno wle dge wor ker' (see Drn cke r, 1966).
72
A theory of abstract objects and intellectual property is developed in Drahos (1996) .
- 76 -
competition, in which he showed that product differentiation is the mo st important barrier
to market entry:

... the advantage to established sellers accruing from buy er preferences for their
products as opposed to potential-entrant products is on the average larger and more
frequent in occurrence at large values than any other barrier to entry.

In addition, trade marks stifle competition more significantly than other forms of IP
protection because trade ma rk rights are rights of indefinite duration. In contrast, patents
and copyright are grants of monopoly that are of limited duration. The term of a standard
patent is 20 years and for a copyright ma rk it is the life of the author plus 50 years or 70
years depending on the jurisdiction. In theory , a trademark could be held in perpetuity.
Particularly where brands are highly valuable assets and are well-established, trade marks
are also more significant in economic terms and the potentially extensive ambit of trade
ma rk rights (see below) offers trade ma rk owners a more pervasive influence in the market.

The unique characteristics of trade ma rk ownership discussed here exacerbate the

mo nop oly pow er attributed to IPRs. This pow er has bec om e all the greater in the context
of the contemporary legal environment in which laws and standards pertaining to
commercial knowledge have become global in their reach und er the auspices of the Wo rld
Trade Organisation (WTO) (see Drahos, 2005). Trade ma rk law is a brilliant exa mp le of
the extension of commercial legal pow er to the global level and demonstrates how 'po we r
ove r' (de1ived from ownership of abstract objects) becomes glo bal power.

The impo1iance of trade ma rk law to bra nd companies for controlling markets was recently
demonstrated by a cadre of MN Cs that invested heavily in lobbying for the terms and rights
of the Agreement on Trade-Related aspects of Intellectual Property (TRIPS). TRIPS is an
international trade agreement conferring unprecedented legal 1ights on some of the largest
and most powerful IPR owners in the wo rld to restrict and control the activities of others in
the global market (see Bellmann et al., 2005). In a study published by the Cambridge
University Press (Bellmann et al., 2005), the authors' analysis of the TRIPS Ag ree me nt
highlights how TRIPS marks 'a significant step in the evolution of trade ma rk law '.

- 77 -
 The neg otia tion of the TR IPS Ag ree me nt was ins tiga ted by US and Eur ope an ind ust ry
groups who per cei ved that the ir sales and pro fits were bei ng dim inis hed by
misappropriation of the ir trade ma rks thro ugh cou nte rfei t signs, par ticu larl y in the
73
developing cou ntry con tex t (Be llm ann et al., 2005: 218 -21 9) . Un til the TR IPS
Agreement, the Paris Con ven tion - reg ula ting the gra ntin g and use of trad e ma rks - was the
primary reg ula tory ins trum ent for trade ma rk protection. Bu t the Par is Con ven tion did not
define the sub jec t ma tter of pro tec tion und er trad e ma rk law; this is pre cise ly wh at the
multilateral TRIPS Ag ree me nt now does. The WT O is the global reg ula tor of the TRIPS.
Several exa mp les of the changes to trad e ma rk law ma de und er the new TR IPS Ag ree me nt
justify Bel lma nn et al. (2005) in the ir ass ess me nt of the TR IPs agr eem ent as a 'sig nifi can t
evolution' in the laws gov ern ing trade ma rks , not least bec aus e of the ir glo bal reach.

A particular exa mp le is the def init ion of the sub jec t ma tter of trade ma rks (Ar ticl e 15,
'Protectable Sub jec t Ma tter ') in the TR IPS Ag ree me nt. Con ven tion ally , trad e ma rks hav e
served an origin function (see abo ve) - to giv e con sum ers a sig n wh ich ties the pro duc t to
an identifiable trade source. Thi s trad itio nal eco nom ic ass um ptio n abo ut trad e ma rk
function is cha llen ged und er the TR IPS Ag ree me nt sin ce the def init ion of a trad e ma rk has
expanded in scope to inc lud e 'an yth ing per cep tibl e to a hum an bei ng tha t cou ld ser ve as a
signaling device - vis ual ly per cep tibl e wo rds , designs, sou nds , scents, tastes or tex ture s'
(Bellmann et al., 2005: 214). Thi s def init ion of a trad e ma rk has tran sfo rme d the sub jec t
and pur pos e of trade marks: trade ma rks ser ve no lon ger as a sig n for con sum ers to ide ntif y
the specific sou rce of a goo d or service, but rath er as a sig n allo win g the m to diff ere ntia te
one ma rk from oth er trad e-m ark ed goods, two dis tinc tly diff ere nt functions. In fact, there
is nothing in trade ma rk law stip ula ting tha t trad e ma rk ow ner shi p req uire s a ma rke d goo d
to be uni que or diff ere nt from com pet ing pro duc ts. Con ver sely , a trad e-m ark ed pro duc t is
not a guarantee of uni que nes s (see van Cae neg em , 2003: 710). Thi s rein forc es the not ion
of ma rke t com pet itio n as bra nd- bas ed rath er tha n as bas ed on quality/value.

Another alteration relates to the use of a trad e ma rk (Article 15.3). Tra diti ona lly, the use of
a trade ma rk was a pre con diti on for its registration. Thi s 'pre con diti on' bec am e vie we d by

73
This was in spite of a sign ifica nt bod y of rese arch givi ng evid ence that this was a spur ious argu men t (ibid. ,
2005: 218 -219 ) .
- 78 -
industry groups as 'an impediment to modern marketing strategies' such as advertising new
goods and services to the public before these products and services are actually placed on
the market (Bellmann et al., 2005: 233). Whether or not the market demand for future
products and services exists is clearly not the issue for brand companies. As Hamilton
(2003: 80) notes, 'corporations manufacture a product, usually jus t a variation on an
existing product, and then set about creating a market for it'. For modern corporations in
the business of creating new consumer wants, the risk of advertising new goods before they
are available to the public is higher for a company if trade ma rk registration is conditional
on use. Other enterprises could launch a product using the trade mark and on this basis file
for registration of the trade mark. Under TRIPS, the mere 'int ent to use ' is now sufficient
and legally acceptable as the basis for registration of a trade mark.

Where this change becomes problematic or its repercussions potentially kno wn is with the
concurrent changes to trade ma rk laws made under the TRIPS Agreement with respect to
'we ll-k now n' trade marks (see above). Because of the subjective nature of the terminology
in TRIPS it is now possible for trade mark owners to use TRIPS to defend their trade ma rk
from being imitated by companies active in unrelated industries, on the basis that a
competitor's trade-marked good or service is 'sim ilar ' or that a 'lik elih ood of confusion'
arguably exists (Bellmann et al., 2005: 236). Given contemporary market concentration
wherein conglomerate corporations move into other industries by acquisition or mergers
unrelated to the primary sector in which they are 'we ll kno wn ' (together with the fact that
TRIPS has legitimised registration of trade marks on the intention to use rather than actual
use), well-known trade mark owners can claim intent to use their trade ma rk in non-related
industries at a future point in time, thereby blocking competition to their brand name in
unrelated industries.

At the same time, a further change to trade ma rk law which has elevated MN Cs' control
over brands relates to licensing and assignment of trade marks (Article 21 ). Whereas trade
marks have conventionally served the purpose of source identification for consumers, the
multinational, subsidiary-based nature of contemporary international trade has seen the
emergence of licensing (whereby a third party can be contracted to use a trade ma rk
ow ner 's trade mark). This practice has altered fundamentally the function of trade marks,

- 79 -
 in that this change to trade mark law unde r TRIP S elevates the trade mark to an abstr acted
'stand-alone comm odity ' and thus trade able like any other comm odity (Bell mann et al.,
2005: 249).

While econ omic theor y hold s that trade mark s are vital in a comp etitiv e mark et, the
foregoing story abou t trade marks tells of bran d control on a glob al scale. That is, it has
highlighted the espe cial relev ance of trade mark s as a vehic le for bran d control, not as tools
of legal prote ction that enco urag e mark et comp etitio n and prote ct cons umer sovereignty.
Despite their heav y lobb ying for stron ger trade mark prote ction at the glob al level , bran d
corporations are not inter ested in trade mark s per se but the trade mark as a vehicle for
controlling mark ets with their parti cular bran d. TRIP S globalises a versi on of trade mark
law that is cons isten t with the global prote ction of brands. By stren gthen ing the rules of
trade mark owne rship , bran d comp anies can now legal ly exert more perv asive and long-
lasting control in the glob al mark etpla ce. A legal tool desig ned to serve and prote ct
consumers, trade mark owne rship has beco me the weap on of bran d comp anies to keep
competitors from the mark et and to stren gthen mon opol y powe r. In short, TRIP s conta ins
rules that broa den and glob alise rights of trade mark owne rship that favo ur those comp anies
74
with large adve rtisin g budgets .

Illustrated in Diag ram 2.3 is the mean s by whic h corporations exerc ise glob al pow er in
world markets: contr ol of the bran d (image) throu gh prop rieto rial contr ol of the trade mark
(abstract object). It show s how cons umer s and prod ucers are dom inate d by MNC s throu gh
advertising and mon opol y stren gth respe ctive ly. Furth ermo re, wher e mark et comp etitio n is
concerned, trade mark owne rship gives legal powe r and prote ction to well -kno wn bran ds
that inhib it comp etitio n, throu gh mark et segm entat ion and throu gh the fostering of
psychological proc esses of cons umer 'lock -in' in those mark et segments. Thes e are the
passages and proc esses of global 'pow er over ' .

4
Drahos (2005) observes that the content ofTRlPS was 'heav ily influenced by owners of intellectual
property'. In this case of trade mark rights, trade mark owners with the most powerful and valuable brand s in
world markets stand to gain the greatest benefits from those rights.
- 80 -
 Trade Mar k
Bra nd

Competitor
Competitor
Multinational Corporation (MNC)

Suppliers/Producers/Workers Consumers

Diagram 2.3: The trade mar k as a vehicle for control in world markets in the post-industrial context.

Conclusion
The purpose of this chapter has bee n to sho w that in the post-industrial com ple x, 'po we r
ove r' has bec om e glo bal power, and corporate heg em ony has rep lac ed traditional state
hegemony. In its contemporary cor por ate and global form, 'po we r ove r' is a mo nop oly on
shaping ma rke t discourse and is ach iev ed through exclusive proprietorial ownership of
abstract objects in wo rld markets. Sup por ted by bur eau cra tic ma nag em ent and
administrative structures, the industrial giants of the twentieth century arose to pow er by
means of accumulation and scale of pro duc tion and distribution (Chandler, 1962, 1964;
Chandler et al., 1968). The bra nd- bas ed bus ine ss con tex t their organisational leadership
helped to create turned the bra nd into a key tool for ma rke t control and 'po we r ove r'. As
the chapter argued, wh en bas ed on the ownership of abstract objects in wo rld markets,
namely trade marks (the brand), 'po we r ove r' bec om es global in its exercise. This
argument was developed by com bin ing a psy cho log ica l the ory of the ima ge - to sho w how
the image, and therefore the brand, influences the individual - wit h a the ory of abstract
objects and intellectual pro per ty wh ich illuminates how the image is subject to exclusive
proprietorial control in the global market. The chapter applied this two -tie red theoretical
argument to the global coffee ma rke t as an empirical instantiation of how 'powe r ove r'
works at the global level.

Assuming this is indeed how global pow er works, the constituent elements of the dominant
pow er complex mu st be addressed if those dom ina ted by it wis h to see k alternatives -
alternatives that give bet ter expression to their values (see especially Cha pte r 5). This
thesis analyses and develops an inductively-based the ory of how global markets can be

- 81 -
used to liberate the different values 'pref eren ces' of cons umer s. The fair trade mov emen t ' s
development of alter nativ e busin ess and tradi ng mode ls has been estab lishe d and is
operational in spite of the domi nant powe r comp lex. Befo re exam ining empi rical ly how
this chall enge has been poss ible and incre ased in scale (Cha pters 5-8), the follo wing
chapter prese nts an over view of the move ment , its gove rnan ce struc tures and cons titue nt
groups.

- 82 -
 CHAPTER 3: The History ofFair Trade

The pre vio us cha pte r sho wed tha t exc lus ive pro prie tori al ow ner shi p of the bra nd (the
trad em ark ) has bec om e MN Cs' key tool for ma rke t control and val ue acc um ula tion in a
pos t-in dus tria l wo rld economy. This cha pte r outlines the con tem por ary his tory of the
global fair trade mo vem ent . Beg inn ing in the mid twe ntie th cen tury wit h an alte rna tive
trade org ani sati ona l (AT O) mo del , the fair trad e mo vem ent has sou ght to brin g abo ut a
fairer trad ing sys tem tha t em pow ers sma ll-s cal e producers. A sec ond app roa ch has sin ce
em erg ed - a pro duc t cer tifi cat ion and lab elli ng sys tem - tha t aims to ins titu tion alis e fair
trade into exi stin g com me rcia l supply, dis trib utio n and retail cha nne ls, and the orig ina l
AT O mo del has evo lve d to com ma nd gre ate r com me rcia l pow er for pro duc ers . The se two
mo del s are gov ern ed by the Inte rna tion al Ass oci atio n for Fai r Tra de (IF AT ) and the
Fai rtra de Lab elli ng Org ani sati ons Inte rna tion al (FLO) resp ecti vel y. Wh ile its ma rke t
gro wth continues to exp and globally, the fair trad e mo vem ent has bee n exp erie nci ng a dee p
split bet wee n its two ma jor con stit uen cie s and mo del s, refl ect ed in the evo luti on of the ir
different gov ern anc e institutions. The se structures are out line d her e and dra wn upo n in
late r chapters for the pur pos e of det aile d em piri cal analysis.

Fair Trade in Context: economic theory and development pra xis

Mo re tha n two -thi rds of tho se livi ng on less tha n $US1 per day (on e-fi fth of the wo rld 's
pop ula tion ) are loc ate d in rural areas and wo rk as eith er sma ll-s cal e farmers or agr icu ltur al
labourers (UN DP , 2005: 129). The se are the so- cal led 'los ers ' and wea kes t actors in the
75
inte rna tion al trade reg ime . The so- cal led 'wi nne rs' and stro nge st actors are the glo bal
bra nd cor por atio ns and wea lthy countries tha t det erm ine the 'rul es of the gam e' in glo bal
76
trade . Acc ord ing to free-trade theory, com par ativ e adv ant age will det erm ine tha t two

75
The y are not the only losers in global trade. According to one statistical report on global poverty, half the
world (close to 3 billion people) lives on less than $US 2 a day (Shah, April 3, 2006).
76
Multinational corporations constitute 51 per cent of the wor ld's wealthiest entities (Anderson & Cavanagh,
2000: i). According to the UN 's Hum an Dev elop men t Rep ort (2005: 129), the agricultural subsidies paid by
the US and EU to agricultural industry lobbies are the root cause of the failure of the Doh a Dev elop ment
Rou nd of the WT O to deliver concrete change - a round of negotiations designed to make international trade
'wo rk' for the developmental needs of developing countries. Per year, $US350 billion dollars is paid by the
US and EU governments to the most politically influential agriculh1ral farming groups - corporate
agribusiness entities and landowners, and large-scale farmers. These subsidies cause huge distortions in
- 83 -
 parties (cou ntry A and cou ntry B) will exp ort wh at eac h is mo st effi cien t at pro duc ing and
import goods it is com par ativ ely ine ffic ien t at pro duc ing . On this bas is, und er free trad e
both parties (cou ntry A and cou ntry B) are tho ugh t to be bet ter off; free trad e is a win -wi n
scenario for all. Wh ile rich cou ntri es pre scr ibe the prin cip les of trad e libe rali sati on
indiscriminately to dev elo pin g cou ntri es as the pat hw ay to pro spe rity , his tory sho ws tha t
their ow n pat hw ay tells a sto ry of gua rde d pro tec tion ism and pro trac ted ma rke t
deregulation (Ch ang , 2003). Inc rea sing ly, littl e em piri cal evi den ce sup por ts the the ore tica l
argument that trad e libe rali sati on sup por ts dev elo pm ent for the poo r, a sub jec t wh ich is of
intense theoretical and pra ctic al deb ate (see Stiglitz, 200 2; Bha gw ati, 200 5; Rod rik, 1999).

Indeed, for free trad e the ory to pro ve rou ghl y acc ura te in pra ctic e, cer tain factors - suc h as
perfect inforn1ation, per fec t access to ma rke ts and finance, and the abi lity and inc ent ive to
diversify or alte r pro duc tion me tho ds - are ass um ed to exist. Wh ere sma ll-s cal e
agricultural fan ner s and lab our ers in poo r cou ntri es are con cer ned , how eve r, the se
assumptions are erro neo us (Os terh aus in F.I. N.E ., 200 6; Nic hol ls & Op al, 200 5). Thi s is
one-fifth of the wo rld 's pop ula tion tha t free -tra de the ory and its imp lem ent atio n doe s not
accommodate. Ske wed rules imp ose d by wea lthy cou ntri es thro ugh the inte rna tion al
trading sys tem are onl y par t of the pro ble m, alb eit a larg e one. Sm all- sca le pro duc ers face
conditions tha t are con trar y to the ass um ptio ns of eco nom ic theory: a lac k of ma rke t access,
imperfect ma rke t info rma tion , lac k of acc ess to fina nci al ma rke ts, lac k of acc ess to credit,
inability to div ersi fy to oth er inc om e gen era ting sou rce s and we ak nat ion al leg al and leg al
enforcement sys tem s (see Cha pte r 2).

Within the con tex t of sma ll-s cale pro duc ers ' rea litie s and a ske we d and imp erfe ct trad ing
stmcture, the fair trad e mo vem ent em erg ed dur ing the pos t-W orld Wa r 2 con tex t to cha nge
this reg ula tory env iron me nt and its per nic iou s imp act on sma ll-s cal e pro duc ers and the ir
communities. The fair trad e mo vem ent see ks to off er the mo st dis adv ant age d pro duc ers in
developing cou ntri es ma rke t acc ess on tem1s tha t fav our the ir interests. The aim of fair
trade is to pro ve thro ugh pra ctic al exa mp le tha t trad e can ben efit all if the rule s and term s
that und erp in inte rna tion al trade are cha nge d.

global commodity market prices and undermine the livelihood and dev elop men t of rural populations and
agricultural c01m11odity-dependent economies.
- 84 -
 Defin ition of Fair Trad e F.I.N .E., Octob er 2001
Fair Trade is a tradin g partne rship based on dialog ue, transp arenc y and respec t, that seeks greate r
equity in intern ationa l trade . It contri butes to sustai nable devel opme nt by offeri ng better tradin g
condi tions to, and securi ng the rights of, margi nalise d produ cers and worke rs - espec ially in the
South. Fair Trade Organ isatio ns (back ed by consu mers) are active ly engag ed in aware ness raisin g
and in camp aignin g for chang es in the rules and practi ces of conve ntiona l intern ationa l trade.

Figur e 3.1: F.I.N. E. Defin ition of Fair Trade .

The alternative 'rule s of the game ' that the fair trade mov emen t prom otes inclu de (1) direct
purc hasin g from demo crati cally -orga nised prod ucers , (2) transparent and long -term tradi ng
relationships, (3) agreed mini mum prices, and (4) a social prem ium for inves tmen t in
capacity-building, technical assistance and social deve lopm ent projects (see Barr att-B rown ,
1993). By contrast with the conv entio nal buye r-dri ven supp ly chain in the coffee mark et in
whic h small-scale producers are struc tural ly disad vanta ged by the num ber of inter medi aries
and value-distribution (see Chap ter 2), the following diagr am show s how fair trade
principles alter this mark et structure:

own Pay minim um

----- --
FT price +
/
Small
fanne rs .e,ayment
.....
.
Coop ( owns mill or
social premi um

.......
- - - - -~ Drink er

0 Impo rter
- - - - -~ Retail Outle t
... contro ls millin g)
00 ~
~ (Roas ter)
e>v -n"rts
0 Osell s coffee rmlled - - - - -~ Resta urant/ Cafe
0 cherri es coffee

Diagr am 3.1: Fairtr ade coffee suppl y chain . Sourc e: Nicho lls & Opal, 2005.

This alternative mod el is desig ned to empo wer small-scale prod ucers . In cooperatives,
producers can pool resources to gain access to infor mati on on mark et prices, trends and
requirements. Access to markets and more stable mark et conditions also tend to exist for
Fairtrade cooperatives beca use of the long-term, trans paren t tradi ng relat ionsh ips requ ired
of traders, plus the paym ent of a mini mum price77. The social prem ium enables producers
to build business capacities and to diversify to alternative and/or additional sources of

77
This tends to be a feature of produ cers ' relatio ns with Fair Trade Organ isatio nal (FTO ) partne rs in
consu mer marke ts and less a featur e of conve ntiona l trader s who are sellin g Fairtr ade produ cts (see below ;
see also Chapt er 7; Bezen con & Blili, 2006; Traid craft, 2003 , 2004) .
- 85 -
 business in co m e; a n d at a c o m m u n it y level, to fi n an ce the c o n st ru c
ti o n o f c le a n a n d
proximate w a te r fa ci li ti es fo r d o m e st ic u se a n d p ro d u c ti o n , h e a lt h fa ci li
ti es a n d ac ce ss to
medicines , c o m m u n it y m ic ro -c re d it sc h e m e s a n d c o m m u n it y b a n
k s, h o u si n g a n d
infrastructure su c h as ro a d s, el ec tr ic it y , st o ra g e w a re h o u se s as w e ll
as sc h o o ls a n d
resources for e d u c a ti n g c h il d re n (s ee F L O , 2 0 0 6 a ). In sh o rt , fair tr a d e
se e k s to tr a n sf o rm
conventional b u y e r- d ri v e n su p p ly c h a in s b y sh o rt e n in g the su p p ly
c h a in to re -l in k
producers a n d c o n su m e rs a n d to m a x im is e p ro d u c e rs ' return. B y d o in g
so, p ro d u c e rs c a n
finance th e ir li v el ih o o d , b u si n e ss d e v e lo p m e n t, a n d c o m m u n it y d e v e lo p m
e n t.

Whilst re se a rc h o n the im p a c ts o f fair tr a d e re m a in s in its in fa n c y (Y o u n

g & U tt in g , 2 0 0 5 :
140), im p a c t st u d ie s n o n e th e le ss p a in t a g e n e ra ll y p o si ti v e p ic tu re re g a rd
in g th e d ir e c t a n d
indirect b en ef it s for sm a ll -s c a le p ro d u c e rs ' d e v e lo p m e n t. A n u m b e
r o f sc h o la rs h a s
observed the c a p a c it y o f fair tr a d e to re d u c e p ro d u c e rs ' v u ln e ra b il it y
, st re n g th e n th e ir
bargaining p o si ti o n , in c re a se o rg a n is a ti o n a l sk il ls a n d v a lu e -a d d in g c a p
a b il it ie s, a n d b u il d
capacity in b u si n e ss , c o m m u n it y a n d p o li ti c a l te rm s (s ee M u rr a y et al.
, 2 0 0 3 ; R a y n o ld s,
2000; R a y n o ld s, 2 0 0 2 ; R a y n o ld s et al., 2 0 0 4 ; T a ll o n ti re , 2 0 0 2 , 2 0
0 0 ; T a y lo r, 2 0 0 2 ;
Perezgrovas & C e rv a n te s, 2 0 0 2 ; M e n d e z , 2 0 0 2 ; B a c o n , 2 0 0 5 ). T h e fo
ll o w in g il lu st ra ti v e
examples tell o f th e d e v e lo p m e n ta l p o w e r o f fair tr a d e p ri n c ip le s fo r im
p ro v in g p ro d u c e rs '
gains fr o m in te rn a ti o n a l tr ad e.

The K a g e ra C o o p e ra ti v e U n io n (K C U ) is a c o ff e e fa rm e rs ' c o o p e ra ti v
e in n o rt h -w e st e rn
Tanzania c o m p ri se d o f 9 0 ,0 0 0 sm a ll -s ca le fa rm e rs in 124 v il la g e c o o p e ra
ti v e s. S in c e 1988
the K C U h as b e e n se ll in g in c re a si n g a m o u n ts o f its m e m b e rs ' c o ff e e to
F a ir tr a d e m a rk e ts .
During the 1960s, th e T a n z a n ia n c o ff e e m a rk e ti n g b o d y e st a b li sh e d
a n in st a n t c o ff e e
powder factory, w h ic h h a d si n c e la in n e a r- d o rm a n t in its p ro d u c ti o n ca p
ac it y . T h e factory,
named 'T a n ic a ', w a s la te r p ri v a ti se d , a n d th e K C U w a s g ra n te d p e rm is
si o n to b u y a fe w
shares in T a n ic a e a c h y e a r w it h the K C U 's F a ir tr a d e in c o m e . A ft e r 14 y
e a rs o f d o in g so, in
2004 the K C U b e c a m e o w n e r o f 51 p e r c e n t o f T an ic a. A im in g to d iv
e rs if y in c o m e a n d
reduce d e p e n d e n c e o n e x p o rt s, th e K C U 's p la n is n o w to m u lt ip ly its in st
a n t co ff ee sa le s b y
selling it n at io n -w id e. T h e U n io n h as al so u se d its F a ir tr a d e in c o m e to b
u il d th re e sc h o o ls ,
hire m o re sc h o o l te a c h e rs a n d p ro v id e h e a lt h y fo o d fo r th e ir ch il d re n . F
u rt h e r in v e st m e n ts

- 86 -
 in ch ild re n' s sc ho ol bo ok s, bl ac kb oa rd s an d sc ho ol bu ild in g re pa ra tio ns are cu rre nt ly be in g
m ad e (FLO, 2005b).

A no th er ex am pl e is th e Es tw at in i K itc he n, a ja m an d je lly fa ct or y in Sw az ila nd , So ut h

Af ric a78 . Tw o hu nd re d w om en an d 20 ha nd ic ap pe d vi lla ge rs w or k as pa rt of the bu sin es s,
an d the in gr ed ie nt s are gr ow n by Sw az i fa rm er s an d pr oc es se d by a w om en -o nl y
cooperative. In ad di tio n to ja m s an d je lli es , th e K itc he n also sells w ov en ba sk et s an d
w oo de n sp oo ns ca rv ed by ha nd ic ap pe d vi lla ge rs w ho , be in g ec on om ic al ly m ar gi na lis ed ,
ha ve few ot he r so ur ce s of income. Th e pr of its fro m th e Es tw at in i K itc he n pr od uc t ra ng e are
in ve ste d in yo ut h ce nt re s w hi ch ho us e 20 0 A ID S or ph an s an d str ee t ch ild re n. Es tw at in i
Ki tc he n sells its go od s in the re ta il ou tle ts of its fair tra de pa rtn er s in N or th er n m ar ke ts,
na m el y Al te rE co an d SE RR V In te rn at io na l (N ic ho lls & Op al , 20 05 : 14 4- 14 5) .

A th ird ex am pl e is El Ce ib o, a 70 0- m em be r fa rm er co co a co op er at iv e in th e Ri o Be ni
re gi on of Bolivia. Se t up in 1978 by hi gh la nd m ig ra nt s, th e El Ce ib o co op er at iv e is m ad e
up of 36 co op er at iv es an d has re ce iv ed at te nt io n as a fa rm er -o w ne d co m pa ny tra di ng
in te rn at io na lly w ith a un iq ue so ci al or ga ni sa tio na l str uc tu re pr em is ed on eq ui ta bl e in co m e
earnings, re ci pr oc ity , so lid ar ity an d co ns en su s- bu ild in g as se m bl ie s (T iff en & Za de k, 1998:
25; Or ga ni c Tr ad er , 2006). A ll m em be rs sp en d tim e at th e co co a fa ct or y or in
ad m in ist ra tio n in th e capital, La Pa z, to en su re all m em be rs de ve lo p sk ill s an d training.
Fa rm er s re se rv e so m e of th ei r re ve nu e fo r so ci al pr oj ec ts in or de r to en su re th at co m m un ity
de ve lo pm en t an d te ch ni ca l tra in in g is av ai la bl e, as w el l as to pr ov id e a sa fe ty fu nd fo r
m ed ic al em er ge nc ie s (O rg an ic Tr ad er , 2006). In 1995, El Ce ib o em ba rk ed on th e
co ns tru ct io n of a ne w fa ct or y w ith m od em in sta lla tio ns to im pr ov e pr od uc t qu al ity an d
va lu e- ad di ng .

A final ill us tra tiv e ex am pl e is K ua pa Ko ko o, a co co a fa rm er s' co op er at iv e co m pr ise d of

so m e 48 ,0 00 sm al l sc al e co co a gr ow er s lo ca te d in Ghana. Es ta bl ish ed by N an a Fr im po ng
Ab eb re se in 1993 , w ith th e as sis ta nc e of th e U K -b as ed Th ird W or ld In fo rm at io n N et w or k
Ltd. (T W IN Ltd.), K ua pa wa s in te nt on in cr ea sin g its fa rm er m em be rs ' po w er an d

78
A British volunteer helped to set up the Estwatini Ki tch en to enable marginalised wo me n and the
handicapped to earn an income and be em po we red by the social organisation of the business.
- 87 -
 presentation wi th in the co co a m ar ke t. A t its 1997 A G M , K ua pa de ci de d to se t up D iv in e
Chocolate Ltd., de sig ne d to in cr ea se th ei r sh ar e of pr of its fro m the co co a th ey pr od uc ed ,
increase th ei r kn ow le dg e of th e co ns um er ch oc ol at e m ar ke t, an d to pr od uc e th ei r ow n
chocolate br an d for sale in th e U K m ar ke t (K ua pa Ko ko o, 20 06 ; D iv in e Ch oc ol at e Ltd.,
2006). Th e K ua pa K ok oo Fa rm er s' Tr us t (KKFT), a un it of K ua pa K ok oo , wa s se t up to
receive the pr em iu m s ga in ed fro m Fa irt ra de an d ov er se e the us e of th es e funds m ea nt for
the be ne fit of K ua pa fa rm er m em be rs . Th ei r fair trade pa rtn er sh ip in D iv in e Ch oc ol at e Ltd.
has ensured th at the co co a fa rm er s ha ve co ns ist en tly re ce iv ed a be tte r deal, en ab lin g th em
to earn a liv in g fro m th ei r skills, an d it ha s pr ov id ed tra in in g an d ac ce ss to m ar ke t
information. Be tw ee n 1995 an d 20 05 , on e hu nd re d pr oj ec ts ha ve be en fin an ce d by th e
KKFT, in cl ud in g the dr ill in g of bo re ho le s, in co m e di ve rs ifi ca tio n an d ge ne ra tio n pr oj ec ts
(such as w om en s' so ap pr od uc tio n) , a cr ed it un io n for cr ed it an d ba nk in g se rv ic es , sc ho ol s
and ed uc at io n (in cl ud in g th e pr ov isi on of ed uc at io na l re so ur ce s) , sa ni ta ry facilities an d the
purchase of 3 ve hi cl es (K ua pa Ko ko o, 2006).

In addition to the po sit iv e ou tc om es of fair tra de for pr od uc er s, re se ar ch er s also no te the

positive im pa ct on co ns um er s in th e pr oc es s of so ci al ch an ge in ec on om ic va lu es , no rm s
and pr ac tic es (L ev i & Li nt on , 20 03 ; M ur ra y & Ra yn ol ds , 2000: 67; Ra yn ol ds , 20 00 ;
Hudson & Hu ds on , 2003). As M ur ra y an d Ra yn ol ds (2000: 67) ob se rv e, th ro ug h its
awareness-raising activities, fair tra de 'ed uc at e[ s] co ns um er s to m ov e be yo nd th ei r ow n
self-interest in m ak in g pu rc ha sin g ch oi ce s'. Fo r others, it 'u nv ei ls ' (H ud so n & H ud so n,
2003: 1) an d 'm ak es vi sib le ' th e 'in vi sib le ha nd of th e m ar ke t' (R ay no ld s, 20 00 : 306),
serving to tri gg er th e co ns um er 's 'p ol iti ca lly crucial le ap fro m pa ss iv e co ns um er is m to
active en ga ge m en t' (H ud so n & H ud so n, 2003: 1) (see Ch ap te r 5). A t bo th th e pr od uc er
and co ns um er ends of in te rn at io na l bu sin es s an d trade, then, the fair tra de m ov em en t is
challenging the co nd iti on s th at su pp or t co rp or at e co nt ro l of w or ld m ar ke ts (s ee Ch ap te r 2).
While th es e po sit iv e de ve lo pm en ts ca n be do cu m en te d today, w he re an d ho w di d this
m ov em en t be gi n, an d ho w has it ev ol ve d?

Fair Trade as Political Activism an d 'Alternative Tr ad e'

The ea rli es t signs of fair trade tra ce ba ck to th e po st- W or ld W ar 2 co nt ex t of 1946 wi th a
US -b as ed re lig io us or ga ni sa tio n no w kn ow n as Te n Th ou sa nd Vi lla ge s (K oc ke n, 20 03 ;

- 88 -
 W ill s in F.I .N .E. , 20 06 : 9). Te n Th ou san d Vi lla ge s tra de d dir ec tly wi th pro du ce rs of
ne ed lew ork fro m Pu ert o Ri co , joi ne d so on aft er by SE RR V Int ern ati on al (al so ba sed in the
US ) wh ich be ga n tra din g wi th pro du ce rs in the So uth . By 1958 , the first alt ern ati ve tra de
org an isa tio n (A TO ) wa s est ab lis he d to sel l the se go od s to US co ns um ers . In Eu rop e, the
go od s of Ch ine se ref ug ee s we re so ld to co ns um ers thr ou gh Ox fam UK sh op ou tle ts.
Sim ult an eo us ly, gro up s in the Ne the rla nd s set up im po rti ng org an isa tio ns for pro du ce rs '
go od s un de r the na me Fa ir Tr ad e Or ga nis ati e (19 67 ). Pa ral lel to the em erg en ce of the se
pio ne eri ng rel igi ou s an d ch ari ty org an isa tio ns , at UN CT AD 's De lhi (19 68 ) co nfe ren ce the
Ge ne ral ise d Sy ste m of Pr efe ren ce s (G SP ) wa s est ab lis he d as a me an s to cre ate an eq uit ab le
tra din g reg im e be tw ee n No rth an d So uth co un tri es. Th is wa s sti mu lat ed by de ve lop ing
co un tri es' pre ssu re for the cre ati on of an eq uit ab le tra din g sy ste m fro m wh ich the y wo uld
rec eiv e the be ne fit s of int ern ati on al tra de to su pp ort the ir so cio -ec on om ic de ve lop me nt.
Th eir ad vo ca cy for 'tra de no t aid ' foc us ed att en tio n on No rth ern ap pro pri ati on of va lue
fro m the So uth for mi nim al ret urn , de liv ere d by wa y of (ti ed ) int ern ati on al aid (K oc ke n,
20 03 ; Lo w & Da ve np ort , 20 05 : 145).

W ith in thi s po lit ica l co nte xt an d str ug gle for na tio na l ec on om ic lib era tio n fro m W est ern
co un tri es' ow n int ere sts , the AT Os pio ne eri ng alt ern ati ve ap pro ac he s to tra de pla ye d a vit al
rol e in co ns um er ed uc ati on an d aw are ne ss- rai sin g an d co nc om ita ntl y in the sp rea d of fai r
tra de ac tiv ism an d su pp ort . Th e mo ve me nt de ve lop ed thr ou gh ou t the 19 70 s to 19 90 s
am on g po lit ica lly mo tiv ate d ind ivi du als bo th in co ns um er co un tri es an d La tin Am eri ca ,
Af ric a an d As ia (L ow & Da ve np ort , 20 05 ). Th rou gh mi ssi on ary co nta cts , ex po rt sal es of
ha nd cra fts fro m pro du ce r gro up s pro vid ed va lua ble 'su pp lem en tar y inc om e' for ho us eh old s
(la rge ly run by wo me n wh o are ec on om ica lly dis ad va nta ge d) (K oc ke n, 20 03 ; see also
Lit rel l & Di ck so n, 19 99 ). Ha nd cra fts we re so ld thr ou gh wo rld sh op s or AT O ret ail ou tle ts
(as rem ain s the ca se tod ay (se e be low )). Th e tra din g lin ks cre ate d be tw ee n So uth an d
No rth AT Os pra cti sed the ph ilo so ph ica l ten ets of fai r tra de - pa rtn ers hip , dia log ue ,
tra ns pa ren cy , res pe ct - as a me an s of cre ati ng an eq uit ab le int ern ati on al tra din g str uc tur e
(K oc ke n, 20 03 ). M an y AT Os we re est ab lis he d in the se So uth ern reg ion s wi th the he lp of
de ve lop me nt org an isa tio ns wi th su bs idi ary bra nc he s. Th is su pp ort he lpe d to org an ise
pro du ce rs int o co op era tiv es an d bu ild ca pa cit y, est ab lis h so cia l de ve lop me nt ini tia tiv es, an d
en ab le pro du ce rs to ex po rt the ir pro du ct.

- 89 -
 Despite gr ow in g awareness in co ns um er m ar ke ts ab ou t trade in ju sti ce th ro ug h A TO s'
campaigning efforts , the pr od uc t ra ng e th ey of fe re d was lim ite d pr im ar ily to ha nd cr af ts 79
and the co ns um er m ar ke t re m ai ne d small. As Ta llo nt ire (2000: 168) wr ite s, 'th e pr od uc er
focus of earlier periods was as so ci at ed w ith the ne gl ec t of the co ns um er . As pr of its
dropped and so m e A TO s faced ba nk ru pt cy , m an y A TO s be ga n to lo ok to wa rd s co ns um er
needs and to ba la nc e these wi th th os e of pr od uc er s'. By th e 1990s, it be ca m e cl ea r th at the
Northern A TO m od el - of religious or ch ar ity or ig in - w as pr ov in g un su sta in ab le an d
inadequate for be ne fit in g pr od uc er s in sig ni fic an t terms an d in sig ni fic an t nu m be rs . Lo sin g
their 'u ni qu e selling pr op os iti on ' m or e ge ne ra lly to a ris in g in te rn at io na l m ar ke t in 'ex ot ic '
goods, AT Os w er e also re ce iv in g re qu es ts fro m th ei r co re co ns um er m ar ke t for m or e
guarantees and pr od uc t in fo rm at io n - A TO s' 'w or d' was in su ffi ci en t (L ow & D av en po rt,
2005: 146). To address the dw in dl in g of an al re ad y sm al l m ar ke t, th e 1990s sa w ne w
approaches ad op te d an d structures em er ge to in co rp or at e a focus on co ns um er m ar ke tin g,
product de ve lo pm en t an d pr od uc t qu al ity (Tallontire, 2000).

Institutional D ev el op m en t (l 990s)
Product certification an d the Fa irt ra de La be lli ng O rg an isa tio ns In te rn at io na l (F LO )
A new - bu t no t substitute - ap pr oa ch th at em er ge d to ad dr es s the pr ob le m of m ar ke ts w as
the pr od uc t certification system. A t the en d of the 1980s, a pr ie st w or ki ng w ith M ex ic an
coffee pr od uc er s and affiliated w ith a D ut ch re lig io us or ga ni sa tio n, So lid ar id ad , de ve lo pe d
the idea of a pr od uc t label to create a ne w w ay to en ab le a br oa d co ns um er m ar ke t to
engage wi th fair trade. Th e id ea was simple: go od s th at w er e bo ug ht , tra de d an d so ld on
fair trade terms co ul d be vi su al ly di sti ng ui sh ed an d re co gn ise d on an y su pe rm ar ke t sh el f by
the pr od uc t certification label; th ey w ou ld no t ne ed to be so ld th ro ug h A TO outlets to
convey or ensure th ei r un iq ue pr od uc tio n an d tra di ng value. Th is tool w ou ld en ab le a
product to be so ld in a w id er nu m be r an d ra ng e of outlets w he re th e m aj or ity of co ns um er s
shopped. Th e certification an d labelling sy ste m that w as su bs eq ue nt ly de ve lo pe d in the
Netherlands was called 'M ax H av el aa r' - th e na m e of a fictional D ut ch lit er ar y ch ar ac te r
who ex po se d the ex pl oi ta tio n of coffee farmers in Ja va ne se co lo ni es for th e D ut ch co ffe e
market. A TO s th ro ug ho ut Eu ro pe in sti ga te d the es ta bl ish m en t of la be lli ng or ga ni sa tio ns in

79
Trading in coffee between coffee producers in Guatemala and Fair Tr ad e Organisatie in the Netherlands
began only in 1973 .
- 90 -
 their countries - cu lm ina tin g in the est ab lis hm en t of the Fairtrade Labe lling Or ga nisation s
International (FLO) in 1997 , an org anisation representing the no w 20 Na tio na l Initiatives
80
that exist in 21 countries .

To da y, FL O is the wo rld wi de standard-setting and certification org an isa tio n for lab ell ed
Fairtrade. FL O' s mi ssi on is to 'im pro ve the po sit ion of the po or an d dis ad va nta ge d
producers in the de ve lop ing world, by setting the Fairtrade standards an d by creating a
fra me wo rk that enables trade to tak e pla ce at conditions res pe cti ng the ir int ere st' (FLO
2006a). Co ns ist ing of two organisations , FL O e.V. and FL O Cert. (see dia gra m be low ),
FLO has 3 responsibilities: set tin g the international Fa irt rad e standards, pro du ct
certification and trade auditing , an d pro du ce r su pp ort services.

80
Th e countries in wh ich Nls exist (and thus Fairtrade markets operate) include: Au stria, Be lgi um, Canada,
Denmark, France , Germany , the UK, Italy, Ireland, Japan, Luxem bur g, the Ne the rla nds, No rw ay, Finland,
Sweden, Switzerland, US A, Australia and Ne w Zealand, Spain , Mexico.
- 91 -
 Pro duc er Networks FLO Me etin g 20 National
Latin America (CLAC) Sta keh old er of Me mb ers Lab elli ng Initiatives
~ ~ ~
Africa (AFN) For nm (M oM ) (in 21 countries)
Asia (NAP)
l l

Traders i
I Boa rd of
Directors

--- --- --- --- --- --- --- --- --- --- --- - - . --- --- --- --- --- -- --- --- -- - --- - --- ---
Certification Standards
Committee Committee

General
Appeals Dir ect or
I
I Committee
I

Dir ect or Standards Pro ducer Fin anc es &

FLO Cert Un it Bu siness Central
Un it Services
I
I I
Pro duc er Tra de Fin anc es I
Certific- Certific- and Local Lia iso n Officers in
ation ation Central the Pro duc er Countries
Un it Un it Services
I
I
Regional & Local Inspectors
in the Pro duc er Countries

FLO Cert FLO e.V.

I
- - -- - --- --- --- -

Diagram 3.2: FLO Organisational Structure at 2004/05. Source: FLO 2005b.

FLO e. V. is a mu lti -st ak eh old er ass oc iat ion inv olv ing FL O' s 20 me mb er org an isa tio ns

(National Initiatives), pro du ce r org an isa tio ns , traders an d ex ter na l experts. It de ve lop s an d
reviews sta nd ard s an d assists pro du ce rs in ga ini ng an d ma int ain ing ce rti fic ati on in ord er to
81
capitalise on ma rke t op po rtu nit ies . Fa irt rad e sta nd ard de ve lop me nt (fo r an y pro du ct)
involves de ve lop ing pr od uc er or ga nis ati on al req uir em en ts (in clu din g ge ne ric pro du ct
group sta nd ard s - on e for sm all ho lde r co op era tiv es an d on e for pla nta tio ns), su sta ina ble
pr od uc tio n req uir em en ts, an d tra de sta nd ar ds for req uir em en ts be tw ee n pro du ce r, ex po rte r

81
FLO ' s standards for coffee were developed on the basis of the pre-existing Nl s' coffee standards, wh ich
have served as a template for subsequent pro duc t standards. Comprised of 2 FLO staff, 3 NI representatives,
1 ATO , producer group, commercial trader and independent actor, the Standards & Policy Committee meets 5
to 6 times per year (Nicholls & Opal, 2005).
- 92 -
 82
and im po rt er relations . O nc e pr od uc t st an da rd s ha ve be en de ve lo pe d and ap pr ov ed ,
pr od uc er s are in sp ec te d for th ei r co m pl ia nc e w it h the standards.

F LO Cert. w or ks w it h m or e th an 60 local in sp ec to rs to ca rr y ou t this w or k w hi ch in vo lv es

the following steps. O nc e a pr od uc er gr ou p has re gi st er ed for an in sp ec tio n, a FL O
in sp ec to r spends the requisite pe ri od of ti m e for the si ze of the co op er at iv e or pl an ta ti on
in vo lv ed (e.g. ar ou nd on e or two weeks). E xi st in g FL O -c er ti fi ed pr od uc er gr ou ps are re-
in sp ec te d annually, and in addition, at an y tim e ra nd om in sp ec ti on visits are co nd uc te d by
FL O inspectors. Fo ll ow in g th e in sp ec tio n of a pr od uc er gr ou p, the FL O in sp ec to r w ri te s a
co m pl ia nc e- as se ss m en t re po rt on the gr ou p' s ad he re nc e to th e re le va nt pr od uc t st an da rd s,
83
w hi ch the C er tif ic at io n C om m it te e re vi ew s to de te rm in e a gr ou p' s co m pl ia nc e 84 .

O nc e the standard-setting, pr od uc er in sp ec tio ns an d C er tif ic at io n C om m it te e ap pr ov al s are

85
finalised, traders can ap pl y to the N I in th ei r re sp ec tiv e co un tr y to pa rt ic ip at e in FL O ' s
system. A pp ro ve d traders are au di te d on th ei r Fa ir tr ad e tr an sa ct io ns , su bm it ti ng to FL O
an d/ or the N I tr an sp ar en t reports of all sales an d pu rc ha se s of Fa ir tr ad e pr od uc e to the po in t
of labelling the final pr od uc t. O ve rs ee n by the C er tif ic at io n an d A pp ea ls C om m it te e, FL O
conducts trade audits of pr od uc er s, ex po rt er s an d im po rt er s. W he n an im po rt er bu ys the
pr od uc t from the Fa ir tr ad e co op er at iv e, th e N I in the co un tr y in w hi ch th at pr od uc t is
in te nd ed for sale tracks the su pp ly chain, an d the co m pa ni es th at bu y th e Fa ir tr ad e la be ll ed
pr od uc t from FL O re gi st er ed traders re qu ir e a lic en se fr om the N I in or de r to sell th at
product. T hu s FL O Cert. ensures th at pr od uc er s an d tr ad er s co m pl y w it h th e st an da rd s an d
th at pr od uc er s in ve st the be ne fi ts re ce iv ed th ro ug h Fa ir tr ad e into de ve lo pm en t pr oj ec ts . It

82
Th e Co m m itt ee ap pr ov es ne w - an d am en dm en ts to ex ist in g - Fa irt ra de pr od uc t sta nd ar ds , ad dr es
sin g
pr op os al s to dr af t ne w Fa irt ra de pr od uc t sta nd ar ds , ch an ge s to m in im um pr ic es at ta ch ed to ex ist in
g Fa irt ra de
pr od uc ts an d ch an ge s to pa rti cu la r as pe ct s of ex ist in g Fa irt ra de sta nd ar ds (w he th er in re la tio n to
tra de
sta nd ar ds , pr od uc er or su sta in ab ili ty re qu ire m en ts) . Gi ve n th e re la tio ns hi p be tw ee n Fa irt ra de sta
nd ar ds an d
its str at eg ic ob je ct iv es , th e St an da rd s & Po lic y Co m m itt ee ca n se ek FL O Bo ar d gu id an ce an d cl ar
ifi ca tio n
ov er ce11ain issues.
83
Si m ila r to th e St an da rd s & Po lic y Co m m itt ee , th e Ce rti fic at io n Co m m itt ee m ee ts 5 to 6 tim es pe
r ye ar , an d
is co m pr ise d of the sa m e nu m be r of sp ec ifi c ac to rs (2 FL O staff, 3 N I re pr es en ta tiv es , 1 A TO , pr
od uc er
gr ou p, c01mnercial tra de r an d in de pe nd en t bo dy ).
84
Pr od uc er gr ou ps th at are ju dg ed as un su cc es sf ul in fu lfi lli ng th e re qu ire m en ts ca n ap pe al th e de ci
sio n to th e
Ap pe al s Co m m itt ee ( co m pr ise d of FL O Bo ar d m em be rs an d ex pe rts ap po in te d fo r th e sp ec ifi c ca
se in
qu es tio n) wh os e de ci sio n on pr od uc er co m pl ia nc e is co nc lu siv e.
85
Tr ad er s in cl ud e ex po rte rs , im po rte rs an d m an uf ac tu re rs of a pr od uc t.
- 93 -
 coordinates all ta sk s an d pr oc es se s all in fo rm at io n re la te d to the in sp ec tio n of pr od uc er s,
trade auditing an d certification.

In early 20 04 , FL O Cert. wa s le ga lly se pa ra te d from FL O e.V. as a su bs id ia ry of FL O (see

Diagram 3 .2). Un til 20 04 , FL O wa s on e or ga ni sa tio n an d pr od uc er ce rti fic at io n, sta nd ar d-
setting and pr od uc er or ga ni sa tio ns ' in vo lv em en t in FL O co m m in gl ed . Th is wa s du e to the
developmental ob je ct iv es of Fairtrade. Fo r m an y pr od uc er or ga ni sa tio ns , ac ce ss in g
markets - ev en fair tra de m ar ke ts - is ve ry di ffi cu lt w ith ou t as sis ta nc e fro m FT Os . U nd er
this pr e- 20 04 ar ra ng em en t, FL O bo th se t sta nd ar ds an d m on ito re d co m pl ia nc e, an d
producers w er e ex em pt from ce rti fic at io n pa ym en ts - th es e w er e su bs id ise d by co ns um er s
(Tallontire, 2002). Si nc e 20 04 , th e se pa ra tio n of FL O into sta nd ar d- se tti ng an d sta nd ar d
inspection/certification fu nc tio ns is in ac co rd an ce w ith IS O St an da rd s fo r ce rti fic at io n
bodies, an ac cr ed ita tio n w hi ch FL O wi sh es to ga in to m iti ga te th e po te nt ia l for co nf lic t of
interest. It is also de sig ne d to he lp FL O co ve r the co st of in sp ec tio n an d tra de au di tin g
functions for bo th pr od uc er s an d traders, w hi ch bo th gr ou ps no w pa y to FL O Cert.
(Doppler & G on za le z Ca ba na s, 2006: 54-55).

The In te rn at io na l Fa ir Tr ad e As so ci at io n (IF A T)
Parallel to th e de ve lo pm en t of FL O an d th e N is du rin g th e 19 90 s w as th e fo rm al
organisation of Fa ir Tr ad e Or ga ni sa tio ns (th en Al te rn at iv e Tr ad e Or ga ni sa tio ns )
86
worldwide . In 1989, th e In te rn at io na l Fe de ra tio n for Fa ir Tr ad e (IF A T) (n ow th e
International Fa ir Tr ad e As so ci at io n) wa s established. IF A T is a gl ob al as so ci at io n for th e
fair tra de in du str y of ne ar ly 30 0 FT O s of pr od uc er s an d tra de rs ( of la be lle d an d no n-
labelled pr od uc ts) sit ua te d in ne ar ly 70 co un tri es 87
. IF A T ex ist s to 'im pr ov e the liv el ih oo ds
and we ll be in g of di sa dv an ta ge d pr od uc er s by lin ki ng an d pr om ot in g Fa ir Tr ad e
Organisations an d sp ea ki ng ou t for gr ea te r ju st ic e in w or ld tra de ' (IF AT , 20 06 a) . IF A T
does this th ro ug h th re e core or ga ni sa tio na l activities: 1) de ve lo pi ng the m ar ke t fo r fa ir
trade (p ro vi di ng in fo rm at io n on m ar ke t op po rtu ni tie s to IF A T m em be rs , or ga ni sin g
conferences an d wo rk sh op s an d ac tin g as an in fo rm at io n centre); 2) bu ild in g trust in fa ir

86
For the purposes of this thesis, the section on IFAT in this chapter deals only with IF AT 's emergence. Its
operation, system of governance and evolution are elaborated and examined in Chapter 8.
87
Fair Trade Organisations have Fair Trade principles at the core of their business model (IF AT , 2006j).
- 94 -
 trade (IF AT operates a three-levelled monitoring system including self-assessment, mutual
review and external verification and members who are successful in their registration
process use the Fair Trade Organisational M ark (FTO Mark) to distinguish themselves in
the market); 3) sp ea kin g ou t for fai r trade (IFAT develops the voice of fair trade by
building the IF AT network, building capacity of its members, and through this, conducting
advocacy campaigns more effectively). It also works through the F.I.N.E. Advocacy
88
Office to lobby political institutions and coordinate international campaigns and advocacy
(IF AT, 2006b ). The political achievements of the movement at regional and international
levels to date are documented in Appendix A.

...,,
I Sub-committee
..j~
~ International
Secretariat
Working groups I
(4 sta ff+ volunteers)
....
Executive Committee
~- (1 regional representative fro m 5 regions: Latin America,
Africa, Asia, Europe, North Am eric a & Pacific Rim)
....
Global
I General Ass em bly
A~
I Level
--- --- --- --- --- --- - -------------------------- A ~- --- --- --- --- --- --- ---
Regional/
I Regional Office
National
.... Level
National & Regional National & Regional National & Regional
Platforms Platforms Platforms
(Executive Council) (Executive Council) (Executive Council)
....
I • •
Associates Me mb er Organisations Associates (Individuals)
(Organisations)

Diagram 3.3: IFAT Organisational Structure.

IF AT consists of three main groups: its members, the Executive Committee, and the IF AT
Secretariat. Members are located in five different regions, each region represented by one
elected representative on the IF AT Executive Committee. Today, more than two-thirds of
IF AT 's members are from Southern regions (around 60 per cent of members are from the

88
The F.I.N.E. Advocacy Office in Brnssels, Belgium, was set up with the purpose of influencing European
policymakers. The acronym 'F. I.N .E. ' represents the four networks that support, manage and fund this
organisation, FLO, IF AT, NEWS! and EFTA. F.I.N.E. is a discussion fornm for these four international
associations which collectively realised the need for strategic cooperation and coordination. F.I.N.E. exists to
facilitate cooperation between these members and their networks on issues of advocacy/ campaigning and Fair
Trade standards and monitoring (IFAT, 2006b).

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 Middle East, Africa, As ia and La tin America). IF AT me mb ers in Asia, Af ric a and Latin
America ha ve established regional pla tfo rm s (the As ia Fa ir Tr ad e Fo rum (2001), the
Cooperative for Fa ir Tr ad e in Af ric a (C OF TA ) (2005), the As so cia cio n Latino Am eri ca na
de Commercio Justo (2006) and soon, Europe. Na tio na l pla tfo rm s are also be ing rap idl y
established within these regions including EC OT A Fa ir Tr ad e Fo rum in Ba ng lad esh , Fa ir
Trade Group Nepal, As so cia ted Partners for Fa ir Tr ad e Philippines, Fa ir Tr ad e Fo rum Ind ia
and Ke ny a Federation for Alternative Tr ad e (K EF AT ) (see Ch ap ter 8 for further detail on
IF AT 's operations).

The Executive Co mm itt ee is the sec on d ke y group in IFAT. It is a vo lun tar y Co mm itt ee
comprised of five me mb ers elected by, and from among, the IF AT me mb ers hip to lea d
IFAT. The Executive Co mm itt ee develops an d im ple me nts the directive ag ree d by the
IF AT me mb ers hip at ea ch bie nn ial AG M, ma ke s policy, and decides on me mb ers hip
applications. IF A T' s Secretariat is the third group. Th e Se cre tar iat is a co nta ct po int for
members worldwide, facilitating and co ord ina tin g me mb ers ' initiatives an d activities, an d
uses its po sit ion at the centre of a global ne tw ork to ma ke links be tw ee n, an d dis sem ina te
information to, individuals, groups and ne tw ork s (IF AT, 20 06 c ).

While the organisational de ve lop me nt of So uth ern reg ion al pla tfo rm s ha s be en a mo re
recent ph en om en on (see Ch ap ter 8), during the 1990s IF AT 's institutional de ve lop me nt
was pre do mi na ntl y Northern-centred, wi th the est ab lis hm en t of the Eu rop ea n Fa ir Tr ad e
Association (EFTA), its US counterpart the Fa ir Tr ad e Fe de rat ion (FTF), an d the Ne tw ork
of European W orl d Shops (NEWS!). Th ese strategic institutional arr an ge me nts (IF AT ,
EFTA, FTF, NE W S! ) em erg ed to address no t only issues of ne tw ork ing an d inf orm ati on
exchange to link pro du ce rs and traders bu t also ma cro issues of fair trade ma rke t
governance and development.

Established in 1990, EF TA is an association of ele ve n im po rti ng org an isa tio ns loc ate d in
nine countries across Eu rop e (Austria, Be lgi um , France, Ge rm an y, Italy, Ne the rla nd s,
Spain, Switzerland and the UK). To ge the r the y im po rt from ov er 400 ma rgi na lis ed
producer groups across Africa, As ia and La tin America. EF T A aims to su pp ort the wo rk of
its me mb er organisations and to foster greater cooperation and co ord ina tio n am on g them. It

- 96 -
 circulates inf orm ati on and organises me mb er meetings in ord er to facilitate inf orm ati on
exchanges and networking, divides ov erl ap pin g functions be tw ee n me mb ers for greater
efficiency, and identifies and pu rsu es joi nt initiatives (Krier, 2005: 25).

W ith its roots in the 1980s, the then-North Am eri ca n Alternative Tr ad e Or ga nis ati on
(N AA TO ) he ld annual conferences for No rth Am eri ca n ATOs. This group inc orp ora ted in
1994 with an elected board, ch an gin g its na me to the Fa ir Tr ad e Fe de rat ion in the following
ye ar (Novey, Ju ne 5, 2006, pe rso na l co mm un ica tio n). To da y, the Fa ir Tr ad e Fe de rat ion
(FTF) (USA) is an association of US -ba sed wholesalers, traders and pro du ce rs wh os e
me mb ers ha ve fair trade principles at the core of their work. Specifically, me mb ers are
co mm itt ed to 'pr ov idi ng fair wa ge s and go od em plo ym en t opportunities to ec on om ica lly
dis ad va nta ge d artisans an d farmers wo rld wi de ' (F air Tr ad e Federation, 2006). FT F also
disseminates and exchanges inf orm ati on be tw ee n me mb ers wi th resources an d
opportunities for its me mb ers by pro du cin g a jou rna l for me mb ers an d ne ws ab ou t
up co mi ng fair trade events. Furthermore, the FT F offers me mb ers access to its me mb er
directory an d tra din g ne tw ork to facilitate their wo rk (Krier, 2005: 25).

NE W S! is a ne tw ork of fifteen na tio na l W or ld Shop associations, co mp ris ing rou gh ly 2,4 00

shops across thirteen countries. Th e ne tw ork was est ab lis he d in 1994 to facilitate
ne tw ork ing an d co op era tio n am on g me mb ers by pro vid ing information, to organise a bi-
annual conference, an d to develop and co ord ina te Eu rop ea n-w ide ca mp aig ns (in clu din g
de ve lop ing and dis sem ina tin g the ne ce ssa ry ca mp aig n ma ter ial s to its me mb ers ).

Ins titu tio n-b uil din g aside, as was no ted above, by the 1990s the AT O mo ve me nt ha d be gu n
to face the financial un su sta ina bil ity of its traditional pro du ce r-f oc us (Tallontire, 2000: 168;
Lo w & Davenport, 2005: 146; Ni ch oll s & Opal, 2005: 99-100; Litrell & Dickson, 1999).
Pio ne eri ng a transfom1ation in the traditional AT O mo de l, a nu mb er of 'ne w' AT Os
em erg ed in the 1990s tha t we re de sig ne d to thrive in a co mm erc ial en vir on me nt (see
Ch ap ter 7). Cr ea ted by the mo ve me nt' s pio ne ers , these un iqu e AT O mo de ls rec ast the
conventional AT O as a (fair trade) bra nd co mp an y to sell bra nd ed fair trade pro du cts to
ma ins tre am consumers. W hil st sim ult an eo us ly ex plo itin g co mm erc ial tools (br an din g and
ma rke tin g in particular), these companies - su ch as Cafedirect, Di vin e Ch oc ola te Ltd. ,

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 Equal Ex ch an ge an d A gr oF ai r - ex hi bi t ra di ca l go ve rn an ce m od el s of pr od uc er ow ne rs hi p
and/or co -o wn er sh ip (s ee Ch ap te r 7). H en ce th e ch an ge to co nv en tio na l su pp ly ch ai n
co nf ig ur at io ns in th es e ca se s in cl ud es sh ift in g th e va lu e- di str ib ut io n an d ow ne rs hi p in
favour of pr od uc er s (s ee Ch ap te r 7). Th ou gh un do ub te dl y th e m os t ra di ca l an d ea rly
response am on g the FT O co m m un ity du rin g th e 19 90 s ( an d sti ll to da y) , FT O s at la rg e
began to pl ac e em ph as is on pr of es sio na lis in g th ei r bu sin es s op er at io ns , im pr ov in g pr od uc t
quality an d m ar ke tin g to at tra ct m ai ns tre am co ns um er s (T al lo nt ire , 20 00 ) 89 . Th is tre nd
continues still.

Mainstreaming Fa ir Trade (2000 - )

The ra pi d gr ow th of Fa irt ra de m ar ke ts in re ce nt ye ar s ca n be la rg el y at tri bu te d to th e
Fa irt ra de ce rti fic at io n sy ste m (R ay no ld s, 20 02 ; Ca ld we ll & Ba co n, D ec em be r 7, 20 05 ).
The em er gi ng su cc es s of Fa irt ra de ce rti fie d pr od uc ts in th e m ai ns tre am co ns um er m ar ke t
during th e 19 90 s en ab le d th e m ov em en t to sta ke ou t a pl ac e in tra di tio na l m ai ns tre am
outlets th ro ug h co nv en tio na l re ta ile rs an d tra de rs . W ith its em er ge nc e ca m e th e av ai la bi lit y
of a sc or e of ne w pr od uc t ca te go rie s (b ey on d th e tra di tio n of te xt ile s, gi ftw ar e an d
ha nd cr af ts) , in cl ud in g co ffe e, tea, ric e, su ga r, co co a, fre sh fruit, ju ic es , ho ne y, sp ic es an d
nuts, sp or ts ba lls , wi ne an d flo we rs . W ith a w id er pr od uc t ra ng e av ai la bl e an d ris in g
co ns um er aw ar en es s th ro ug h no ve l so ci al m ar ke tin g in iti at iv es 90 , sy m pa th et ic la rg e- siz e
retailers an d he al th fo od sto re s w er e th e fir st to be gi n to of fe r Fa irt ra de pr od uc ts th ro ug h
m ai ns tre am di str ib ut io n ch an ne ls su ch as th e U K he al th fo od sto re 'F re sh an d W ild ' an d th e
Co op er at iv e Gr ou p ('t he Co -o p' ). Th e Co -o p co nv er te d al l of its ow n- la be l co ffe e an d
ch oc ol at e to Fa irt ra de in 20 02 an d 20 03 re sp ec tiv el y. Si m ila rly th e U S re ta ile r 'W ild O at s'
co nv er te d all of its ow n- la be l co ffe e to Fa irt ra de in 20 02 an d no w sto ck s a ra ng e of ot he r
Fa irt ra de pr od uc ts (N ic ho lls & Op al , 20 05 : 19 3, 146).

89
Low and Davenport (2005: 147) attribute the na me -ch an ge from Al ter na tiv e Tr ad e Organisations to Fa ir
Trade Organisations and the International Al ter na tiv e Tr ad e Fe de rat ion to the International Association for
Fair Trade to this shift in ATO thinking.
90
The movement has initiated and exploited novel forms of social marketing and co ns um er education to
continue to expand fair trade markets including ph en om en a such as 'Fa ir Tr ad e Fo rtn igh t' , 'Fa ir Trade
Towns ' , 'Fa ir Trade Churches' and 'Fa ir Tr ad e Universities/Schools ' . Th es e grassroots community
initiatives bring together members and organisations in a town, university campus or school for the purpose of
promoting Fa irtrade and have spread quickly from the UK to Ca na da and Australia. Active student ne tw or ks
and movements have likewise spread, with annual or biennial conferences organised in the US , Ca na da,
Europe, the UK, Australi a/N ew Zealand as well as at international fora such as the W TO .

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 The uptake of Fairtrade products in m or e traditional co m m er ci al retail settings and by
conventional multinational retailers and manufacturers is on ly ga th er in g strength, a pr oc es s
which has in tu m increased the volume, tu rn ov er and awareness of Fairtrade pr od uc ts
immensely. D ur in g 2004, the global retail sale of ro ug hl y $US 1 bi lli on in Fa irt ra de
labelled products contributed ro ug hl y $US 100 m ill io n in financial return to pr od uc er s
(FLO, 2005b ). In 2005, global retail sales rose by 37 pe r cent to ro ug hl y $US 1.5 bi lli on ,
and are expected to re ac h $US 1.79 bi lli on or m or e by 2007 (D em et rio u, 2003). Th e fair
trade m ar ke t is hence co ns id er ed to be one of the fastest gr ow in g m ar ke ts in the w or ld
(Krier, 2005: 7). Conventional retailers ha ve pl ay ed a pa rti cu la rly sig ni fic an t role in fast-
tracking the growth of Fairtrade ce rti fie d pr od uc t markets th ro ug h access to es ta bl ish ed
91
retail channels (Table 3 .1 reflects the es tim at ed gr ow th rate of FL O ' s pr od uc t sectors
during this pe rio d of up ta ke am on g co nv en tio na l retailers):

91
According to IFAT (20 06j) more than two-thirds of Fairtrade products are sold in catering and retail outlets.
Fairtrade certified products are now being offered to consumers by global brand companies, movie theatre
complexes, global retailers and catering services.
- 99 -
 Pro du ct 200 4 (real) 200 5 (est im ate d) Gr ow th
Coffee* 24.222 33.992 40%
Tea* 1.965 2.614 33%
Bananas* 80.640 103.877 29%
Fresh Fruit* 5.156 8.289 61 %
Cocoa* 4.201 5.657 35%
Sugar* 1.960 3.613 84%
Honey * 1.240 1.331 7%
Juices * 4.543 4.856 7%
Rice* 1.384 1.706 23%
Dried Fruit* 238 306 29%
Beer* * 62.934 123.758 97%
Wine ** 617.744 1.399.129 126
Sports balls/\ 55.219 64.144 16%
Flowers *** 101.610.450 113.535.910 12%
Cotton 0 1.402 ++ %
Other* 611 833 36%
*Metric Tonnes (MT) **Litres /\Items ***Stems

Table 3.1: Market growth ofF air tra de product categories from 2004 to 2005. Each Fairtrade product
sector developed at different times, thus some products are much 'ne we r' to the market than others .
Source: FLO, 2006a: 5.

In Sw itz erl an d for ins tan ce, the tw o na tio na l retailers, Mi gro s an d Coop, off er ow n-l ab el
Fairtrade pro du cts in 10 an d 9 dif fer en t ow n-l ab el pro du ct gro up s res pe cti ve ly (N ich oll s &
Opal, 2005: 196). Mi gro s' tur no ve r of Fa irt rad e pro du cts ac co un ted for 40 pe r ce nt of the
total sales of Fa irt rad e in Sw itz erl an d in 20 02 (N ich oll s & Op al, 2005: 196). In the UK , in
addition to the Co -op , Sa ins bu ry' s (20 02 ) an d Te sco (20 04 ) off er ow n-l ab el Fa irt rad e
products an d the oth er rem ain ing ret ail ers ha ve be gu n sto ck ing Fa irt rad e go od s (ibid., 2005:
193). Al be rt He ijn (H oll an d), Mo no pri x (Fr an ce) an d Al be rts on 's (U S) are oth er lar ge
retailers sto ck ing Fa irt rad e goods. Fa ir Tr ad e im po rte rs an d bra nd co mp an ies ha ve also
contributed to this gro wt h. Kr ier (2005: 28) no tes tha t the sev en lar ge st EF TA me mb ers
(fair tra de im po rte rs) ha ve see n the ir sal es figures inc rea se by 80 pe r ce nt in five ye ars , an d
altogether the ele ve n EF TA me mb ers so ld mo re tha n $U S2 50 mi lli on wo rth of lab ell ed an d
no n-l ab ell ed fair tra de go od s in 20 04 . Ca fed ire ct is no w the fourth lar ge st co ffe e bra nd in
, the UK ma rke t, an d wo rth UK 8.4 mi lli on po un ds (C afe dir ect , 20 06 ; see Ch ap ter 8). Eq ua l
Ex ch an ge in the US saw its sales gro w fro m $U S 10 .4 mi lli on in 20 02 to $U S2 0. 7 mi llio n

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by 2005 (Equal Exchange, 2005). Divine Chocolate Ltd. made $US 18 million in sales in
2006, expects to announce its first dividend in April 2007, and like AgroFair, has recently
expanded into the US market (The Economist, April 4, 2007).

The rapid growth in sales reported by FLO Nis in recent years also illustrates this market
consolidation (see Chapter 6). In 2004/2005, the US became the largest market for
Fairtrade certified goods, with Transfair USA achieving a retail value of more than $US276
million in 2004, and nearly $440 million in 2005 (a 60 per cent increase) (FLO, 2006a: 4).
Prior to the US ' mammoth growth, the UK was the largest market for Fairtrade products,
worth $US165 million in 2003, more than $US264.53 million by 2004, and over $US350
million in 2005 (FLO, 2006a: 4). The next mo st significant market is Switzerland which ,
though a population a tenth the size of the UK, has grown rapidly from $US90 million in
2002 to over $US180 million by 2005 (FLO, 2006a: 4). Ne w Nis such as Australia/New
Zealand have also reported more than 45 per cent growth per quarter (FLO, 2005b ), rising
by 178 per cent in 2005 to over $US3.1 million (FLO, 2006a: 4). France is also
experiencing a rapid growth rate to reach nearly $US 140 million (FLO, 2006a: 4). A 2005
Report on the fair trade market across N ort hem America and the Pacific Rim highlights a
rise from $US291.75 million in retail sales in 2003 (52 per cent growth since 2002) to an
estimated $US376.42 million in 2004. In Europe, the net retail value of (labelled and non-
labelled) fair trade products sold among 25 countries amounts to over $US847.81 million
(Krier, 2005: 7).

Notably, large-scale brand companies' move into the Fairtrade market - such as the global
roasters discussed in Chapter 2 - has been recalcitrant and largely superficial, a response
which has gained increasing attention at a practical and academic level (see Chapters 6 and
8; Fridell et al., forthcoming). Practically, conventional brand companies have engaged in
'tok eni sm ' - stocking minimal amounts of Fairtrade products under new niche brands (see
Hood, February 22, 2007; see Chapters 6 and 8). A key example is Ne stle 's 'Pa rtn er's
Ble nd' (launched in the UK in 2004), which amounts to less than one-tenth of 1 per cent of
Ne stle 's total volume (North, February 10, 2006). This strategy has been met with severe
criticism from within the fair trade mo vem ent (AGICES, No vem ber 11 , 2005; Equal
Exchange, October 7, 2005; North, February 10, 2006; Ransom, October 17, 2005; see also

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 Caldwell & Ba co n, D ec em be r 7, 20 05 ; W ill s in F.I.N.E., 2006: 13-14; Ho od , Fe br ua ry 22,
2007). Th e pr in ci pa l co nc er n am on g FT O s is th at co ns um er s will pe rc ei ve co nv en tio na l
brand co m pa ni es to be 're fo rm ed ' in th ei r bu sin es s pr ac tic es , po lic ie s an d ob je ct iv es w he n
they are an yt hi ng but; the pe rc ep tu al di ffe re nc es be tw ee n a pr od uc t an d a company (or a
label and a bu sin es s m od el ) wi ll be bl ur re d (E qu al Ex ch an ge , O ct ob er 7, 20 05 ; N or th ,
February 10, 2006). Th e ris k is to co ns um er s' un de rs ta nd in g of th e FT O 'g ol d- st an da rd '
and the va lu e th ey pl ac e on it, an d in de ed to th e loss of th e m ov em en t's co re co ns tit ue nt s
who in the m ea nt im e pe rc ei ve fair tra de to be 'se lli ng ou t' (s ee Ch ap te rs 6-8; Re na rd , 20 03 ;
Murray et al., 2003; Ta llo n tire, 20 02 ; Ca ld w el l & Ba co n, D ec em be r 7, 20 05 ; N ic ho lls &
Opal, 2005: 246; Sw en ey , 20 01 ; Lo w & D av en po rt, 2005: 148) 92
.

In fact, fair tra de su pp or te rs , co ns um er s an d FT O s at the co m m un ity le ve l ha ve be en the

engine of the fair tra de m ar ke t's gr ow th to da te (see N ic ho lls & Op al , 20 05 : 16 3- 17 8) (s ee
Chapter 5). He nc e, in a m ar ke t w he re ce rti fie d Fa irt ra de go od s are w id el y av ai la bl e, ye t
essential 'fa ir tra de ' pr in ci pl es are be in g po or ly ap pl ie d by m ai ns tre am tra de rs (i.e. no n-
FTOs ), IF A T de ve lo pe d a m on ito rin g sy ste m for 100 pe r ce nt Fa ir Tr ad e Or ga ni sa tio ns in
2004. Th e FT O M ar k is of sp ec ia l im po rta nc e to FT O s se lli ng a ra ng e of fair tra de
products in th e m ar ke t (m an y of w hi ch do no t ca rry a Fa irt ra de label, su ch as ha nd cr af ts 93 ):

92
Global br an d co mp an ies en ga gin g wi th Fa irt rad e su ch as Ne stl e, Ch iqu ita , St arb uc ks or Pr oc ter & Ga mb le
are lon g-s tan din g tar ge ts of po lit ica l ca mp aig nin g an d ac tiv ism , an d de ve lop ed du bio us rep uta tio ns for the ir
social an d en vir on me nta l pra cti ce s ab roa d. Ne stl e is the wo rld 's mo st bo yc ott ed co mp an y an d 'th e lar ge st
single so urc e of vio lat ion s of the W or ld He alt h Or ga nis ati on an d UN IC EF 's Int ern ati on al Co de on M ark eti ng
Br ea st- Mi lk Su bs tit ute s' ( cit ed in Ra ns om , Oc tob er 17, 20 05 ) . In 1973 the co mp an y wa s tar ge ted for its
heavy ad ve rti sin g an d pr om oti on s to mo the rs ac ros s the de ve lop ing wo rld , pa rti cu lar ly in Af ric a, ab ou t the
nutritional va lue of its ba by mi lk pro du cts . Th e su bs eq ue nt 'm isu nd ers tan din g an d mi su se ' of the se pr od uc ts
among mo the rs wh o we re lar ge ly ill ite rat e an d po or wa s all eg ed to be ca us ing ea rli er on se t of ma lnu tri tio n
among ba bie s dri nk ing the se ba by mi lk su bs tit ute s (N ew Int ern ati on ali st, 19 73 ). Gi ve n Ne stl e's his tor y, UK
consumers ha ve be en en co ura ge d to bo yc ott the Pa rtn er' s Bl en d pr od uc t by Ne stl e ca mp aig ne rs be ca us e it
'm ak es an ab so lut e mo ck ery of wh at the pu bli c be lie ve s the Fa irt rad e ma rk sta nd s for ' (R an da ll, cit ed in
Ra ns om , Oc tob er 17, 20 05 ).
93
FL O' s sy ste m is mo re am en ab le to food pr od uc t ce rti fic ati on tha n for tex til e an d ha nd cra ft pr od uc tio n - the
variation in the tec hn iqu es an d log ist ics of pr od uc tio n for the se no n- fo od pro du cts is hig hly pr ob lem ati c as far
as de ve lop ing ac ros s-t he -bo ard sta nd ard sp ec ifi ca tio ns for tex til es an d ha nd cra fts (N ich oll s & Op al, 20 05 :
24) . Ye t ma ny So uth ern FT Os pr od uc e ha nd cra fts , for wh ich FL O do es no t ha ve sta nd ard s. Th es e pr od uc ers
have be en ult im ate ly ex clu de d fro m the be ne fit s wh ich foo d-p rod uc ing far me rs rec eiv e in the Fa irt rad e
ce1iification sy ste m, an d the ma rk et for fair tra de ha nd cra fts ha s lan gu ish ed (N ich oll s & Op al, 20 05 : 24 -5) .
The FT O M ark is thus pa rti cu lar ly im po rta nt for tho se fair tra de pro du ce rs wh o pr od uc e ha nd cra fts in or de r to
benefit fro m fair tra de ma rke ts. De sp ite the log ist ica l an d po lit ica l dif fic ult ies , IF AT is pre sen tly wo rk ing
with FL O to de ve lop an 'on pr od uc t ' ma rk for all Fa ir Tr ad e pro du cts in or de r to inc orp ora te ha nd cra fts int o
'm ain str ea m' Fa irt rad e pr od uc t ma rke ts (se e Ch ap ter 8). Th e co mm erc ial ma rk et po ten tia l for ha nd cra fts is
significant. As Ni ch oll s an d Op al (2005: 23 6) ob ser ve , by co ntr ast to the $U S 107 mi lli on wo rth of sal es in
- 102 -
 it str en gth en s the cre dib ilit y an d va lue of the ir sho ps an d pro du cts am on g co ns um ers (see
Ch ap ter 8).

Ac ad em ica lly , res ea rch on the 'm ain str ea mi ng ' of Fa irt rad e has be gu n to qu est ion the
ca pa cit y for the ce rti fic ati on sy ste m to pro du ce me an ing ful an d su sta ina ble de ve lop me nta l
ou tco me s for sm all -sc ale pro du ce rs (se e Do pp ler & Go nz ale z Ca ba na s, 20 06 ; Ta ylo r et al.,
2005; Lo w & Da ve np ort , 2005: 151; Be ze nc on & Blili, 20 06 ; Re na rd, 20 03 ; Ar an da &
Mo ral es, 2002: 20; Va nd erH off Bo ers ma , 20 02 ) (se e Ch ap ter s 6-8). Ind ee d, it is be tw ee n
the tw o ap pro ac he s to fair tra de - as an organisational mo de l an d as a pr od uc t certification
an d labelling system - tha t em pir ica l dis cre pa nc ies ha ve em erg ed . Be ze nc on an d Bl ili
(2006) for ins tan ce dra w att en tio n to the dif fer en t su pp ly ch ain co nfi gu rat ion s be tw ee n the
'al ter na tiv e' (F TO ) mo de l an d 'm ain str ea m' (pr od uc t cer tif ica tio n) mo de l an d no te tha t ke y
fair trade pri nc ipl es are rel ax ed , if no t absent, in the latter. Th e aff ec ted pri nc ipl es inc lud e
dir ect pa rtn ers hip s, lon g-t erm tra din g rel ati on s, mi nim al so cia l dis tan ce be tw ee n pro du ce rs
an d co ns um ers , a pri ori tis ati on of ma rgi na lis ed pro du ce rs, co op era tio n be tw ee n tra de rs to
ex pa nd the fair tra de ma rke t, an d po lit ica l lob by ing an d ca mp aig nin g for tra de jus tic e.

In the ab sen ce of the se pri nc ipl es, Sh rec k (20 05 ) ob ser ve s tha t the po we r rel ati on sh ip in
co nv en tio na l su pp ly ch ain s - ind ee d the su pp ly ch ain co nfi gu rat ion s the ms elv es (see
Ch ap ter 2) - as we ll as the ma rke t rea liti es tha t sm all -sc ale pro du ce rs face, rem ain
un ch an ge d in the ce rti fic ati on sy ste m. At on e wi th this vie w, res ea rch ers Lo w an d
Da ve np ort (2005: 151-2) co nte nd tha t wh ils t de liv eri ng me an ing ful de ve lop me nt an d
em po we rm en t for pro du ce rs in the fut ure does no t pre clu de 'm ain str ea mi ng ', it wi ll
pre su pp os e a mo re 'ra dic al ma ins tre am ing ' ap pro ac h pio ne ere d by FT Os .

Th is str ate gic dir ec tio n is a qu est ion of go ve rna nc e, ho we ve r. In lig ht of the ten sio ns an d
inc on sis ten cie s tha t ha ve em erg ed in the pre sen t-d ay era of 'm ain str ea mi ng ' fair tra de , the
fol low ing ch ap ter s em pir ica lly ex am ine the tw o mo de ls of fair tra de - as an organisational
mo de l an d as a pr od uc t certification mo de l - the ins titu tio ns (IF AT an d FL O) an d the actors
tha t ha ve gu ide d the ir de ve lop me nt thu s far.

fair trade handcrafts made in Europe in 2003 , the European 'exotic gifts ' market - comprised principally of
private sector enterprises - amounts to an estimated $US6.3 billion.
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 Conclusion
The fair trade movement spans more than 40 years of an attempt to transfom1 the
international trade structure in favour of small-scale producers in developing countries.
Building on its concerted political activism in the m id twentieth century, the m ov em en t
developed its main institutional structures in the 1990s, which to da y identify its various
facets in different regions of the world. Through an organisational model and pr od uc t
certification system, the movement has demonstrated the capacity for fair trade to empower
weak market actors in a heavily structured m ar ke t environment (see Chapter 2). These two
models are overseen by the m ov em en t's two governance institutions, IFAT and FLO
respectively. In key markets of the world, fair trade is be co m in g a 'm ai ns tre am '
phenomenon, yet its dominant 'm ai ns tre am in g' mechanism, the Fairtrade certification
system led by FLO and the Nls, is creating challenges to delivering the developmental
gains that fair trade principles have the capacity to deliver (see Chapters 6 and 8). This
chapter has aimed to give a br ie f outline of these developments and has acknowledged the
deep discord between these two constituencies. Th e following chapter outlines the
methodological framework and research m et ho d for the detailed empirical analysis of this
discord in Chapters 6-8.

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 CHAPTER 4: Methodology
This thesis looks to the fair trade mo ve me nt wi th the pu rpo se of ask ing wh at can the fair
trade mo ve me nt and its un ex pe cte d success tell us ab ou t the the ore tic al pu zz le it pa ral lel s:
wh y has ag en cy be en able to shift structure if the rev ers e is no rm all y true? As we have see n
in the previous chapter, we ne ed to ad va nc e a mo re nu an ce d me an s of ex pla ini ng this tha n
ex ist ing theorising offers. W hil e the de ve lop me nt of ideas thus far has po int ed to the
po ten tia l for ag en cy an d change, Br ait hw ait e's (fo rth co mi ng ) fra me wo rk of de fia nc e po int s
to a rich po rtr ait of different ind ivi du al ps yc ho log ies an d be ha vio urs in de fyi ng so cia l
structures and institutional constraints. Of further co nc ern is ho w - an d to wh at ex ten t -
the se different outlooks and res pe cti ve be ha vio urs int era ct with, an d affect, the ex ist ing
status quo. Ho w do 'ga me -players ' differ fro m 're sis tor s' an d ho w do the ir res pe cti ve
mo de ls and strategies inf lue nc e the pre va ili ng po we r str uc tur e in the glo ba l ma rke tpl ac e?
Th is mo re nu an ce d ac co un t of the wo rld of social mo ve me nt po liti cs an d pra xis all ow s for ,
an d suggests, gre ate r po ten tia l for pu rpo siv e action, critical aw are ne ss an d so cia l ch an ge
tha n existing po we r scholarship cu rre ntl y ac co mm od ate s. By an aly sin g ho w the mo de ls
an d actors of the fair tra de mo ve me nt op era te at a tra ns na tio na l lev el we sta nd to ga in ne w
kn ow led ge to do wi th po we r and its ex erc ise to bri ng ab ou t so cia l ch an ge in the
co nte mp ora ry world.

Methodology: An anthropological study of a unique global regulatory community

Be for e I go into detail of the me tho ds us ed for the fieldwork, I wi ll co mm en t on the bro ad er
me tho do log y wh ich is lar ge ly anthropological. It was an thr op olo gic al in the sen se tha t I
so ug ht to gain a de ep er un de rst an din g of the glo ba l culture of the fair tra de 'co mm un ity ', as
a me an s of co nc ep tua lis ing ho w ind ivi du al actors, situated wi thi n a glo ba l reg ula tor y
co mm un ity , see k to inf lue nc e the ir reg ula tor y wo rld and ac hie ve the ir objectives. I aim ed
to dis co ve r ho w va rio us fair trade actors ha ve ma ter ial ise d inn ov ati ve mo de ls an d ho w
these mo de ls wo rk at the tra ns na tio na l level.

In addition to ex plo rin g a global 'co mm un ity ', this is an un ex plo red are a of res ea rch on the
fair trade mo ve me nt - and mo re sig nif ica ntl y on the ne xu s an d dy na mi cs be tw ee n
Br ait hw ait e's (forthcoming) co nc ep tua l fra me wo rk and ex ist ing theories of po we r. As

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 such, an th ro po lo gy 's pr ef er re d ethnographic m et ho d of stu dy was m os t apt for the pu rp os es
of this study. Th e ethnographic m et ho d focuses on un de rs ta nd in g the cultural norms, rules
and values of a given group to help the re se ar ch er arrive at a deep un de rs ta nd in g ('t hi ck
description') of the co m m un ity in vo lv ed in the study. Ra th er than 'st ud y' subjects, the
ethnographic m et ho d aims pr in ci pa lly to learn from those w ith in the co m m un ity un de r
study who act as an 'in fo rm at io n so ur ce ' and as native speakers to teach the re se ar ch er
about the micro social w or ld in w hi ch th ey live, an d the processes, dynamics an d m ea ni ng s
under enquiry (Rice & Ezzy, 2001 ). Co m in g out of this approach, interviews w ith
informants un fo ld m or e like conversations or 'se rie s of co nv er sa tio ns ' w he re in specific
questions and discussions about certain topics, events, issues and other actors (in w hi ch the
researcher is interested) are all po ss ib le parts of the m or e lo os el y str uc tu re d in -d ep th
interview m od el le d by the ethnographic m et ho d 94
. In this thesis, the gr ou nd ed findings
derived from the kn ow le dg e ga in ed from in fo rm an ts in the field enable the ex tra po la tio n of
more general pr op os iti on s about ho w m od el s of em po w er m en t operate at th e tra ns na tio na l
level.

Such an approach to th eo ry de ve lo pm en t is at one w ith the 'm ic ro -m ac ro m et ho d'

developed by Br ai th w ai te and D ra ho s (2000). In or de r to develop gr ou nd ed theory,
Braithwaite and D ra ho s (2000) stu di ed the 'm ic ro pr oc es se s that constitute structural
change', all the w hi le co gn iz an t th at those ve ry m ic ro pr oc es se s un de r stu dy 'ar e
constituted and co ns tra in ed by the str uc tu ra l'. Th ey to ok to analysing the ve ry type of
global culture or co m m un ity un de r an th ro po lo gi ca l stu dy here, their in ve sti ga tio n be in g
'just as anthropological as the fieldworkers w ho sip tea ar ou nd a campfire. W e sip pe d
Beaujolais around the bistros of Paris, N ew Y or k and G en ev a'. W hi lst m y ow n fieldwork
experience of in ve sti ga tin g the global fair trade culture was no t ne ar ly as chic or high-class
(see below), the in te rv ie w s- cu m -c on ve rs at io ns I en ga ge d in w ith informants from the fair
trade m ov em en t - and be yo nd - fo rm ed the ba sis of this anthropological stu dy of a un iq ue
regulatory community.

94
Indeed, the questions po se d by eth no gra ph ers , as in the case of my fie ldw ork ex pe rie nc e for this res ea rch,
are bo un d to evolve na tur all y fro m any pr ior tem pla te as, thr ou gh lea rni ng fro m tho se wh o ca n sp ea k fro m
and ab ou t a socia l or cultural ' nic he ' ab ou t wh ich little is kn ow n, mo re cu ltu ral ly- ap pro pri ate and mo re
accurate and sensitive questions ca n be pu t for wa rd (R ice & Ez zy , 2001 ).
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 Fi el dw or k m et ho d
In total, the interviews co nd uc te d for data collection to ok roughly four months (March 29 -
July 28, 2005). Six weeks of this time (March 29 - M ay 13, 2005) was spent conducting
interviews throughout continental Europe (Brussels, Belgium; Utrecht, The Hague and
Amsterdam in the Netherlands; Bonn, Germany; Geneva, Switzerland; Paris, France), the
U K (London and Oxford), then briefly to San Francisco, USA. U po n m y return to
Australia, I then conducted a series of telephone interviews w ith informants located in
continental Europe, U K and U SA (Washington D.C., Wisconsin, Chicago, Massachusetts,
Vermont) whose contact details I ha d be en given or w ith w ho m I ha d m ad e contact whilst
travelling bu t was unable to m ee t in person.

Subsequent to these interviews, requests for further information on specific issues were
addressed to ne w informants to w ho m I ha d be en re fe rre d during the interviews. This was
done via email in the early months of 2006; the informants were ba se d in Adelaide,
Australia; Oaxaca, M ex ic o City; Auckland, N ew Zealand; Bonn, Germany; U tre ch t and
Amsterdam, the Netherlands. By the tim e of w rit in g the thesis, I ha d established a 'co re '
group of interested, w el l-n et w or ke d and w el l-i nf or m ed actors w ith w ho m I stayed in good
contact.

Those who comprised m y initial list of informants w er e colleagues of one of m y panel

advisors, Dr. Sasha Courville (who was on m y pa ne l un til th e en d of 2005 until she left to
take up a position with an organisation ba se d in London). Th e list was broad, to
incorporate a wide base of stakeholders in vo lv ed in fair trade - N G O s, FTOs, funding and
development institutions, br an d corporations, researchers, fair trade associations, N is and
FLO producers. In addition, ha vi ng already established good contact w ith one informant in
one of the international offices in Brussels, Be lg iu m , I gained further referrals to
political/bureaucratic informants who have be en in vo lv ed in the de ve lo pm en t of fair trade
in recent years.

Informants on this initial list w er e approached through an email and fax containing a br ie f
introduction about m ys el f and m y research project, details of the research process they
w ou ld be involved in sh ou ld they choose to participate, and a pr op os ed date and time for an

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 interview w he n I arrived in their country. Th os e to w ho m they re fe rre d m e and w ho m I
subsequently interviewed vi a ph on e or email w er e also ap pr oa ch ed us in g this procedure.

Dr. Sasha Courville was he ld in high re ga rd by ea ch of the informants on m y initial list of

contacts. This was pa rti cu la rly advantageous for m y re se ar ch purposes. Fo r instance, I was
warmly received - w ith an air of familiarity in so m e cases. I was often su rp ris ed and
humbled by the w ar m th ex te nd ed to m e - a str an ge r "f ro m so far aw ay on the other side of
the world". It was also helpful in the sense th at these informants di sp la ye d an im pl ic it trust
in me during the in te rv ie w w ith respect to often po lit ic al ly sensitive su bj ec t matter. A t the
same time as Dr. Co ur vi lle 's na m e was ad va nt ag eo us for 'g ai ni ng en try ' into this un iq ue
community (a challenge for the ethnographic m et ho d 95
), the informants I in te rv ie w ed w er e
equally interested to be in vo lv ed in m y re se ar ch and found the re se ar ch co m pe lli ng on its
own merits. M y re se ar ch pr oj ec t on fair tra de was also largely um el at ed to Dr. Co ur vi lle 's
area of cmTent research focus. As such, he r list of contacts acted as 'st ep pi ng st on es ' to
new, more relevant informants w ho be ca m e im po rta nt for m y re se ar ch project; m os t of the
latter be ca m e pa rt of the core list of contacts in the field w ho w er e m os t he lp fu l and
generous w ith their time in the later stages of the writing process.

The w ar m th and en co ur ag em en t ex pr es se d by these informants in the later stages of th e

thesis (both am on g those I already kn ew and those w ho w er e ne w referrals I ha d co nt ac te d
via email) was he ar te ni ng and invaluable. Th re e factors w or ke d in m y favour to ga in this
reception. I often ha d a referral name, w hi ch carried an un de ni ab le cachet. I was sensitive
to their busy-ness, tim e- po ve rty and frequent travelling w hi ch ke pt th em from re sp on di ng
to emails or calls for up to six weeks at a time. Finally, I strove to be polite, courteous an d
flexible, which he lp ed to establish a strong ra pp or t w ith m y informants ra th er rapidly.

The un de rp in ni ng logic of this process of selection of informants (or ra th er be in g le d to

informants by other ne tw or ke d actors) was sim ila r to ho w Br ai th w ai te and D ra ho s (2000:
12) described th ei r pr oc es s for pinpointing ke y nodes and actors w ith in w eb s of re gu la to ry

95
See Rice & Ezzy , 2001 ; Flick, 2002 : 53-60.
- 108 -
 cultures an d ho w tho se actors we re inv alu ab le as wh at I de scr ibe d ab ov e as 'st ep pin g
sto ne s' to oth er ke y pla ye rs:
On ce we loc ke d onto so me we ll ne tw ork ed pla ye rs in the we b, the y we re ge ne rou s
in all ow ing us to us e the ir na me s to ga in en tree to oth er ke y pla ye rs ... in this wa y
the sam pli ng wa s no t ath eo ret ica l sn ow ba llin g, bu t ba sed on fie ldw ork at str ate gic
sites fol low ed by a the ore tic all y gro un de d str ate gy of tra cin g the str an ds of we bs of
control.

In this sense, I wa s led by actors alr ea dy en me sh ed in the ne tw ork s of this glo ba l

co mm un ity to (ot he r) inf orm an ts 'ch os en for the ir kn ow led ge ' wh o co uld sh ed lig ht on the
issues in wh ich I wa s interested. Th is ap pro ac h, of see kin g ou t on ly a few actors on the
ba sis of the ir 'co mp ete nc e' or su pe rio r kn ow led ge rat he r tha n the ir 're pre sen tat ive ne ss' , is
ad vo ca ted wi thi n eth no gra ph ic circles for ex tra cti ng ins igh t fro m de ns ely po pu lat ed
co mm un itie s un de r stu dy (se e Be rna rd, 1994; Ri ce & Ez zy , 2001). Th e pro ce ss of
un co ve rin g ke y act ors am ids t a de ns e cu ltu re (a co mm un ity co mp ris ed of ma ny act ors an d
me ch an ism s) an d en ga gin g the m in the res ea rch pro ces s, wa s ref ine d an d sh ort en ed by
tap pin g the kn ow led ge of ex ist ing act ors in thi s glo ba l co mm un ity for the na me s of tho se
oth er actors an d org an isa tio ns tha t we re ke y sites of ac tiv ity or inf lue nc e or ex pe rti se in a
pa rti cu lar iss ue area. Th is wa s also pa rti cu lar ly pr ac tic al an ap pro ac h for a stu de nt wi th
lim ite d tim e an d finances.

Ea ch fac e-t o-f ace an d ph on e int erv iew ex ce pt on e wa s rec ord ed an d tra ns cri be d an d va rie d
in ter ms of len gth fro m 20 mi nu tes to 2 hours. Em ail ex ch an ge s we re pri nte d an d co lle cte d
am on gs t the oth er int erv iew data. In ad dit ion to int erv iew s, sev era l inf orm an ts pro vid ed
me wi th do cu me nts , leaflets, an nu al rep ort s, dra ft po lic y do cu me nts an d mi nu tes of
me eti ng s to aid my res ea rch an d he lp me to un de rst an d the his tor ica l co nte xt of pa rti cu lar
issues an d debates. Th ese do cu me nts we re im po rta nt for he lpi ng me to sta y ab rea st of
org an isa tio n an d po lic y de ve lop me nts as I wa s writing. Th is wa s sig nif ica nt in the ca se of
the final da ta ch ap ter (C ha pte r 8) wh ich wa s be ing wr itt en at the sam e tim e as pa rts of the
sto ry to do wi th the iss ue of tha t ch ap ter we re un fol din g an d ke y de cis ion s be ing ma de 'in
the wo rld '. Th e ge ne ros ity an d tru st sh ow n by my inf orm an ts in the fair tra de mo ve me nt
wa s hu mb lin g. W ith ou t the ir tho ug htf uln ess to sen d me do cu me nts tha t I wa s no t aw are of,
or the ir ca nd id res po ns es, ins igh ts an d the ir ke en su pp ort of the res ea rch pro jec t an d its
content, I wo uld no t ha ve be en ab le to co mp let e the em pir ica l ch ap ter s, no r ho pe for the

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 requisite empirical accuracy that lies wi thi n them. I was pa rti cu lar ly lucky that the topical
issues I was interested in kn ow ing mo re about we re issues of pa ssi on ate interest to mo st,
and were literally be ing 'liv ed ' at the time of writing. Personally, I also sen sed that
informants appreciated the space in their bu sy wo rk schedules to ref lec t on the ir wo rk and
the mo ve me nt in a more strategic sense of its direction and role.

The long distance I ha d travelled to rea ch my informants ap pe are d to wo rk in my favour -

informants appeared im pre sse d by the distance I ha d travelled to co nd uc t this research "ju st
to meet the m" and to learn about their wo rk and he ar their ind ivi du al stories. Th ey we re
also eager to find out mo re about the research centre wh ere I was ba sed , int rig ue d by a
research organisation that wo uld inv est in an area of pra cti ca l social "in no va tio n" that the y
consider fair trade to represent. M y short tra ve l arrangements an d tig ht itin era ry we re
generously accommodated, wi th informants de mo ns tra tin g kin d ho sp ita lity an d gre at
flexibility in their own he av y wo rk schedules by me eti ng wi th me du rin g bu sy pe rio ds at
their offices, at their ho me s, on ma ter nit y or recreational leave, on we ek en ds , an d at
international hostel dining rooms be for e ea rly -m orn ing train departures. Li ke wi se wi th
informants interviewed via telephone, they ob lig ing ly wo rke d aro un d the tim e differences
between Australia and Eu rop e or Am eri ca to ho ld int erv iew calls wi th me.

Face-to-face interviews wi th informants from bra nd co mp an ies and po liti ca l/b ure au cra tic
circles in the European Co mm iss ion , UK De pa rtm en t for Tr ad e and Ind us try (DTI) an d
national go ve rnm en t bureaucrats were, in the main, mo re formal an d oft en - from a
research perspective - less insightful. De sp ite my cle ar ex pla na tio ns of wh o I was and my
independent research status I sen sed tha t inf orm an ts from bra nd co mp an ies ha rbo ure d
initial concerns that I was a jou rna lis t, and were often mo re res erv ed and 'fr on t-o f-h ou se' in
their responses. The na me s of those wh o ha d ref err ed me to these co rpo rat e inf orm an ts
were particularly im po rta nt in these contexts - so me corporate inf orm an ts I me t face-to-
face visibly rel ax ed and 'so fte ne d' in their de me an ou r once I ex pla ine d tha t 'M r/Mrs. 'so
and so ' rec om me nd ed I sp ea k wi th yo u about. .. '. Bu rea uc rat s by co ntr ast we re formal bu t
welcoming , and very interested in my research for the pu rpo ses of the ir respective an d
current wo rk agendas on fair trade. Interestingly, the bu rea uc rat s and co rpo rat e inf orm an ts
with wh om I spoke over the telephone were relatively mo re ex pa ns ive , at ease, ch att y, and

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 generous (some sending internal documents or policy papers that were hard to otherwise
come by as well as referral contact details). Overall, telephone respondents were less
'g ua rd ed '.

Face-to-face interviews took place predominantly in the organisational offices of m y

informants, and sometimes at the informants' own homes, restaurants and hostels where I -
or they, both en route to another city - were staying. Phone interviews were conducted
from the Regulatory Institutions Network (RegNet) at The Australian National University
where my Ph.D. project was based. Access to a meeting room serviced with a telephone
was invaluable for early morning and late night interview calls, as was the continual
support of RegN et ' s administrative st af f for booking the necessary space and recording
equipment over this period. Interviews (whether face-to-face or telephone-based) were
transcribed anywhere between one ho ur and seventy-two hours following the actual
interview. Though transcription as ne ar as possible to the actual interview is desirable, I
was often unable to do so due to travel constraints, such as travelling by train between three
different countries over the space of two days, or where numerous interviews were
conducted in close proximity to one another required several ho ur s' transcribing time.
Nonetheless, immediately after each interview I took notes of personal observations and
reflections, key ideas discussed and physical descriptions of the location to serve as
'm em or y jo gg er s' at a later stage.

During the research process, I quickly became aware of both the contemporary nature of
m y research topic, and m y informants' awareness of the realpolitik in the fair trade
movement. Informants often responded to m y questions by saying 'I' d be interested to
know how others respond to this question ... ', or ' ... mine certainly is n' t the only vi ew on
th is ', or 'w ho else are you talking to about th is ?' or 'it 's difficult to answer because the fair
trade movement is a very broad church'. Government and fair trade movement informants
often asked me when m y research would be available and what m y thoughts were on
certain issues. Some sought 'ad vi ce ', evidently grappling with how to move forward on
particular issues which I was analysing and enquiring about. All were keen to read the final
research document and offered to be available via email or telephone for additional
questions after the interview had finished. In a divided or disunited political context, being

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 a researcher who was 'the re to lea rn' was fortuitous because it was not possible for me to
assume the particular political disposition of my informants prio r to the interview wit h only
their previous organisational affiliations as a reference. As was often the case, informants
offering me a particular standpoint and approach to fair trade had wo rke d previously in, or
been founders of, organisations within an alternative wa y of approaching fair trade. My
explanation of my purpose in speaking wit h them in order to learn from the m gave
informants license to elaborate freely on, and pro mo te candidly, the wa y in wh ich they
work and their perspective on fair trade.

While all fair trade informants spoke can did ly and freely during interviews, their doi ng so
was bas ed on a signature and/or verbal agr eem ent on how I wo uld treat sensitive
information and on how I wo uld see k per mis sio n for anything an info rma nt stated that I
used in the final published thesis. I had add res sed these issues of confidentiality and
anonymity wh en I ma de initial contact wit h each informant with a proposal about how the
research process wo uld be conducted. I had pro pos ed that if I sou ght to use direct
quotations from their interview in the final thesis, I wo uld re-contact the m to seek
permission, providing the intended quotation. This way, informants wo uld be aware of
what I would be usi ng from the interview prio r to thesis publication, and could decide on
whether to remain anonymous in relation to a quotation or not have the quotation appear at
all. This procedure suited all.

Data Organisation and Ana lysi s

As I worked through the collected data to gain insight into how age ncy can shift structure
if, by current theoretical accounts of power, the opposite is nor ma lly true, discernible
'the me s' and apparent character categories naturally em erg ed and fell into four dat a piles,
with other material and issues from the 5 8+ interviews rec edi ng into the background.
Foremost was insight into how the mo vem ent had gained scale, or in oth er words, bec om e
increasingly successful. This was par ticu larl y intriguing given that the mo vem ent has had
few financial resources to invest in the pro mo tion of the ma rke t in a conventional
commercial manner. This bec am e the subject of the first data chapter (Ch apt er 5). The
second and third data piles (subsequently Chapters 6 and 7) related to two discernible
'character' types or dynamics in the mo vem ent , with corresponding outlooks and strategies.

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 As such, I derived two conceptual categories from the data for these two character
dynamics , categories which subsequently corresponded with Braithwaite's analytical
categories of 're sis tor s' and 'ga me -pl ay ers ' in her conceptual scheme of defiance (see
Chapter 1). The final key theme , which emerged from the interplay between these two
character dynamics, was that of strategic governance and the evolution of the mo ve me nt' s
governance structures.

These four key data 'pi les ' served as the basis of the four respective data chapters and
guided the development of the social connections model pu t forward in Chapter 1. The
four piles included 'networking grassroots networks and advocates'; 'ev olu tio n of FLO and
Nis '; 'fa ir trade pioneers /fair trade business model innovation'; 'governance
tensions /structural organisation/strategic direction'. Within each data pile, three sources of
data were included. The first, as mentioned, came from interviews with informants. The
second were documents, draft policy papers, annual reports and website material either
given to me by informants or gathered prior and subsequent to actual interviews. The third
were informants' responses to my questions sent via email. These were collected as data -
much the same as informants' responses in interviews - and clarifications were made via
further emails or telephone calls.

The first pile ('n etw ork ing grassroots networks and ad vo ca tes ') containing empirical data
relating to how the movement expanded to its present-day size, enabled me to answer the
question 'how do social actors cause large-scale market ou tco me s?' . The second data pile
('evolution of FLO and Ni s') , which related to the development of the Fairtrade
certification system, offered insight into the question 'ho w does po we r and agency operate
in the institutional sequence of static adaptation?'. The third pile ('f air trade pioneers /fair
trade business model innovation'), containing data about innovative fair trade models that
were established after the certification system, their relevance and the creative actors who
envisaged and built them, enabled me to probe the question 'ho w does po we r and agency
operate in the context of entrepreneurship (of no rm s)? '. Finally, the fourth data pile
(' governance tensions /structural organisation/strategic direction') pertaining to the current
evolution of, and tension between, the representative governing associations in the

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movement (FLO and IF AT), offered insight into the question 'how does the entrepreneur
(of norms) change the institutional environment?'.

The data overall ultimately consisted of informan ts' interpretations of their work, their
ambitions and hopes, their observations and reflections of events, opportunities and
challenges they face both in the present and looking forward as they pursue their social
mission. My attempt was to understand the movemen t's success and the dynamics and
strategies underlying the movement from the perspective of my respondents. In other
words, my intention was to discover how individuals and groups themselves understand the
reality or truth of their actions in striving for a social mission. This approach had the
benefit of teasing out the issues, insights and motivations that were important to, or relevant
for, respondents, which brought subsequent data 'themes' naturally to the surface of the
analysis. In this way, the theoretical conclusions about the relationship between, and nature
of, defiance and institutionalised power structures emerged directly from the data to guide
the development of an empirically-grounded theory.

Having set out the research methodology and recounted the fieldwork method and
experience involved in collecting and analysing the data, in the following chapter I examine
this modem day movemen t to discover the puzzle of its success.

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 CHAPTER 5: Ne tw or kin g Networks fo r Scale

Chapters 2 and 3 jux tap os ed the de ve lop me nt of two competing business paradigms.
Conventional bra nd corporations dominate wo rld markets by means of exclusive
proprietorial ownership of abstract objects and strategies of accumulation and concentration
(see Chapter 2; Drahos, 1996; Ch an dle r et al., 1968). Th e fair trade mo ve me nt empowers
small-scale producers in wo rld markets wi th alternative models of economic organisation
predicated on values of social jus tic e and pro du ce r ownership (see Chapter 3). This chapter
empirically examines ho w fair trade has ac hie ve d increasing scale, and done so in the
context of corporate oli go po ly by me an s different from conventional corporate strategies,
including different no rm ati ve principles and wi th social rat he r than financial resources (see
Chapter 2). Th e ke y finding in this ch ap ter is that networking existing networks rather tha n
creating ne w networks causes large-scale effects. Th e process of ne tw ork ing networks
enrols increasing hu ma n resources by stimulating on go ing social connections be tw ee n
ma ny people. Micro-level ne tw ork ing is translated into scale by triggering an ever-
widening circle of en rol me nt (see Latour, 1986). This chapter draws on theories of
networks (Castells, 2000; Granovetter, 1973; Putnam, 1993), ne tw ork ed and nodal
governance (Burris et al., 2005), and utilises the social connections mo de l of po we r
constructed in Chapter 1, for the pu rpo se of explicating ho w micro action at the individual
and collective level translates into macro ou tco me s at a transnational level.

Networks: their contemporary relevance to so cia l action an d po we r

Ne tw ork theory is a sub-field of the social sciences wh ich refers to a large nu mb er of forms
of social organisation, from families to organisations to na tio n states 96 . The term 'ne tw or k'
refers to a set of actors or entities ('n od es ') situated along a network, and ne tw ork analysis
involves ma pp ing the relationships be tw ee n these nodes ('t ies '). Fo cu sin g on these nodal
relationships, ne tw ork theory (also referred to as social ne tw ork theory) seeks to un de rst an d

96
The concept of social networks emerged over fifty years ago with Ba rne s' (1954) study of a No rw egi an
island parish. Since then, Ma rk Granovetter (1973) has bee n a key pro pon ent of social net wo rk theory in the
social sciences and today it is used widely in the fields of politics, globalisation studies, anthropology, social
psychology, sociology, organisational studies, mathematics, communications, marketing, and mental health.
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 the w ay in w hi ch th es e re la tio ns hi ps , an d th ei r nature, de te rm in e th e be ha vi ou r, be lie fs ,
97
social capital an d capacities of an entity.

Networks are th ou gh t to se rv e in di vi du al s by co or di na tin g di ff us e in fo rm at io n, kn ow le dg e

8
and capacities to facilitate action (H ay ek , 1960)9 . Socially, ne tw or ks are of es pe ci al va lu e
to hu m an an d so ci et al w el lb ei ng (P ut na m , 20 00 ; Lin, 20 01 ; Po rt es , 1998), pr ov id in g ac ce ss
to social re so ur ce s de ri ve d from th e ne tw or ke d re la tio ns hi ps su ch as in fo rm at io n, in fl ue nc e,
social credentials, an d so ci al id en tit y an d re co gn iti on (Lin, 20 01 : 3). T he se en do w m en ts ,
often de sc ri be d lo os el y as 's oc ia l ca pi ta l', are re la tio na l an d th us un ab le to be 'o w ne d' by ,
or attributed to, an y on e in di vi du al (Szreter, 2001: 291 ). G iv en th ei r im po rt an ce to
individuals in society, ex cl us io n fr om so ci al ne tw or ks is co ns id er ed bo th a fa ct or in, an d a
form of, so ci al di sa dv an ta ge (see Pu tn am , 20 00 ; Portes, 1998).

Castells (2000) has be en a se m in al figure in st re ss in g th e si gn if ic an ce of ne tw or ks for ou r

understanding of (p ow er in) a kn ow le dg e so ci et y, de sc ri bi ng ne tw or ks as th e 'n ew so ci al
morphology of ou r so ci et ie s' . In his vi ew , in fo rm at io n te ch no lo gy ha s tr an sf or m ed
networks into in fo rm at io n ne tw or ks , re ca st in g th em as th e pr e- em in en t m ea ns of
coordinating an d m an ag in g in fo rm at io n- ri ch en vi ro nm en ts . So in fl ue nt ia l are ne tw or ks fo r
action and po w er th at C as te lls (2 00 0) po si ts th at 'th e po w er of flows ta ke s pr ec ed en ce ov er
the flows of po w er '. In this way, st ra te gi c ne tw or ki ng offers a po w er fu l w ea po n for ri ch or
poor, w ea k or st ro ng (see for ex am pl e B ur ri s et al., 20 05 ; B ra it hw ai te & D ra ho s, 2000).

Granovetter (1973, 1983) m ad e ea rl y ob se rv at io ns of th e im po rt an ce of ne tw or ks to

individuals, relative to the type of ne tw or k re la tio ns hi p in qu es tio n. Sp ec if ic al ly ,
Granovetter (1 97 3) su gg es te d th at ne w ideas, co nt ac ts , op po rt un iti es an d ac ce ss to
resources flow ab un da nt ly in ne tw or ke d re la tio ns hi ps th at are of lo os e an d/ or in fo rm al
affiliation, w hi ch he te rm ed 'w ea k ti es '. If th e st re ng th of a tie is co ns ti tu te d ro ug hl y by
high levels of time, em ot io na l intensity, re ci pr oc al se rv ic e an d in tim ac y, w ea k ties ha ve

97
Social capital broadly refers to the benefits and resources that are available to and us ed by bo th indivi
duals
and groups as a result of their social/ community connectedness (see Lin, 2001; Co le m an, 1988). Soci
al
capital is thought to be 'ca pt ur ed from em be dd ed resources in social ne tw or ks ' (Lin , 2001 ).
98
Hayek (1960) developed a theory of spontaneous ordering to describe the way in w hi ch diffuse resour
ces,
capacity and knowledge are coordinated within complex networked arrangements (specifically marke
ts) to
produce order.
- 116 -
 gre ate r co he siv e po we r in ma cro -so cia l ter ms be ca us e 'w ea k ties are mo re lik ely to lin k
me mb ers of dif fer en t sm all gro up s tha n are str on g [ti es] ' (G ran ov ett er, 1973: 1376). Mo re
tha n jus t lin kin g the m, 'id ea s an d inf orm ati on dif fer en t from on e's ow n ' can rea ch ou t to
be ne fit oth er ind ivi du als an d gro up s by pro vid ing 'ac ce ss to inf orm ati on an d res ou rce s
be yo nd tho se av ail ab le in the ir ow n so cia l cir cle ' (G ran ov ett er, 1983: 20 8-9 ). W ea k ties,
then, are hig hly su ite d to the kn ow led ge so cie ty in wh ich an ab un da nc e of inf orm ati on
exists. Co nv ers ely , the qu ali tie s att rib ute d to we ak ties are sca rce in ne tw ork ed
rel ati on sh ips wh os e ties are 'st ron g', or pro xim ate an d ins ula r in na tur e. Ex am ple s inc lud e
tho se be lon gin g to on e's im me dia te so cia l cir cle an d family, or tho se pre mi sed on
ine qu ita ble au tho rit y rel ati on shi ps. Hi era rch ica l an d bu rea uc rat ic org an isa tio ns m
pa rti cu lar are tho ug ht to mo re rea dil y foster the insular, sel f-r efe ren tia l typ e of rel ati on sh ips
de scr ibe d as 'st ron g tie s' (A ch rol & Kotler, 1999; see also Pu tna m, 1993 )9 9
, wh ich inh ibi t
the free flo w of inf orm ati on , ide as an d kn ow led ge . Pu t sim ply , ind ivi du als an d gro up s
ha ve gre ate r inf lue nc e an d access to av ail ab le res ou rce s to the ex ten t tha t the y are
ne tw ork ed wi th ma ny others, an d tho se ma ny oth ers lik ew ise en joy nu me rou s dis pe rse d
rel ati on shi ps.

Fr om a La tou ria n pe rsp ec tiv e, the rea so n tha t ho riz on tal , bro ad -ba sed ne tw ork rel ati on sh ips
ha ve gre ate r po ten tia l to ex erc ise inf lue nc e is be ca us e 'th e am ou nt of po we r ex erc ise d [by a
pe rso n or group] va rie s no t ac co rdi ng to the po we r so me on e ha s, bu t to the nu mb er of oth er
pe op le wh o en ter the co mp os iti on ' (Latour, 1986: 265). Fo r La tou r (19 86 ), the real va lue
of ne tw ork s de riv es fro m the nu mb er of act ors tha t co ns titu tes a ne tw ork . To the ex ten t tha t
'w ea k', de ce ntr ali sed ne tw ork s lin kin g dis tan t pa rts of the so cia l sy ste m off er po ten tia l
access to a gre ate r nu mb er of ne tw ork s tha n do 'st ron g tie s', po we r rests wi th the
cu mu lat ive eff ec t of ma ny ag en ts wh o ea ch 'tra ns lat e' the pro jec t ac co rdi ng to the ir
wo rld vie w an d co ntr ibu te to the pro jec t's rea lis ati on . Th is ac co un t of po we r lea ds to the

99
The benefits that flow from networks are thought to predominate in, and be an asset to, organisations with
porous strnctures (meaning that sta ff are well-connected outside the firm) and egalitarian management. By
contrast these benefits appear to be stifled in hierarchical and closed bureaucracies. These differences in
organisational strncture are increasingly relevant for understanding optimal organisational and managerial
models for competitiveness in a knowledge economy (see Achrol & Kotler, 1999; see also Schaper & Volery,
2002: 271). Putnam' s (1993) research on the Mafia in Italy led him to conceptualise networks in a way
similar to Granovetter's 'we ak ties' and 'str ong tie s' categories, namely ' horizontal networks ' - those that
link decentralised, loosely connected and equal members of a network - and 'vertical networks ' - those that
display strong inequalities in authority and power and are insular or 'closed' to outside sources.
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 conclusion that, in a net wo rke d wo rld, effe ctin g pow er nec ess itat es enr olm ent com pet enc e
ratber than the pos ses sio n of mil itar y, tec hno log ica l or financial mu scle (see Bra ithw aite &
100
Drahos, 2000: 482; see also Allen, 200 3) . Thi s per spe ctiv e offers the hop efu l sug ges tion
that reso urc e-d efic ien t gro ups can exe rt pow er in a kno wle dge eco nom y thro ugh stra teg ic
networking - a typ e of net wo rkin g tha t eng age s tho se nec ess ary - and the numbers
necessary - to effect cha nge (see Bra ithw aite & Dra hos , 200 0).

Nodally-coordinated networks: fro m information to action

While net wo rks are cru cia l for ena blin g actors to bet ter com pre hen d and infl uen ce the
complexity of the ir soc ial env iron me nt, little is und ers too d abo ut the me ans by wh ich
networks actu ally tran slat e info rma tion into act ion (Bu rris et al., 200 5). Aim ing to furt her
our und erst and ing of the sup erio rity of net wo rks for pro duc ing out com es, Bur ris et al.
101
(2005: 37) dra w atte ntio n to the 'no des ' wit hin net wo rke d arra nge me nts tha t giv e the
'marching ord ers ' to pro duc e action in tho se net wo rks . The aut hor s pos it the con cep t of
nodally-coordinated net wo rks in ord er to dev elo p a mo re nua nce d and ind uct ive acc oun t of
governance thro ugh net wo rks . Thi s acc oun t acc om mo dat es the res pon sib ilit y of par ticu lar
nodes in a net wo rk for pro duc ing out com es - and thu s the ir con cep tua l prio rity for any
accurate exp lan atio n of gov ern anc e.

While theories of net wo rks and net wo rke d and nod al gov ern anc e aid a con cep tua lisa tion of
why and how net wo rks facilitate act ion and ena ble coo rdin atio n, this cha pte r offers ins igh t
into how social actors exp loit a wo rld of net wo rks and nod al org ani sati on to trig ger
expanding circles of enr olm ent . The key con trib utio n of this cha pte r to the se lite ratu res is
an exp lan atio n of a sop his tica ted stra teg y for ach iev ing sca le in a wa y tha t inte gra tes the
concept of pow er. Thi s ins igh t departs fro m the ass um ptio n tha t acto rs bui ld new net wo rks
to exploit the ben efit s of, and exe rt infl uen ce thro ugh , net wo rke d form atio ns. Rat her , the
chapter sho ws tha t actors tie existing net wo rks tog eth er to cata lyse a seq uen ce of exp and ing

100
Developing this line of thinking are Braithwaite and Drahos (2000: 482), who, in the context of global
business regulation, find that those who exercise the greatest pow er in global regulatory regimes are not those
who possess the most resources (money , knowledge , technology) but rather those who enrol others with more
resources and auth01ity than themselves and/or those who can enrol others with mor e effective enrolment
capacity . Corporations for instance frequently enrol states to do their enrolment wor k for them .
101
A node is a site of governance which mobilises diffuse knowledge, capacity and resources that reside
within networked arrangements (see Burris et al. , 2005: 37).
- 118 -
 circles of enrolment, thereby capitalising on the resources of many other networks 102 . In
other words, scale is precipitated by tying existing networks together.

The following diagram illustrates the process of expansion conceptualised here. This
diagram will be broken down into smaller segments shortly to provide a more nuanced
explanation of the micro-activity of nodes. (After breaking them down, I elaborate this
model of networking networks to illustrate the explosive effect of tying networks together,
which I term 'circles of enrolment'). As is depicted in Diagram 5.1, a 'n od e' refers to an
element or entity within a wider network. Nodes can include organisations, families , a
shop, a swimming club, entire networks (such as a w om en 's network) or office. In each
case, each node is a social network of varying size, whether comprised of dense networked
relationships (such as a family unit) or dispersed and informal ones (such as a gym club):

'Superstructural
'T ie s': no de ': a node with
ie: influence in the
networks it enrols
together. ~~~ and an intersection
point where the

~~\
cfco
capacities and
'N od e' :a n el eL resources of each
/ \
within the larger ~ network are
network structure e.g. leveraged and
a student campus coordinated.
group or church
network.
0
Diagram 5.1: Networking networks to mobilise the resident resources, knowledge and capacity of netw
ork
members. These networks do not merge or integrate as a result of being networked together; each pre-
existed
the networked relationship and is thus important as a distinct entity. The networked connection merel
y
creates gateways or links into new networks.

The 'ti es ' •in the diagram depict a networked relationship between two nodes that one of the
nodes has initiated. Tying existing networks together does not result in the merging or
conflation of the two networks - each remains independent and distinct. The first node
simply harnesses greater influence for scaling-up its project by mobilising the diffuse

102
Bu ni s et al. (2005) have conceived of the idea of 'ty in g' networks together through 'su pe rs tru ct ur al ' no
des
(see below) . Yet this idea relates to the process of creating 'su pe rs tru ct ur al ' nodes, not utilising existin
g
nodes in strategic ways . Also , they use the idea of superstructural nodes to examine issues of governan
ce and
influencing outcomes rather than achieving scale p er se .

- 119 -
 resources that res ide in the sec on d no de an d tho se that can be ac ce sse d be yo nd it. As wi ll
be shown be low , the pro ce ss of tyi ng ne tw ork s tog eth er to bu ild ma rke ts is a dia log ic
matter reliant on 'w ea k tie s' (G ran ov ett er, 19 73 ) in the sen se tha t ne tw ork ers fro m on e
network us e the ir co nta cts in oth er so cia l gro up s as 'br idg es' to sp rea d the ir mi ssi on into
other social circles. Ne tw ork ers en lis t ne tw ork s in wh ich the y ha ve est ab lis he d trust an d
credibility. On ce en rol led , the sec on d ne tw ork can be tho ug ht of as ho ldi ng the ke y tha t
opens doors in ne w ne tw ork s; it is a ga tew ay int o a series of oth er est ab lis he d ne tw ork
relationships. Su ch is the lab yri nth -li ke na tur e of the soc ial fabric.

Networks tha t pla y the rol e of tyi ng sev era l oth er po we rfu l ne tw ork s to the ms elv es ca n be
conceptualised as 'su pe rst ruc tur al' no de s (se e Bu rri s et al., 20 05 ). Bu rri s et al. (2005: 38 )
define a 'su pe rst ruc tur al' no de as a no de wh ich 'br ing s tog eth er rep res en tat ive s of dif fer en t
nodal org an isa tio ns in a 'su pe rst ruc tur al' no de to co nc en tra te the me mb ers ' res ou rce s an d
technologies for a co mm on pu rpo se bu t wi tho ut int eg rat ing the va rio us ne tw ork s'. Th e
commonality be tw ee n the co ns tru ct of Bu rri s et al. (20 05 ) an d tha t wh ich is co nc ep tua lis ed
here is that su pe rst ruc tur al no de s pla y the rol e of tyi ng ne tw ork s tog eth er in ord er to po ol
and leverage tho se ne tw ork s' em be dd ed res ou rce s bu t wi tho ut me rgi ng the tw o ne tw ork s.
A sup ers tru ctu ral no de is an int ers ec tio n po int tha t links dif fer en t ne tw ork s. It ha s
influence an d au tho rit y in the ne tw ork s it ties to its elf an d is ca pa ble of eff ec tiv ely en rol lin g
those ne tw ork s to su pp ort the project.

At the sam e time, an d fro m a bro ad er vie w of the lar ge r ne tw ork str uc tur e, su pe rst ruc tur al
nodes are the ms elv es ac tiv ate d by the su pe rst ruc tur al no de to wh ich it, an d oth er po we rfu l
networks, is att ac he d (this is a feature of su pe rst ruc tur al no de s tha t Bu rri s et al. (20 05 ) do
not explore). Th is ad dit ion al ch ara cte ris ati on of su pe rst ruc tur al no de s is dis cu sse d lat er in
the chapter.

The ins igh t fro m this em pir ica l an aly sis also co ntr ibu tes to an em bry on ic bo dy of res ea rch
on fair trade, a bo dy to wh ich the ap pli ca tio n of ne tw ork the ory is no t wi tho ut pre ced en t.
Researchers of fair tra de ha ve dra wn on so cia l ne tw ork the ory , ac tor ne tw ork the ory an d
commodity ne tw ork the ory to un de rst an d the op era tio n of inf orm ati on flows, ma rke tin g an d
the int erp ret ati on of the me an ing of fair tra de (N ich oll s & Op al, 20 05 ; Ra yn old s, 20 02 ;

- 120 -
 Renard, 2003; M ur do ch , M ar sd en & Ba nk s, 2000; Leslie & Re im er, 1999; W ha tm or e &
103
Th om e, 1997) . Th es e studies focus on re la tiv el y co nt ai ne d networks and those tied to
the structure of pr od uc tio n and co ns um pt io n relationships, w he th er directly be tw ee n
pr od uc er -a nd -c on su m er or pr od uc er -a nd -A TO , or a co ns um er -c om m un ity and pr od uc er -
community. A lth ou gh an em er ge nt bo dy of ric h data, these ne tw or k analyses pl ac e little
focus on less co nt ai ne d or am or ph ou s so ci al ne tw or ks and ho w th ey expand. M or eo ve r,
no ne has asked ho w scale has be en re ac he d in practice. Th e empirical research in this
chapter thus also offers ne w material to this re se ar ch agenda.

Networking networks: realising scale

W he n the M ax H av el aa r sy ste m (the first certification an d labelling organisation) was
originally established, the fair trade pi on ee rs ha d m at er ia lis ed on e solution to creating the
means to access a m ai ns tre am market. A cc or di ng to Ro se m ar y Byrde, Global A dv is or on
Fairtrade/Fair Trade for O xf am GB, ha vi ng a 're ac h' be yo nd ac tiv ist circles (w hi ch at the
time formed the core co ns tit ue nc y for fair trade pr od uc ts) into m ai ns tre am co ns um er outlets
was of strategic im po rta nc e for the m ov em en t. By rd e ob se rv ed th at the pr od uc t
certification system ha s be en an essential aspect of in cr ea sin g th e size of, and in te re st in,
the fair trade m ov em en t be ca us e the Fa irt ra de la be l 'ad dr es se s th e ev er yd ay pe rs on in the
str ee t' and enables an yo ne to pa rti ci pa te in ch an gi ng trade relations. Co m pa rin g th e
Fairtrade system w ith global tra de ju st ic e ca m pa ig ns , By rd e ob se rv ed th at un til the
certification system w as established, co ns um er s ha d be en un de rv al ue d and un re co gn ise d as
a 'h ug e fo rc e' for so ci al change an d no t ef fe ct iv el y en ro lle d (April 29, 2005, pe rs on al
communication). In or de r to activate this m od el to ha ve the in te nd ed effect of re ac hi ng
scale, ho w ev er , de m an d in m ai ns tre am m ar ke ts w as needed. In his recollection of the ea rly
days of the M ax H av el aa r system, Je ro en D ou gl as , D ire ct or of Fa irt ra de tropical fruit an d

103
Co1m11odity ne tw or k the or y an d ac tor ne tw or k the or y hig hli gh t dif fer en t asp ec ts of ne tw ork s. Co mm od ity
ne tw or k the ory draws on Ge ref fi' s (1994) c01mnodity ch ain the or y wh ich so ug ht to co nc ep tua lis e glo ba l
lab ou r and pro du cti on in the wo rld system. A co mm od ity ch ain analysis of fair tra de em ph asi ses the re-
em be dd ed relationship be tw ee n pr od uc tio n, co ns um pti on an d dis tri bu tio n in the co nc ep tua lis ati on of fair tra de
as an alternative ag ri- foo d ne tw or k an-angement (see Ra yn old s, 2002; Re na rd , 1999; W ha tm or e & Th om e,
1997). Ac tor ne tw or k the or y by co ntr ast pla ce s focus on ho w the rel ati on sh ips be tw ee n the no de s in the
ne tw or k define those no de s rat he r tha n hig hli gh tin g the str uc tur e of the rel ati on sh ips be tw ee n the ide nti fie d
nodes (see Callon, 1999 ; Latour, 1993; Law, 1994). Re sea rch ers us ing this fra me wo rk for un de rst an din g fair
trade analyse the alternative co mm od ity ne tw or k of fair tra de which, pa rti cu lar ly wh ere fair tra de ac tiv ism is
involved, is in the pro ce ss of co nti nu ou s cre ati on (see W ha tm or e & Th om e, 1997).
- 121 -
 cotton programs at Solidaridad in the Netherlands, highlighted the ke y role that the
'grassroots' therefore played in creating demand:
. . .the introduction of the M ax Havelaar label was really a jo in t effort be tw ee n the
NGO movement, bu t especially the grassroots groups. It was no t with love that the
product label entered the supermarket shelves. N ow ad ay s yes, because [fair trade]
is widely recognised and business leaders th in k that [fair trade] is go od for their
corporate image to incorporate fair trade labelled products. Bu t in those days, it was
really not done to bring this political message into the marketplace. W e w er e living
in a totally different time. So ... we really ha d to fight and fo rc e su pe rm ar ke ts to
open market space, and the only w ay to do that was to mobilise grassroots
campaigns. A nd that is really the clue to [our] success. W e have m an ag ed through
our campaign leaflets, through all the churches, the schools, the w om en m ov em en ts,
the agricultural movements, to raise a lot of an ge r or an xi et y from the grassroots
groups who have be en informed on the exploitative situations in the third w or ld and
they w an te d to do something about it. So we sa id to them, 'w e can of fe r yo u fa ir
[trade] coffee' which yo u can bu y with a fair conscience, w hi ch is pr om ot in g
sustainable growth for the farmers involved. Th ey all said 'w he re , where, w he re ?',
so we got to the problem: 'w e do n' t have the distribution ye t, and yo u ha ve to bring
it to us '. 'H ow th en ?' 'W el l, le t's organise actions, entering m as siv el y the
supermarkets and obliging the managers of the supermarkets to incorporate fair
[trade] coffee onto their shelves ... if [the managers did] no t? ' - that was the threat -
' ... w e'l l all move to yo ur ne ig hb ou r [competing retailer], who does ha ve M ax
Havelaar co ffe e'. Within one week, all of the supermarkets turned to take the [fair
trade] product on board, because they were all afraid that th ey 'd lose their client
base. A nd that client is not only pu rc ha sin g coffee, bu t the entire food basket, so
they w ou ld ultimately lose everything (April 12, 2005, personal co m m un ic at io n) .

Douglas' co m m en t draws attention to the fact that from its beginnings, the fair trade
movement has realised scale by ne tw or ki ng ex ist in g social networks to enrol and coordinate
their members to actively spread the fair trade message. The m ov em en t has no t bu ilt a
network to achieve scale, bu t tied existing networks to itself. This quote injects life into the
diagram set up earlier: Solidaridad can be vi ew ed as a superstructural no de that has
networked powerful social networks - the agricultural, w om en 's m ov em en t, churches, and
schools - to its project to expand the Fairtrade certification model. D ou gl as ' ex am pl e can
be illustrated thus:

School Q /0 Agricultural mo ve me nt

~
W om en 's mo ve me nt
Ch mc h · ·
Solidaridad

Diagram 5 .2: A superstructural node networking networks to its elf for scale.
- 122 -
 D ou gl as ' observation of the connection be tw ee n the strategy of networking ne tw or ks (' the
clue to our su cc es s') and the large-scale effect it has caused illuminates that networking
networks triggers the growth of a continuous circle of enrolment from activists to
consumers to activists to consumers and so on (see D ia gr am 5.6). As Douglas highlights,
the 'g ra ss ro ot s' is comprised of intertwined individuals and groups (local networks,
organisations, clubs, movements, schools, co m m un ity and to w n associations).
Superstructural nodes such as Solidaridad graft their strategy for achieving scale onto these
multiple and overlapping po ck et s of hu m an activity and connection that constitute the
social fabric. N on e of these networks alone has the po w er to create scale w ith ou t the
contribution of m an y others. In this pa rti cu la r social game it is a m at te r of enrolling
existing networks to achieve scale.

The br oa d social base that the Fairtrade certification system has attracted has be en the fair
trade pi on ee rs ' vehicle for gaining po w er and authority with this m od el (the 'cl ue to ou r
su cc es s') . As Douglas reflected, 'b y offering a tool to the end co ns um er to act. .. [t]his
creates ... a certain authority to the fair trade m ov em en t'. Implicit in the process of
achieving influence by this ne tw or ke d means is the social-connections m od el of po w er
constructed in Chapter 1 (D ia gr am 5.3), pr ed ic at ed on a Latourian co nc ep tio n of power,
wherein po w er can only be effected by collective action and the greater the collectivity, the
greater the po w er generated (see Latour, 1986). Metaphorically, the Fairtrade certification
system has functioned as a po w er circuit for pe op le to 'p lu g in to ', to exercise the 'p ow er to '
act in the m ar ke t in ways co ng ru en t with their values. It can be seen that ne tw or ki ng
networks makes operative ga m e- pl ay er s' m od el (the social connections m od el ) of the w or ld
for pr od uc in g influence and large-scale change with their innovations. (Discussed later in
the chapter is the additional po in t that ga m e- pl ay er s' innovations enable social connections
for po w er in the first instance):

- 123 -
 DEF IAN CE

~ ~
Pow er is
an -
outc ome
G -----------~
SOC IAL CON NEC TIO NS
(CO LLE CTI VE LEV EL: DEF IAN CE GRO UPS )
~ -Game-?l aye rs'
mnovat10ns e.g.
F · d
airtr a e
cert ifica tion syst em,
fair trad e bran ds

NEW CIR CUI TRY OF POW ER

(TR AN SNA TIO NA L LEV EL: INT ERC ON NEC TED DEF IAN CE GRO UPS )

Gro ups/ indi vidu als plug ged into new circ uitry prod uce pow ers
('po wer with ', ' pow er to', 'pow er with in', 'pow er ove r' stru ctur es)
and crea te new stru ctur es

Diagram 5.3: Con cept ual Mod el of Emp owe rme nt.

Diagram 5 .3 depicts how game-playing effects pow er at the collective and transnational
level by innovating in step one (see further below; see especially Cha pte r 7) then triggering
the process of scale at step two (the collective level) by tying together social networks.
This mobilises local capacities, action and knowledge to produce concentrated pockets of
collective action. By focusing action on connecting with gam e-p lay ers ' innovations,
collective action produces pow er at the local level and networks (superstructural nodes)
work to increase this local pow er by tyin g additional networks to fair trade. These pockets
are linked or interconnected at the transnational level, pro duc ing new pow er flows upo n
which new structures are built. In the analysis here, we see how 'sup ers truc tura l' nodes
such as Solidaridad activate collective action to trigger new pow er flows by tying existing
networks together to produce those larger scale flows of power. Com me nts from
respondents reflected their mental maps of the world in terms of the social-connections
model of pow er and expertise in triggering ever-widening circles of support for fair trade:
The campaign I'm working on right now is to connect consumers of Wo rld 's Finest
Chocolate - the com pan y that makes the fundraising bars for schools and churches
and faith groups , and other charitable causes. We 're [Global Exchange] trying to
pressure them [World ' s Finest Chocolate] to carry Fairtrade, or to source some
amount of Fairtrade for all their chocolate bars, and in that [campaign] action, it's
really important that we bring together the actual customers that are
organisations ... here in San Francisco we wo rk wit h the Archdiocese to support
Fairtrade. We bring together these blocks of customers to support Fairtrade (Guzzi,

- 124 -
 Fair Trade Chocolate Campaign Coordinator, Global Exchange , M ay 10 , 2005 ,
personal communication).

... our [Lutheran World Relief] [LWR] whole goal is to get a greater nu m be r of
congregations and individuals participating. . . .in 2002-2003 , we looked at our
records and saw that through the Lutheran W or ld Re lie f coffee project we had sold
45 tonnes of Fairtrade coffee. [That figure] still pu t us at the highest percentage of
faith groups at that time, bu t what we did was partner with the EL CA with the
w om en 's group and the w om en 's magazine of the church. We did a one year
project for the 2003-2004 year to run a project called 'P ou r Justice to the Brim: The
90-Ton Challenge'. We challenged Lutheran congregations to double the amount of
Fairtrade coffee that they purchased in a year - to go from 45 to 90 tonnes. By
October 2004, Lutheran affiliates, individuals, congregations and businesses -
people who called and bought coffee and identified themselves as Lutherans for this
pr oj ec t- bought 99.4 tonnes of coffee. So ... we feel th er e's re al value in putting this
information out, maybe it' s no t in the big world of coffee, bu t it' s a lot for a single
identified group to bu y (Ford, Policy Director, Public Policy, Lutheran W or ld
Relief, July 14, 2005, personal communication).

The first comment illustrates that in order to increase its influence with this campaign to
expand the fair trade chocolate market, Global Exchange mobilises other communities
('b lo ck s' of customers) such as organisations and institutions that have their own
independent and established constituencies and resources, rather than create a new network.
Global Exchange does so by 'co nn ec tin g' powerful social networks to itself, leveraging the
capacities and resources of these networks to expand fair trade in the US chocolate market.
While each collective pre-exists the networked relationship with Global Exchange, and is
unrelated to other networks with which Global Exchange becomes networked, according to
Guzzi, once networked together w ith Global Exchange (by enrolling key actors with
authority and influence within each network, such as the Archdiocese), the 'ac cu m ul at io n
of all these small community initiatives adds up '. Important to note here is the evidently
Latourian (1986) operation of, and presumption about, power: Global Exchange does not
prioritise one particular individual organisational network or institutional community bu t
instead engages networks that are linked to many other social threads that feed out into
broader (mass) society (such as schools, churches and charitable organisations) to
contribute to the process of expansion.

The second example of Lutheran W or ld R el ie fs outreach initiative to the wider Lutheran

network of congregations illustrates ho w a network active in tying other networks to its el f

- 125 -
 (i.e. a superstructural node ) (depicted in Diag ram 5.4) can itsel f be cons idere d as 'a single
identified grou p' (Ford, July 14, 2005, perso nal comm unica tion) , or in other words, just
one nodal comm unity with in a much larger fair trade netw ork (dep icted in Diag ram 5.5).
This comm ent suggests that, from a broa der view of the larger mov emen t, superstructural
nodes initiate mult iple ties betw een themselves and other netw orks at the same time as
being one of a num ber of nodes that anoth er supe rstru ctura l node has tied to itself. This
empirical observation is illustrated below:

Cong regat ionQ O ECLA wome n's group

Congregation ( \ LWR

0 Congregation

Diagram 5 .4: LWR as a superstmctural node.

Congregation Q 0 ECLA wome n's group

I
) LWR

0
Congregation o ~
Cong rega tion( ).---
0

\
~o
Diagram 5.5: LWR: both a superstmctural node and a nondescript node within the larger networked structure.

The empirical examples of Solidaridad, Global Exch ange and LWR abov e demonstrate the
scale that has been achie ved by this uniq ue noda l strategy for broa d-ba sed enrolment:

- 126 -
micro-level networking translates into scale through an ongoing process of emolment. Joe
Curnow, the 2005 co-Coordinator for the United Students for Fair Trade Convergence (a
national student movement conference in the USA) emphasised the powe r and scale that
emolling networks in a continual process makes realisable:
... we have a lot of powe r in terms of numbers - our potential outreach is every
college campus, and the communities they affect. So once we have affiliates on
each of these campuses, we are able to foster education and empowerment and
grassroots organising in each of those cities and campus communities. I think that
is pretty unique. Because we have this [attribute] - [ofJ students in a bloc k - we are
especially suited or uniq uely suited to organise a group of students ... and they 're
eager to get involved ... (June 25, 2005, personal communication).

Curn ow's observation makes clear that the pow er ofUS FT is realised through numbers. As
she describes, the USFT has substantial 'pow er' because of the networks (communities of
student campuses) that are tied together and the social resources that beco me available to
harness. Illustrated in Diagram 5.6 is a radial diagram of the ongoing circle of emol ment
(COE) achieved by networking networks (pictured each as individual nodes) and the
cumulative influence this process generates (depicted by the dotted arrows). This diagram
brings together the smaller elements of the networks analysed and depicted above (using
examples of Solidaridad and LWR) , and more importantly, reveals the explosive pattern
that lies behind the spread of fair trade:

- 127 -
 ;,
//~
'~ __ __ _ ?_ __ - - ""
'
,✓
/,,",,~ - ------- o. . _
/

""
'-

//~
J ,,
/
/ \

I
/ / , , , ~~ /
------x ',, .._ '
N et w or ke d
I
,' Q - r '/ / ~ ' ,'\ networks
' \
contribute to the

\ 0 - - - -
6 -----q-f-o
I I ---- ---- \
I II ---- ---- II \I continuous gr ow th
/L - - - 1 1
/
I
I
I
\ CO E 1: CO E 2: ,- -- : of available social
\1- - _I I \
resources and
I
'()>(_ --- __ ,\ ( , ,: ---;· reach into br oa de r

/'\. ._,/ "',_ 6 u

\ /
j- ~ -: _ --
u 0
, - /'\_
/ 'vf
society.

'--!"- -- -- -- - '\. )_ , I
,--
1 I
-.c- '-- __ !--

Diagram 5.6: The cumulative and continuous nature of the pr oc es s of ne tw or ki ng networks. Th e do

tte d
arrows indicate the dynamic and continual process of expansion, and the su bs eq ue nt 're ac h' th es e ne
tw or ke d
networks have. The pr oc es s is dialogic; ne tw or ki ng networks describes the id ea of 'sp re ad in g the w
or d' to
enrol new networks. Th e dotted arrows depict the cu m ul at io n of influence.

These data suggest a type of po w er that the traditional construct of 'p ow er ov er ' does no t
adequately explain (see Chapter 1). Fo r example, the fair trade m ov em en t's ge ne ra tio n of
power and scale has no t been achieved by one organisation or institution co m m an di ng
influence with exclusive ownership ov er technological, military, legal or financial
resources. Rather, the fair trade m ov em en t is a m aj or ity constituted by small-scale yet
interconnected nodes of action. Indeed, it stands in st ar k contrast to Chandlerian
corporations' methods whereby exclusive financial resources are ac cu m ul at ed and
exploited to monopolise the construction of, and globalise, he ge m on ic discourses (see
Chapter 2). The po w er of the fair trade m ov em en t to bu il d a collective discourse has be en
generated among, and is dependent on, m an y decentralised groups acting 'in co nc er t'
(Arendt, 1958).

Their approach has not be en ha ph az ar d or 's po nt an eo us ' in a H ay ek ia n sense. N ot least,

( this unique process of expansion through ongoing en ro lm en t of m or e groups appears the
" most efficient means of creating scale and exercising po w er in three important ways: the

- 128 -
 time-cost associated with network building; the likelihood of successful enro lment of a
community; and ensuring that the process of expansion continues.

First, network theory tells us that an existing network has an organised constituency and
established set of relationships, information channels and social capital (see Lin , 2001 ).
Rather than starting from scratch to build a unique network in order to foster these
capacities, fair trade actors have made themselves an intersection point where the resources
embedded in existing social networks coalesce and can be coordinated. The result of these
nodal intersections is the coordination of action and leveraging of the embedded resources
and capacities that exist in each of the individual networks. While network theory
conceptualises how networks - and their composition - benefit (or disadvantage) members
(see for example Putnam, 1993; Granovetter, 1973), these data offer new insights into how
social actors in networks capitalise on and enrol the resources, capacities and knowledge
(i.e. the benefits) embedded in other networks. The implication is not only social actors'
awareness of networks as sources of value and enabling pathways for social action and
change, but also their exploitation of this fact in ways that breed creativity and efficiency in
network activity.

The second w ay that networking networks appears economical derives from the idea that
individuals' level of trust in the source or messenger of information, particularly in the case
of mass-advertising, plays an important role in motivating an individual to support an idea
10 4
and take action (Granovetter, 1973) . For instance, an individual is more likely to believe
or be persuaded by a friend or family m em be r than by a stranger or random advertisement.
This is illustrated by the empirical observation above that superstructural nodes draw on
communities in which they have influence, or enrol those they know in those networks to
persuade network members for them. The following comment from one respondent
illustrates this well:
... the way w e' ve organised ourselves has been as simple as saying - and this is
across the world - 'w ho do you kn ow '? Then w e' ve built up a list. Everybody will
know somebody who knows somebody ... so get them in to see politicians, in the

104
Granovetter (1973: 1374) emphasises that 'p eo pl e rarely ac t on mass-media information unless it is als
o
transmitted through personal ties ... otherwise one has no particular reason to think that an advertised pr
oduct
or an organization should be taken seriously' (a ut ho r's italics).
- 129 -
 Eur ope an Par liam ent , go in there and talk to peo ple , talk to the m abo ut wh at ma tter s
to fair trade, and gra dua lly you bui ld up sup por t so tha t now for exa mp le we hav e a
cross Par liam ent ary wo rkin g gro up on fair trad e ... we can ask them to hol d me etin gs
and the n spe ak at the m ...

As this com me nt rev eals , ind ivid ual con nec tion s and con tact s in oth er arenas pla y a vita l
role in the pro ces s of enr olm ent . Thi s dat um sho ws tha t act iva ting pow er (a con seq uen ce
of enrolment) dep end s on 'we ak ties ' (Gr ano vet ter, 1973): the se ties off er access to 'rea dy-
made' con stit uen cies wit h the ir ow n res our ces , info rma tion and rea ch tha t lie bey ond mo re
intimate net wo rke d rela tion ship s. The see min gly dis -or der ed nat ure of hor izo nta lly
dispersed soc ial rela tion shi ps apt ly des crib ed by the ide a of 'we ak ties ' (Gr ano vet ter, 197 3)
or 'horizontal net wo rks ' (Pu tna m, 1993) non eth ele ss app ear s abl e to cau se effects (po wer )
at a pac e com par abl e to hie rarc hic al and bur eau cra tic mo del s of soc ial org ani sati on (see
Putnam , 1993; see also Ach rol & Ko tler , 1999; Sch ape r & Vo lery , 200 2: 271). Thi s
empirical obs erv atio n offers ins igh t into the mic ro- fou nda tion s of bui ldin g new ma rke t
structures tha t are pre mis ed on a dec ent rali sed and hor izo nta l mo de of soc ial org ani sati on.

The third ind ica tion of the effe ctu al nat ure of the uni que net wo rkin g stra teg y dis cus sed her e
is that, as Lat our argues, tho se wh o enr ol oth ers in a pro jec t are no mo re imp orta nt for the
continuation of ene rgy and for bre ath ing new life into the pro jec t tha n any oth er sub seq uen t
agent in the chain, sin ce col lect ive acti on is dep end ent on con tinu ed ind ivid ual act ion
(Latour, 1986). Hen ce, wh ile a sup ers truc tura l nod e mig ht enr ol sev era l oth er net wo rks in
its project, it is no mo re imp orta nt tha n tho se ind ivid ual com mu niti es - and tho se tha t
stretch out bey ond the m - for gen era ting pow er. The abo ve dat a illu stra te tha t tap pin g into
existing soc ial net wo rks has ena ble d sup por t to spr ead in a rhiz om e-li ke way. Fai r trad e
supporters util ise the ir con tact s wit hin oth er soc ial net wo rks and com mu niti es to enr ol
these groups - and tho se bey ond the m - to sup por t fair trade. Thi s pro ces s of gen era ting
support thro ugh net wo rks is rap id bec aus e the net wo rks ope rate org ani call y. As By rde
described it, UK sup por t for fair trad e at the gra ssro ots 'ge ner ate d a life of its ow n' . The
empirical obs erv atio n tha t sup ers truc tura l nod es are, in the con tex t of the bro ade r
networked structure, sim ulta neo usl y non des crip t nod es, not onl y illu stra tes Lat our 's poi nt,
but also furthers our und ers tan din g of nod al gov ern anc e by add ing gre ate r cha rac teri sati on
to the activity of sup ers truc tura l nod es in net wo rke d stru ctu res (se e for exa mp le Bur ris et
al., 2005).
- 130 -
 Ga me -P lay ers ' Innovations in lib erating individual an d collective po we r
Ne tw ork ing networks thus appears to be a very powerful - in an unconventional sense of
po we r - and efficient wa y of creating scale by channelling the po we r pro du ce d by multiple
social connections (see Chapter 1). This 'ch an ne l' has be en constructed by the fair trade
pioneers who innovated in the act of social protest. To pu t it another way, ga me -pl ay ers '
innovations have enabled ne w social connections for po we r (see Ch ap ter 7 for further
analysis). Fo r its time, the certification and labelling sy ste m was an im po rta nt inn ov ati on
for the fair trade mo ve me nt (Douglas, April 12 , 2005, pe rso na l communication) (see
Chapter 7). Until then, all fair trade products - primarily handcrafts - ha d be en sold in
alternative trade shops and through social mo ve me nt networks and oth er avenues of
distribution wh ich were not 'ac ce ssi ble ' to a wide po pu lat ion (Eshuis, April 11, 2005,
personal communication) or did no t pro vid e a significant ma rke t from wh ich pro du ce rs
could benefit. Th ese channels of distribution catered for a mi no rit y po pu lat ion or market,
na me ly 'ac tiv ist s' (Byrde, April 29, 2005, pe rso na l communication). This alternative
market was pe rce ive d as too 'w eir d' and 'fr ing y' to create im pa ct and increase ma rke t share
for fair trade, and created the pe rce pti on that people were ex pe cte d to 'bu y into a wh ole set
of political beliefs tha t they [did not] necessarily be lie ve in' (Gorman, Ju ly 12, 2005,
personal communication).

So, the fair trade pioneers revolutionised the ide a of protest, ma kin g protestors ma tte r in the
economistic sense of attaching a 'pr ice ' to status quo ac tor s' support or op po sit ion to fair
trade. By setting up the pro du ct certification system to access 'm ain str ea m' ma rke t outlets
such as supermarkets, the mo ve me nt ha d translated its philosophical mi ssi on into a reality
for the mainstream. Jeroen Douglas of Solidaridad, one of the pioneering organisations
involved in the creation of the M ax Ha ve laa r system, explained ho w the fair trade
mo ve me nt be ca me an important pla ye r in industry and politics wh en the labelling sy ste m
emerged in the marketplace:
... ho w come mainstream business and business leaders take notice of these [fair
trade] standards? It is because they kn ow that [fair trade] is a real thing. An d the y
kn ow that by getting into the marketplace and by really competing - pla yin g their
ball ga me - that we are a pla ye r to be taken seriously, because we can do their trick ,
and even be tte r ... W e pla y their ba ll game and that gives you a license to sp ea k .
. . .In the 70 's we were ve ry mu ch linked to what we call the protest mo ve me nt - we
were against this and against that - and the Spanish wo uld say we we nt from
pr otesta to propuesta. Instead of be ing a pro tes t mo ve me nt we we nt to an
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 alternative, by showing that it can be done in our way, and by offering a tool to the
end consumer to act. This creates a rather unique ... campaign model [and] a certain
authority to the fair trade movement. If you come with realistic alternatives [as we
do] ... you get a license to speak, a license to operate. There I think the fair trade
movement has been able to create a niche for itse lf in the political debate and in
industry (April 12, 2005, personal communication).

Douglas emphasises here how the fair trade mo vem ent has distinguished itse lf from a
traditional 'pro test ' movement. Its reinvention of the 'pro tes t' model has been important
for gaining scale bey ond activist circles, or rather, has widened the spheres of the consumer
market which can 'pro test ' in support of fair trade ('in ste ad of bei ng a protest mo vem ent
we went to an alternative ... by offering the end con sum er a tool to act '). This innovation
has ultimately proved extremely powerful. For instance, He rma n uit de Bos ch of ICCO
attributed the mo vem ent 's pow er and scale to 'ult ima tely their access to consumers, the
access to the pub lic' (April 13, 2005, per son al communication), and likewise Douglas
above observes the 'cer tain authority' that corralling collective action has per mit ted the fair
trade movement (April 12, 2005, personal communication). Others concurred, observing
that of all things, the product labelling system has ma de it possible for the mo vem ent to
gain a greater public 'pro file ' by accessing mainstream outlets where the majority of
consumers shop.

The mo vem ent 's newfound authority has bee n achieved by enabling a broad-based
consumer population to assign a dollar value to their political decision-making in the
105
marketplace and thereby institutionalise protest . Wh ile a soc ial form of protest, the fair
trade pioneers' innovation in the concept of protest can also be seen as hig hly capitalistic.
Fair trade products enable consumers to reveal their preferences via the market. This
creates competition for established businesses, competition that on cost grounds alone the y
cannot ignore. An observation from Ian Bretman, De put y Director of the UK 's Fairtrade
Foundation, indicates well the (monetary) value the Fairtrade system has given its new type
of protestor:
... [our marketing approach is] really working with this sense of consumer
empowerment. I think that tha t's really important, an issue like international
development is so huge, and although everybody cares about it - and the ·issue of

105
Bendell and Murphy (1999) conceptualise the political pow er that rests with consumers in a global
economy as opposed to the political pow er of workers.
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 poverty - and that it' s a ba d thin g and that something sh ou ld be done about it,
people don ' t actually feel em po we re d to do it, so w he n th ey 're pr es en te d with a
situation like that , they just sort of switch of f from it, be ca us e it' s
uncomfortable .. .[ours] is a tried and tested strategy of saying 'there is this huge
problem , but you can do something about it, yo u can be pa rt of th e so lution no t part
of the pr ob le m ' . I th in k that th at 's something that excites pe op le , and w e' ve be en
plugging away at this message for several years no w ... (M ay 3, 2005, pe rs on al
communication).

Bretman emphasises ho w protestors have be co m e em po w er ed by be in g given a tool to act

in a w ay that has an impact. As he suggests, it is pr im ar ily pe op le 's sense of powerlessness
to change existing structural injustices that inhibits the release of their actual ca pa ci ty to
make a difference to those injustices ('t he y do n' t actually feel em po w er ed to do it' ) . This
co m m en t shows that fair trade pioneers ha ve m ad e this ne w type of social pr ot es t m at te r
economically, with consequent costs for conventional m ar ke t players. The authority this
has created for the m ov em en t lies in the lin k be tw ee n 'p ow er to ' ('t he po w er to act or do
something w he th er as a group or as an in di vi du al ') at the individual level and 'p ow er w ith '
('t he po w er to achieve w ith others what one co ul d no t achieve al on e') at the collective and
transnational level. This interconnectedness was captured in re sp on de nt s' descriptions of
the repercussions of the collective exercise of 'p ow er to ' in the marketplace:
Fo r me [the fair trade movement] is m uc h stronger than initiatives like the anti-
apartheid movement. . .It [fair trade] is felt m uc h m or e str on gl y than other initiatives
because it does no t sim pl y oppose an existing [trading] sy ste m bu t demonstrates
that an alternative one is there and is workable. So, if the fair trade m ov em en t were
to react negatively to companies or products on the m ar ke t [as the anti-apartheid
m ov em en t did], it w ou ld have be en sim pl y disastrous for the co m pa ny be ca us e the
fair trade m ov em en t has this available and w or ka bl e alternative trading system.
This is the basis of the [fair trade] m ov em en t's po w er (Paulsen, April 14 , 2005 ,
personal communication) .

... [the alternative trade system] is an extremely im po rta nt pa rt [of fair

trade] ... [because] m ak in g a criticism is ve ry easy , bu t pe op le are ve ry quickly
bored. Bu t ju st to say 'o ka y I do n' t like the existing trading system, it needs to be
ch an ge d' , th at 's all well and fine. O ka y - so what? Ho w do I do that? A nd in the
fair trade context we can say 'w el l if yo u do n' t like the existing trading system, then
you can go and bu y Fairtrade products! W e can give yo u an alternative'. Th en we
can demonstrate that it can w or k differently, and yo u can show the w or ld by
growing the fair trade pe rc en ta ge in the m ar ke t that pe op le actually wa nt this to
change (Paulsen, April 14 , 2005 , personal co m m un ic at io n).

. . .consumers are voters, I really th in k it comes to this. Politicians are practical ,

pragmatic people , and they ne ed those votes, and if they see that this is something
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 that consumers care about, then the y rea lly hav e to take notice , or the y'll get vot ed
out. So tha t's it at bas e .. .ordinary peo ple across Eur ope are expressing a con cer n
and care for people across the rest of the world. An d so of course that now has to be
taken into account [by politicians] (Wills, April 29, 2005, per son al communication).

Brought into sharp reli ef by these com me nts is that collective pow er ('po we r wit h') has
been achieved by offering individual peo ple the 'po we r to' act in sup por t of fair trade - by
means of the fair trade pro duc t as a tool. This innovation enabled the mo vem ent to liberate
and institutionalise alternative values, and consumers (protestors) to assign a dollar val ue to
the expression of their value-preferences. By offering peo ple a small, eve ryd ay and
practical wa y to ma ke trade exchanges a pos itiv e force for change in status quo trade and
business practices, via the activities that ma ke up their ow n lives, the fair trade mo vem ent
has operated outside of formal political pro ces ses - thro ugh trade - to further its pro jec t of
bringing about social jus tice in the market. These dat a illustrate how ena blin g and
enrolling ma ny ind ivid ual s' 'po we r to' generates 'po we r wit h' - a collective pow er tha t
brings about cha nge the mo re others ena ct the sam e behaviours. The dee per ins igh t
signposted earlier is that liberating individual pow er to unl eas h this pot ent iali ty hin ges on
game-playing. Gam e-p lay ing is ana lys ed in dep th in Cha pte r 7.

For the pur pos es of this chapter though, from an eco nom ic perspective, the fair trad e
pioneers' creation of the certification sys tem unc ove red an opp ortu nity to rec onf igu re
markets to exploit a com pet itiv e advantage (see Porter, 1980). Bus ine ss theorists refer to
this as the opportunity for ma rke t reconfiguration, wh eth er in the attributes that can be
offered, or thro ugh con sum ptio n and val ue chains (M acm illa n et al., 2000). Rec onf igu ring
markets in these ways enables ma rke t actors to materialise new business mo del s wh ich are
otherwise ham per ed by existing barriers (organisational, reg ula tory or technological)
(Macmillan et al., 2000: 89).

Strategic inn ova tion describes the act of exploiting an opp ortu nity to del ibe rate ly dis rup t
existing ma rke t pow er relations and structures and rem ove their acc om pan yin g constraints.
This conventional business strategy has bee n exploited in the case of fair trade. The
pioneers identified an unm et - albeit pol itic al - 'ne ed' for products tha t wer e link ed to
values of social jus tice in the market. The y radically rec onf igu red the esta blis hed ma rke t

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 structure in ord er to liberate a bro ad pop ula tion of con sum ers /citizens thro ugh new ma rke t
seg me nta tion wh ich gives exp res sio n to these val ues (see Ma cm illa n et al. , 2000: 94-7).

Wi th the new mo del of acti on and social org ani sati on tha t gam e-p lay ers ' inn ova tion s hav e
offered and continue to offer, the fair trade mo vem ent has mo bili sed (thro ugh the enr olm ent
of) an inc rea sin gly wid e circle of activists and con sum ers (see above). The mo des t social
me ans and reso urc es fro m wh ich fair trad e has gai ned scale is test am ent to the infl uen ce
that 'we ak ties ' link ing dis tan t par ts of the sys tem can exe rt on the social env iron me nt (see
Granovetter, 1973; 1983). The soc ial- con nec tion s mo del offers an acc ura te des crip tion of
how giv ing peo ple the pow er to act - by usi ng gam e-p lay ers ' inn ova tion s - generates
'po we r wit h'. Thi s stra teg y has rec eiv ed little atte ntio n am ong net wo rk theorists as an
ena blin g and efficient pat hw ay to gai nin g scale and infl uen ce 106
. To the ext ent that tyin g
net wo rks tog eth er dep end s on dra win g on we ak ties to trig ger a seq uen ce of exp and ing
circles of enrolment, net wo rkin g net wo rks con cep tua lise s a dec ent rali sed pol itic al pro ces s
thro ugh wh ich soc ial cha nge is rea lise d (see Cha pte r 8). Giv en its pol itic al and eco nom ic
imp lica tion s for brin gin g abo ut cha nge in the eco nom y, the actors res pon sib le for
net wo rkin g new con nec tion s bet wee n unr ela ted soc ial net wo rks app ear to be key pla yer s
(see Steinberg, cite d in Gra nov ette r, 1983; see also Bra ithw aite & Dra hos , 2000;
Bra ithw aite , 2004; Dra hos , 2002). It is bec aus e of these actors tha t fair trad e continues to
spr ead thro ugh an eve r-g row ing num ber of net wo rks . The se net wo rk ent rep ren eur s are
con sid ere d mo re clo sely bel ow .

Network 'Networkers ': fair trade missionaries in the cultural economy

The foregoing sec tion has sho wn how enr olm ent /co nve rsio n of con sum ers has bee n don e in
a gro up- orie nte d ma nne r to enr ol col lect ivit ies to bot h sup por t fair trade and enrol others
the y kno w to do likewise. By bre aki ng up exi stin g ma rke t seg me nta tion , the gam e-p lay ers '
inn ova tion in the Fai rtra de cer tifi cat ion sys tem has ma de it pos sib le for new soc ial
connections, pre mis ed on alte rna tive values, to be fostered and nurtured. Thi s has ach iev ed
sizeable results. A see min g iron y in the ir con tem por ary scale, how eve r, is tha t the fair

106
Burris et al. (2005) describe the process of tying networks together to govern events but not as an explicit
strategy for creating scale. The superstructural node the authors conceive also differs in its composition from
that conceived here.
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 trade pioneers and activists who have initiated this networking process are - and ha ve
107
always been - of small means and resources . In their attempt to further their m is si on in
the market, fair trade pioneers have be en forced to enrol the grassroots (to w ho m they have
access and affiliation an d wherein lie established constituencies and social resources) ,
persuading these communities to support fair trade and to spread the m es sa ge further.

The subsequent irony of their makeshift approach was su m m ed up by one re sp on de nt w ho

made the observation that 'w ha t to da y w e call "s tr at eg y" was once a ne ce ss it y' (Bretman,
May 3, 2005, personal communication). T ho ug h driven by 'n ec es si ty ' at the time, gaining
support through grassroots networks has indeed be en recast and va lu ed as a 's tr at eg y'
because it works. It has sent thousands of fair trade activists and consumers running w it h
the fair trade mission and message, a m od em -d ay evangelism re m in is ce nt of the w or k of
missionaries who spread the w or d of God to enlighten and recruit the masses for the (m os t
commonly Christian) Church throughout m od em history . In bu si ne ss terms, the fair
108

trade m ov em en t's strategy of ne tw or ki ng social networks to focus collective action on the

fair trade mission is a type o f' guerrilla ca m pa ig ni ng ', a concept ba se d on the ph il os op hy of
Mao Tse Dung, involving the use of un co nv en ti on al means (such as in this case the
exploitation of social networks as an advertising mechanism) to tackle a be tt er financed and
well-established opponent (the m od em corporation), rather than tackling th em he ad on in
an attempt to match the op po ne nt 's strengths or competencies (see M ac m il la n et al., 2000:
207-9). One respondent in fact described the m ov em en t's po w er in these terms:
... I was recently ha vi ng a conversation w it h the w om an w ho 's in a pa ri sh in Seattle.
First of all, in the coffee world, Seattle is ki nd of gr ou nd zero. She was saying that
[the parish] did coffee sales of Equal E xc ha ng e coffee and one of he r parishioners
decided not to ju st drink it after Mass, bu t in his ho m e and then he also to ok it into
his office at B oe in g .. .he be ga n serving fair trade coffee at Boeing, so all of those

107
The fair trade movement relies heavily on the personal co m m itm en t of a small nu m be r of highly
committed and dynamic (underpaid) staff, and more significantly, on the unpaid w or k of dedicated vo
lunteers.
I had frequent reminders of this during my fieldwork experience w he re by those I in te rv ie w ed often w
ere
located in modest operations and had insufficient (human) resources to allow for non-essential activiti
es su ch
as contributing to a research interview .
108
Non-religious missionaries are not un co m m on but rather make br oa de r reference to 'an yo ne who atte
mpts
to convert others to a particular doctrine or pr og ra m ' (Hiney, 2000). To the extent that the fair trade ac
tivists
seek to convert groups to supporting fair trade - and fair trade pr od uc t consumption - they, and the m
any
volunteers who promote fair trade and 'sp re ad the w or d' , can be thought of as missionaries. By this
definition, Braithwaite and D ra ho s' (2000) 'en tre pr en eu rs ' in global regulatory agendas - who w or k to
'conve1i' and 'en ro l' other actors in their pr oj ec t - can likewise be thought of as examples of (non-relig
ious)
missionaries.
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 people would be exposed to fair trade and learn about it. .. In my mind, that kind of
tipping point effect.. .guerrilla marketing ... has a lot of power. Like when students
go home for the holidays and the y'v e shopped on campus at a fair trade sale, and
their parents and siblings are opening these really beautiful and precious items and
saying 'well, where did you get thi s?' , and then they tell the story ... (DeCarlo,
Author, Fair Trade: A Be gin ne r's Guide, former Executive Director, Fair Trade
Resource Network, June 30, 2005, personal communication).

This comment shows that fair trade 'm iss ion ari es' have played a critical role in continuing
the process of expansion of fair trade. Rather than being a handicap, the small-scale and
diffuse nature of networking social networks together at the grassroots has been the
mo ve me nt' s key weapon against the structured commercial mechanisms and routes of
global corporate brand advertising (see below). Braithwaite and Drahos (2000: 31) suggest
the possibility for networking to be a powerful weapon in their observation that persuading
others to joi n on e's project to influence outcomes is more important than commanding
organisational po we r or possessing resources. In other words, enrolment based on
persuasion is superior to top-down command. Drahos (2004) goes further to suggest that
enrolling more and more actors is a tactic that weak actors can exploit to amplify what
power they do have to topple the stronghold of more powerful actors.

In this approach, dialogue - persuasion - rather than physical and financial resources, is the
essence of power. The potency of this dialogic approach is exemplified in the fair trade
case in the sense that it describes the fair trade mo ve me nt' s mo du s op era nd i for reaching
greater scale. Carol Wills, the former Executive Director of IF AT and Erin Gorman, CEO
Divine Chocolate Ltd. in the US, highlighted how the movement has relied indeed on
enrolling and converting consumers and other activists not least because the mo ve me nt has
not had the organisational and financial po we r to do otherwise:
... what the fair trade mo ve me nt ha sn 't ever had is the advertising budgets of the big
corporations and so they [fair trade mo ve me nt supporters] have to be very very good
at public relations and getting free PR through articles in the press, and an y oth er
way they possibly can ... (Wills, April 29, 2005, personal communication).

.. .it 's jus t amazing, there are n't that many national organisations [in the US] - like
large-scale organisations - that actually do fair trade work. It' s really being fuelled
by individual churches and individual schools and community groups and wo me n's
organisations and citizens' groups that are really committed to this issue [fair trade]
and are taking action in their own community to make it possible. So one of the
things we [Co-op America] do is run something tha t's called the Fair Trade Alliance

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 which is a network of about 350 grassroots organi sations all across the country that
work on all kinds of things - forestry organisations , hunger reli ef org ani sations,
housing co-ops - that all have a commitment to do something on fair trade, and it's
actually one of the more pow erful things that I've seen [for spreading the message
about fair trade] because what it does is to really get people out there and say ' this is
what it [fair trade] means to me and this is wh y fair trade is important, and that 's
why I think you should buy fair trade too , and you live in my com mu nity and I
know you ... (Gorman, July 12, 2005 , personal communication).

Wills' observation shows the alternative (non-financial) resources and means by which fair
trade activists have penetrated the pub lic' s information environment to spread the idea of
fair trade. This illustration of grassroots social marketing efforts offers an empirical
illu stration of the 'intense activity of enrolling, convincing and enlisting' that is constitutive
of the exercise of pow er (see Latour, 1986) and the 'we bs of dialogue and per sua sio n'
through which actors seek to convert others to their project (see Braithwaite and Drahos ,
2000).

Gorrnan's comment captures the pot enc y of mis sio nar ies' dialogic activity given its role in
building cultural consensus around the value of fair trade. As Gorman describes, those wh o
initiate conversations to persuade those they kno w about the genuine value of fair trade to
themselves and for others - the melting-pot of grassroots groups she describes above - are,
in her terms, the 'ma rke ting dep artm ent ' for fair trade in the US. Indeed, this amorphous
group can be seen to imbue fair trade wit h cultural me ani ng and value, indicating an
alternative means of 'ad ver tisi ng' to create markets (see below).

To understand the significance of mis sio nar ies' enthusiastic attempts to persuade others as
part of the sequence of causing ma ss-e nro lme nt conceptualised above, a useful starting
point is to think of the economy in cultural terms. Fro m this view, economic activity is
ensconced in cultural meaning and perceptions of culture itse lf are 'cre ate d and preserved
mainly by communication' (Holt et al. , 2004). As Douglas and Ish erw ood (2000: 74)
describe, 'con sum ptio n is the very arena in wh ich culture is fought over and licked into
shape ' . In this wa y, the market is a discursive arena for the exchange of competing ideas
and 'me ani ngs ', much more than it is a place for utilitarian exchange bet we en functional
goods (see Fiske, 2000: 283; see also Featherstone, 2000). Har per (1996: 5), for instance,
portrays the marketplace as an 'intersubjective and pluralistic process for generating

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conjectures, exchanging and promoting ideas and attempting to refute them ' . Hence, a
business model, a product, or a brand is a 'tex t. .. a discursive structure of potential
meanings ... that constitutes a major resource of popular culture' (Fiske, 2000: 283).

The commercial advertising and marketing communications used by brand companies to

imbue their brands with the aura of premium cultural value and meaning (see Chapter 2)
represent but one of the multiple forms of communication in society that influence the
individual. Other forms of communication are those social informational channels that
have grown cultural consensus around the value of fair trade, such as word-of-mouth
(Coates, June 13, 2005, personal communication), website discussions, press releases,
newspaper articles, community radio interviews, social group events, community meetings,
local market stalls, conferences, promotional events or campaigns and through physical and
virtual networking between organisations and networks dispersed across cities, countries
and regions (Curnow, June 25, 2005, personal communication; Ford, July 14, 2005,
personal communication; Byrde, April 29, 2005, personal communication). These are
some of the many paths of communication that contribute to enabling individuals to
construct, contest and perceive culture (see Holt et al., 2004). Through these routes and
multiple sites of shared conversation, cultural value in fair trade has been and is being
constructed. This was reflected in the following observations:
... the faith movement [in the US] ... has been focused on doing general
education ... at the level of the congregation, hoping to influence congregations as
institutions, and their congregants as individual consumers, to look at fair trade
within the context of their faith, to say that - say within the Christian tradition,
similar arguments obviously are in the Jewish tradition bas ed on the Hebrew bible -
the teachings of their faith tell them, whether Lutheran, Presbyterian, Catholic ... that
their economic life should not be bas ed on the exploitation of others, that the
scripture calls people to live a life in line with their values, and that their values call
them to make choices - and the scripture calls them to make choices - that places
human life and human dignity above economic concerns ... fair trade makes such
intuitive sense for the people we talk to (Ford, July 14, 2005, personal
communication).

... [NGOs supporting fair trade and doing consumer education work] have truly
inspired the consumer at the grassroots level by promoting the [Fairtrade] ma rk
itse lf so that people recognise it, but also by building the fantastic motivated
consumer movement by these other various activities, like Fairtrade towns, like
Fairtrade universities, building a grassroots movement from the bottom up. An d
Oxfam supporter groups, who work with Fairtrade ... two very dynamic and driven

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 [Oxf am volun teers ] who were just deter mine d to make [Fair Trad e univ ersit ies and
Fair Trad e towns] start. And once they got the ball rolling, beca use in both cases it
was a fantastic idea, it gene rated a life of its own (Byrde, Apri l 29, 2005 , perso nal
comm unica tion) .

The above excerpts captu re the dialo gic proc ess of mean ing creat ion arou nd fair trade in the
109
context of diffe rent comm uniti es . One respo nden t desc ribed for insta nce how, in
enrolling wide sprea d supp ort from diffe rent comm uniti es, each with its own share d
worldview, 'fair trade mean s diffe rent things for diffe rent peop le, and effec tivel y
communicating the essen ce of fair trade need s diffe rent mess aging for diffe rent audie nces '
(Coates, June 13, 2005 , perso nal comm unica tion) . Thes e exam ples of conte xtual
deliberation abou t fair trade initia ted by fair trade miss ionar ies illust rate how the
move ment 's netw orkin g strat egy to build the fair trade mark et explo its the cultu ral natur e
of the market. It illum inate s how actors skille d in the art of persu asion initia te large -scal e
effects of polit ical signi fican ce with out recou rse - or access - to tradi tiona l resou rces
deployed to exerc ise powe r, such as capital, milit ary weap onry , techn olog y, legal autho rity
110
or centralised orga nisat ion (see Brait hwai te & Drah os, 2000 ; Drah os, 2002 ) . Thei rs is
instead a cultu ral powe r, a capa city to explo it grass roots socia l comm unica tion chan nels
and connections to influ ence the ongo ing proc ess of cons truct ing cultu ral unde rstan ding s of
what is valua ble in society, and ergo, how and on what basis indiv idual s perce ive and relat e
to themselves and others.

In fact, given its direc t role in expa ndin g the fair trade mark et, the miss iona ries' netw orkin g
activity can be seen to chall enge conv entio nal comm ercia l adve rtisin g, to the exten t that
both influ ence the cultu ral perce ption of value - howe ver unco nven tiona l in the fair trade
move ment 's case - to build mark ets. Thou sand s of fair trade activists and cons umer s are
continuing to mobi lise millions of 'ever yday ' peop le worl dwid e throu gh exist ing socia l
channels to buy fair trade prod ucts and sprea d the mess age abou t their avail abili ty and
value. This mess age is conv eyed large ly throu gh estab lishe d socia l netw orks and in the
many conv ersat ions and ongo ing dialo gue/d iscou rse abou t fair trade. This is a many -to-

109
To the extent that cultural values and identity inform who we are and desire to be, this dialo gue process is
relevant to politics itself (Bow les & Gintis , 1986) .
110
Drahos ' (2002 ) study of how the WTO 's Agree ment on TRJPS came to be shows that even strong actors
depend on emolm ent to achiev e large-scale effects.
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many model of advertising: fair trade activists are in the many thousands worldwide and
have capitalised on the potential of broad-based social networks ('weak ties ') to deliver
mass-enrolment (depicted in Diagram 5.6). The fair trade movemen t's capitalisation on its
competencies (in social networks and network resources) rather than its attempt to match
the competencies of its opponent is exemplary 'guerrilla campaigning' (see Macmillan et
al., 2000: 207-9).

It also shows that the movemen t's contrasting approach to developing a counter-hegemonic
discourse is based on, and subject to, collective participation and deliberation in its
construction (see Chapter 8). In conventional markets, consumers and producers
worldwide do not control or participate in the governance of hegemonic discourses
embodied in consumer brands (see Chapter 2). This dominant discourse is exclusively
constructed to serve corporate ends and is expounded through commercial avenues that are
not subject to collective governance. For instance, and by comparison, unlike the many-to-
many process that has led to the expansion of fair trade, one corporation works to spread an
image to millions of consumers (a one-to-many model of communication), spending
billions of dollars each year on commercial advertising to influence consumer behaviour in
a Pavlovian-like way (see Chapter 2).

By contrast with fair trade, this approach can be seen to create the perception of cultural
value in brand companies' products by deception to the extent that consumers are largely
unaware of the consequences of acting on the 'brand' preferences they are being influenced
to take up (see Chapter 2). Setting up this Pavlovian psychology through brand advertising
on a mass scale permits corporations to bar entry to competition (see Chapter 2;
Economides, 1988; van Caenegem, 2003). To put it in terms analogous to the market as a
cultural forum for competing ideas (see Harper, 1996; Fiske, 2000), the one-to-many model
of market building enables brand companies to monopolise the podium and keep other
voices from reaching the microphone. In short, the conventional brand corporation relies
on its own or single power - its financial resources, trademark ownership and vertical
integration - to achieve market scale and power. The following diagram offers a simplified
depiction of this one-to-many approach to gaining market share:

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 Brand corporation

Radio Internet Public Spaces

Consumers

Diagram 5.7: One-to-many model of gaining market share.

Given the ultimate effectiveness of the fair trade missionaries' approach to building cultural
value around, and support for, fair trade, paiiicular emphasis must be placed on fair trade
missionaiies - the network networkers - as they work to spread an alternative discourse
that is stifled by the current prevailing business model. To the extent that the fair trade
activists' mobilisation of many actors has created scale and increasing awareness, and that
corporations' power relies ultimately on consumers buying their brands, the fair trade
activists' strategy of networking networks to send forth further grassroots marketers is a
potentially potent (and arguably comparable) source of power to corporations' command of
organisational power and possession of vast resources. The fair trade 'missionaries' are
themselves of simple means but have enrolled the large and established grassroots
constituencies belonging to other networks. To be sure, the scale of fair trade far outweighs
the initiators' and pioneers' own organisational capacities and resources. Tying together
networks in a dialogic fashion to widen the circle of enrolment can be seen as a powerful
'bottom-up' antidote to corporations' mass-advertising of brands. Network networkers step
into the cultural market brandishing innovative business models that are designed to
challenge the prevailing discourse of conventional commerce.

Concluding C01nments
This chapter has examined the way in which the fair trade movement has approached the
problem of expanding fair trade. The chapter has illuminated a key finding: to create scale,
fair trade networks tie other networks to themselves to activate those networks, and through
their support, further networks. This is not a strategy of building networks from the ground
up, but rather an assumption that multiple, overlapping social networks exist and represent

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supe nor chan nels of comm unica tion, infor mati on acqu isitio n and sourc es of laten t
colle ctive powe r. Thes e chan nels have beco me tied to fair trade. Gam e-pla yers '
inno vatio ns free up capa cities and relat ionsh ips that are inhib ited or obstr ucted by exist ing
structures; they explo it a 'com petit ive adva ntage ' (Mac milla n et al., 2000 ) by spott ing a
perce ived need for, and exist ing restr aint on, hum an freed om in the value s unde rpinn ing
conv entio nal busin ess and mark et pract ice. As such, they creat e new struc tural aven ues that
offer and rely on these comm uniti es to exerc ise 'pow er to' (see Chap ter 7). This inno vatio n
in mark et segm entat ion alone is a signi fican t achie veme nt: fair trade pion eers have made it
poss ible to instit ution alise grou p prote st in an innat ely atom ising socia l envir onme nt - the
capit alist mark etpla ce.

The polit ical relev ance and influ ence of this econ omis tic inno vatio n has been explo ited by
fair trade pion eers and activ ists who have enco urag ed grou p-ori ented or grou p-rel ated
action. Beca use fair trade activists, resou rce-d efici ent as they are, have neve r been in a
posit ion to 'com man d' orga nisat ional powe r, they have had to capit alise on their socia l
netw orks and activ ely enro l other s throu gh persu asion (see Brait hwai te & Drah os, 2000).
The mov emen t's appa rent weak ness - its lack of finan cial capit al and diffu se or
dece ntral ised socia l orga nisat ion - has been its great est and parad oxica l stren gth, a
guerr illa-l ike mov e that has serve d as an antid ote to corp orate powe r and centr al
organ isatio n. The data exam ined here indic ate inste ad the impo rtanc e of wide ly dispe rsed
socia l netw orks and the accu racy of a Lato urian visio n of powe r in a netw orke d worl d. In
this worl d, the poss ibilit y for the weak , or unde r-res ourc ed, to trum p the stron g by inten se
'enro lling , conv incin g and enlis ting' (Lato ur, 1986 ) is very real (see Brait hwai te & Drah os,
2000 ; Burr is et al., 2005 ). In fact, whil st view ed in tradi tiona l terms as 'wea k', socia l
actors who are rich in socia l resou rces are stron g in a netw orke d world. The chap ter also
show ed that the dialo gic natur e of this netw ork entre pren eursh ip was cruci al to caus ing a
chan ge in perce ption s, beha viou rs and relat ions. This tactic spea ks to the cultu ral term s
upon whic h the mod em know ledge econ omy, in fact econ omic evolu tion more gene rally , is
prem ised.

The surp nsmg scale that the fair trade miss ionar ies' (netw ork netw orke rs ') prax is has
prod uced poin ts to the signi fican ce of the actors who weav e unre lated netw orks toget her to

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widen the circle of enr olm ent . The se actors ens ure the circ le of enr olm ent exp and s and
continues by star ting the con ver sati ons and dia log ue in diff ere nt are nas tha t are
construction sites for bui ldin g sha red per cep tion s about, and und ers tan din g of, the cul tura l
value of eco nom ic activity. The ir ma ny- to-m any wa y of wo rkin g is a uni que cou nte r-
weapon to glo bal cor por atio ns' exc lus ive ma ss-a dve rtis ing of a bra nd ima ge to mil lion s of
individual con sum ers. The mo vem ent 's ma ny- to-m any mo del is an adv erti sing -as-
collective-deliberation tha t forms a sha red dis cou rse (se e also Cha pte r 8). The ma ny- to-
many me tho d dra ws on the cap aci ty of 'we ak ties ' to spr ead alte rna tive cul tura l ide as to
move soc iety alo ng (Gr ano vet ter, 1973). The stra teg y of net wo rkin g net wo rks hig hlig hts
the sop hist icat ion of fair trad e act ivis ts' util isat ion of opp ortu niti es affo rde d by a net wo rke d
landscape. It also brin gs into sha rp reli ef the imp orta nce of net wo rks as an ena blin g
pathway for soc ial actors dea ling wit h the con stra ints pos ed by exi stin g ins titu tion s and
structures.

The det aile d net wo rke d and nod al acti vity ana lys ed in this cha pte r sug ges ts tha t the re is
nothing spo nta neo us in a Hay eki an sen se abo ut net wo rkin g net wo rks to del ibe rate ly cau se
large-scale out com es. It dem ons trat es the (po litic al) imp orta nce of we ak ties - or
horizontal net wo rks - for ext end ing bey ond mo re inti ma te soc ial circ les to facilitate
widespread enr olm ent and ach iev e ma cro soc ial aim s (Gr ano vet ter, 1983; Put nam , 1983;
Steinberg, cite d in Gra nov ette r, 1983). In this way, the ana lysi s of pow er in the pro ces s of
networking net wo rks ena ble s a vie w of the nod al life of larger, mo re com ple x net wo rk
structures (Burris et al., 200 5) and the ir role in ma rke t evo luti ona ry pro ces ses . Thi s adds
greater com ple xity to the mic ro and ma cro role of sup ers truc tura l nod es for pro duc ing
large-scale out com es. It offers a hel pfu l exp lan ato ry fram ewo rk for ma rke t out com es and
processes tha t are oth erw ise por tray ed as 'spo nta neo us' and nat ura lly- occ urr ing (see
Schumpeter, 1934; Ha yek, 1960; Ne lso n & Wi nte r, 1982).

The atte mp t to inst itut ion alis e or 'co nso lida te' the Fai rtra de cer tifi cat ion sys tem has, ove r
time, bro ugh t its ow n challenges. Alt hou gh this ide a, kno wn gen era lly as the 'cy cle the ory
of inn ova tion ' is not new to theorists of eco nom ic evo luti on (see for exa mp le N oot ebo om ,
2001; see also Sch ape r & Val ery , 2002: 261 ), the net wo rke d wa y in wh ich con sol ida tion
has occ urre d and the imp lica tion s of this pro ces s for the oris ing pow er, kno wle dge and

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social change do provide new insights. While the scale so far achieved with the Fai1irade
certification model has been rapid and exponential, its subsequent limitations as a model for
change have made themselves known in the market and to the movement (see Chapters 6
and 7). This model, and the constituency involved in its consolidation, is the subject of
detailed analysis in the following chapter.

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CHAPTER 6: Resistor s

Within evolution ary economic s it is an accepted propositi on that innovatio n has a cyclical
or temporar y nature (see Nooteboo m, 2001). As a new business venture grows, it evolves
into a more bureaucra tic and rigid structure. In this phase of consolida tion, it becomes
increasingly challengi ng for the organisat ion to exploit new opportun ities to 'capitalis e on
new ideas' or adapt effectivel y to a dynamica lly changing environm ent (see Schaper &
Valery, 2002; Foster & Metcalfe , 2001; Nooteboo m, 2001; Achrol & Kotler, 1999; Robert
111
& Weiss, 1988) . This is because bureaucra tic, hierarchi cally structured organisat ions are
poor receptors and exploiter s of new informati on. As Achrol and Kotler (1999: 147)
describe, 'large, vertically integrate d hierarchi es are inefficien t means of governan ce in
knowledge-rich and turbulent environm ents ... [a ]daption is slow and costly because of
entrenched interests eager to preserve their power and prerogati ves'. Intent on survival,
traditional organisat ional forms maintain status quo bodies of knowledg e (Ramazzo tti,
2001: 7 6). This inhibits the generatio n and spread of new knowledg e - not least because
new ideas and knowledg e pose inconsist encies with the dominant belief system (Schaper &
Valery, 2002: 271; Achrol & Kotler, 1999: 146; see also Granovet ter, 1973, 1983). As
Popper (cited in Loasby, 1999: 27) observed , 'orthodox y is the death of knowledg e, since
the growth of knowledg e depends entirely on the existence of disagreem ent'.

The ideas from evolution ary economic s provide insight in this empirical chapter. The
previous chapter detailed the rapid growth of the fair trade pioneers' innovatio n in the
Fairtrade certificat ion system. Those who now administe r and govern the expansio n of
FLO, the National Initiative s (Nls ), have an organisat ional mission to consolida te the
Fairtrade system within the wider conventio nal marketpla ce. They are the resistors in the
fair trade movemen t, who, like John Braithwa ite' s 'model mercenar ies', work to
institutionalise new models and 'cash in on them'. This chapter illuminat es how resistors'

111
Evolutionary economists look to biology to explain this pattern (termed 'natural selection') and economic
evolution more generally (see especially Nelson & Winter, 1982). The basic idea is that in nature, 'selection
mechanisms favour one variety (e.g. a species) over another, from which one species is eliminated and the
other prevails, based on its adaptability ... selection mechanisms bring to the fore techniques, organisational
routines and products that are best adapted to their respective environmental contexts' (Foster & Metcalfe,
2001: 1).

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con soli dat ion of the Fai rtra de cer tifi cati on sys tem , rath er than 'na tur al', arises from the
politics of kno wle dge and its exp res sio n in FL O' s evo luti on into an inc rea sin gly status quo
gov ern anc e model.

It is her e tha t we nee d to dra w on ide as from pol itic al scie nce as a star ting poi nt for
und ers tan din g the pol itic al pro ces ses tha t und erp in evo luti ona ry pro ces ses . To be sure,
inn ova tion is bas ed on the exp loit atio n of new kno wle dge (see Har per , 1996) yet wh at is
acc ept ed as 'va lid' kno wle dge is hig hly pol itic al: 'con test s for kno wle dge are con test s for
pow er' (Pim ber t, 2001: 81; see also Pim ber t & Wa kef ord , 200 1; Elster, 1998; Bo hm an &
Rehg, 1997; Gav ent a, 1993; Hall, 1981; Bel l, 1978). For this rea son , the org ani sati on of
kno wle dge is not val ue- free (see Hay war d, 1998; Lef ebv re, 1991; Gav ent a, 200 6a; see also
Cha pte r 8). The org ani sati ona l form sui ted to exp loit ing new info rma tion , esp eci ally in a
kno wle dge rich env iron me nt, differs from tha t wh ich sup por ts the pro ces s of con sol ida tion
(see Ab ern ath y, 1978; No ote boo m, 200 1; Ach rol & Ko tler , 1999). Ind eed , the latt er is
averse to the dis cov ery of new kno wle dge and info rma tion . To the ext ent tha t inn ova tion
drives the evo luti on of the eco nom y (Sc hum pet er, 1934) and is dep end ent on new
kno wle dge , evo luti on itse lf dep end s on the evo luti on of kno wle dge (see Loa sby , 1999: 25-
8). Req uis ite for evo luti on the n are org ani sati ona l stru ctu res - bui lt on alte rna tive pow er
relations - tha t ena ble and val ue new disc our ses , ide as and info rma tion (see Ach rol &
Kotler, 1999; Do her ty et al., 2004). Thi s cha pte r em piri cal ly dem ons trat es this poi nt by
sho win g how FL O' s inc rea sin g con sol ida tion - and the hie rarc hic al org ani sati ona l form it
has tak en - stym ies an evo luti on of kno wle dge in the info rma tion -ric h sec tor of trade. In
its inst itut ion al pre ser vat ion of '01 iho dox y' (De wey , cite d in Pim ber t & Wa kef ord , 2001:
26), FLO und erm ine s gen uin e evo luti on.

Consolidating innovation and the pol itic s of kno wle dge

Aft er a gro up of fair trad e pio nee rs and Me xic an pro duc ers set up the Ma x Hav ela ar
lab elli ng sys tem in 1989 in the Net her lan ds, a gro up of Ma x Hav ela ar lab elli ng init iati ves
em erg ed in oth er Eur ope an cou ntri es, inc lud ing Bel giu m, Lux em bou rg and Sw itze rlan d. In
1992 a fair trad e lab elli ng org ani sati on in Ge rma ny ado pte d the nam e 'Tr ans fair ' , pus hin g
for a 'Tr ans fair ' cer tifi cati on ma rk to be rec ogn ised am ong the Ma x Hav ela ar frat ern ity .
Tra nsf air Ger ma ny did not wis h to ado pt the Ma x Hav ela ar org ani sati ona l title wh ich

- 147 -
 carried the historical 'b ag ga ge ' unique to the N et he rla nd 's socio-political ba ck gr ou nd
(Douglas, April 12 , 2005 , personal communication). Tr an sf ai r G er m an y br ou gh t an
approach and attitude that was ve ry different from that of the Be ne lu x countries
(VanderHoff Boersma, Ja nu ar y 7, 2006, pe rs on al communication; de Clerck, A pr il 28 ,
2005 , personal communication). Until Tr an sf ai r G er m an y arrived on the scene, a
democratic 'm ix ed bo ar d' ov er sa w the M ax H av el aa r organisational initiatives , in cl ud in g
producers, the certification organisations , and co ns um er s (V an de rH of f Bo er sm a, Ja nu ar y 7,
2006, personal communication). This m ix ed -b oa rd is depicted in D ia gr am 6.1:

Governing Bo ard of M ax Ha ve laa r Labelling Organisations

(Producers, consumers , labelling organisational
representatives, traders)

Di agram 6.1: M ixe d Democratically-Elected Bo ard of M ax Ha ve laa r Initiatives before 1992 (i.e. pre-FLO ,
pre-Transfair).

Each labelling or ga ni sa tio n was no t on ly w or ki ng with sim ila r (th ou gh no t un ifo rm )

standards, bu t also carrying out similar functions. A t the sa m e time as sh ar in g ov er la pp in g
tasks , each N I was set up by different individuals an d at different times (albeit in general
they were fo un de d by A TO s or no n- pr of it organisations). As a result, no tw o N is ha ve the
same structure or character. Th e social, cultural an d intellectual characteristics of ea ch N I
are different, their legal se t up and national no n- pr of it or ga ni sa tio na l laws differ; th ei r
marketing strategies are diverse, as is each or ga ni sa tio n' s go ve rn an ce structure. A no th er
distinguishing feature of the N is is their ideological outlooks an d str at eg y for ex pa nd in g
Fairtrade (see below). D es cr ib in g the diversity of organisational characters found am on g
the N is , one re sp on de nt referred to the N is as a 'c an of w or m s' (Tiffen, O ct ob er 25 , 2005,
personal communication).

Despite these organisational differences , as the Fairtrade m ar ke t de m an ds gr ew , a ne w

organisation was de em ed ne ce ss ar y no t only to help realise ec on om ie s of scale by
cooperating w ith each other, bu t also to ad m in ist er the ov er la pp in g functions of the
labelling organisations - standard-setting, pr od uc er relations and ve rif ic at io n activities.
The Fairtrade La be lli ng Organisations International (FLO) was es ta bl ish ed by and fo r the

- 148 -
Nis to serve these members ' interests and take direction from them. The Nis are FLO ' s
legal owners. The organisational prerogative or ' interest' of Nis is to expand the market for
Fairtrade certified products in their own market.

As part of FLO ' s establishment, a new label was created as the international label for
Fairtrade products. This created a symbol for Fairtrade products across consumer
countries. To this day, however, in countries where the respective NI preceded the
establishment of FLO and the international Fairtrade label (1997), the Max Havelaar and
Transfair labels can still be found alongside the FLO product label. These labels are shown
in Figure 6.1:

www .fairtrade .net LOOK FOR THIS LOGO

www.Tnm sFair.ca

FLO Label Transfair Label Max Havelaar Label

Figure 6.1: Current variety of Fairtrade certified product labels - the FLO label, the Trans fair label and the
Max Havelaar label.

In addition to the creation of a new label, the governance structure that had overseen the
fair trade certification organisations prior to FLO 's establishment (the democratically-
elected mixed Board) was made redundant. It was succeeded by FLO ' s new governance
body comprised in its majority by Nis (see Diagram 6.2). Producer representation was
reduced in the new governing Board in order to create impartiality between the certification
body and producer organisations (who were being monitored and certified by this body).
An informal biennial meeting was set up as an alternative forum for producers and other
non-NI members of FLO (e.g. traders) to deliberate FLO 's affairs. Forming a minority in
the governance structure from then on, producers have struggled to exercise influence over
the Nis' decision-making forum in the development of FLO ' s policies and practices to do
with Fairtrade (VanderHoff Boersma, December 23 , 2005 , personal communication) .

- 149 -
 Fo rum
Pro duc er ◄ ►
Ne two rks

FL O Bo ard of Dir ect ors 20 Nl s in 21

( 6 Nls , 4 pro duc ers , 2 trad ers ) cou ntr ies
Tra der s

FL O Ex ecu tiv e Dir ect or

Standards & Pol icy Co mm itte e (Bo nn, Ge rm any )
(sets sta nda rds )

FL O Pro duc er Sup por t FL O Pro duc er Ma nag ers FL O Cert.

Ne two rk (Bo nn; liai se am ong st
(st aff in Bo nn & pro duc ers , Nl s and
pro duc er cou ntr ies com mit tee s
acr oss Afr ica , As ia
and Lat in Am eri ca Ins pec tio n Sta ff
(wo rld wid e;
ins pec t
pro duc ers for
Fai rtra de
com pli anc e
Tra de Au dit Sta ff
(Bo nn & pro duc er
cou ntr ies ; aud it sup ply
Ce rtif ica tio n
cha ins for F air tra de
Co mm itte e (ap pro ves
sta nda rds com pli anc e
pro duc ers aft er
ins pec tio n)

Diagram 6.2: FL O Go ver nan ce Stm ctu re at 200 4. Th e circ le in bol d aro und the Me eti ng of Me mb ers (M oM )
illustrates tha t wit hin this ent ire com ple x stru ctm e and sys tem of gov ern anc e, the Mo M to dat e has bee n the
most pow erf ul dec isio n-m aki ng bod y.

This description of the emergence of the international ne tw ork of Nl s shows the evolution
of networked governance stmctures bu ilt for the task of consolidating the certification and
labelling system. Th e mo ve me nt' s resistors are driving this ph ase of consolidation. Th e
above data show the organisational shift from innovation in the Fairtrade certification
model to organisational centralisation, efficiency and bu rea uc rat ic routinisation for scale
(see Abernathy, 1978; Nooteboom, 2001). Th e resulting stm ctu re has replaced the
democratically-elected mi xe d Board. As a su pe rst mc tur al no de for multiple Nl s situated

- 150 -
 within the broader fair trade network, FLO represents a hierarchical and centralised
organisation for governing the mo de l's growth in the wider marketplace.

This coordinated network approach to evolution nevertheless stands in contrast to M N Cs '

evolution - which was a product of corporate mergers and takeovers (see Chapter 2;
Chandler, 1964). Even so, while FLO was not formally established until 1997, since 1992
the 'socio-political thrust' and mission of the first Max Havelaar organisation in the
Netherlands have diminished relative to, and because of, the more pragmatic 'm ark et-
driven' Ni s that subsequently emerged and became part of the nodal community of Ni s
(VanderHoff Boersma, January 7, 2006, personal communication). This has seen the
emergence of hierarchy between nodes within networked structures. Indeed, the reference
to the 'socio-political thrust' of the certification system and the distinction of pragmatic
'market-driven' Nl s draws attention to an intricately entwined political and practical
dynamic in the networked governance of fair trade which operates at two levels. FL O' s
nodal hierarchy is central in this dynamic.

First, at an international level, FL O' s pragmatic market-driven approach agitates IFAT, the
main fair trade association which represents the international fair trade mo ve me nt of FTOs;
IF AT 's majority membership is comprised of Southern producer organisations (see Chapter
8). As mentioned in Chapter 3, this deep conflict internal to the fair trade movement pivots
on two competing worldviews of fair trade: market reform (FLO certification) and market
transformation (IF AT and FTOs) (for more detail see Chapter 8). As a result of these
different ideological positions, FLO and IF AT pursue fair trade in different ways. These
positions are depicted in Diagram 6.3:

Fa ir Trade Ma rke t Conventional Ma rke t

Mi ssi on: to
transform exi stin g
ma rke tpl ace i
IFA T: FT Os &
i
Mi ssi on: to inc rea se the
pre sen ce of Fai rtra de
pro duc ts in ma ins tre am
FL O: NI con sum er out lets
pro duc er
coo per ativ es

Dia gra m 6.3: IFA T and FL O at opp osi te end s of a fair tra de ide olo gic al spe ctr um .

- 151 -
 As Diagram 6.3 shows, FLO and the Ni s aim to consolidate Fairtrade certified products
throughout mainstream distribution and retail outlets (involving conventional retail
supermarkets and bra nd companies). By contrast IF AT and FTOs are building the
movement of 100 pe r cent Fa ir Tr ad e Organisations (not Fairtrade certified products pe r
se) whose explicit mission is to transform international trade relations and terms for
marginalised and disadvantaged small-scale producers in developing countries. As such ,
their focus is on supporting small-scale farmers and craftspeople, whereas FL O' s focus is
increasingly on factory and plantation workers (Dalvai, April 13, 2005, personal
communication). IF AT me mb ers aim to ma ins tre am a more radical interpretation of fair
trade: expanding the nu mb er and ma rke t value of FTOs and pro du ce r cooperatives through
consumer demand to bri ng forth social change (see Chapters 7 and 8).

Whilst related, these missions are not the same (see Ch ap ter 8). As one res po nd en t noted,
there is 'ov erl ap ' be tw ee n the missions of Ni s and FTOs, bu t the ir missions are 'no t
synonymous' (Tiffen, Oc tob er 25, 2005, pe rso na l communication). Nonetheless these
more radical nodes co-exist alongside the conservative nodes of FL O and the Ni s in the
decentralised ne tw ork structure of the bro ad fair trade mo ve me nt (see Chapters 7 and 8).

For their part, FLO and the Ni s are ke y protagonists in the rec en t spread of Fairtrade
products into international 'm ain str ea m' outlets and by large conventional bra nd
112
companies /traders . Conceptually the y are the mo ve me nt' s 're sis tor s'. Those in the fair
trade industry/movement ref er to FL O and the Ni s as the 'FL O fam ily ' 113
. The FLO family
is seeking to consolidate the Fairtrade sy ste m by gaining acceptance am on g conventional
market traders whose ma rke t po we r is entrenched. 'Re sis tor s' are structurally located in
capitalist market institutions, seeking on ly to institutionalise alternative models into
capitalist institutions rather than transform those institutions themselves. Be ari ng a striking
resemblance to John Br ait hw ait e' s 'm od el me rce na rie s', resistors un de rta ke the 'ha rd sell
and execute model im ple me nta tio n' (see Ch ap ter 1).

11 2
IFAT is analysed in greater depth in Chapter 8.
11 3
Not all of the 20 Nls were interviewed for this research, though those of historical and contemporary
significance in the regions chosen for this fieldwork were included whether by face-to-face interview or
telephone/ email correspondence. These included Nls across Europe (such as Ma x Havelaar Netherlands ,
Belgium, Switzerland, France), the Fairtrade Foundation in the UK , Transfair USA, FLO in Germany.
- 152 -
 The data on resistors in this chapter tell a more complex story still. Untangling this
complexity - as the first ha lf of this chapter does - involves consideration of the distinct
evolutionary phase of 'consolidation' and how knowledge and organisational structure
respectively operate in this cycle. In this context is the second level at which the political
and practical dynamic in the fair trade movement exists. A m on g FL O 's N I membership
reside two distinct sub-cultures which nurture the broader ideological tension between
IF AT and FLO. These sub-cultures play, and have played, pivotal roles in the development
and evolution of FL O ' s system, and have determined the w ay in which FLO responds to
the outside world (see below). Respondents' comments illuminated the existence of these
two sub-cultures:
... within FLO you have N is that are saying 'w e are the Anglo-Saxons' with a
'business m od el ' approach. It seems to be another culture. A nd then you have the
French, Belgian, Europeans saying, 'o ka y use the business model to de m on str at e
something, but once we have done this, we ne ed to take [Fairtrade] onto another
level which is advocacy and ... a society ap pr oa ch '.

... our attempt [at Trans fair U SA is] no t to overthrow global capitalism, bu t to work
within the mechanisms of global capitalism, to shift its benefits to people in the
countries where many of the products we consume originate. W e' re no t anti-WTO
protestors, w e'r e not throwing rocks at Starbucks or other companies ... w e'r e very
much working with these companies and see them as actual or potential allies and
friends to w or k with us to develop the growth of Fair Trade, and simply to shift
more of the benefits ba ck to po or farmers. So ... we 're not rock throwers, w e 're ve ry
business oriented and free-market oriented, and we believe strongly that for Fair
Trade to work in the United States, we have to understand the market and we have
to embrace it and we have to work within the free market (Sellers, Ch ie f Operating
Officer, Transfair USA, M ay 10, 2005, personal communication).

The first respondent describes FL O ' s two distinct N I sub-cultures and the tension between
the two approaches: the advocacy N is view Fairtrade as a means to an end (that Fairtrade
certification merely 'd em on st ra te s' something) whereas the business model N is view
Fairtrade certification as an end in itself. The N is from continental European countries
constitute one sub-culture (the 'ad vo ca cy ' approach). The so-called 'L at in os ' (Italy and
Spain) are also part of this sub-culture (V an de rH of f Boersma, January 7, 2006, personal
communication). The US, UK, Switzerland and to some extent the Netherlands, the
'A ng lo -S ax on ' members, form a 'business m od el ' sub-culture. Sellers' comment illustrates
the Anglo-Saxon N is ' market-oriented perception and promotion of fair trade: Transfair
USA 'em br ac es ' and 'works within' the confines of existing market norms, the idea being

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that if it were to act more radically, Transfair USA woul d be view ed nega tivel y as 'rock-
throwers' by the corporate sector. This shows how mark et-or iente d Nls aim to be 'allie s'
of the corporate sector.

These data illustrate the affinity that resistors share with existing capitalist mark et
institutions. For example, Tran sfair USA does not appe ar to view the exist ing trading
regime in a critical light or see a need for it to change. As one prod ucer described, the
'business mod el' Nls (of whic h Tran sfair USA is a key one) are 'prag mati c', 'mar ket-
driven' and 'do not like discussions on a polit ical level '. To the extent that prod ucer s'
disadvantaged posit ion is caused by the institutional structures that govern the inter natio nal
trade regime, Selle rs' comm ent suggests that 'busi ness mod el' Nls are not seek ing to bring
about significant change, at least if Fairtrade is going to 'wor k' in the main strea m
conventional market. Indeed, the same prod ucer obse rved that the 'Ang lo-Sa xons ' are
quite 'happ y with the way of the neoli beral econ omic appr oach ' and operate the Fairt rade
system as a paternalistic 'char ity orga nisat ion' inste ad of as an empo weri ng tradi ng syste m
for producers (Van derH off Boer sma, Janu ary 7, 2006, perso nal comm unica tion) . By
contrast, the 'advo cacy appr oach ' sub-culture, whil e also operating with in conv entio n with
FLO' s system, is more suspicious of the mark et, and stron gly advocates chan ge to the
terms and rules of international trade for prod ucers (Van derH off Boer sma, Janu ary 7, 2006,
personal communication). Diag ram 6.4 illustrates the micro ideological spec trum with in
FLO reflecting that whic h distinguishes IFAT and FLO:

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 Fa ir Trade Ma rke t Conventional Ma rke t
Mi ssio n: to transform Mission: to increase the
existing marketplace. pre sen ce of Fai rtra de pro duc ts
in ma ins tre am con sum er
outlets .

Ad voc acy Bu sin ess

Ap pro ach FLO mo del

Bu sin ess
Ad voc acy Ap pro ach
mo del
Continental Eu rop ean s &
US A
' La tin os' (Sp ain & Italy)
En gla nd
Sw itze rla nd
Dia gra m 6.4: Mi cro cos m of fair tra de mo vem ent 's bro ade r ide olo gic al spe ctr um wit hin FLO.

W hil e the Nl s ca n be co lle cti ve ly co nc eiv ed as the res ist ors in the wi de r mo ve me nt, the
po rtr ait of res ist ors pa int ed by the se da ta sh ow s tha t the res ist ors are ac tua lly a
he ter og en eo us rat he r tha n ho mo ge ne ou s gro up in ter ms of the ir ide olo gic al pe rsp ec tiv e an d
aim. Sp rea d alo ng an ide olo gic al sp ec tru m, the ad vo ca cy Nl s are sit ua ted (ph ilo so ph ica lly )
mo re clo sel y to the wi de r mo ve me nt tha n to the bu sin ess mo de l Nl s, an d the bu sin ess -
mo de l Nl s gra vit ate tow ard s co nv en tio na l ma rke t actors rat he r tha n 'ad vo ca cy ' Nl s. Th is
adds gre ate r nu an ce to Br ait hw ait e's (fo rth co mi ng ) 're sis tan ce ' ca teg ory of de fia nc e by
po int ing to va ria tio n wi thi n the ca teg ori es of de fia nc e.

Th e ide olo gic al dif fer en ce s be tw ee n the se tw o su b-c ult ure s of res ist ors , an d the mo re
ma cro -m ov em en t pe rsp ec tiv es the y ref lec t, hin ge on co mp eti ng vie ws of the eff ica cy or
au tho rit y of the ex ist ing ne oli be ral ec on om y an d the rol e of the Fa irt rad e ce rti fic ati on
mo de l in em po we rin g sm all -sc ale pro du ce rs wi thi n the ma rke t. Fu nd am en tal ly, thi s is a
co mp eti tio n be tw ee n dif fer en t typ es of kn ow led ge - on e tha t do mi na tes the co nv en tio na l
ma rke tpl ac e, the oth er alt ern ati ve an d ma rgi na l to this pre va ili ng dis co urs e. Ev olu tio na ry
ec on om ist s ob ser ve tha t as ne w ve ntu res gro w ov er tim e, the y co me to ref lec t do mi na nt
bo die s of kn ow led ge (se e Ra ma zz ott i, 20 01 : 76). Th is org an isa tio na l an d ide olo gic al
ev olu tio n co me s at the co st of the org an isa tio n's ad ap tab ilit y an d res po ns ive ne ss to ne w
ideas an d inf orm ati on (se e Ma cm ill an et al., 20 00 ; Sc ha pe r & Vo ler y, 20 02 : 269). Th ese
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 observations to do wi th org an isa tio na l ev olu tio n in the ma rke t an d its eff ec t on kn ow led ge
are illustrated here. Int ere sti ng ly, de cen tra lis ed , ne tw ork ed org an isa tio na l an d go ve rna nc e
structures are ge ne ral ly co mp lim en ted for the ir su pe rio r inf orm ati on pro ce ssi ng , fle xib ilit y
and adaptability in co ntr ast to integrated, hie rar ch ica l str uc tur es of go ve rna nc e (se e Ac hro l
& Kotler, 1999; Do he rty et al., 2004). Th ese tw o types or styles of org an isa tio n are
attributed to dif fer en t ma rke t en vir on me nts : dis int eg rat ed , 'or ga nic ' for ms of org an isa tio n
in volatile, un pre dic tab le contexts; an d int eg rat ed bu rea uc rat ic, 'm ec ha nis tic ' for ms of
organisation in pre dic tab le, sta ble en vir on me nts (N oo teb oo m, 2001: 51 ). Th e su pe rio rit y of
the former in co nte mp ora ry times, ho we ve r, arises fro m the inf orm ati on -ri ch na tur e of the
knowledge ec on om y (see Ac hro l & Ko tle r, 1999). Fo r Ac hro l an d Ko tle r (1999: 146),
networks are ad ap ted be tte r to kn ow led ge -ri ch en vir on me nts be ca us e of the ir su pe rio r
inf orm ati on -pr oc ess ing capabilities. As the y describe:
Th e ne tw ork org an isa tio n is ... a su pe rio r lea rni ng org an isa tio n ... [co mp are d with]
hie rar ch y [which] creates str on g ties wi thi n an d am on g fun cti on al units. Str on g ties
cause me mb ers to thi nk an d ac t alike, an d thus, inf orm ati on tha t flows in the sy ste m
be co me s lar ge ly red un da nt ov er time. In co ntr ast , ne tw ork s cre ate de ns e bu t we ak
ties wi th me mb ers wi th dif fer en t functions, int ere sts an d kn ow led ge ba ses . Ea ch
lin k tra ns mi ts ne w an d dif fer en t inf orm ati on , an d for the ne tw ork as a wh ole , thi s
me an s su pe rio r kn ow led ge ass im ila tio n (A ch rol & Ko ttle r, 1999: 14 7).

Be this as it ma y, the ab ov e da ta su gg est tha t ne tw ork ed org an isa tio na l str uc tur es are no t
immune to hie rar ch ica l for ma tio n in the pro ce ss of ma rke t ev olu tio n or the no ted
repercussions on the flow an d pro du cti on of kn ow led ge . Th at is, no de s wi thi n ne tw ork ed
governance str uc tur es ap pe ar to ex hib it the ev olu tio na ry pro pe ns ity to co ns oli da te an d bu ild
centralised, hie rar ch ica l structures for go ve rni ng kn ow led ge ; no da l hie rar ch ies ca n for m
and pro du ce dis cre pa nc ies an d ine ffi cie nc ies in kn ow led ge flows (se e Ch ap ter 8). Th ese
political ch all en ge s at the lev el of the mi cro -fo un da tio ns of ind us tri al tra ns for ma tio n, an d
the mi cro -fo un da tio ns them.selves, ha ve no t be en ca ptu red by ev olu tio na ry ec on om ist s.
The effect of no da l hie rar ch ies is co ns ide red be low ; su ffi ce to say he re tha t thi s em pir ica l
insight adds ref ine me nt to the ide a of ne tw ork org an isa tio ns as so ph ist ica ted an d de sir ab le
structures of go ve rna nc e for kn ow led ge . Ind ee d, Ch ap ter 7 sh ow s tha t in the face of
conservative no de s, no de s wi thi n the wi de r ne tw ork ha ve co nti nu ed sco pe for inn ov ati on ,
and Ch ap ter 8 reveals alt ern ati ve ne tw ork str uc tur es tha t nu rtu re inn ov ati on an d thr ive in
information-rich en vir on me nts . Th ese pro ce sse s are im po rta nt for un de rst an din g ho w the
political obstacles to tri gg eri ng ma rke t tra ns for ma tio n are ov erc om e; the res po ns e of
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innovative nodes is crucial to understanding the evolutionary success of alternative
discourses (see Chapters 7 and 8). The following section examines in mo re detail how
FL O's organisational structure - specifically its governance and funding models -
privileges ma rke t orthodoxy and displays an aversion and hostility to the spread of new
ideas and information.

Instituting Orthodoxy: Governance and Fun din g

Dep end enc y theorists pos it that an org ani sati on' s need to survive and acquire resources for
growth encourages conformity to the external political climate. As Ma cm illa n et al. (2000:
141) describe:
Mo st firms ... are pre dis pos ed to seek efficiency rather than und erg o the hig h costs
of generating variety in the ir portfolios through the pursuit of new business
models ... firms are driven to res pon d to the external environment in ways that allow
the m to gain essential resources. Thus they are highly constrained in the actions
they ma y take and are continually engaged in political negotiations to acquire mo re
resources.

This vie w is insightful in this case. Wh ile a pragmatic market-driven vie w constitutes onl y
one perspective of expanding fair trade markets, it nonetheless commands a gre ate r degree
of influence over the radical fair trade discourse. This pow er imbalance bet wee n FLO and
IF AT is predicated on their different ideological positions: FL O' s exercise of authority and
influence over IF AT is jus tifi ed on the basis of FL O' s embrace of an explicitly
conventional market-oriented approach, one that does not see k to question or criticise the
authority of the existing market. As one respondent explained, FLO and a few par ticu lar
Nis (see below) exert decision-making pow er ind epe nde ntly and in the absence of IFA T
me mb ers ' support, deliberation or consensus bec aus e IF AT me mb ers ' vis ion is too 'old
fashioned' and 'tra diti ona l' for Fairtrade to succeed in the marketplace. Des crib ing this
pow er imbalance one respondent observed that:
... there needs to be mo re dialogue bet wee n IF AT and FLO. Bec aus e at the mo me nt
it is not good - we [IFAT] have to bargain with FLO. For me it is a bargaining
game, we have to ask certain rights ... to be recognised or if we wan t to influence the
standards, such as after we discussed wit h [banana, coffee and cocoa] producers the
introduction of plantations - [they] were completely against FLO [on this issue].

This description of the 'bar gai nin g gam e' that IF AT is forced to play wit h FLO illustrates
the unequal pow er relationship bet wee n their competing discourses in governing the

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 development of fair trade. FL O' s is a liberal style of po we r ('p ow er ov er' ) - red uc ed to
bargaining and po we r plays - rat he r tha n a 'po st- lib era l' ex erc ise of po we r ('p ow er wi th' )
embodied in collaboration, deliberation an d co op era tio n (see Mo uff e, 1997). In fact, FL O
is able to gain a lot of 'po we r wi th' fro m ma ins tre am actors by co nfo rm ing to pre va ili ng
market norms; its pra gm ati c ma rke t-d riv en int erp ret ati on of Fa irt rad e is mo re ac ce ssi ble to
conventional ma rke t actors than the tra ns for ma tio na l mo de l of fair trade esp ou sed by IF AT.
These data sh ow the eff ec t of kn ow led ge hie rar ch ies - FL O appears to stifle debate an d
deliberation by dis tan cin g its elf from, an d en ac tin g de cis ion s ind ep en de ntl y of, tho se wh o
would challenge a status quo wo rld vie w of ma rke ts for the pu rpo se of its ob jec tiv e of
consolidation in the ma ins tre am ma rke t. Mo re tha n this, FL O appears to be us ing this
'power wi th' to exert 'po we r ov er' the wi de r fair tra de mo ve me nt an d its alt ern ati ve ma rke t
agenda. This sh ow s ho w 'po we r ov er' rel ati on s wi ll be rec rea ted if ne w institutions are
based on pre va ilin g de cis ion -m ak ing str uc tur es an d relations (V en eK las en & Mi lle r, 2002:
45).

Governance
FLO' s org an isa tio na l str uc tur e ins titu tio na lis es ort ho do xy in a co mp lex way. Mo re
specifically, FL O' s go ve rna nc e an d fun din g mo de ls va rio us ly co nfe r ad dit ion al str en gth to
some nodes rat he r than others. As alr ea dy sh ow n above, the pra gm ati c ma rke t-d riv en
approach to Fa irt rad e co ns titu tes on ly on e su b-c ult ure am on g FL O' s NI me mb ers . De sp ite
this, the pra gm ati c ma rke t-d riv en NI su b-c ult ure is all -po we rfu l in FL O' s de cis ion -m ak ing .
It dictates ho w FL O res po nd s to the ou tsi de wo rld , su ch as in its dealings wi th IFAT. Th is
power is ga ine d in tw o ways. Th e first wa y in wh ich the ma rke t-o rie nte d Ni s' interests
pervade FL O' s sy ste m is thr ou gh the Ni s' leg al ow ne rsh ip ov er the org an isa tio n. In sp ite
of be ing on ly one of a nu mb er of sta ke ho lde rs in the Fa irt rad e sy ste m, the Ni s ha ve
Constitutional po we r ov er pro du ce rs in the go ve rna nc e of FL O 114
. Re sp on de nts co nv ey ed
the un de mo cra tic and lar ge ly un ac co un tab le po we r tha t Ni s' pro pri eto ria l co ntr ol of FL O
gives the m in go ve rni ng the de ve lop me nt of Fairtrade:
... the dy na mi c in FL O is no t always ea sy to un de rst an d be ca us e ... the po we r in FL O
lies with the Na tio na l Initiatives. FL O ca nn ot im po se the po liti cs on the Na tio na l
Initiatives. Th is has to do wi th the his tor y of ho w FL O started. Al l of this be ga n

114
FLO 's Constitution has since bee n changed. Chapter 8 analyses this change.
- 158 -
 wi th the Na tio na l Initiatives, an d on ly the n the y ca me tog eth er to ma ke FL O, bu t
the y did no t give the ir po we r to FL O. FL O [does] standards, yes, FL O [does] the
[product] registers, yes, the mo nit ori ng , sure ... bu t the po we r? It is no t [given to
FLO]. Or the criteria wh ich ma ke s Ch iqu ita a yes or no [in FL O' s system], it is no t
[F LO ' s decision]. . .. the re' s a hu ge cnt1c1sm ab ou t FL O no w from
pro du ce rs ... [that] there is no pa rti cip ati on , we ll there is pa rti cip ati on , bu t wh en it
comes to decision-making, the y [producers] are in a mi no rit y, be ca us e the Na tio na l
Initiatives ha ve this majority.

... legally, the Na tio na l Initiatives (N is) are the ow ne rs of FL O

Int ern ati on al ... This ... po int has im po rta nt co ns eq ue nc es for the sit ua tio n we find
ourselves in today; the pe op le wh o ac tua lly ma ke the de cis ion s wi thi n the Fa irt rad e
sy ste m are the NI Directors. At the NI Di rec tor me eti ng s (ca lle d the Me eti ng of
Me mb ers - Mo M) , ne ith er the pro du ce rs no r an y oth er Pa rty ca n pa rti cip ate ... these
me eti ng s [of me mb ers ] do no t tak e pla ce wi thi n the str uc tur e of FL O, de sp ite the
fact tha t the y ma ke all the de cis ion s pe rta ini ng to FL O ... . FL O' s Bo ard of Di rec tor s
is co mp os ed of 6 me mb ers rep res en tin g the Ni s (ap po int ed by the m an d the y also
vote for the Pr esi de nt) an d the y po sse ss 50 pe r ce nt of the votes. In oth er wo rds ,
alt ho ug h FL O' s Bo ard of Di rec tor s inc lud es 4 pro du ce rs an d 2 ind us try
representatives, the Ni s ha ve en ou gh vo tes the ms elv es to ap pro ve or de ny an y po int
of action. Al l final de cis ion s are ma de at the M oM s an d so me tim es the y ev en
rev ok e decisions ma de by the Bo ard (D en au x, No ve mb er 25, 2004).

Th e first of these co mm en ts hig hli gh ts the inf lue nc e of no t on ly the Ni s ov er FL O in

de cis ion -m ak ing bu t also the ir inf lue nc e ov er pro du ce rs in de cis ion -m ak ing wh om FL O' s
pu rpo rte d mi ssi on is to serve. In this go ve rna nc e mo de l, bo th FL O as an org an isa tio n an d
pro du ce rs in FL O' s sy ste m are ess en tia lly ho sta ge to the int ere sts an d de cis ion s of the Ni s.
Ni s also rep res en t a ma jor ity on the Bo ard wh ich ma ke s pro du ce rs' Bo ard pa rti cip ati on an d
de cis ion -m ak ing inf lue nc e me an ing les s; the pro du ce rs ca nn ot inf lue nc e Bo ard decisions.
Irrespective of the Bo ard 's decisions, De na ux ' s co mm en t rev ea ls tha t the Me eti ng of
Me mb ers (M oM ) (the ex clu siv e me eti ng be tw ee n Ni s) is the actual an d final de cis ion -
ma kin g forum in FL O wh ich in pra cti ce ha s so me tim es ov ert urn ed de cis ion s tak en by the
Bo ard (Pare, Ju ly 4, 20 05 , pe rso na l co mm un ica tio n; Br etm an , M ay 3, 20 05 , pe rso na l
co mm un ica tio n).

Th ese excerpts capture the str uc tur ed me an s by wh ich the Ni s ma int ain co ntr ol of
inf orm ati on an d 'po we r ov er' FLO. Th ey illustrate ho w FL O' s hie rar ch ica l an d vertically-
int eg rat ed org an isa tio na l mo de l enables the Ni s to do mi na te pro du ce rs an d fair tra de rs in
de cis ion -m ak ing thr ou gh sets of 'st ron g tie s' at bo th the Bo ard an d M oM level. Ab ov e an d
be yo nd ev olu tio na ry ec on om ist s' un de rst an din g tha t this typ e of hie rar ch ica l an d
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centralised orga nisat ional form acco mpan ies the phas e of cons olida tion and has pern iciou s
effects on the prod uctio n of new know ledge , demo crati c theorists ' persp ectiv e adds a
political elem ent to the expla natio n of why the prosp ect of evolu tion wane s in this proce ss.
Theorists of delib erati ve demo cracy obse rve that gove rnan ce mech anism s are not value -
free; the relat ive valid ity of comp eting persp ectiv es in decis ion-m aking proc esses is a
political contest. Acco rding to Dew ey, instit ution s are no long er helpf ul - indee d they are a
'problem ' - when with in them a 'cadr e of expe rts' forms and beco mes 'shut off from
knowledge of the need s they are supp osed to serve ' (cite d in Pimb ert & Wak eford , 2001:
26). One respo nden t in fact desc ribed FLO as heav ily deter mine d by a 'sma ll cadre of
people ' .

The ideas from demo crati c theor y offer the insig ht that FLO ' s gove rnan ce mod el is an
institutional impe dime nt to chan ge to the exten t that it is close d off from the know ledge
that resides in the broa der syste m and impe des 'post -libe ral' powe r relat ions vis-a -vis
knowledge (see Chap ter 8 for further analysis). From this view , this empi rical evide nce
highlights the signi fican ce of demo cracy for mark et evolu tion. Loas by (1999: 27) obse rves
for insta nce that 'econ omic syste ms, like ... polit ical syste ms, are likel y to gene rate more
knowledge and to use it more effec tivel y if they are open socie ties'. Dem ocra tic theor ists
add the polit ical insig ht to this, name ly that demo crati c gove rnan ce struc tures and proc esses
temper the pow er strug gle that inevi tably unde rscor es the gene ratio n, distr ibuti on and use
of know ledge , parti cular ly in a know ledg e econ omy wher ein powe r relat ions are shap ed by
who owns and controls know ledge (see Gave nta, 1993). The orga nisat ional impl icati on is
that, as Aclu·ol and Kotl er (1999: 147) see it, 'larg e, verti cally integ rated hiera rchie s are
inefficient mean s of gove rnan ce in know ledge -rich and turbu lent envir onme nts ... '. Thes e
data show the conc omit ant polit ical impl icati on - that 'pow er over ' resur faces throu gh
institutions built on statu s quo powe r relat ions in decis ion-m aking and the exerc ise of
influence (see Vene Klas en & Mill er, 2002).

Fund ing
As show n abov e, FLO ' s gove rnan ce struc ture has been desig ned to prese rve the
conservative inter ests of powe rful mark et playe rs. The privi lege conf erred on them has
been achie ved at one level throu gh FLO ' s gove rnan ce struc ture whic h exclu des non-NI

- 160 -
voices from dec isio n-m aki ng. Ye t eve n wit hin the NI group, adv oca cy- orie nte d Nis are
ide olo gic ally sym pat het ic to pro duc ers wh ose interests are at log ger hea ds wit h tho se of
large con ven tion al traders. Thu s the further wa y in wh ich FL O's sys tem filters ma rke t-
orie nte d kno wle dge from the ide olo gic ally het ero gen eou s gro up of Nis to sup por t a
pra gm atic ma rke t-dr ive n vie w is thro ugh its fun din g model. As wil l be sho wn bel ow , this
mo del has the effect of ma rgin alis ing non ma rke t-or ien ted NI voi ces at the hig hes t level of
(actual) dec isio n-m aki ng wit hin FL O (i.e. the Mo M) . Bas ed on how FLO and the Nis are
funded, the ma rke t-or ien ted Nis are bot h the wea lthi est Nis and con trib ute the larg est funds
to FL O' s operations. The ir wea lth in tum dep end s on gai nin g con trac ts wit h larg e-s cal e
con ven tion al traders, ma kin g the m sus cep tibl e to the interests of the se actors. Thi s fun din g
mo del is a key wa y in wh ich FL O' s con ser vat ive out loo k is pro duc ed. Usi ng the exa mp le
of coffee, Dia gra m 6.5 depicts the thre e key rev enu e stre am s tha t fina nci ally und erp in the
bias tha t has evo lve d in the system:

FLO

iRevenue (v)
National
Initiative
Revenue (z)

~enue(x)

Coffee
►
Coffee
Producer
Bra nd company/
roasters /
___. Supermarket
Retailer
Producer
Cooperative manufacturer

Diagram 6.5: Three key funding streams within FLO.

Wi th the first inc om e stre am , Nis rec eiv e inc om e from lice nse es of the Fai rtra de lab el (an y
ma rke t actors wh o wis h to affix the lab el to a pro duc t), wh o ma ke pay me nts to the NI on a
per -po und basis (dep icte d as rev enu e flow 'x '). Hen ce, by virt ue of the ir size, the larg e
bra nd com pan ies dem and the larg est vol um e of Fai rtra de cof fee reg ard less of how sma ll a
per cen tag e this vol um e rep res ent s of the ir tota l stock. By imp lica tion , these pla yer s
rep res ent the larg est inc om e sou rce for the Nis . For the bus ine ss mo del Nis wh o em bra ce
these larg e con ven tion al ma rke t pla yer s for scale, MN Cs are the key pla yer s to attract into
the Fai rtra de system. Wh ere the se con ven tion al ma nuf act ure rs hav e bee n slo w to sto ck

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Fairtrade coffee, an effective approach has been to work directly with retailers (and
mobilise consumer pressure on supermarkets) to convert all own- bran d coffees to Fairtrade,
thereby putting pressure on conventional bran d companies to source Fairtrade if they want
access to consumers. This is the first plan k in the Nis' and FLO ' s appr oach to
mainstreaming Fairtrade: the focus on large-scale conventional companies as revenue-
raisers.

Building on large-scale trade rs' payments to Nis (revenue strea m 'x ') are paym ents from
the Nis to FLO (revenue stream 'y'). The Nis that contribute the most mon ey to FLO gain
the most influence over FLO, since the Nis prov ide much of FLO 's operating budget.
Among the 20 Nis, those with the most mon ey are those that pursu e contracts with large-
scale MNCs since MNC s represent the largest per-p ound fee payments. The Nis that are
reluctant to draw MN Cs into FLO ' s system, given their more radical ideological disposition
towards Fairtrade (the 'advo cacy ' Nis) , have fewer funds to give to FLO, and thus less
'buying powe r' in FLO ' s system. Given the funding capacity of business mod el Nis, FLO
gives preference to their interests over those of advocacy Nis in decision-making. One NI
Director attributed the influence of the business mod el Nis with in FLO to FLO ' s funding
model:
... And which are the strong Nis within FLO? The US, the UK, Switzerland, and to
a lesser extent, the Netherlands ... And the big ones [Nis] are the Angl o-Sa xons ,
because in business, it's like that ... [that 's] the difference betw een me [as an NI with
a small Fairtrade market] and them [the 'Ang lo-Sa xons '], they 're big and rich and
I'm not...

This respo nden t's poin t is that the Nis that make the largest contributions to reven ue strea m
'y' (by virtue of engaging the large mark et players into FLO 's syste m in their mark et) exert
the greatest influence over FLO 's decision-making and polic y development, not least
because they largely deten nine FLO ' s organisational activities through the funding they
grant or refuse to provide (see below). The empirical data clear ly demonstrate how FLO 's
funding model effectively subordinates non market-oriented Nis' voices with in FLO 's
governance structure. The survival of the Nis and FLO has come to rely on MN Cs. MN Cs
have 'pow er over ' the Nis and FLO.

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This funding mod el has repercussions for decision-making in that market-oriented Nls '
interests are guided by what their funders (MN Cs) will support politically . To be sure, by
virtue of their buyi ng power, MN Cs have a huge influence over Nls and, indirectly through
the Nls, over FLO. Respondents suggested the political influence that MNC s enJoy m
FLO ' s system beca use of FLO ' s and the Nls' funding model:
... one of the majo r prob lems with the 'gree nwas hing ques tion' is that FLO and
Transfair USA refuse to address it publicly. Thei r probable reasoning is obvious:
these companies [that are] doing the damage provide most of the cash for their
operating budgets ... (Earley, February 11, 2005).

FLO hasn 't mana ged to cultivate an environment where a princ ipled application of
the label does n't prev ent growth but at the same time does n't allow the
corporatisation of fair trade. [It's] not 'corp orati sed' beca use they [MNCs] can
carry the label, but because they 're allowed to define the rules of the game
(Gorman, July 12, 2005, personal communication).

... the Anglo-Saxons [within FLO are] saying, 'we need a business mod el, so we
need a service-provider. .. [FLO] do your job' ... [But] if you want to be ideological
[as an NI]? That 's an issue ... [because] if you want to do some thing on a political
level ... you ... need to be centralised, you need to coordinate your campaigns and
efforts and so on. Well the Anglo-Saxons say 'no priority, we are not going to fund
this. How can I justi fy to my license hold er that he is also going to pay for my
lobbying. I can't say that, no way' .

As these comm ents illustrate, beca use of the size of the funds that bran d companies bring
the Nls, the Nls are not going to do anything to jeop ardis e their relationship with these
clients such as requiring significant changes to the com pany 's wide r practices or maki ng
commitments that challenge their pragmatic market-driven worldview. With in the
governance and funding mod el that has been established to facilitate the growth of
Fairtrade markets, Nls are intent on preserving and expanding revenue strea m 'x' beca use it
in tum enhances their share of revenue stream 'y' and therefore their powe r and influence
within FLO. FLO and the market-oriented Nls have purs ued a mod el of grow th in a way
that has led to decision-making and rule-making that serves the interests of conventional
mark et actors at the expense of fair trade principles. As Gorm an phra sed it, Fairtrade is
'corp orati sed' beca use MNC s are 'allo wed to define the rules of the game '. This is the
second plan k to resistors' approach: the interests of FLO ' s most powe rful decentralised
organisational nodes are favoured and the powe r of those nodes is the prod uct of their
support for the status quo.

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The third income stream to FLO whic h encourages a conservative mod el of Fairtrade is
from small-scale prod ucer s (who m FLO purp orts to serve) who pay for certification (ergo,
gain access to Fairtrade markets) (depicted as revenue flow 'z'). Previously, licensee
payments covered prod ucers ' certification costs, prov iding a subs idy for prod ucers for them
to access Fairtrade markets. Lice nsee paym ents no long er subsidise prod ucer certification.
Producers' new need for significant finances to beco me part of Fairt rade markets has
excluded and created an obstacle for man y smal l-sca le prod ucers who cann ot afford the
high costs of achieving certification. The polic y changes to the Fairt rade mod el that redu ce
the costs for conventional mark et traders come at the expe nse of prod ucer s' needs and
interests in the marketplace, there by unde rmin ing fair trade princ iples (see Dopp ler &
Gonzalez Cabanas, 2006). As one prod ucer explained:
... FLO is allowing itsel f to be run by the market. In the begin ning , FLO 's (Max
Havelaar) only objective was to develop organisations of smal l prod ucers . Also
their other activities serve d this purp ose - the [Fairtrade] certi ficat [ion], the criteria,
the market, the inspections, the supp ort the Natio nal Initiatives and the certification
committees. But now, it appears that FLO 's only goal is the 'mar ket' and [to show
that] all [in the exist ing market] is well. . . [For] the Nls - if the mark et requires IS 0
65, we [FLO] give it to them, if the mark et requires plantations, we give it to them,
if the mark et requires us to work with the MN Cs, we do it. And now that FLO Cert.
has beco me indep ende nt from FLO e.V., prod ucers must pay for their
certification ... certification is no long er part of the supp ort prov ided to help develop
prod ucer organisations. Rather, certi ficat ion show s the mark et [that] 'all is good '
(Denaux, Nove mber 25, 2004).

This observation suggests that FLO has 'allo wed' the original, more radic al visio n of
serving prod ucers ' interests to be supe rsede d by the terms and conditions unde rpinn ing the
existing market. The whol e poin t of the syste m was to subsidise prod ucers to enable them
to get into the mark et and certification was part of a proc ess of mean ingfu l trade capacity-
building. Dena ux describes how the 'cert ifica tion' syste m no long er serves the purp ose of
meaningful trade capa city- build ing beca use of these adaptations to FLO 's model. Rather,
FLO' s system is creating a new barri er to entry for prod ucers by requ iring them to pay for
their own certification. A vivid description of this emer ging new syste m was Fran z
Vand erHo ff Boersma, one of the founders of Max Havelaar, and farm er and assistant of
UCIRI (an Indian unio n in Sout h Oaxaca, Mex ico), who expla ined that 'the 'mar ket drive n'
approach [of FLO] at almo st all costs [has] creat ed man y questions in the field [for]

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producers who feel left out [of FL O' s system] and funneled into a ma rke t app roa ch the y are
struggling aga ins t' (De cem ber 23 , 2005, per son al communication).

By excluding small-scale pro duc ers in this way, MN Cs are left to wo rk wit h larg er
Fairtrade cooperatives with greater eco nom ies of scale. Pau line Tif fen com me nte d for
instance that large con ven tion al traders wit hin FL O' s sys tem are still wo rkin g onl y wit h
larger Fairtrade pro duc er cooperatives (or pla nta tion s) to give the bra nd com pan ies the
economies of scale and vol um es tha t they need, but wh ich is 'no t ver y dev elo pm ent al' a
pat tern for smaller, mo re vul ner abl e pro duc er groups to access the ma rke t wh o hav e
'wo rke d rea lly har d and [have] nee ded the bre ak' . As Tif fen des crib ed it, 'yo u can lea d a
horse to water, but you can 't ma ke it drin k' (Tiffen , Oct obe r 25, 200 5, per son al
communication); FL O's sys tem is not con duc ive to ma kin g large com pan ies 'do ' fair trade
in letter and spirit. MN Cs are also see kin g to be gra nte d Fai rtra de certification on
plantations that are par t of their ow n ver tica lly- stru ctu red pro duc tion systems (see Paulsen,
Jul y 7, 2005). In this case, MN Cs are setting up the ir ow n pla nta tion s wh ere the y are bet ter
able to control costs thro ugh the ir bar gai nin g power. Pot ent iall y this me ans tha t wit h time,
any MN C cou ld com e to ow n an entire sup ply cha in wit hin FL O's system.

This is the third pla nk to FL O' s and the Nls ' app roa ch - ma kin g pro duc ers pay for access
to Fairtrade markets. Since pro duc ers are alre ady ma teri ally dis adv ant age d and so can not
access Fairtrade ma rke ts easily (an d wo uld not wit hou t the sup por t of FT Os (see Cha pte r
2), a vac uum is eas ily cre ate d in the num ber of pro duc er coo per ativ es wit h sig nifi can t
capacity. The lac k of small-scale pro duc ers creates a rationale for certifying larg e trad ers '
ow n plantations to pro vid e those sam e MN Cs wit h the vol um es the y nee d at sho rt notice.
This third pla nk in FL O' s funding mo del has thus cre ate d two barriers to entry. The first is
certification of pla nta tion s wh ich exacerbates small-scale pro duc ers ' ma rgin al ma rke t
position. The sec ond is the certification fee - an imm edi ate obs tac le to entry for the poor.

Organisational theorists and (social) psy cho log ists observe that the mo tiva tion to con for m
to authoritative nor ms (or figures) is strong, par ticu larl y wh en it gua ran tee s sur viv al or
acceptance (see Ma cm illa n et al., 2000; Rob ert & We iss, 1988; Mi lgra m, 1974). This
analysis of FL O' s funding mo del sho ws how FLO is sec urin g its org ani sati ona l survival by

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 moulding its fun din g mo del to the pre vai ling ma rke t pow er structure. Bus ine ss theorists
posit that this ten den cy refl ects the pro ces s of org ani sati ona l 'lea rni ng' ; org ani sati ons
'learn' wh at cou rse of acti on ens ure s sur viv al and ins titu tion alis e it:
... Peo ple ten d to rep eat acti ons tha t hav e led to success. Act ion s ass oci ate d wit h
failure ... ten d to be elim ina ted . Bec aus e dis cov erin g brig ht future pro spe cts req uire s
exp erim ent atio n, and thu s ent ails pos sib le failure, ma ny peo ple wil l be too risk-
averse to try ... inv esti ng in var iety ( as in pur sui ng mu ltip le new opp ortu niti es) lead s
to erratic per for ma nce , inc rea sin g the pro bab ilit y tha t key stak eho lde rs, suc h as
inv esto rs and cus tom ers, wil l wit hdr aw the ir sup por t. Eno ugh loss of sup por t, and
the fin n can 't sur viv e (M acm illa n et al., 2000: 140-1).

As Ma cm illa n et al. (20 00) sug ges t her e, the res our ces tha t ext ern al actors off er pro vid e
significant mo tiva tion to toe the line. Nel son (2001) offers the sam e ide a in say ing tha t
firms are mo re com for tab le wit h doi ng 'mo re of the sam e' tha n wit h div erg ing from
standard bus ine ss pra ctic e. Imp orta nt her e is the ide a tha t an org ani sati on con for ms to its
wider env iron me nt in ord er to sus tain itse lf (see Pfe ffer & Sal anc ik, 1978; Hav em an, 1992;
Hannan & Fre em an, 1979).

From this vie w, the Nls hav e 'lea rne d' tha t alig nin g wit h con ser vat ive and pow erfu l ma rke t
players offers the Nls the res our ces nee ded to ach iev e sca le and a sig nifi can t am oun t of
institutional pow er. Thi s evo luti on has res ulte d in a mo re con ser vat ive vis ion for, and
version of, Fai rtra de. On e Fai rtra de farm er not ed for ins tan ce how the 'sto ry' tha t som e
Nls tell - tha t MN Cs mu st be acc om mo dat ed how eve r sma ll the ir com mit me nt to sto cki ng
Fairtrade pro duc ts - sim ply 'dis gui ses ' the 'eco nom ic inte rest of FLO and Nls ': 'sel ling
more [means] hig her inc om es for the Nls and FL O' thro ugh the pay me nts fro m lice nse es. ·
Indeed, con cer ned not to cha llen ge MN Cs for fea r tha t the y wil l stop sup ply ing Fai rtra de
(and thus red uce Nls ' and FL Os' inc om e stre am ), bus ine ss mo del Nls hav e arg ued tha t
FLO can not exc lud e MN Cs on (rad ical ) ide olo gic al gro und s and mu st acc om mo dat e the ir
requests to eith er bec om e lice nse es or to cer tify the ir cur ren t pro duc tion sites/p lan tati ons .
The Nls ' rati ona le has bee n tha t if exc lud ed or thw arte d in the ir atte mp ts to sell Fai rtra de
products, MN Cs wil l be ma de to feel like the 'ba d guy s' and wo uld hav e a rea son for
creating a com pet ing lab el to get into the Fai rtra de ma rke t (Pa ulse n, Jul y 7, 2005). Thi s
clearly dem ons trat es the pow er tha t the Nls gai n from pol itic al con for mit y to the status
quo.

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 These ideas from organisational theorists highlight a key paradoxical theme in this chapter:
in the process of social change, resistors bu ild structures that maintain market equilibrium
for resistors' own benefit. One producer described this paradox vividly when he said that
'th ey [the Nls] profess lip service to the struggle [that we producers face] against the
dominant neoliberal imperial ec on om y', bu t that despite their words, the Nl s have actually
'lo st [the] mission of Fair tra de '. In response to pro du ce rs' demands to FLO to involve
producers in FL O' s decision-making, Va nd erH off Bo ers ma noted that the pragmatic
market-driven Ni s 'da re to say that the neoliberal ec on om y and ma rke t is a reality and you
have to stick to it and [it] cannot be changed; only marginal wo rk can be do ne '
(V an de rH off Boersma, January 7, 2006, pe rso na l communication). His comment brings
into sharp rel ief that, having accepted the terms and conventions of the status quo, FLO and
the Nl s are exerting 'po we r ov er' others in the Fairtrade system wi th this worldview via
FL O' s organisational structure. FL O' s governance and funding structures effectively
exclude views that are inconsistent with FL O' s market oriented be lie f system.

Evolutionary economics tells us that structures promoting debate or 'di sag ree me nt' are
essential for progressing hu ma n knowledge wh ich in tum drives economic change. This
idea is based on a Popperian view of kn ow led ge that 'ec on om ic and hu ma n activity
changes knowledge ... and every change in kn ow led ge opens up the conditions for changes
in activity and, thus, further changes in kn ow led ge ad infinitum' (cited in Foster &
Metcalfe, 2001: 4). In this sense, the evolution of po we r that underpins consolidation
frustrates the process of evolution through the development of preferential treatment of
particular knowledge. FL O' s organisational structure illustrates this - it is impervious to
the diffuse and contextual knowledge of the bro ad er fair trade system as a result of a
governance and funding model that prioritises prevailing ma rke t discourse and its
structures. The following section shows empirically ho w res ist ors ' institutional
preservation of orthodoxy undermines the purpose of innovation - to trigger transformation
in economic structures.

Mainstreaming the Status Quo? The value chain an d the Fairtrade 'Business Mo de l'
In order for a new venture to be co me do mi na nt in the marketplace, repeated model
adaptation is commonly required. As Loasby ( 1999: 28) describes:

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 ... contrary to the Schu mpet erian imag e of the inno vator who drives the original
conception to success, most imaginative conceptions whic h succ eed are
substantially chan ged along the way. As in biological systems, selec tion is main ly
rejection, but in econ omic systems it sometimes takes the fonn of adaptation and
redesign, leading to another set of trials, whic h may resul t in further adaptation, or
eventual rejection.

Loasby' s point here is that work ing out 'wha t work s' in orde r to thrive in the mark et is an
uncertain process of trial and error. Whil st not reflected in Loas by' s passa ge, the
adaptation process is as much political as it is pract ical/ expe rime ntal (see also Chap ter 8).
As Schaper and Vole ry (2002: 269) express it, ' [e]xis ting comp anies face a difficult choic e
between sustaining technologies ... and disruptive ones whic h may initially resul t in wors e
performance ... '. Organisational inertia describes how firms seek to prote ct their mark et
(maintain mark et equilibrium) rathe r than explo it new infor mati on (see Robe rt & Weis s,
1988; Mac milla n et al., 2000). In fact, capitalising on new infor mati on and ideas is 'slow '
and 'cost ly' beca use of 'entr ench ed interests eage r to prese rve their pow er and
prerogatives'.

Static adaptation is in abundance in this chapter: the original 'imag inati ve conc eptio n' of
the Fairtrade syste m has been adap ted to suit the cons ervat ive interests of conv entio nal
market actors to consolidate the Fairtrade market. Whil e the foregoing secti on has show n
the key role of FLO ' s gove rnan ce and funding structure in adap ting the Fairt rade syste m to
maintain mark et equilibrium, this section - and the rest of the chap ter - analyses how an
organisation's static adaptation, whil e amen able to cons olida tion with in main strea m
structures, subverts the prosp ect of change.

This section examines the distribution of value throu gh the Fairt rade supp ly chain to show
empirically how evolu tiona ry change is stalled by static adaptation. Diag ram 6.6 roug hly
depicts the coffee value -chai n and shows the prop ortio n of one dollar recei ved by each
actor in the chain - coffee producers, prod ucer cooperatives, traders and retailers
(additional supply chain actors in conventional supply chains and the value they accrue are
not shown):

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 FLO

t Revenue
National
Initiative
Revenue
~ue

Coffee
Coffee _ _ . Producer Brand company/ ~ Supermarket
Producer Coop erati ve roasters Retailer
Valu e- r-----------------------------~
Distr ibuti on I Sc 3c 67 11 I

Diagram 6.6: Illustration of the coffee value-chain upon which the Fairtrade certification system depends for
scale.

Similar to the income stream of FLO, the distribution of value in the Fairtrade 'business
mod el' approach advocated by market-oriented Nis reinforces existing powe r/value
inequities in the trading chain (albeit payi ng producers a higher 'Fair trade ' price). Diag ram
6.6 illuminates this in monetary terms to show that bran d company roasters still capture the
lion' s share of the dollar-value. By comparison with producers in this system who, in this
illustrative example, receive five cents and the cooperative receives three cents to invest for
collective purposes, bran d company roasters receive thirteen and twenty-two times as much
respectively, as well as six times as much as the retailer. Importantly, these monetary
figures highlight that, whilst FLO ' s system may pay producers a relatively high er price for
their coffee, it is marginal to the systematic accrual of value at the other end of the chain
with market players who control the bran d and distribution. Thus it is clear how brand
corporations maintain monopsonistic domination of producers within FLO ' s system.

This model also circumscribes the bounds of possibility for producers. For instance,
producers cannot increase their powe r in this Fairtrade value chain to receive more than
five cents per dollar (as depicted above) (this is an ideological issue which FLO and the Nis
115
refrain from addressing with their corporate licensees) . MN Cs nevertheless continue to

115
Interestingly, this conflict of interest emerging from revenue flow 'x' comes in the wake of market-
oriented Nis' criticism of more political or 'activ ist' natured Nis and the 'tradit ional' or non-profit approach
characteristic of the wider movement and earlier periods in the fair trade move ment' s history. The criticism
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 receive sixty-seven cents in the dollar - the greater proportion - as th ey control the value
(the brand) in the chain. Thus producers can on ly ever hope to increase the vo lu m e of
Fairtrade coffee they sell in order to earn more. O n the one hand, this recreates the same
problem for producers that exists in conventional international co m m od ity markets
whereby pe rsistent depreciation of the value of ra w commodities in world markets is
forcin g producing countries to export increasingly large volumes in order to earn an income
(see UNDP, 2005: 118). On the other ha nd , the N ls pe rp et ua te this pr ob le m in that all they
can do for producers in this model , given their apolitical stance, is to encourage M N Cs to
incr ease the volume of Fairtrade th ey stock. N ls are thus he av ily de pe nd en t on M N Cs and
retailers with this m od el as well as limiting pr od uc er s' 'g ai n' to a vo lu m es -tr ad ed basis
rath er than a value-owned basis. Tw o informants described the limitations that have
appeared in the wake of the conservative adaptation of the Fairtrade system:
... [increasing] vo lu m e is great, vo lu m e is excellent, bu t vo lu m e is not a strategy
... volume can 't be a strategy [for social change] in its el f (Earley, Co -fo un de r, Just
Coffee, June 23 , 2005 , personal communication).

... it' s not all about vo lu m e and signing up m or e M N Cs, th er e's so m et hi ng else.
Signing up more companies do es n' t address ideological issues ... FL O needs to pu sh
companies no t ju st to address the price issue, bu t fundamental issues of in eq ua lit y in
the supply chain ... that ' s tough be ca us e it' s easy to ask a co m pa ny to write a
cheque , bu t to ha nd over power, I th in k th at 's where the challenge lies (Petchers,
Coffee Program Manager, O xf am America, Ju ly 19, 2005 , personal
communication).

As thes e comments help to illustrate, this vo lu m e- ba se d m od el ad vo ca te d by pr ag m at ic

market-driv en N ls is inadequate and limiting for the fair trade m ov em en t's m iss io n of
producer empowerment. As Petchers puts it, 'th er e's so m et hi ng el se ' be yo nd ' vo lu m e ' and
sc ale: market power. His po in t is th at - as illustrated di ag ra m m at ic al ly above - the N ls '
approach to promoting the certification m od el neglects the issue of M N Cs ' m ar ke t power.
Instead it re affirm s M N Cs ' monop sony power. As respondents described:
. .. for reas on s of corporate adoption and for ease of co ns um er access , [fair trade] is
so m ething that has be en bo ile d down to 'F ai rtr ad e means producers get a fair price '.
Bu t in actuality, it' s ab ou t almost ev erything bu t that ... [fair trade] is actually not

of advocacy -oriented Nl s has been that by siding with the wi der moveme nt of fair tra de camp aigners an d
activists, Nl s marginalise industry an d are ins ufficiently imparti al for the rol e of a ce rtification bo dy. By the
same token , the data above su ggest that a marke t-d riven dis posit ion am ongs t the Nl s makes them
insufficiently committed to the fair trade mission of pr od uc er empo we rm en t in the tra ding relationship.

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 ab ou t wh at yo u 're pa yin g so mu ch as the fact tha t yo u are en ga ge d in dir ec t, lon g-
ter m rel ati on s wi th pro du ce rs, wh ere the ob jec tiv e is to ma xim ise be ne fit s go ing
ba ck to the mo st vu lne rab le pe op le in the su pp ly ch ain in wa ys tha t ch all en ge the
ex ist ing ter ms of trade. So it's rea lly pro ce ss- ori en ted, it's rea lly a lon g-t erm
pro jec t. .. tha t's no t so me thi ng tha t yo u ca n ea sil y do by say ing 'ye p he re' s yo ur sea l
an d pu t it on yo ur ba g an d pa y 1.26 an d be do ne wi th it'. . .. ev en tho ug h yo u ca n
ge t pe op le to pa y a be tte r pri ce wh en yo u ge t the se lar ge co rpo rat ion s on
bo ard ... wh at yo u lose is ... the po we r of wh at co uld co me if the y rea lly un de rst oo d
wh at the y we re bu yin g int o.. . if yo u co uld rea lly ge t Pr oc ter & Ga mb le to
un de rst an d tha t it's no t jus t ab ou t pa yin g a Fa irt rad e pri ce, it's ab ou t de ve lop ing
lon g-t erm rel ati on sh ips , it's ab ou t rea lly inv est ing in the se co mm un iti es, it's ab ou t
see ing the su sta ina bil ity of yo ur bu sin ess be ing tie d to the su sta ina bil ity of their
bu sin ess ... [then] we 'd ha ve a mu ch dif fer en t sto ry to tel l.. .(G orm an , Ju ly 12 , 20 05 ,
pe rso na l co mm un ica tio n).

.. .if we 're all ow ing co mp an ies to pa rti cip ate [in Fa irt rad e] an d no t ask ing an yth ing
in ret urn oth er tha n to pa y a hig he r pri ce for the ir coffee, we 're no t ask ing the m to
ch an ge the ir bu sin ess pra cti ce s in ge ne ral , we 're no t ask ing the m to do pre -
fin an cin g in general, we 're no t ask ing the m to co mm it to for mi ng lon g-l ast ing
rel ati on sh ips wi th the se [producer] co mm un itie s. W ha t we 're do ing is we 're giv ing
pe op le this false sen se of do ing so me thi ng to ch an ge an un jus t ec on om y ... wh en we
all ow the se co mp an ies to pa rti cip ate wi tho ut ask ing the m to ch an ge the ir pra cti ce s
or ev en for the sam e lev el of tra ns pa ren cy tha t the far me rs ha ve to go thr ou gh [in
FL O' s sy ste m] , the n in eff ec t wh at we 're do ing is we 're wa ter ing [fa ir trade] do wn
(Earley, Ju ne 23, 20 05 , pe rso na l co mm un ica tio n).

Go rm an de scr ibe s ho w FL O' s sy ste m su pp ort s co ns erv ati ve po we r rel ati on s in the
ma rke tpl ac e by foc us ing on on ly ret urn ing a ma rgi na lly hig he r pri ce to pro du ce rs. In so
do ing sh e ma ke s the ob ser va tio n tha t FL O dis reg ard s the mo re po lit ica lly sig nif ica nt
pri nc ipl es of fair trade. Th ese co mm en ts also hig hli gh t tha t by ess en tia lly rec rea tin g
co nv en tio na l rel ati on s be tw ee n lar ge -sc ale tra de rs an d sm all -sc ale pro du ce rs in wo rld
ma rke ts, FL O' s sy ste m does no t dis rup t the status quo. To the ex ten t tha t the Nl s an d FL O
are de pe nd en t on M NC s for sca le an d res ou rce s, ad dre ssi ng the mo de l's po lit ica l
lim ita tio ns aff ec tin g pro du ce rs wo uld be inc on sis ten t wi th the ir pre rog ati ve to ma int ain
the ir ex ist ing lic en see contracts. In fact, it is be ca us e of this ve ry mo de l tha t FL O an d the
Nl s ha ve rid de n a wa ve of ma rke t su cc ess an d ex pa nd ed the ir bu dg ets in rec en t years.

Th ese da ta illu mi na te that the ce rti fic ati on mo de l does little to rec tif y the ine qu ita ble
dis tri bu tio n of va lue an d po we r tha t pre va ils in the ma rke t. Ch ap ter 2 sh ow ed tha t the ba sis
of this dis tri bu tio n in wo rld ma rke ts rests on ex clu siv e ow ne rsh ip of ab str ac t ob jec ts
(brands). Th ese da ta sh ow tha t res ist ors are see kin g to ga in 'po we r' thr ou gh co ns oli da tio n
- 171 -
 in existing mainstream structures - in other words, through dependence on mainstream
actors' pow er (in the brand). Resistors aim to 'cas h in' on models, not cause economic
change. That they are not exploiting new information about the mo del 's weaknesses is
therefore not surprising. This data set illustrates how change is stymied when the
exploitation of new information and knowledge (market 'fee dba ck' ) is ma de subordinate to
maintaining ma rke t equilibrium.

Through feeding off MN C's ma rke t pow er for scale, static adaptation makes resistors we ak
relative to MN Cs. In other words, the 'po we r wit h' that FLO and the Nls ' gain from
cooperating wit h MN Cs gives MN Cs 'po we r ove r' FLO and the Nls . This notion is
reflected in Go rma n's com me nt above that FLO 'los es' the 'po we r' tha t resides in its
alternative discourse that agitates the ma rke t (creating ma rke t disequilibrium). In
Gorman's view, the mo vem ent 's pow er lies in its 'lon ger-term pro jec t': to not sim ply
involve MN Cs in FL O's system to stock Fairtrade pro duc ts but to tran sfo rm corporate
thinking and practices. In oth er words, the mo vem ent 's pow er lies in its 'po we r to'
innovate to trigger eco nom ic change wit h an alternative ma rke t discourse. Inn ova tion is the
product of exploiting new kno wle dge (Harper, 1996), but as the sections above have
shown, the organisational structures that resistors bui ld to imp lem ent mo del consolidation
are ill-suited to discovering and utilising new information. Indeed, resistors are averse to
new information since the y bas e the ir survival on ma rke t equilibrium, not ma rke t
disequilibrium (innovation). The following section sho ws how dependence on ma rke t
equilibrium ulti ma tely endangers res isto rs' survival in the market.

Duping FL O to destroy Fairtrade

According to Har per (1996: 5, 38), the ma rke t is mo re tha n a sys tem for resource
allocation; the ma rke t is a learning process, and entrepreneurship a 'pro ble m-s olv ing
activity'. A process of discovery, learning occurs 'in the light of experience and feedback
from the ma rke t', wh ere by entrepreneurs 'ma y retain som e par t of the ir systems of
knowledge while mo dify ing the res t' or ma y 'de vis e entirely new systems to replace their
original ideas and stra teg ies' (Harper, 1996: 6). In this wa y innovation ma rks the continual
process of trial and e1Tor in exp and ing hum an knowledge. As the injection of new

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 kn ow led ge int o the sy ste m at an y his tor ica l jun ctu re, inn ov ati on is a cat aly st for ec on om ic
tra ns for ma tio n (se e Sc hu mp ete r, 1934).

Ne w kn ow led ge thu s rep res en ts a po ten tia lly de sta bil isi ng for ce on ex ist ing str uc tur es.
Be ca us e of this, the de sir e to ac kn ow led ge an d ex plo it ne w inf orm ati on is no t un ive rsa l.
Fo r ex am ple , as org an isa tio ns mo ve int o a ph ase of co ns oli da tio n, the ex pe rie nc e of ini tia l
ma rke t su cc ess ca n be hig hly sed uc tiv e - so sed uc tiv e tha t the pe rce ive d ne ed to co nti nu e
lea rni ng an d ex plo itin g ne w inf orm ati on dim ini sh es an d be co me s mo re dif fic ult (se e Ro be rt
& W eis s, 1988; Ma cm ill an et al., 20 00 ). Th e da ta ab ov e illu str ate thi s sed uc tio n. No r do
dif fer en t act ors sha re the sam e int ere sts or int en tio ns vis-a-vis the use of kn ow led ge (see
Ga ve nta , 19 93 ). Fo r ins tan ce, po we rfu l ma rke t ac tor s va lue kn ow led ge for profitability
( an d in so me ca ses pre ve nti ng oth ers ' ab ili ty to pro fit fro m kn ow led ge ), no t for the pu rpo se
of co nti nu ed inn ov ati on in mo de ls of eq uit ab le go ve rna nc e of alt ern ati ve ma rke t dis co urs e.
Ind eed , thi s sec tio n bri ng s the po liti cs of kn ow led ge to the fore to hig hli gh t ho w ex ist ing
ma rke t act ors ma na ge the thr ea t of ne w kn ow led ge (i.e. po ten tia l IP) for pri va te en ds.

As no ted ab ov e, ma rke t-o rie nte d Ni s see M N Cs as the ir 'al lie s' in co ns oli da tin g Fa irt rad e
pro du ct ma rke ts (Se lle rs, M ay 10, 20 05 , pe rso na l co mm un ica tio n). Ye t co rpo rat ion s see
Ni s an d FL O as all ies for a co mp let ely dif fer en t ob jec tiv e. W hil e M NC s are op po sed to
Fa irt rad e bu sin ess pri nc ipl es, the y ha ve no ne the les s so ug ht to be ass oc iat ed in co ns um ers '
mi nd s wi th the Fa irt rad e image - the Fa irt rad e lab el - to giv e the appearance of sh ari ng the
Fa irt rad e ide nti ty. As sev era l co rpo rat e res po nd en ts ob ser ve d, Fa irt rad e is ve ry we ll kn ow n
by 'ev ery bo dy ' (M ey er, Co rpo rat e Af fai rs, Kr aft Eu rop e, Ju ne 27 , 20 05 , pe rso na l
co mm un ica tio n); the Fa irt rad e im ag e or log o ca rri es wi th it wi de sp rea d po pu lar ity an d a
cer tai n cachet. He nc e ass oc iat ing the ir bra nd wi th the po pu lar im ag e of the Fa irt rad e log o
offers co mp an ies a me an s of rec tif yin g the ir br an d im ag e wi th co ns um ers an d bu ild ing
go od wi ll va lue (se e Ch ap ter 2). Th is is ne ve rth ele ss a fine lin e to tre ad sin ce co mp an ies
wa nt co ns um ers to giv e pre fer en ce to the ir pro du cts be ca us e of the de sir ab ilit y of the ir
brand, no t be ca us e a pro du ct car rie s the Fa irt rad e cer tif ica tio n ma rk (L eh eu p, Co mm od ity
So urc ing Ma na ge r for Co ffe e & Be ve rag es, Str ate gic Bu sin ess Un it, Ne stl e, Ap ril 18, 20 05 ,
pe rso na l co mm un ica tio n).

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So in recent years, prominen t brand companie s such as Procter & Gamble and Starbucks in
the US, and Nestle in the UK, have begun to purchase small percentag es of Fairtrade
certified coffee as the Fairtrade market and its popularit y has increased across continent al
Europe, the UK, the US and Canada. The brand companie s' Fairtrade coffee lines have
been presented as new specialty coffee brands for the company rather than offered in their
existing or mainstrea m coffee lines. McDonal ds, the largest global food-serv ice/quick
service restauran t chain, and Dunkin' Donuts, a global coffee and baked goods chain, as
well as global supermar ket retailers such as Tesco's, are other global brand companie s that
have begun to stock Fairtrade coffee. In other product industries such as bananas, Chiquita
and Dole have begun to offer Fairtrade bananas, and Cadbury- Schwepp es recently bought
out the growing chocolate brand Green & Black's (the first company to be awarded the
Fairtrade label for their 'Maya Gold' chocolate brand line).

This recent corporate response to the Fairtrade market is indicativ e of the underlyin g threat
of certificat ion to brand control, namely that MNCs do not want certificat ion labels
increasing in value in consume rs' minds and diminishi ng the value of their trademark .
Corporati ons' minimal uptake of, and commitm ent to, Fairtrade certified products are likely
to remain the nonn in order to preserve their means of controllin g the marketpl ace:
ownershi p of the brand. Brand companie s would rather increase the value of the brand
(which they exclusive ly control) than leverage the value of a certificat ion mark (which they
do not control) in the mind of the consumer . Indeed, the threat that the Fai1irade label
poses is that it could make the brand of a product irrelevan t but the Fairtrade mark on the
product the product's key value for consumer s. As such, the Fairtrade label is viewed by
industry as another 'brand' competin g for market share. Indeed, Jeroen Douglas of
Solidarid ad described Fairtrade in terms of this threat to brand companie s' means of
differenti ation (the brand):
... if you have three coffee roasters - all of whom deliver Max Havelaar coffee - but
you cannot as a consume r distinguis h the three [roasters] from each other, then
those roasters are not interested at all in the Max Havelaar brand because they're
investing in their competit or (April 12, 2005, personal communi cation).

Jeroen highlight s the threat that Fairtrade - or any certificat ion label popular with
consumer s - poses for brand companie s: the dilution of the brand value in favour of the
certification 1nark. Carsten Schmitz- Hoffman n (Senior Project Manager of the Common
- 174 -
 Code for the Coffee Community) concurred, explaining that certification has not, and will
never be , the 'm ain ga me ' for industry as the perception among brand companies is that the
bra nd 's value is diminished vis-a-vis the certification label:
I really think it is important what companies say, that they see the value of their
product in their brand, and not in the label. But the certification schemes of the
niche markets, Rainforest and Utz Kapeh and Fairtrade ... they are building their
marketing aspects on labelling a pr od uc t ... l mean, imagine you go to a supermarket
sh elf and you see the product of Sara Lee and Nestle and Kraft. .. all standing close
to each other, and they all have the [certification] label [from a particular
certification body such as Fairtrade] on the product. .. [from the co ns um er' s
viewpoint] the re' s no credibility in the brand then, because consumers will assume
that a product that has been labelled has a very high value ... [and that the label] is
the value of the product [not the brand] ... So this is important to understand wh y the
companies did not go for certification and labelling, and wh y they do no t have an
interest to transfer one of the existing certification systems to the mainstream
(Schmitz-Hoffman, June 10, 2005, personal communication).

Carsten' s description of brand companies' perspective shows how corporations are seeking
to ensure that they maintain bra nd control of the market, not to mainstream a certification
label like Fairtrade. This is how MNCs maintain market po we r - through ownership of
intellectual property (see Chapter 2). The threat is that if all brands' products carried the
Fairtrade label, bra nd differentiation would be lost, thereby removing the very core of
brand companies' market power. It would make their investment, legal protection and
advertising strategy completely meaningless (see Chapter 2). Br an d companies would never
willingly subordinate their means of market control and value to the Fairtrade label.
Because the brand is the means by which corporations exercise market control with
consumers (Chapter 2), and the Fairtrade label hypothetically makes the bra nd - all brands
- irrelevant in consumers' minds, bra nd companies are seeking to reinforce their brand
po we r in the face of the Fairtrade threat.

Unlike conventional means of annihilating market competition such as acquisitions or

mergers (see Chapter 2), however, FLO is not a single company but a decentralised
network of governing nodes. Thus no one bra nd company can 'ta ke ov er' the Fairtrade
label. The best companies can do in this situation is to cooperate with other brand
companies to bring about FL O' s destruction. One Fairtrade producer described this
corporate strategy:

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 TNCs have never liked Fairtrade. The war never ended, the strategy just changed -
if you can't beat 'em, join 'em. Then get rid of 'em ... (VanderHoff Boersma, in
Paulsen, July 7, 2005).

Upon reflection of the way in which MNCs are using the Fairtrade system, respondents
described how many of the huge brand companies beginning to tap the Fairtrade market are
simply 'window-dressing': making a minimal commitment to Fairtrade to profit from
association with the Fairtrade image but leaving untouched the company's wider business
operations and philosophy. An example of this is in the UK market where Nestle recently
launched its 'Partner's Blend' Fairtrade certified coffee brand. While gaining association
in the mind of the consumer with Fairtrade and entry into the UK's lucrative Fairtrade
market, this brand accounts for only one tenth of one per cent of the company's total
volume, and involves just over two hundred of the three million producer groups around the
world dependent on Nestle for a living. Illustrated below, this 'commitment' to producer
empowerment is questionable:

N ·e s tle' s Non
F airtrade Purchases
99.99%

Nestle's Fairtrade
producers selling to Nestle Purchases
0.01%

Diagram 6.7: Percentage of Nestle's total volume of coffee certified as Fairtrade.

This illustration of Nestle's demand for Fairtrade coffee in the UK market as a percentage
of its total volume powerfully illustrates how large-scale market players are using the
Fairtrade system for their own purposes to increase their profits. As respondents observed:
... brands like McDonalds ... [now] own these other brands which have no
association with the main brand and introduce [Fairtrade] there. You see that with
Procter & Gamble's 'Millstone' in the US ... that Millstone [brand] thing is
completely hypocritical [by contrast with the rest of the company's philosophy]
(Rosenberg, Director, Utz Kapeh, April 7, 2005, personal communication).

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 ... when you' re talking about markets [like fair trade] that are that small and
emergent, there 's interest in the business sector in getting into those niche markets
for the traditional business reasons like 'wha t does that represent in terms of growth
poten tial', 'if I can secure a place here, what does it mean in terms of long-term
profitability'. But there 's usually no interest in putting mark eting or advertising
dollars or cons umer education dollars behi nd that [speculative business venture].
... So I think [big corporations] see [Fairtrade] as a way of buyi ng themselves a CSR
profile. They see this as a way of saying 'we'r e a responsible comp any because we
carry these prod ucts' . And in some ways, [the Fairtrade label] then beco mes [the
comp any's ] own marketing. So the [companies] are not buyi ng [Fairtrade] because
they 're trying to develop a new product, they 're buyi ng it - and they 're selling it -
because it's PR. And you don' t spen d PR dollars to prom ote your PR ... (Gorman,
July 12, 2005, perso nal communication).

These comments bring into sharp relie f how corporations are leveraging the Fairtrade label
in small quantities as corporate PR - to create a positive, thou gh superficial, image of the
entire company. This is a symbolic form of imita tion of Fairtrade, an institutional response
whic h Chapter 8 examines further. The Fairtrade label becomes MNC s' 'own mark eting '
in the sense that carrying a few Fairtrade prod ucts equates to a responsible corporate image.
Rather than the Fairtrade label being a tool for connection and comm unica tion betw een
producers and consumers in a globalised marketplace, corporations are using the label as an
advertising tool to reassert their mark et influence.

This abuse of the system is possible not least beca use FLO and the Nls have not dema nded
a quantifiable shift in corp orati ons' existing business practices ~n orde r to use the Fairtrade
label (Earley, June 23, 2005, perso nal communication). As the last section illustrated,
instead of exploiting new information to do with the inadequacies of the Fairtrade mod el to
improve the system for producers, resistors have ignored it and pursu ed the mod el's
consolidation. For their part, corporations see the mod el mere ly as an opportunity for them
to make profit, not to democratise the distribution of powe r and value structured by the
ownership of abstract objects in international commerce. Corporate infomrnnts' comm ents
reflected their traditional business interest. Som e suggested that their comp any woul d only
source Fairtrade coffee if their consumers dema nded it, or in other words, if the Fairtrade
mark et were to recede, the comp any woul d cease to offer Fairtrade coffee (Ato rf, Coffee
Manager, Proc ter & Gamble, July 27, 2005, perso nal communication). Othe r respondents
from the coffee indu stry suggested that since the market price of coffee had begu n to rise,
the value proposition of Fairtrade woul d decrease and beco me 'less nece ssary ' in the eyes
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of conventional buyers and sellers (Mecklenburg, Vice-President, Sustainable Proc urem ent
Practices, Starbucks July 12, 2005 , personal comm unica tion; Lingle, Exec utive Dire ctor,
Specialty Coffee Asso ciati on of Ame rica, July 6, 2005 , perso nal comm unica tion) .

Given FLO 's funding mod el and the busin ess-m odel appr oach to Fairt rade it has adop ted,
MNCs are and will be able to find ways to re-as sert mark et control in the Fairt rade mark et
through their parti cipat ion in FLO 's system. The Man agin g Dire ctor of a comm ercia l Fair
Trade Organisation desc ribed the basis of MN Cs' ability to explo it the weak nesse s in the
Fairtrade system:
You 've got to actually work out how you' re goin g to enga ge with a mult inati onal
corporation in a mean ingfu l way. How are you goin g to make sure that they deliv er
on the comm itme nts that they 're appa rentl y maki ng? ... Part of when you get the
Fairtrade mark on a prod uct is that you' re [as a company] sayin g that you' re not
going to cannibalise some body else' s mark et, you' re goin g to grow the mark et and
you' re comm itted to see grow th year on year - i.e. you' re not just putti ng this
[Fairtrade product] there as a block ing posit ion ... Are the sorts of peop le who are
running the Fairtrade mark ing syste m throu ghou t Euro pe in any posit ion to do that
sort of nego tiatio n with organisations with bigg er resources than these [NI]
organisations? ... [in this situation] you [as an NI or FLO] are runn ing befo re you
can walk in terms of who you' re enga ging with. Beca use how do you make sure
that they [MN Cs] do that, and how do you do it in a time ly fashion, how do you do
it so that you don' t realise too late that they [the MNC ] actua lly were takin g the piss
in terms of what they said they inten ded to do, and are just block ing [other mark et
entrants] so that they can take the Fairt rade slot on the shelf, remo ve some body else
out of it, and then even tuall y drop out of it [the Fairt rade mark et].

This comm ent highlights how the Fairt rade syste m is vuln erabl e to corp orati ons' man y
strategies to maxi mise profit and domi nate mark ets beca use the mod el depe nds on them;
MNCs have a stron ger barg ainin g posit ion in negotiations with Nis relat ed to what the
company will and will not do. Whil e mark et-or iente d Nis view corp orati ons' uptak e of
Fairtrade products as being in the fair trade mov emen t's interests, these data sugg est that
corporations will neve r 'main strea m' Fairt rade prod ucts on a wide scale. The MNC s can
assure the Nis with whic h they deal that the comp any intends to make significant
commitments to the syste m in the futur e whil st in the mean time bloc king other comp anies '
entry into the Fairtrade mark et and limiting the growth poten tial of the Fairt rade market.
They will do so to main tain their mark et control. Diag ram 6.8 illustrates the above-
mentioned corporate strategies to bring about FLO 's destr uctio n and use it for their own
ends:
- 178 -
 Trade M ark

Consu mers

l
MNC Brand restric ted to
Fairtr ade Label enhan ces
purch asing
brand image ; marke ting at
MNC s own
Fairtr ade
MNC s determ ine
volum e; which
MNC 's discre tion e.g. sellin g ,, ,, ,, ,, .,, F airtra de range
from MNC ; no
FT line as new/e xistin g brand .
certifi ed coope rative s to comp etitio n in
planta tions. sourc e from. block ed marke t.
FLO Certif icatio n & Label ling
Fairtr ade Consu mers
Syste m
Produ cers
MNC s influe nce standa rds and
polici es.

Diagr am 6.8: Prese nt - or future - explo itation of FLO' s system by MNC s to maint ain contin uity in
conve ntiona l marke t struct ures.

These data highlight weaknesses in the certification system. Its powe r to engage
corporations in fair trade practices sufficient to deliver developmental gains for producers is
undermined by FLO 's organisational model. While static adaptation may fast-track market
consolidation, the data show that FLO ' s organisational evolution makes the system
susceptible to industry 'capt ure' (see Ayres & Braithwaite, 1992).

Moreover, the data on the adaptation of the Fairtrade system illuminate how static
adaptation is a tlu·eat to organisational survival. These data show bran d companies
exerc1smg control over their association with the Fairtrade system. This includes the
degree to which Fairtrade products have a presence in the mainstream market, the extent to
which - and how - a company uses Fairtrade stock, as well as the extent to which the
emerging Fairtrade market is the comp any's own (branded) market. In these ways the data
illustrate the way in which brand companies are re-asserting their market control to reaffirm
statu s quo business practices. FLO ' s weakness results from the fact that it appears to no
longer set the tenn s in this market. Rather, the terms are heavily shaped by the interests of
conservative mark et actors. In this way FLO 's mark et influence and relevance is
diminished.

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Th e Symbiotic Dance of Resistors and Game-Players
If we accept that the market process is 'a continuou s sequence of conjectur e and exposure
to refutation , a learning procedur e for generatin g and testing entrepren eurial ideas ' (Harper,
1996: 38), it follows that governan ce structures that nurture learning and enable the flow of
new and alternativ e informati on in a knowledg e economy are essential for evolution (see
Achrol & Kotler, 1999; see Chapter 8). Those that constrain this flow - the hierarchi cal,
vertically -structure d forms suited to market predictab ility such as those analysed in this
chapter - are problema tic for evolution . For example, vertically -structure d hierarchi es
govern and use new informati on poorly since their propensit y towards efficienc y and scale
diminishes the perceived value of new informati on and ideas (see Macmilla n et al. , 2000).
That FLO does not recognise and exploit this new informati on demonstr ates the vested
interests that are embedde d in discourse s. Preservin g orthodox y to maintain market
equilibriu m poses its own threat to FLO' s organisat ional survival; it becomes redundan t for
those who are disfranch ised by it, by invalidat ing their worldvie w (see Chapter 8).
Business theorists refer to this impendin g threat for organisat ions in a state of inertia as the
stage of market 'decline'. Innovatio n - the exploitat ion of new knowledg e - is the means
of market renewal (Robert & Weiss, 1988). The indicatio n is that the Fairtrade system's
relevance and survival is threatene d if it does not exploit new informati on and ideas as they
emerge. This 'dilemma ' between market protectio n and market renewal is common
(Christen sen, cited in Schaper & Volery, 2002). FLO reflects a venture faced with this
dilemma. As Gorman describes :
... where I hope ultimatel y Fairtrade will end up proving itself... [is that] it can
demonstr ate that it can be responsiv e to new and emerging needs, and that it has a
way of being critical and not stagnant. For example, the next horizon of fair trade is
really dealing with the issue of ownershi p. Because for cocoa farmers ... the dollar
value of cocoa in a bar of chocolate that costs 1 dollar is about eight cents. So you
can be paying a cocoa grower a fair wage with respect to the local market, but [the
producer] is not actually able to capture the value that their labour has directly and
indirectly generated because all the value happens further in the supply chain - it's
in the brand. So companie s like the Day Chocolat e Company in the UK which sells
Divine Chocolat e is one third owned by the farmers that grow it. So they get the
value from the Fairtrade premium , they get the value of the brand ... I think that
Fairtrade will only be successfu l and sustainab le if it can adapt and respond to
emerging difficultie s that producer s face (Gorman , July 12, 2005 , personal
communi cation).

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Gorman emphasis es here FLO's emerging blind-spot: the neglected political issue of
producer s' ownershi p of value in the brand. Her comment illustrates the earlier insight that
FLO is losing significan ce for producer s because it has become 'stagnant ' in the market.
This suggests that resistors have a detrimen tal effect on their own institutional survival by
conformi ng to the status quo.

Importantly, the above quote alludes to the actors who are critical in this context of market
decline to the process and prospect of economic transform ation: the actors in the fair trade
movemen t operating fair trade brand companie s. These actors - the 'game-pl ayers' in the
fair trade movemen t - are exploitin g new knowledg e to bypass the Fairtrade certificat ion
model. Followin g on from the previous diagrams showing FLO's 'business -model'
approach, Diagram 6.9 shows the way in which the moveme nt's game players are
exploiting the market feedback on the Fairtrade certificat ion system's weakness es in the
marketpl ace to make new, stronger commerc ial fair trade relationships:

FLO
t Revenue
National
Initiative
Revenue

~nue
Coffee
Producer • Coffee Producer - - - - - 1 - - - - - - Brand company/ ~ Supermarket
Cooperative roasters Retailer
Relationship 'a' .\ .
Revenue 1'
/

/ Competition
Relationship 'b' ~ /
/

Fair Trade Brand Company

Diagram 6.9: Fair trade pioneers ' means of by-passing MNCs' market power in FLO ' s system: the
introduction of fair trade brand companies.

As the diagram shows, game-pla yers' strategy is to bring producer s into cooperati ves
(depicted as line 'a') and work directly with them by giving them both ownershi p over a
brand and a direct long-term trading relationship with their ' own' trader (shown as line 'b').
The fair trade brand company then deals directly with the retail supermar ket or other outlets
(thus competin g directly with conventio nal brand companie s) (illustrate d as line 'c'), and as

- 181 -
it grows in the marketplace, creates competition for conventional players (indicated by the
dotted arrow).

The significance of this new business model relates to the knowledge gained from the
Fairtrade certification system's experience in the market. The new model seeks to
overcome the Fairtrade system's political weaknesses in the market. As Gorman describes,
this innovative business model addresses issues of producer ownership in the company and
brand equity, long-term and direct trading relations and value (in short, empower ment in
supply chain relations). Game-pla yers' revised approach bypasses conventional brand
company's control over distribution and ownership of brand equity, and more so, creates
actual competition between fair trade brands and conventional brand companies. In
response to this innovative model, orthodox players are forced to change their strategy.
This innovation exploits an alternative discourse which articulates and validates producer s'
worldview. A key feature of this alternative discourse that is liberated through this
business model is its radical alternative governance structure. As was shown, FLO' s
governance structure by contrast muffles this alternative discourse. The power of this
innovation - in fact any innovatio n - is a capacity to disrupt market norms (see Macmilla n
et al., 2000) and in so doing define new terms and standards of competition to which
conventional market actors must respond if they are to survive. As one game-pla yer from
the movemen t described it, conventional companies are 'forced to change or exit' the
market (Tucker, Managin g Director, Third World Information Network, June 16, 2005 ,
personal communication).

The (political) elements that are exploited in this innovation in business organisation are
those that the certification system - as governed by the resistors - has failed to incorporate.
Analysed in closer detail in Chapter 7, this shows the calculated nature of innovative
adaptation derived from careful observation and learning (see N ooteboom, 2001; Harper,
1996). In this way resistors and game-players appear to be engaged in a symbioti c dance
choreographed to the rhythm of the evolutionary cycle. This chapter has examined
resistors' moves in this dance sequence which are as follows: game-players create new
innovations; resistors consolidate them in the existing market structure through static
adaptation, which recreates conditions of market equilibrium. These conditions - in which

- 182 -
resistors ignore new knowledg e that lies within its system - encourag e and become the
basis of game-pla yers' next innovatio n. Chapter 7 analyses the moveme nt's game-pla yers
who take part in this symbiotic dance, and the innovativ e models they have spawned since
the certificat ion system.

Concluding Comments
This chapter has empirical ly demonstr ated how market evolution is itself dependen t on the
evolution of knowledg e (Loasby, 1999: 25-8). Innovatio n, which is based on the
exploitati on of new knowledg e, drives the economy forward. Given the political nature of
knowledg e, organisat ional forms that effective ly govern the productio n, spread and
exploitati on of new informati on and ideas are crucial to the process of change (Achrol &
Kotler, 1999). Such forms, in which decentral ised and egalitaria n 'weak ties' predomin ate,
starkly contrast the organisat ional forms that frequentl y emerge to drive the consolida tion
of new innovatio ns (see Chapters 7 and 8; Abernath y, 1978; Nooteboo m, 2001; Achrol &
Kotler, 1999; see also Granovet ter, 1973). They are averse to new informati on and its
exploitati on, and in their attempt to survive in the market, conform to status quo bodies of
knowledg e that preserve market equilibriu m (see Nooteboo m, 2001; Macmilla n et al.,
2000). The centrality of knowledg e in economic evolution makes this cyclical shift - from
the organisat ional form that supports innovatio n to that which drives consolida tion - a
highly political process; 'contests for knowledg e are contests for power' (Pimbert, 2001:
81).

The chapter has articulate d this empirical ly-based argument through the conceptu al lens of
defiance (see Chapter 1; Braithwa ite, forthcom ing). Doing so illuminat es the value of this
conceptu al framewo rk for understan ding the complex nature of contempo rary social change
processes and the role of different actors in the process of change. As suggested in Chapter
1, Braithwa ite' s defiance framewo rk enables a deeper analysis of agency and power that
captures the heterogen eous ideologie s and practical strategies of different actors and their
roles in the process of change (see for example Bevir & Rhodes, 2005; Nygren, 1999).
This chapter has revealed even further nuance within, and complexi ty across, these
conceptu al character categorie s.

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The chapter drew on ideas from evolu tiona ry economics to exam ine and show the modu s
operandi of resistors in the fair trade move ment . Thes e actors drive the phas e of
consolidation. The chapter analy sed the shift from the game -play ers' original inno vatio n in
the Fairtrade certification system into a phas e of consolidation. The pern iciou s effects of
FLO's governance and funding models on the prod uctio n and flow of new know ledge were
shown. Specifically, the chap ter illustrated how FLO ' s gove rnan ce and funding mode ls
filter and prote ct a mark et-or iente d worl dview in decision-making. Thes e closed, exclu sive
circuits (' strong ties') in whic h prev ailin g mark et ideol ogy circulates serve to inval idate the
needs and interests of other parts of the system. The empi rical data on resis tors' netw orke d
structures offered insight into the evolu tiona ry dynamic to whic h netw ork orga nisat ions are
subject. This refines our unde rstan ding of netw orks, whic h conv entio nally are repu ted for
their superior ability to acquire, govern and utilise infor mati on in infor mati on-ri ch
environments. The data show ed how evolu tiona ry dyna mics can prod uce noda l hierarchies
and information inefficiencies, respectively, in those netw orke d structures. None thele ss,
the netw orke d gove rnan ce structure supports the co-ex isten ce of radic al and more
conservative nodes; of 'stro ng' and 'wea k' ties of gove rnan ce (see Chap ters 7 and 8).

Like any venture intent on survival, FLO has come to refle ct main strea m mark et ortho doxy
(see Noot eboo m, 2001). This institutional prese rvati on of ortho doxy is not naturally-
occurring. As the chapter has shown, it is inste ad a polit ical judg emen t made in orde r to
gain wide r mark et acceptance for a new venture. Indeed, demo crati c theorists offer the
insight that organisational structures that govern know ledge - and the parti cular bodi es of
knowledge they reflect - are not value -free (see Gaventa, 1993; Hayw ard, 1998; Lefebvre,
1991 ). An empirical acco unt of how powe r operates in this conte xt followed, illum inati ng
the powe r struggle that underpins contests betw een comp eting discourses and their
governance. Since resis tors' role in social change is to cons olida te new mod els, not to
i1movate in them, they are depe nden t on institutional actors to supp ort the mod els they
promote. In this case we saw how FLO seeks mark et influ ence and acce ptanc e by build ing
'pow er with ' statu s quo actors in the wide r marketplace. Conf ormi ng to their worl dview
('static adap tatio n') supports this process.

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On the one hand, this chosen path way to reali sing powe r is base d on a depe nden cy
relationship - FLO and the Nis are reliant on dom inant bran d companies ' mark et power.
Resistors are thus weak in the sense that, as seen in the case of FLO ' s syste m, they are
forced to empo wer dom inant mark et actors to main tain their survival, maki ng themselves
vulnerable to indu stry capture. In this structure they are powe rless with out the back ing of
large MNC s. The analysis of the Fairt rade busin ess mod el show ed indee d how it reaffirms
MN Cs' mono pson istic mark et power, and FLO ' s funding mod el demo nstra ted how Nis are
only as powe rful as their MNC licensee contracts. Thei r 'pow er with ' MNC s is base d on
MNC s' 'pow er over ' the Nis and FLO.

On the other hand, resistors exercise powe r by using this 'pow er with ' to exert 'pow er over '
others in favour of dom inant mark et players, in this way perp etuat ing mark et inequality. In
this case, the interests and need s of IF AT and prod ucers are subo rdina te in FLO ' s syste m
and subje ct to its prag mati c mark et-dr iven appr oach to Fairt rade growth. This captured
syste m beco mes redu ndan t for actors who are disfr anch ised in the syste m since resistors
ignore new know ledge and infor mati on to main tain their power.

Whil e a threat to their own orga nisat ional survival, resistors play the role of creating new
conditions of mark et stasis. In this sense, their capa city to bring chan ge throu gh mark ets is
limited. In fact, resistors can be seen as dang erou s to the extent that they seek to main tain
mark et stability, howe ver great the cost to those disad vanta ged by the statu s quo. For this
reason, resistors must be kept off-balance (thro wn into a state of mark et volatility). Gam e-
players play this role. Gam e-pla yers act in conditions of mark et stasis to liberate
alternative discourses that are supp resse d in this static environment; game -play ers capitalise
on the know ledge and infor mati on whic h is unde r-val ued in resis tors' institutions. In this
way, game-players ensure that mark et evolu tion continues. The chap ter show ed how powe r
lies in exploiting new know ledge beca use inno vatio n sets the tenn s of comp etitio n; new
know ledge has the oppo rtuni ty to beco me dom inant (valued) in the marketplace.
Empirically, the fair trade pion eers (game-players) are spaw ning new fair trade bran d
companies. Thei r role (and powe r) in the proc ess of social chan ge is to innovate. They are
the subje ct of detailed analysis in the next chapter.

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 CHAPTER 7: Game-players

Game-players are radical and 'bold ' actors. They seek to trans form the regu lator y
environment rather than ackn owle dge conv entio n and accepted norms. The game -play er
'imagines' another regulatory worl d by 'thin k[ing ] outside the squa re', and transcends
existing regulatory constraints by accu ratel y perce iving , 'mov ing arou nd and redefining the
rules' (see Braithwaite, forthcoming; Braithwaite, 1998). The ability of the game -play er to
manoeuvre around institutional and structural constraints as well as lead the creat ion of new
ones mirrors that of the entrepreneur. Like game -play ers, entrepreneurs desire structural
change: entrepreneurs disrupt the 'rule s of the game ' with inno vativ e busin ess mode ls to
'break down barriers that cause the curre nt mark et to be struc tured as it is' (see Mac milla n
et al., 2000: 94). Entrepreneurs are desc ribed as 'visio nary ', 'crea tive' and 'conv entio n-
defying' actors (see Caut hom , 1989: 15; Goyder, 1998; Mac milla n et al., 2000). They are
thought to possess 'aler tness ' to their envir onm ent whic h is respo nsibl e for their ability to
'transcend an existing fram ewor k of perc eived oppo rtuni ties' (Kirzner, 1985: 7).
Schumpeter ( 1934) desc ribed entre pren eursh ip as the 'gale of creative destr uctio n' that
overturns accepted industrial patterns.

Via new models, entrepreneurs have the capa city to revo lutio nise perce ption s and structures
that define what is possible. As entrepreneurs of norms, game -play ers thus appe ar to
possess an unus ual degree of individual agen cy and structural freedom. Indeed, with out
alternative models, social actors are thou ght to recre ate 'pow er over ' relations in their own
environment and institutions (Ven eKla sen & Mill er, 2002: 45). The psyc holo gy of the
game-player thus sits at odds with Fouc ault' s over -emp hasis on the success of mod em
regimes to normalise indiv idual beha viou r and subje ctivi ty (see Chap ter 1). He over look ed
the capacity for agency made poss ible with in his own theor y of resistance. The game-
player exhibits significant agency, much more than resistors. Gam e-pla yers create
alternative models of powe r to liberate new discourses that annihilate those they reject,
exploiting positive forms of powe r to do so.

While theories of entrepreneurship go some way to expla ining the game -play er's
psychology and beha viou r, their utilit y ends when it comes to expla ining how these actors

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actua lly achie ve the feat of annih ilatin g and restr uctur ing mark et pow er relat ions; little
cons idera tion is given to the micr o-pro cesse s that enab le entre pren eurs to disru pt and defy
the powe r relat ions that unde rpin the exist ing mark et struc ture (see for exam ple Mac milla n
et al., 2000; Scha per & Vale ry, 2002 ; Goyd er, 1998; Harp er, 1996; Loas by, 1999).
Schu mpet er (193 4) for insta nce took great er inter est in the effec tual role of
entre pren eursh ip in the evolu tiona ry proc ess than in expla ining the caus es or preco nditi ons
of inno vativ e acts (Bink s & Vale, 1990: 28). Thro ugh an analy sis of the fair trade
mov emen t's pion eerin g entre pren eurs (the 'gam e-pla yers' ), the uniq ue psyc holo gy of the
game -play er and the act of game -play ing is the subje ct of detai led analy sis in this chap ter.
It offers empi rical insig ht into the micr o-pro cesse s of indu strial trans form ation that
Schu mpet er negle cted (Bin ks & Vale , 1990; Harp er, 1996) to show how pow er oper ates in
the game -play ing context.

A Cast of Unique Characters: Game-players and the 'Power With in'

As was discu ssed in Chap ter 1, for Fouc ault (197 7), resis tance is the Siam ese twin of
'pow er over ', 'neit her exists alon e' (Fou cault in Tow nsen d et al., 1999). In this way,
Fouc ault creat ed the ongo ing oppo rtuni ty for agen cy to chan ge powe r. How ever, he did not
elabo rate a theor etica l acco unt of this proc ess of chan ge in his own work , whic h focu sed on
the effec tiven ess of disco urse powe r to disci pline socia l actors. In so doin g, socia l actor s
were portr ayed as more often than not subs cribi ng to dom inan t norm s and value s of how
the worl d 'shou ld be' and exerc ising 'tyra nny' over the self to conf orm (see for exam ple
Fouc ault, 1977). An emer ging grou p of post- liber al socia l scien tists has recen tly pick ed up
Fouc ault' s negle ct of the notio n of agen cy and posit ive powe r to deve lop great er
unde rstan ding of this proc ess (Sim ons, 1995: 81; O'M alley et al., 1997; Bevi r & Rhod es,
2005). Push ing this theor etica l agen da forw ard, Brai thwa ite's (fort hcom ing) game -play er is
distinct; the game -play er is an entre pren eur of norm s, not a victi m of them . But how does
posit ive powe r oper ate in the game -play ing conte xt? Schu mpet er' s work on the pecu liar
psyc holo gy of the entre pren eur (see also McC lella nd & Wint er, 1964; Mac milla n et al.,
2000; Goyder, 1998) and its role in econ omic evolu tion, offers a start ing poin t for
conc eptua lizin g the way in whic h powe r oper ates in the game -play ing conte xt. This secti on
exam ines the histo rical evolu tion of the fair trade mov emen t's entre pren eurs (the 'gam e-
playe rs ') to cons ider the uniq ue powe r that game -play ers poss ess.

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 Since the original Ma x Hav ela ar mo del was created, tho se wh o created it hav e mo ved on to
other fair trade projects. Bas ed prim aril y in the Net her lan ds and Me xic o, tho se wh o bui lt
the Ma x Hav ela ar sys tem are am ong a few of the fair trade inn ova tors dis per sed thro ugh out
the fair trade mo vem ent wo rldw ide . The se characters are rad ical alternative traders (AT Os)
operating wit hin the com me rcia l ma rke tpla ce.

The term AT O has mu ltip le me ani ngs and ma nife stat ion s (see for exa mp le Bar ratt Bro wn ,
1993; Tiffen & Zad ek, 1998; Tallontire, 2000; Nic hol ls & Opal, 2005). AT Os orig ina lly
experimented wit h dire ct trade rela tion shi ps and bet ter trad ing con diti ons for sma ll-s cal e
producers wh o wer e not ben efit ing from exi stin g bus ine ss and trad ing links. Wi th the ide a
of Fairtrade bec om ing inc rea sin gly pop ula rise d today, AT Os' 'alt ern ativ e' status is bro ugh t
into question. Wh ile con ven tion al bus ine sse s are inc rea sin gly inte res ted in som e of the
concepts of fair trade, or in sto cki ng a few Fai rtra de pro duc ts, the term 'AT O' non eth ele ss
remains use ful in tha t it con tinu es to dis ting uis h stil l-re lev ant or dis tinc tive cha rac teri stic s
116
of ATOs •

For instance, the term 'AT O' dist ing uish es tho se org ani sati ons set up for the exp lici t
mission of ser vin g and em pow erin g pro duc ers in the trad ing rela tion ship from 'sec ond -
mover' com pan ies tha t hav e sim ply res pon ded to con sum er pre ssu re for Fai rtra de, or car ry
a few Fai rtra de pro duc ts (Tr aid cra ft 2003, 2004; see Cha pte r 6). In fact, a key
differentiator bet we en AT Os and con ven tion al com pan ies is tha t the ma xim isat ion of pro fit
is not the AT Os' prim ary goal; suc ces s is me asu red by the ma xim isat ion of inc om e and
117
value to suppliers . A sec ond cha rac teri stic of AT Os is tha t all (or nea rly all) of their
products are pro duc ed acc ord ing to fair trade prin cip les (inc lud ing fair prices, dire ct
trading, lon g-te rm rela tion ship s, and pre -pa ym ent ). Thi rdly , nea rly all AT Os me et and
ca1Ty FLO certification for pro duc ts for wh ich FL O carries standards.

11 6
Noted elsewhere in the thesis, in recent years 'Alternative Trade Organisations' (ATOs) have bec ome
known as 'Fai r Tra de Organisations (FTOs) (see Chapter 8).
117
Numerous ATO s for instance are structured to return max imu m income to producers above and bey ond
Fairtrade minimum prices and premiums. As an example, in addition to paying Fairtrade prices and
premiums, in 2004-2005 Cafedirect put 86 per cent of its operating profits (UK574,000 pounds) into 'tailor-
made' initiatives within its Pro duc er Partnership Programme (PPP) to support prod ucer organisations'
capacity-building such as management training and market information (Cafedirect , 2005) .
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While the term ATO helps to distinguish these so-characterised businesses with unusual
commercial prerogatives (such as deliberately increasing production costs or encouraging
competition) from conventional companies , it nonetheless is a reference to companies with
diverse organisational structures including not-for-profit associations, not-for-profits with
guardian shares in a for-profit company, worker-owned cooperatives, part-producer-owned
companies, a company limited by shares, and privately held companies.

Their experimentation with structures of corporate governance and fair trading principles
aims to show to mainstream corporations the commercial viability of fair trade and
progressive stakeholder governance arrangements whereby producers and/or employees are
part-owners of the company. Some ATOs - such as Divine Chocolate Ltd. , Equal
Exchange or AgroFair - aim not only to demonstrate the viability of fair trade principles as
the basis of a company, but also to intentionally be a catalyst for change in their industry
(see below). Taken to its logical conclusion, with this type of purpose a company aims to
be put out of business upon recognition that it has achieved its organisational mission to
transform the industry. This end-goal sits at odds with economic theories of corporate
monopoly (Nicholls & Opal, 2005).

Historically, ATO s' mann er of pursuing their market mission has not always been so
diverse. During the 1950s and 1960s, ATOs were primarily religious- or charity- affiliated,
working closely with small-scale prod ucer groups for development and emergency relie f
(Kocken, 2003). As such, many ATOs are non-profit organisations. For instance, in 2000,
38 per cent of ATOs affiliated with the Nort h American fair trade industry association, the
Fairtrade Federation, were not-for-profit organisations (Nicholls & Opal, 2005: 96). During
the 1970s and 1980s, ATOs took on a more politically active nature, fuelled by Northern
consumers' and grassroots' political motivations. These groups had made connections with
developing-country producer groups that were part of solidarity and national liberation
movements (Kocken, 2003).

By the mid 1990s, ATO s' non-market objectives for development were, in the main , weak
in challenging existing market players to change; their models of business were proving
economically unsustainable (see Redfern & Snedker, 2002). By now, the brand power of

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 modem corporations was well entrenched and their value was on the rise (see Chapter 2).
Perceiving these business model challenges and structural changes, a few new radical
ATOs began to express themselves in a more commercially-oriented form in the 1990s with
a focus on consumers in addition to their commitment to producers. This development
brings to life Druc ker's (1985) observation that entrepreneurs perceive change in their
external environment and seek to exploit it. Indeed, while some not-for-profit ATOs went
out of business in this changing context, a small circle of pioneering alternative traders
seized an opportunity to reinvent the profile of the ATO. The radical commercial ATO
models they have created have prospered in a commercial setting. These models are
distinct within the wider movement of ATOs. As respondents observed:
Some of the [fair trade] companies - like Divine Chocolate Ltd. and Equal
Exchange - those are great models, but that' s not the norm in the fair trade world
(De Carlo, June 30, 2005, personal communication) .

. . . our success [at Divine Chocolate Ltd.] comes quite heavily down to the fact that
we'v e taken a bran ded route, so that the Fairtrade products from Cafedirect and
Divine Chocolate are coming from companies that specialise in the comm odity that
they 're dealing in and are coming to the mark et with a bran d which is what people
can associate with. And I think that' s quite distinct from ... GEPA in Germ any -
they appear to me to be the equivalent of. .. Oxfam - coming to the market with a
chocolate [not a brand], and that [approach] is .... much harder to crack [in the
market]. You get your initial core supporters - obviously people interested in
development are Oxfam supporters [and will buy the chocolate], but if you actually
want to brea k it wide r than that [in the market], then you actually need to have
something that communicates something with the broadest range of the
population ... (Tranchell, Managing Director, Divine Chocolate Ltd., UK May 5,
2005, personal communication).

The individuals and ATO actors who have launched these uniq ue commercial fair trade
brand companies in the movement of ATOs are the game-players - the entrepreneurs - in
the fair trade movement. They have innovated in the traditional ATO and its raison d'etr e
with commercial and legal tools such as branding. Below, some of the key game players
11 8
and the models they have built are introduced .

11 8
For brevity, not all of the game-players in the fair trade move ment are includ ed in this thesis . Those that
are included are for illustrative purposes.
- 190 -
Solid arida d
Solid arida d is one such fair trade pion eer. The Neth erlan ds-ba sed orga nisat ion was
instr umen tal in settin g up the origi nal Max Have laar certi ficat ion syste m with UCIR I, the
indig enou s India n farm er unio n in Mex ico. As the last chap ter show ed, the FLO
archi tectu re is the Max Have laar orga nisat ion's (now expa nded ) prog eny. Follo wing the
estab lishm ent of the Max Have laar syste m and label ling orga nisat ion in the Neth erlan ds,
Solid arida d mov ed onto other fair trade proje cts. In colla bora tion with prod ucer
coop erati ves in Latin Ame rica, Afric a and Asia , Solid arida d has gone on to help prod ucer
orga nisat ions set up comm ercia l fair trade comp anies such as Agro Fair (199 6) in the
bana na - then wide r fresh fruits - sector, and Kuyi chi (200 0) in the cotto n/tex tile industry.

Agro Fair
The first of these comp anies , Agro Fair, mana ged by Jeroen Kroe zen, is a fair trade fruit
comp any co-o wned by its farmers. As the comp any webs ite descr ibes, this co-o wner ship
struc ture ensu res farm ers have decis ion-m aking powe r and safeg uard s their long -term
tradi ng relat ionsh ips. Agro Fair was foun ded by Solid arida d in 1996 in partn ershi p with
grou ps of fruit farm ers and farm er coop erati ves locat ed in Ghan a, Ecua dor and Cost a Rica .
Initia lly, a Dutc h comp any owne d a third of Agro Fair, but Solid arida d later boug ht back
these share s to restr uctur e the comp any, such that prod ucers own half the comp any's share s
but also recei ve 100 per cent of its profi ts (Nic holls & Opal , 2005: 91). Twin Trad ing,
CTM Altro merc ato (see below ) and Solid arida d hold Agro Fair' s rema ining share capit al
and ensu re fair trade princ iples are uphe ld (Agr oFair , 2006 ). Thes e orga nisat ional co-
owne rs are also respo nsibl e for sales and mark eting of Agro Fair fruit in Euro pean
(Agr oFai r B.V) , the UK/I relan d (Agr oFai r UK) and Italia n (Agr oFai r Italy) mark ets
119
respe ctive ly, thus supp ortin g the expa nsion of Agro Fair fruit into other mark ets . As
Nico Rooz en of Solid arida d desc ribes below , prod ucer s' invo lvem ent in Agro Fair' s sales
and mark eting is a nove l aspe ct of this busin ess mod el in the globa l bana na trade:
With the tradi tiona l playe rs you can see a trend: west ern comp anies are integ ratin g
the supp ly chain, getti ng close r and close r to the glob al South. They do not focus

11 9
In 2006, AgroF air's Oh~-labelled bananas gained access to marketing and distribution through a new fair
trade company called Oke USA. Oke USA is owne d by AgroFair, Equal Exchange (US pione er in fair trade
coffee) and Red Toma to (Boston-based non-profit organisation that helps family farmers in New England to
access markets, founded by co-founder of Equal Exchange). AgroF air farmers benefit from this ownership
structure through ownership of comp any equity in addition to fair trade minim um prices and premiums.
- 191 -
 onl y on sell ing ban ana s - the y also dom ina te pro duc tion and logistics. Wh at
Ag roF air is doi ng can be call ed 'rev ers e sup ply cha in inte gra tion ': the Thi rd Wo rld
pro duc er is inte gra ting the sup ply cha in in his ow n interest. The pro duc er is
ded icat ed not onl y to gro win g pro duc t, but to org ani sin g log isti cs, and hav ing at the
sam e tim e a voi ce and vot e in the sales strategy. In con tras t to nor ma l opi nio n,
Ag roF air has sho wn tha t inv olv ing Thi rd Wo rld pro duc ers in bus ine ss stru ctu res,
ma kin g the m co- res pon sib le for the ma rke ting stra teg y, is a via ble asp irat ion (cite d
in Nic hol ls & Opal, 2005: 91).

AgroFair fruit, par ticu larl y ban ana s (the first and mo st esta blis hed pro duc t in Ag roF air' s
range), is the dar ling of one of the two nat ion al retailers in Sw itze rlan d, Coop, wh ich
switched its ban ana sup ply to 100 per cen t Fai rtra de (Ag roF air, 200 4: 4). Ag roF air has
become the sec ond larg est ban ana sup plie r in Sw itze rlan d as a result, and the Coop sells
more Fai rtra de ban ana s tha n any oth er sup erm ark et reta iler in the wo rld (Ag roF air, 2004:
120
24) . In 2004, Ag roF air' s turn ove r inc rea sed by 47 per cen t to 37. 6 mil lion eur os, up
from 25.6 mil lion euros in 200 3.

Prod ucer
Cooperatives t:----___
50% ow ner shi p/• - - - - - ~ ~ - - - - - - - - - - ~
100% of profits - - -
Ag roF air
67% CTM (Italy)
Twi n Trading (UK) 50% ownership
33 % ownership 50%

AgroFair UK AgroFair B.V. Agr oFa ir Agr oFa ir Italy

(sales & marketing) (purchasing, EU Fou nda tion ( sales & marketing)
sales & marketing) (pro duc er support)

Diagram 7 .1: AgroFair corporate governance structure. (Source: adap ted from Nic holl s & Opal, 2005: 92).

The Ag roF air Fou nda tion pro vid es grants and loa ns to pro duc er gro ups for qua lity
imp rov em ent projects. Ne w fruit pro duc ers wh o are FLO -ce rtif ied and hav e ma inta ine d
reliable trading rela tion s wit h Ag roF air for lon ger tha n 12 mo nth s are off ere d ow ner shi p in
the pro duc er-o wn ers hip coo per ativ e. Gro wer s fro m Per u, Bur kin a Fas o and the Do min ica n
Republic hav e ben efit ed from this ain nge me nt thu s far. Ag roF air' s pro duc ers -ow ner s are

120
The company observes that fmih er growth in the volu me of Agr oFa ir ban anas dem and ed is unlikely to
grow due to EU protectionism, hence overall growth in the com pan y will depend larg ely on Agr oFa ir 's othe r
products, particularly citrus fruits (Ag roFa ir, 2004: 4).
- 192 -
not only financially rewarded by this corporate governance model, but also are involved in
the sales and marketing strategy of their product throughout Europe, a model of co-
responsibility in marketing strategy which radically defies the trend in W estem
corporations' organisation and structure of logistics and production by increasing
producers' control over a greater num ber of aspects of the supply chain, rather than less
(Roozen & Vand erHo ff Boersma, 2003 cited in Nicholls & Opal, 2005: 91) (see Diagram
7.1).

Kuyichi
The second of these companies, Kuyichi, is a fair trade jeans fashion bran d for the 'you ng
urban consumer' (Kuyichi, 2007a). According to Solidaridad Director, Nico Roozen:
After Max Havelaar coffee and Oke bananas, fashion produced in a sustainable
manner is our third major fair trade initiative. Why clothing? Because - as
everyone knows by now - the textile industry is a tough sector where cost price
takes priority over people and the environment (MADE-BY, 2005a).

Set up by Solidaridad and cotton producers in 2000, Kuyi chi's mission is to make organic
cotton production and fair trade manufacturing processes the norm in the fashion industry.
st
Kuyichi promotes itsel f as being '1 for Organic Cotton' and is a strong advocate of
producer share-ownership. According to the company website, 'Fair Trade is about
commercial relationships between people. We don' t buy "things", we buy from
"someone" ... Kuyichi is a fair price, fair say and fair share ' (Kuyichi, 2007b ). The
company is co-owned by the Peruvian cotton farmer cooperative, Oro Blanco, which
21
produces the high-quality biological cotton for Kuyichi clothes and jeans 1 .

A unique way in which the company pursues its mission through this business model is by
offering consumers a system for tracing or tracking their purchase to the (multiple)
producers of that good. Termed 'Trac k&T race' , Kuyichi garments carry a code which
122
consumers can enter into the MADE-BY system . The system retrieves information

12 1
Additional cotton farmer cooperatives working towards becom ing part of Kuyichi are situated in Tunisia,
Turkey and India (Kuyichi, 2007b ).
122
This system, set up by Solidaridad, is an umbrella label used by fashion brands to comm unica te their
preference for organic cotton production and factory manufacturing operating a social code of conduct. The
label does not guarantee that a garment or collection is 100 per cent 'clean and socially-responsible' but it
does ensure that the 'door to the production process is wide open' (MADE-BY, 2007). This is achieved by a
- 193 -
correlating to that garment, such as the cooperative that picked the cotton, the workers who
sewed the garment, and who designed the item (Kuyichi, 2007 c). Aside from Oro Blanco,
Kuyichi' s co-owners include the UK's Triodos Bank (a social investment bank),
Netherlands-based NGO Stichting Stimulans, and a private investor (see Diagram 7.2).
The Kuyichi brand sells in several countries across Europe.

Oro Blanco Triodos Bank UK Stichting Stimulans Private Investor

(Peruvian producer (Netherlands-based NGO)
cooperative)

Kuyichi

Diagram 7.2: Kuyichi corporate governance structure.

Kuyichi also actively encourages its young consume r market to become 'agents of change'
in 'Dance4L ife', an 'interacti ve and positive international project aimed at providing an
opportunity and platform for young people to become more actively involved in the fight
against HIV/AIDS. Kuyichi provides organic T-shirts for this new global youth initiative.

Twin Trading
Twin Trading, a London-b ased ATO which provides financing for fair trade businesses and
farmer cooperatives), is another fair trade innovator. Founded by the Greater London
Council in 1985, Twin Trading (managed by Albert Tucker and formerly by Pauline Tiffen)
has been one source of innovation in commerc ial fair trade brands and businesses that today
are leading (fair trade) brands in the UK market. These companies include Cafedirect
(1991), the UK's largest Fairtrade hot drinks brand company, and Divine Chocolate Ltd.
(1997), the UK's largest chocolate brand company.

Cafedirect
Cafedirect, managed by Penny Newman , was founded by Equal Exchange UK, Traidcraft,
Oxfam and Twin Trading. The company operates with the belief that the company is

company linking its production data to the MADE-BY tracking system which enables consumers to see where
a garment was manufactured (MADE-BY, 2005b).
- 194 -
 'do ing today what ma ny will do tom orr ow '; fair trade businesses are the companies of the
future. The com pan y's mission is to be the 'lea din g brand which strengthens the influence,
income and security of pro duc er partners in the south and links the m directly to the
consumer' (Cafedirect, 2006). To date the company has done this remarkably successfully.
From offering one coffee product in 1991 to now 41 products ranging from drinking
chocolate to gourmet and specialty coffees and teas, in 2004 the com pan y's turnover was
UK13.6 million pounds (Twin Trading, 2006). It is the UK 's fourth largest coffee
company with a growth rate of 20 per cent. The com pan y's fair trade mission manifests in
the business having direct partnership wit h its tea and coffee producers, paying Fairtrade
prices and premiums. The com pan y works wit h thirty-three pro duc er organisations in
eleven countries, involving ove r a quarter of a million producers in this fair trade
com pan y's aim to gain producers a better deal from trade in tea, coffee and cocoa. This
business partnership has enabled the wider comm.unities' independent social development
projects in local infrastructure, schools and health care facilities.

Rathbone
Nominees Ltd.
(55%). Non e of
Equal OX FAM TW IN Traidcraft Cafedirect the 4,500
Exchange 10% Trading 10% Producers Ltd shareholders
10% 10% 5% holds more than
3% of shares

Boa rd of Directors
1 Equal Exchange 1 OX FAM 3 non-executive Directors ( one Chair)
1 Twin Trading 1 Traidcraft Cafedirect Man agin g Dire ctor

Biennial Cafedirect prod uce r meetings

feed prod uce rs' interests into Boa rd's
plan ning for Caf edir ect' s future and
development

Diagram 7.3: Cafedirect corporate governance structure. (Source: adapted from Just Business, 2007a).

Since 2003 , in a reorganisation of Caf edi rec t' s ownership structure and capital venture,
Cafedirect' s producers have also had more active influence over the com pan y and its future
through ownership of shares and representation on the com pan y's boa rd (Cafedirect, 2004)

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 (see Diagram 7 .3). In 2004, Cafedirect issued share offerings to raise capital and ma ke its
ownership structure more inclusive. To ensure that, in going public, the co mp an y's fair
trade purpose remains sacrosanct, public shareholders have limited voting rights and its
founders retain guardian shares of the company (see Diagram 7 .3 )1 23
.

Divine Chocolate Ltd.

Divine Chocolate Ltd., managed by Sophi Tranchell (in the UK), was set up between Twin
Trading and the Ghanaian cocoa cooperative, Kuapa Kokoo. At its 1997 AGM, Ku ap a
Kokoo farmers decided to create their own chocolate ba r (Divine Chocolate Ltd., 2005).
The innovative nature of Divine Chocolate Ltd. - other than being a commercial fair trade
brand company - was its radical governance structure: Ku ap a Kokoo producers are Board
Directors of the company and shareowners in brand equity. The mi ssi on of Divine
Chocolate Ltd. is multiform: to ' take a quality affordable range of Fair Trade chocolate bars
into the mainstream chocolate ma rke t'; to 'ra ise awareness of Fair Trade issues amongst
UK retailers and consumers of all ag es' ; to 'be highly visible and vocal in the chocolate
industry and thereby act as a catalyst for ch an ge '; and to 'pa y a Fair Trade price for all the
cocoa used in the pro du cts ' (see Diagram 7.4).

Ku apa Kokoo Twin Trading Christian Aid Comic

40,000 Ghanaian (52%) ( 1% preference share) Re lie f
cocoa fam1ers
(47%)
I I I I
Bo ard of Directors
2T WI N 3 Ku apa Kokoo
1 Christian Aid 1 independent Ma nag ing
Director

Diagram 7.4: Divine Chocolate Ltd. corporate governance structure. (Source: adapted and updated from Just
Business , 2007b ). Until July 2006, The Body Shop, a Bo ard member, hel d ownership of 14 per cent of shares ,
and Kuapa Kokoo only 33 per cent. Since then, The Bo dy Shop has donated its 14 per cent of shares to
Kuapa Kokoo , which now owns 47 per cent of the company.

123
The company raised capital through an alternative share issue in which shares are not listed on an
exchange but rather with the brokering (social investment) ban k, Triodos, which linked willing buyers and
sellers through its matched bargaining system, Ethex.
- 196 -
Positioned consciously among other normal 'main strea m' chocolate bars in terms of price
and availability, the comp any's chocolate brand ranges compete directly with the likes of
Cadbury and M&M/Mars. Its brand comes in a range of flavours and seasonal chocolate
products such as Christmas coins and Easter eggs. In 2000, the company launched the
Dubble chocolate bar (inclusive of an array of educational materials and website resources) ,
a Fairtrade chocolate bar specifically for the child ren's market - the first of its kind for
Fairtrade product markets. Divine chocolate is available in 5,000 stores in the UK,
including Sain sbur y's, the Co-op and Tesc o's supermarkets. Its private label ventures have
helped to increase its availability. In 2000 for instance, the UK's Co-op supermarket
retailer launched with Divine Chocolate Ltd. a co-branded private label chocolate, later
changing its entire own-label chocolate to Fairtrade. Similarly in the same year, Starbucks
changed all its own-brand chocolate to Fairtrade certified, co-branding it with Divine. In
2003, the company reach ed profitability, and has continued to do so year on year. While in
2001 the company generated UKl .79 million pounds, in 2004 its estimated revenue was
UK8.95 million pounds.

Twin Trading, the incubator for these two now highly successful UK fair trade bran d
companies (which continue to mov e into other consumer markets, such as the US),
provides market distribution for other fair trade brand companies and traders, such as
AgroFair, based outside of the UK market. Twin Trading also operates as a trading arm for
Cafedirect.

CTM Altromercato
Mentioned above in this network of pioneers is CTM, an Italian-based cooperative union
which was founded in 1988 in Bolzano, Italy. CTM is the largest ATO in Italy and the
second largest ATO worldwide. It aims to participate in, and promote, a fair trade business
structure in international trade. CTM operates Altromercato, a chain of retail shops
throughout Italy. CTM covers more than 60 per cent of the fair trade market in Italy, with
140 mem ber organisations in its cooperative which together operate more than two-fifths
(260) of the world shops in Italy (Dalvai, Nove mber 9, 2005, personal communication).
The world shops are ATOs that, in addition to trading, undertake active consumer
education about fair trade and trade-related issues. CTM, like the other pioneering

- 197 -
 organisations cre atin g com me rcia l via bili ty for rad ical fair trad e bus iness mo del s
mentioned abo ve, con tinu es to be a 'ke y ally ' for pro duc ers in the fair trad e mo vem ent and
an imp orta nt inn ova tion in new fair trad e ma rke ts (Va nde rHo ff Bo ers ma, De cem ber 23,
2005 , per son al com mu nic atio n). CT M has dev elo ped ove r 200 foo d pro duc ts and 3,0 00
handcraft pro duc ts that are sou rce d from 150 pro duc er org ani sati on par tne rs in dev elo pin g
countries (Ni cho lls & Op al, 2005: 139). As of 200 2/3, the CT M fam ily rais ed $U S39 .7
million, a nea r-50 per cen t inc rea se from the pre vio us year. Bec aus e of the lon g-s tan din g
consumer trus t in the CT M nam e, the com pan y has not tak en up FL O cer tifi cat ion of its
products (see Dia gra m 7.5).

Board of CTM Board (11 people)

Auditors 9 world shop members
2 worker members

World Shop Direction Project Members Regional

Board CTM Co1mnittee Committee Coordination
President (8 members) (14 independent (for area) (world shop
members) single region)

Diagram 7.5: CTM Altromercato corporate governance structure. Source: CTM Altromercato, January 30,
2006.

Equal Exc han ge

Another acto r in this circle of inn ova tors in the fair trad e mo vem ent is Equ al Exc han ge, co-
founded in 1986 in the US by Jon ath an Ros ent hal , Rin k Dic kin son and Mic hae l Roz yne .
Inspired by libe rati on stru ggl es in Lat in Am eric a and Afr ica in par ticu lar, the fou nde rs set
up the US ' first com me rcia l ('fo r-p rof it') fair trad e org ani sati on tha t wo uld 'be a sup por t
mechanism for ... cou ntri es onc e the y ach iev ed nat ion al libe rati on and had set up an
economy' (Ro sen tha l, Jul y 6, 200 5, per son al com mu nic atio n). The fou nde rs wer e
frontrunners wit h fair trad e in the com me rcia l US ma rke t, a nov elty for bot h the
conventional com me rcia l ma rke t and the US fair trad e mo vem ent . Un til the ir arrival, all
other alternative traders in the US fair trad e mo vem ent wer e exp lici tly non -pr ofit , ofte n
religious org ani sati ons , and dea lt prim aril y wit h han dcr afts and textiles.

- 198 -
Lau nch ing a com mer cia l fair trad e coffee com pan y, Equ al Exc han ge was ana the ma not
onl y to the con ven tion al ma rke t, but also to the wid er fair trad e mo vem ent in the US . The
com pan y has a stro ng com mit me nt to its fair trad e par tne rsh ip wit h pro duc er coo per ativ es,
not onl y pay ing Fai rtra de pric es, but also pro vid ing pre -fin anc ing and trad ing dire ctly wit h
farm er coo per ativ es to link the m dire ctly wit h con sum ers. Wh at is par ticu larl y nov el abo ut
this AT O's com pan y is its wo rke r-o wn ed coo per ativ e stru ctu re (see Dia gra m 7.6).
Str uct urin g the com pan y in this wa y from its inc ept ion , the founders dim inis hed the ir
con trol of the com pan y by pro vid ing eac h em plo yee wit h one sha re and one vote. All
em plo yee s are off ere d me mb ers hip and all em plo yee s ow n the sam e sha re and rec eiv e the
sam e sha re of the com pan y's pro fits . Em plo yee s nom ina te and elec t the com pan y's Bo ard
can did ates , the mse lve s hol din g six of the nin e Dir ect or pos itio ns. The Bo ard hire s and
sup erv ises ma nag em ent . Fur the rmo re, the top exe cut ive can ear n no mo re tha n thre e tim es
as mu ch as the low est pai d em plo yee (No rth, 2003a). In add itio n to sell ing Fai rtra de
cof fee s, the com pan y div ersi fied in 1998 into Fai rtra de teas, in 200 2 into coc oa, and 200 4
into cho col ate bar s and in 200 5, sugar. Wh ilst hav ing unc onv ent ion al gov ern anc e and
pro fit structures, the com pan y is thri vin g com me rcia lly, sen din g a cle ar me ssa ge to the
wid er ind ust ry tha t suc h a mo del is pos sib le - and suc ces sfu l. In bus ine ss for 20 yea rs, the
com pan y has ma de a pro fit in the last 16 of 17 yea rs (Eq ual Exc han ge, 200 5). The com pan y
gen era ted $US 10 mil lion in sale s at the end of 200 2 and $U S20 mil lion in 200 5 (Eq ual
Exc han ge, 200 5), win nin g num ero us awa rds for ma kin g a com me rcia l suc ces s of an
uno rtho dox and 'eth ica l' bus ine ss - a poi nt wh ich the fair trad e pio nee rs wa nt to pro ve
(Ni cho lls & Op al, 200 5; Equ al Exc han ge, 200 5).

- 199 -
 q,~:~ -, '
❖ e _• • o • ·
0~ • "·"'·- ·. • '<;;:hii-e~
I • ·..,· : t,·
~ C ~-·-, '8
.:c, ., i ·i:.
t:S • .. ~ .. . .. OfiJ'r-~
o...,.
3:
~-.-,
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:9
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Ab.A-.."! .!• ,"'!I

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Di agram 7 .6: Equal Exchange governance structure. Source: Equal Ex ch an ge , 2006

These mini-portraits of the game-players in the fair trade m ov em en t and their

unconventional business models offer empirical insight into conceptualising po w er and its
organisation in the game-playing context.

On Power
First, they show ho w game-players are us in g fair trade business m od el s to transform
perceptions of w ha t is possible and viable in global trade. O f course, the existence of these
alternative models - and their co m m er ci al success - conflicts w ith the pe rc ep tio n of the
inviolability of the do m in an t business m od el th at un eq ua lly distributes profit, po w er and
ownership (see Chapter 2). W he re as in fair trade companies the principles and prerogatives
of fair trade inform the operating policies, goals, benchmarks, and decision-making criteria,
in conventional M N Cs these components of business re m ai n un af fe ct ed by th ei r efforts in
'corporate social re sp on sib ili ty ', 'ch ar ity ' or even selling Fairtrade labelled goods (see
Chapter 2; see also Traidcraft, 2004). As pioneers within the m ov em en t described:
Fair trade is absolutely integral to the [Day Chocolate] co m pa ny ... there w ou ld not
be a [fair trade] company w ith ou t ou r Fairtrade proposition and w ith ou t our
fantastic farmers we w or k with. Whereas CS R is no t that. Th ey [conventional
companies] ar en 't companies that have be en set up to do that [fair trade] , th ey 'v e
been set up to do w ha te ve r it is th ey 'v e be en set up to do, and then th ey 're doing
something nice on the edge. A nd that is so m et hi ng w ith an incredibly different
proposition ... it' s so different on every level, ho w yo u m ea su re success is different,

- 200 -
 wh at the em ph asi s of yo ur ex ec uti ve an d the ski ll ba se of yo ur ex ec uti ve is is
different. .. and the ide a tha t yo u ca nn ot sep ara te [fair trade] fro m wh at yo u [as a fair
trade co mp an y] are do ing ... me an s tha t yo u ha ve to ma ke a su cc ess of it (T ran ch ell ,
M ay 5, 20 05 , pe rso na l co mm un ica tio n).

... we kn ow tha t str on g far me r bu sin ess es can do thi ng s, the y ca n bu ild roa ds, the y
can bu ild schools, no bo dy ha s to go an d do tha t for the m. .. W he n far me rs can ge t
be tte r ret urn or va lue ou t of trade, the y wi ll inv est in roa ds, the y bu ild wa reh ou ses
... bu t we do n't ha ve to pro vid e tha t un de r ch ari ty if we pu t tha t va lue ba ck by the
wa y tha t we trade. . .. tha t tra de goes on da y in da y out, if yo u do n't ge t an y va lue
fro m tha t yo u oc ca sio na lly ge t the od d cli nic thr ow n at yo u or pro jec ts thr ow n at
you, bu t the y'v e be en wo rki ng for ye ar s, the y do n't wa nt charity. Th ey 've on ly
ac ce pte d it be ca us e the y'v e ha d little ch oic e (T uc ke r, Ju ne 16, 20 05 , pe rso na l
co mm un ica tio n) .

. . .this co rpo rat e so cia l res po ns ibi lit y co nc ep t ... is jus t bu sin ess es co mp lyi ng wi th
the law ... mo st co mp an ies say 'oh , we 'd be tte r co mp ly wi th the law ' - an d the
wo rld ne ed s to ce leb rat e that? (T uc ke r, Ju ne 16, 2005).

It is a sta rk fact tha t the pri ce M NC s no w pa y for co ffe e is at a de sp era te 30 ye ar

low. Ca fed ire ct ha s pro ve d tha t ev en in su ch a crisis, we ca n pa y mo re, off er up fro nt
cre dit an d de ve lop me nt su pp ort to farmers - an d still ma ke profit. As a co mp an y,
we face all the us ua l stresses of a co nv en tio na l bu sin ess - lik e ca sh flow, 'ju st in
tim e' su pp ly ch ain ma na ge me nt, flu ctu ati ng int ere st an d ex ch an ge rates. An d on
top of that, we me et str ing en t Fa ir Tr ad e cri ter ia tha t co nv en tio na l bu sin ess wo uld
no t co un ten an ce. Th is is no t jus t an alt ern ati ve wa y of do ing bu sin ess . It tra ns for ms
bu sin ess ethics (N ew ma n, cit ed in Ni ch oll s & Op al, 2005: 95).

Th ese co mm en ts sh ow ho w the ga me -pl ay ers co ns ide r co nv en tio na l co rpo rat e att em pts at
'so cia l res po ns ibi lit y', 'ch ari ty' or ev en ce rti fie d Fa irt rad e, as me ag re. Th e gro wi ng
success of the ir un ort ho do x bu sin ess mo de ls on ly str en gth en s the ir cri tiq ue of the do mi na nt
design. Fo r ins tan ce, on e res po nd en t no ted tha t Di vin e Ch oc ola te Ltd. eff ec tiv ely pro mo tes
the me ssa ge to status quo pla ye rs in the ch oc ola te ind us try that: 'Th is is the wa y tha t we [in
Di vin e Ch oc ola te Ltd.] wo rk in Ghana. So rry if yo u gu ys are ha vin g tho se kin d of tro ub les
[wi th ch ild lab ou r an d sla ve ry in yo ur su pp ly ch ain s], bu t let us tell yo u wh y we 're do ing
bu sin ess we ll' (De Carlo, Ju ne 30, 20 05 , pe rso na l co mm un ica tio n). Th e da ta ab ov e also
illu mi na te ho w fair tra de pio ne ers ' rad ica l mo de ls en ab le pe op le to de ve lop an d us e ne w
capacities. As Tu ck er de scr ibe s ab ov e, 'st ron g far me r bu sin ess es ca n do things ... no bo dy
has to do tha t for the m' . Th is is dif fer en t fro m resistors; ga me -pl ay ers do no t rel y on
bri ng ing ab ou t ch an ge through ex ist ing tra de str uc tur es an d ma rke t pla ye rs. Th ese actors
are too co ns erv ati ve in the ir vis ion an d po se co ns tra int s on ga me -pl ay ers ' rad ica l ma rke t
- 201 -
 objectives ('w e do n't have to provide that under charity if we pu t that value ba ck by the
way that we trade').

This suggests that game-players seek to liberate a 'po sit ive ' rather than 'ne ga tiv e' form of
freedom (see Berlin, 1958). Whereas the notion of positive liberty emphasises the
possibility of 'se lf- de ter mi na tio n' and gaining ne w freedoms and capacities in on e's life
and future, negative liberty merely prevents interference with an ind ivi du al' s or gro up 's
existing bounds of freedom. Negative liberty does not expand or challenge those bounds.
Berlin's (195 8) distinction be tw ee n positive and negative freedom offers an apposite
parallel between game-players and resistors respectively: game-players seek to create ne w
enabling structures; resistors seek to preserve bu t not expand existing human capacities.
Respondents indicated the greater freedom that the radical models of game-players
embody, in contrast to the limitations of the certification system operated by the resistors:
The labelling people think the y'r e leading the movement, bu t the y'r e jus t the police
force, the y'r e there to do the job the y'r e doing. Th ey 're no t the leading element of
the thing - do you wa nt to be a police state or be led by the movement? (Tucker,
June 16, 2005, personal communication).

... a lot of the success and mo ve me nt [in the US] originally was built on activists -
you know in church groups, community groups et cetera, and although the re' s so me
interest [among them] in working with ... corporations, a lot of the excitement was
about. .. mission-driven [fair-trade] companies (Rosenthal, Ju ly 6, 2005, personal
communication).

These observations infer the resistors' benign, stable role in the ma rke t as opposed to the
unpredictable creativity of the game-players. Fo r game-players, FL O' s system me rel y
fulfils a functional role, yet their own radical creations liberate ne w hu ma n capacities and
energy. As these data show, the game-players actively agitate the status quo with the
intention to cause wider change to conventional industrial structures. Through ne w market
institutions and structures, they seek to empower those who are disadvantaged in the
existing system. This creative intention distinguishes game-players from resistors, who
both conform to, and promote, the status quo and wo rk through existing structures to
institutionalise a model. In this sense, the ga me -pl ay er' s wo rk bears significant
implications for unleashing hu ma n capacities through ne w institutional structures.

- 202 -
 This empirical observation of gam e-p lay ers ' transcendence of existing market norms
illuminates that, unlike resistors, game-players do not subscribe to 'po we r over' . Rather,
game-players appear to possess an internal pow er or disposition which enables them to
create and thereby surpass the oppressive force of prevailing discourse; oppressive social
forces appear to stimulate gam e-p lay ers ' creativity. This was shown in the previous
chapter wherein game-players were motivated to act und er conditions of market
equilibrium. In order to explain the gam e-p lay er's conceptually discrete response to
'po we r ove r', theories of entrepreneurship offer insight. Schumpeter (1934) attributed the
entrepreneur's distinctive beh avi our (the act of innovation) to what he called a 'ho rizo n', a
concept he defined as:
... that range of choice wit hin which a bus ine ssm an moves freely and within which
his decision for a course of action can be described exclusively in terms of
profitability and foresight (Schumpeter, cited in Cauthorn, 1989: 13).

Berger ( 1991: 20-1) posits a similar psychological distinctiveness in the entrepreneur with
the idea that 'dif fere nt individuals possess drive and motivation in different deg ree s', a
124
variation which 'result[s] from a complex process of socialization' . These ideas are
helpful for understanding the rare perception of the game-players studied here: game-
players appear to see a greater range of possibilities for change than others do. Indeed, they
see alternative futures and themselves as harbingers of that future. As one game-player
described:
The future I see .. .is with these new ways of doing business that we 're creating in
the fair trade mo vem ent and with farmers, with new ownership structures of getting
value bac k to poo r farmers and poo r communities and workers. . . . Are
[conventional] companies going to genuinely change because [fair trade] is the wa y
to do business, or are they going to bec om e the dinosaurs of the future? Are they
part of the new way of doing business? (Tucker, June 16, 2005, personal
communication).

This quote illustrates the similarity bet wee n the unique psychological disposition
Braithwaite (forthcoming) attributes to game-players and Sch um pet er's (1934)
entrepreneurs: they possess a capacity to see opportunities bey ond the present and radical
vision and 'for esig ht' of an alternative reality. For Sch um pet er (1934) and others , the

124
The uniqueness of entrepreneurial thinking and behaviour is questioned by some scholars who argue that
entrepreneurship can be learn ed and entrepreneurs are mad e, not born (Robert & Weiss, 1988 : 22).
- 203 -
 ent rep ren eur 's psy cho log ica l out loo k is acc om pan ied by exc ept ion al beh avi our ial traits. As
theorists describe:
Inn ova tion is wo rk .. .It ofte n req uire s gre at ing enu ity ... Bu t wh en all is said and
don e, inn ova tion bec om es har d, foc use d, pur pos efu l wo rk ma kin g ver y gre at
dem and s on dili gen ce, on per sist enc e, and on com mit me nt (Dr uck er, 1985: 138).

The re is the wil l to con que r, the imp uls e to figh t, to pro ve one sel f sup erio r to oth ers,
not for the sak e of the fruits of suc ces s, but of suc ces s itself. Fin ally, the re is the joy
of creating, of get ting thin gs don e, or sim ply exe rcis ing one 's ene rgy and ing enu ity
(Sc hum pet er, quo ted in Go yde r, 1998: 13).

Inn ova tion me ans tak ing new ide as and ma kin g the m hap pen , the reb y ach iev ing a
des ired effe ct on the env iron me nt. .. All of us face obs tacl es in tryi ng to imp lem ent
ideas. It is onl y the true inn ova tors wh o dev elo p the app rop riat e wa ys to neg otia te
the hur dle s and ove rco me the obs tacl es (Ro ber t & We iss, 1988: 21 ).

.. .inn ova tion is alm ost alw ays the res ult of sys tem atic , har d me nta l wo rk (Ro ber t &
We iss, 1988: 22).

[En trep ren eur s] pas sio nat ely see k new opp ortu niti es [and] pur sue opp ortu niti es wit h
eno rmo us disc ipli ne (M acm illa n et al., 200 0: 2-3).

These qualities of the ent rep ren eur - a sig nifi can t cap aci ty for har d wo rk, a det erm ina tion
to ma ke the imp oss ible pos sibl e, and inv ent ive nes s or ima gin ativ ene ss to ove rco me
seemingly ins urm oun tab le obs tacl es - are em bod ied in the por trai t of the gam e-p lay er (see
below). In the ir bol d and future-o rien ted visi on, gam e-p lay ers can be see n as the her oic
'captains of ind ust ry' wh o hav e rev olu tion ised the ma rke t thro ugh out his tory (Sc hum pet er,
cited in Cau tho m, 1989: 15).

While ent rep ren eur ship stud ies pro vid e am ple des crip tion and ana lysi s of the aty pic al
behaviours and out loo k of the ent rep ren eur , an exp lan atio n of this act or's unu sua l deg ree of
agency wit hin soc ial stru ctu res is not fort hco min g. It is her e tha t the wo rk of alte rna tive
power the oris ts adds insight. The abo ve- me ntio ned psy cho log ica l and beh avi our al qua litie s
of the ent rep ren eur - sho wn like wis e in the dat a on gam e-p lay ers - sha re par ity wit h
alternative pow er the oris ts' con cep tion of a uni que ind ivid ual pow er the y term the 'po we r
wit hin ' or 'sel f-em pow erm ent ' (see Tow nse nd et al. , 1999). The 'po we r wit hin ' refe rs to
an inte rna l cap acit y and 'str eng th' to que stio n and reje ct soc ial nor ms and val ues and to
challenge con stra ints on one 's life , and an abi lity to see soc ial con stra ints as stru ctu ral
rather tha n per son al (To wn sen d et al., 1999). For Row lan ds (19 98: 14) the 'po we r wit hin '

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'ca n be what enables the individual to hold to a position or activity in the face of
overwhelming opposition, or to take a serious risk'. It is a 'se ns e of se lf and individual
confidence and capacity' where 'internalised oppression' does not exist (Rowlands , 1995:
103). Self-empowerment is the opposite of internalising these social forces which , for
Gramsci (1971 ), is the means by which the social order maintains its durability. According
to Williams et al. (cited in Rowlands, 1998: 14), the source of the 'po we r within' is 'self-
acceptance and self-respect which extend ... to respect for and acceptance of others as
equals'.

These ideas on power offer insight into how po we r operates at the individual level of the
game-player. The 'po we r wi thi n' can be seen to begin a sequence of change that produces
benefits for others. In other words, to the extent that the game-players' perceptual
'ho riz on ' disrupts assumed 'gi ve ns ' in society and the economy, this class of actor triggers
broader change. Indeed, the implications of the game-player's 'po we r wi thi n' are for
broader socio-cultural and institutional norm change. As minority theorists posit:
... by its very existence, a minority transgresses group norms, thereby suggesting
alternative ways of thinking ... the minority causes cognitive conflict merely by
making its position known. The conflict. .. can provoke people to re-examine their
beliefs and actions ... and such re-examination may result in attitude and behaviour
change ... (Crano, cited in Moscovici et al., 1994: 18).

From this view we see ho w game-players' internal capacity to envisage and create models
can and does cause broader effects; game-players begin sequences of change by using
unorthodox models to provoke critical reflection on cultural norms and structures. Similar
in this way to entrepreneurs, game-players possess a characteristic resilience to the ridicule
that their new or radical ideas attract (Cauthorn, 1989: 15). As game-players in the fair
trade movement suggested:
... all the economists told us that it wa sn 't possible or economically viable , and that
fair traders are a bu nc h of hippies who know nothing about this .... you can have this
conversation with them and the y'l l tell you that it's rea lly not possible. I have an
easy discussion with them. I say 'yo u see this Cafedirect product? Th at' s what it
does' ... and what fair traders have done is to make the market work in a better way
(Tucker, June 16, 2005, personal communication).

... when we started [with Equal Exchange] , people in the industry , well pretty much
everyone, said 'yo u ca n't do what yo u'r e trying to do ', so by demonstrating that it
was possible and that we could actually survive and grow a business , we made what

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 had seemed impossible seem possible (Rosenthal, July 6, 2005 , personal
communication).

... everybody said what they say in each industry 'oh , we do n't ba tch up the
production runs, we wo n't be able to have a traceable supply chain ... this is an
industrial process, so it's got to be big '. An d it's like 'w ell , wh y? ' I'm going to find
a market for a product, and ifl can trace it, I can sell this pro du ct, ifl ca n't trace it,
I'v e got no pro du ct to sell. So let 's wo rk out ho w we can do it'. An d so we found
we could do it. Then they said 'yo u ca n't wo rk wi th farmers, they ca n't organise
themselves, the y'v e got no co mm un ica tio n systems, the y'r e unreliable, bla h blah
blah ... so you get through that. An d then the y go 'oh yo u'l l ne ve r get it into the
supermarkets with that, it's a ve ry nic e ide a bu t it'l l ne ve r wo rk ' ... and yo u go to the
supermarkets and they say 'w ell it tastes nice, reasonable price, it's a go od
idea .. .le t's give it a go '. An d so yo u sort of ca n't kn ow until you try ... (Tranchell,
Ma y 5, 2005, personal communication).

... up until 5 years ago pe op le were telling me, 'oh [fair trade] will ne ve r go above 3
or 5 pe r cent, jus t like the pe op le at the Smithsonian Institute are no w telling us
'oo h, it's not economically sen sib le' , bu t we 're for gin g ahead, we 're there ... bu t
do n't believe us, listen to the ma rke t where all the economists say tha t wh at pe op le
want is wh at' s cheapest. .. (Tucker, June 16, 2005, pe rso na l communication).

These data show ga me -pl ay ers ' defiant refusal to accept defeat or to see the ir ideas as
inferior or unworkable. Indeed the da ta highlight ga me -pl ay ers ' resilience and
inventiveness and use of 'co nv en tio n-d efy ing ' models to ma ke a mo ck ery of the 'ex pe rts '.
As Moscovici et al. (1994) and Sc hu mp ete r (1934) res pe cti ve ly observe, cultural and
institutional repercussions flow from this kin d of activity: no t least, it makes cle ar that
social institutions are no t naturally-occurring. This suggests that ga me -pl ay ers ' pe rso na l
power is a prerequisite for oth ers ' power.

The chapter returns to this po int later; suffice to say that game-players, as entrepreneurs of
nom1s, possess significant po we r in the pro ce ss of social change. W rit large, their
innovations have the effect of shaping ne w perceptions, tog eth er wi th the institutional
bounds , of possibility (see Schumpeter, 1934). An historical ex am ple of the cultural and
institutional impact of entrepreneurs are the industrial giants of the tw en tie th century whose
innovation in industrial organisation and ma na ge me nt 'pr ofo un dly res ha pe d shared beliefs
of the wa y the economy worked, and came to define the concept of mo de m ca pit ali sm '
(Nelson, 2001: 26-7; see Chandler, 1964; Ch an dle r et al., 1968).

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On Organisation
Unlike these corporate beh em oth s, how eve r, the gam e-p lay ers ' pur sui t of 'po siti ve'
freedom is not with a vie w to consolidate and entrench new mo des of oppressive 'po we r
ove r' or 'ne gat ive ' freedom. This brings us to the sec ond empirical ins igh t off ere d by the
mini-portraits of the game-players, and relates to the organisation of their power.
Em piri cal ly we see that, within the wo rld of the se dom ina nt corporate structures , game-
players utilise decentralised and egalitarian mo des of net wo rke d bus ine ss organisation. On
the one hand, despite their gro win g ma rke t success, the organisational forms these radical
fair trade models em bod y do not app ear to hav e evo lve d in a con ser vat ive fashion in ord er
to gain ma rke t scale (see Cha pte r 6). Wh ile the ir form contrasts the hie rarc hic al, vertically-
integrated structures that resistors hav e adopted, the gam e-p lay ers - wh o pla y the crucial
role of inn ova tion in the evo luti ona ry pro ces s - can be see n as ma inta inin g organisational
modes conducive to their uni que role and pur pos e as innovators. The ir organisation
parallels the small 'org ani c', 'dis inte gra ted ' net wo rks com pris ed of 'we ak ties ' that are
com mo nly associated with, and see n as nec ess ary for, inn ova tion (see N oot ebo om , 2001;
Achrol & Kotler, 1999; Sch ape r & Val ery , 2002).

Interestingly, evolutionary eco nom ics tells us that in the evo luti on from inn ova tion to
ma rke t consolidation, a hie rarc hic al and bur eau cra tic form of org ani sati on supersedes the
initial decentralised, egalitarian net wo rke d formations. Wh ile this ulti ma te organisational
structure ma y sup por t the organisational pre rog ativ e to secure ma rke t acceptance, it creates
organisational imp edi me nts to capitalising on new ideas (see N oot ebo om , 2001; Sch ape r &
Val ery , 2002; Ach rol & Kotler, 1999; Rob ert & We iss, 1988; Ma cm illa n et al., 2000).
This was the story of static ada pta tion in kno wle dge and pow er illu stra ted in Cha pte r 6.
The data here on gam e-p lay ers ' organisation app ear to tell a different story of how pow er
and kno wle dge evolve in ways that act ual ly inhibit static adaptation; static adaptation and
organisational hie rarc hy is not nat ura l but ins tea d a pol itic al pro ces s am ong soc ial actors.

Relatedly (and on the oth er hand) is an interesting observation con cer nin g the subject of the
fair trade gam e-p lay ers ' innovation: the y inn ova te in business organisation/ownership.
Fro m a Dar win ian per spe ctiv e of eco nom ic evolution, inn ova tion is a trigger for pot ent ial
diversity (competition) in a pro ces s similar to genetic variation: in any given industry

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 (environmental niche), var iati on is stim ula ted wh en a firm ado pts an inn ova tion (such as a
new tech nol ogy ) and the n com pet es wit h riva l firms in a stru ggl e for survival. Tho se firms
that do sur viv e the stru ggl e are the 'fitt est' ; the y hav e ado pte d bes t-pr act ice (see Nel son &
Winter, 1982). An alo gou s tho ugh it ma y be, a Dar win ian vie w of the ma rke t does not
discriminate bet wee n diff ere nt inte rest s in the ma rke t - suc h as wh eth er it wil l be in the
interests of a firm to ada pt in a static or inn ova tive fashion. The ove rrid ing ass um ptio n
from this per spe ctiv e is tha t the inte rest of all firms is to mim ic and com pet e wit h the
innovation in question. No r doe s it acc oun t for the sele ctio n pre ssu res exe rted on firms by
market inst itut ion s to con for m to dom ina nt mo del s (see Cha pte r 8). Ind eed , the rap id
market ado ptio n of the M- for m of org ani sati on pio nee red by du Pon t and oth ers in the late
nineteenth and ear ly twe ntie th cen turi es was due in larg e par t to the rap id dev elo pm ent of
associated inst itut ion s tha t sup por ted the mo del of ma ss pro duc tion (Ne lso n, 200 1: 26).

Given the pow er rela tion s tha t stru ctu re ma rke t rela tion s (see for exa mp le Cha pte r 2), the
Darwinian ass um ptio n tha t all firms wil l mo ve to mim ic new var ieti es is erro neo us . For
instance, the gam e-p lay ers ' rad ica l org ani sati ona l and gov ern anc e des ign is the ir
innovation, the ir ma rke t value. Hen ce the y are not abo ut to alte r it to con for m to sta tus quo
business design. To be sure, the se bus ine ss mo del s exi st as cata lyst s for tran sfo rma tion in
the structure of esta blis hed ma ins trea m ma rke t actors. The se rad ica l stru ctu res ma nife st the
alternative set of ide as and kno wle dge tha t are em pow ere d by the m. Ad opt ing this
innovation wo uld not sim ply req uire cha nge to the des ign of, or add itio n of a lab el on, a
product. On the con trar y, it wo uld req uire (no t least) sig nifi can t rest ruc ture - actu al
transformation - of the trad itio nal cor por ate leg al pur pos e and ow ner shi p structure. The
insight her e is how issu es of del ibe rate cho ice and the pol itic s in org ani sati ona l des ign and
evolution are mis sin g from an evo luti ona ry acc oun t of how ma rke ts wo rk. The foll ow ing
two sec tion s res pec tive ly pur sue the se em piri cal insi ght s to und ers tan d first the dist inc t wa y
in wh ich kno wle dge and pow er evo lve in the con tex t of gam e-p lay ing (as opp ose d to
resistance), and sec ond ly, the bas is on wh ich org ani sati ona l evo luti on in the gam e-p lay ing
context ena ble s inn ova tion s to thri ve wit hou t con for min g to the sta tus quo.

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The Innovation Continuum: pol itic al evo lution in eco nom ic cha nge
Evolutionary economists posit that the market is a learning process and entrepreneurship a
problem-solving activity (see Harper , 1996). Ne w innovations are a response to market
'fee dback' on preceding innovations; the generation of variety is produced by learning
(Ramazzotti, 2001: 75; Nooteboom, 2001: 41). For No ote boo m (2001: 41-2), 'innova tion
is not ran dom ', it is ' informed' and 'ba sed on a search' of the effect ofa n innovation on the
business environment. While emphasising the learning process that precedes and informs
entreprenemial activity , the above section signposted the inherent politics involved in the
social production of that variety or mo re specifically, the propensity for the innova tion
prerogative to be overcome by the desire for more stable ma rke t conditions. As Schaper
and Volery (2002) observe, while an 'ent rep ren eur ial spirit' ma y initially predominate in
new ventures, it is frequently ove rsh ado we d by organisational pra gm atis m and
conservatism. In this process, organisations reject new information in order to reinforce the
sta tus quo (Achrol & Kotler, 1999; Loa sby , 1999). In this sense, conservative adaptation
can be seen to reflect how ma rke t actors 'lea rn' to survive in a conservative ma rke t
environment.

This story of the fate of innovation reflects , in terms of evolutionary economics, Fou cau lt's
over-emphasis on the success of dominant bodies of knowledge in disciplining social actors
(Simons, 1985: 83; McNay, 1992). In this context, models are not mechanisms for learning
and re-innovation as Har per (1996) and No ote boo m (2001) have suggested. Rat her, they
are a pathway to profit and power, or as Joh n Braithwaite described it, an opportunity to
'cas h in' on the growth of the model (see Ch apt er 6). The y are an avenue through wh ich to
recreate 'po we r ove r' relations. Ro ber t and Weiss (1988: 4) describe this traditional
evolutionary strategy as a means of 'de fen din g' one 's 'tu rf and 'creating fiefdoms of
pow er' .

While this story of reinstituting 'po we r ove r' in the ma rke t (through static adaptation) tells
of a more predominant market pattern , another, more noteworthy, type of adaptation is
innovation. It takes the form of testing new innovations in the market to refine knowledge,
and to re-innovate on the basis of the insights gained. This is what Harper (1996: 37) refers

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to as the 'evo luti ona ry con cep tion of the ent rep ren eur 's lea rnin g pro ces s '. Har per ( 1996:
239) draws on Pop per 's evo luti ona ry the ory of kno wle dge to sug ges t that:
... the ent rep ren eur 's lea rnin g pro ces s ess ent iall y con sist s in goi ng from pro ble ms to
dee per pro ble ms and sub pro ble ms. In sol vin g any par ticu lar ma rke t pro ble m, the
ent rep ren eur discovers new pro ble ms , as wel l as the ir ram ific atio ns and
inte rco nne ctio ns: 'Pro ble ms, after the y hav e bee n sol ved and the ir solu tion s
pro per ly exa min ed, ten d to beg et pro ble m-c hild ren : new pro ble ms, ofte n of gre ate r
dep th and eve n gre ater fertility tha n the old one s' (Po ppe r, 1972: 287 , cite d in
Har per , 1996: 239).

The poi nt her e is tha t the ent rep ren eur 's act of inn ova tion - wh ich der ive s from exp loit ing
new kno wle dge - is ongoing. Thi s con tras ting sto ry of the evo luti on of kno wle dge pla ces
emphasis on the libe rati ng and ena blin g nat ure of new dis cou rse/ kno wle dge . Inn ova tion
enables the evo luti on in kno wle dge upo n wh ich eco nom ic pro gre ss itse lf dep end s (Lo asb y,
1999). Thi s sec tion dra ws on this ide a to brin g to the fore the wa y in wh ich kno wle dge
evolves in the con tex t of gam e-p lay ing ( ent rep ren eur shi p of norms). In so doi ng, the
chapter illu min ates the sign ific anc e of gam e-p lay ing for evo luti on, and thro ugh the se
micro-processes, the pot ent ial for age ncy to brin g abo ut cha nge .

The pio nee rs' frustration wit h FLO and the Fai rtra de cer tifi cat ion sys tem stem s in par t fro m
the fact tha t FL O' s mo del is ina deq uat e for em pow erin g pro duc ers stru ctu rall y in the
trading cha in (fo r det ail see Cha pte r 6). For the m, larg e-s cal e trad ers are 'wi ndo w-
dressing' wit h Fai rtra de and ma kin g a 'mo cke ry' of the fair trad e con cep t. Acc ord ing to
business theorists, ent rep ren eur s ten d to be suc ces sfu l at rem ain ing com pet itiv e in the
market bec aus e the y con cen trat e on the 'en d res ult - the effe ct on the bus ine ss env iron me nt
- rather tha n on the pro duc t' or the 'ma nag eria l act ivit y' (Ro ber t & We iss, 1988: 3). Wh en
they no lon ger hav e the des ired resu lt the y 'up -the -an te' wit h a new inn ova tion . As
Drucker (1985: 210 ) describes, the ent rep ren eur 'aim s at [pe rma nen t] lea der shi p ... of a new
market or ind ust ry'. Lik e ent rep ren eur s, gam e-p lay ers con stan tly use inn ova tion to
maintain lead ersh ip in the fair trad e ma rke t. As one res pon den t described:
I alw ays see it as a kin d of cha llen gin g mo del , you hav e to cha llen ge in ord er to get
[others to change] ... but if you wan t to cha llen ge, you hav e to be able to mo ve up [to
the challenge] you rse lf, bec aus e you can 't cha llen ge oth ers all the tim e wit h all of
the sam e issues. It doe sn't wo rk like that. ... and you r infl uen ce ... wil l dim inis h
wh en the others are res pon din g ... from the mo me nt you stop inn ova ting you 're
alre ady losing. Yo u hav e to be inn ova tive [otherwise] the gap [be twe en you and
oth er pla yer s], it mig ht bec om e too nar row and all of a sud den peo ple mig ht say,

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 wel l wh at's the diff ere nce ? (uit de Bos ch, form er Pro jec t Coo rdin ato r, Inte rna tion al
Ma rke ts, Fai r Eco nom ic Dev elo pm ent Pro gra m, Inte rch urc h Org ani sati on for
Dev elo pm ent Coo per atio n, Ap ril 13, 200 5, per son al com mu nic atio n).

Uit de Bo sch 's des crip tion captures the em pha sis tha t bus ine ss ma nag em ent the oris ts pla ce
on the imp orta nce of inn ova tion as a con tinu ous stra teg y for com pet itiv e eng age me nt. It is
an 'off ens ive we apo n' tha t ena ble s sma ller ma rke t pla yer s to top ple 'be tter fina nce d' and
esta blis hed opp one nts. Thi s dyn am ic is mim ick ed in the con tex t of gam e-p lay ing . Gam e-
pla yer s are per pet ual inn ova tors , a per pet uity mo tiva ted by the cap aci ty for inn ova tion to
cre ate lea der shi p in the ma rke t deb ate and com pet itio n. Gam e-p lay ers are vig ilan t abo ut
rem ain ing the stan dar d-s ette rs of nor ms - a stat us wh ich can be qui ckl y lost. As Sop hi
Tra nch ell of Div ine Cho col ate Ltd., wh o is res pon sib le for this rad ica l bus ine ss mo del in
the fair trad e mo vem ent , observed: 'Fa irtr ade is an eno rmo us inn ova tion , and par t of the
stre ngt h [of inn ova ting ] is tha t we nee d to con tinu e to inn ova te, bec aus e if eve ryo ne is
tryi ng to cat ch up wit h you , the n you hav e to car ry on sett ing the stan dar d and sho win g
the m the wa y to do it' (M ay 5, 200 5, per son al com mu nic atio n). Thi s com me nt illu min ate s
the pow er of inn ova tion as a stra teg ic app roa ch to cha nge ; inn ova tion ena ble s gam e-p lay ers
to infl uen ce the ma rke t in the dire ctio n the y bel iev e is pos sibl e. Gam e-p lay ers ' per pet ual
inn ova tion pre ven ts the ir cap ture , in oth er wo rds the ir static evo luti on, kee pin g the m in an
offe nsiv e pos itio n vis-a-vis the ir opp osit ion .

In larg er par t, the gam e-p lay ers ' frus trat ion wit h the resi stor s is due to FL O's and the Nls '
unr esp ons ive nes s to the gro win g nee d for the cer tifi cat ion sys tem to be ren ewe d. To put it
ano the r way , the res isto rs' pre fere nce for org ani sati ona l ine rtia (or stat ic ada pta tion )
threatens the cer tifi cat ion sys tem 's sur viv al and rele van ce. In bus ine ss terms, the
imp orta nce of inn ova tion 'as an ong oin g pur sui t' relates to pro duc t life cyc les (see Sch ape r
& Vo lery , 200 2; Rob ert & We iss, 1988). As the oris ts obs erv e, 'ev ery pro duc t, ser vic e and
app roa ch in the ma rke tpla ce ulti ma tely rea che s a ma ture stag e and dec line s' (Ro ber t &
We iss, 1988: 5). As Rob ert and We iss (1988: 5) pos it:
It is ess ent ial tha t org ani sati ons kno w the ir lim its - tha t is, tha t the y und ers tan d the
fart hes t poi nt to wh ich exi stin g tec hno log y and app roa che s are cap abl e of
com pet itiv e imp rov em ent . The y sho uld be inv esti gat ing alte rna tive me tho ds -
inn ova ting - bef ore the pla tea u is rea che d, and cer tain ly bef ore a new tec hno log y
ma kes the ir exi stin g one obsolete.

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 The poi nt her e is tha t the org ani sati on mu st ma ke its ow n mo del obs ole te bef ore the
competition does. The mo st life -thr eat eni ng res pon se in a pha se of ' ma rke t gro wth ' is to
'go to slee p', sinc e eac h mo del carries imp erfe ctio ns or 'lim its' (se e also Dru cke r, 1985;
Schaper & Va lery, 2002: 244 ). J ero en Do ugl as of Sol ida rida d in fact arti cul ate d this poi nt
in his obs erv atio n that: 'the stro nge r peo ple wit hin FLO kno w wh at the lim itat ion s of the ir
own mo del are ... The imp erfe ctio n of mo del s is a law of nat ure . An y mo del has to live wit h
that - tha t it's not the mo del '. Ad diti ona lly illu stra tive of this con cep t is the gam e-p lay ers '
creation of new fair trad e bra nd mo del s in res pon se to FL O's 'lim its' (see Cha pte r 6 and
below). A com me nt from Her ma n uit de Bos ch illu min ate d the risk tha t res isto rs' lac k of
innovation pos es to Fairtrade:
.. .if the y [FLO] don 't bec om e the inn ova tors aga in - if the y don 't bec om e the
stan dar d-s etti ng init iati ve - the y'll be for got ten and oth ers wil l tak e the ir pla ce.
Inn ova tion s are com ing mo re fro m the out sid e and not the ins ide [of FLO ] righ t
now ... and if mo re thin gs are cha ngi ng aro und you , the n you 're not the inn ova tor
any mo re, you 're jus t one of the pla yer s. [FLO] is jus t one of the stak eho lde rs, not
the big guys sett ing the stan dar ds ... .ins tea d of bei ng on the def ens ive , ins tea d of
loo kin g at wh at's com ing tow ard s the m, the y sho uld be cha ngi ng the ir pos itio n,
the ir attitude. The y cou ld jus t acc ept the ir role [as me re pla yer s] at the mo me nt, but
the n others wil l tak e ove r and in the end oth ers wil l for get the m (Ap ril 13, 200 5,
per son al com mu nic atio n).

This obs erv atio n hig hlig hts not onl y how resi stor s 'go to slee p' but also the risk tha t it
poses to evolution: resi stor s lose the ir lea der shi p cap aci ty in the dire ctio n of ma rke t debate.
This dat um em pha sise s Dru cke r's (19 85) ide a of the ong oin g nee d to set the tren d and 'up -
the-ante' wit h new inn ova tion s to ma inta in ma rke t lead ersh ip. Inn ova tion ens ure s
authorship in the nor ms of the ma rke tpla ce ('th e big guy s sett ing the stan dar ds') . Sin ce
perpetual inn ova tion is the pre ser ve of gam e-p lay ers (rat her tha n resi stor s), it is her e we see
the sign ific anc e of gam e-p lay ers in the pro ces s of cha nge : the se actors ma inta in a
leadership pos itio n in the ma rke t deb ate ove r the nor ms the ir mo del s pro mo te.

The fair trad e pio nee rs hav e pla yed this lea der shi p role thro ugh out the mo vem ent 's history.
For exa mp le, at the end of the 1980s, sev era l gam e-p lay ers in the mo vem ent ack now led ged
that the the n pre vai ling alte rna tive trad e mo del of non -pr ofit trad e sho ps had a lim ited
market (Do ugl as, Ap ril 12, 200 5, per son al com mu nic atio n). Thi s ma rke t was of min ima l
economic sign ific anc e and thus did not affe ct con ven tion al com pan ies' dom ina tion of the

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commercial market. Wh ile the Ma x Hav ela ar system was sub seq uen tly created in order to
overcome this limitation and access ma ins trea m markets, as the previous chapter sho wed,
the game-players hav e inn ova ted again, mo tiva ted to create fair trade bra nds in ord er to
(re )challenge MN Cs wh ich are able to exert and ma inta in their bra nd pow er and
conventional business structures in FL O' s system. As Pau line Tif fen' s reflections on the
mo tiva tion for fair trade brands illuminates:
[the brands] were des ign ed to achieve a few things. One was - wh en we started
Cafedirect, it was des ign ed to give small-scale pro duc ers wh o had rea lly wo rke d
har d to learn how to access the market, som ebo dy to sell to, som eon e to call the ir
own ... Bec aus e you kno w that old adage 'yo u can lea d a horse to wat er but you
can 't ma ke it drin k' - the thing abo ut Tra nsf air and the trad e-m ark ing mo del s -
... [is] it ma de it pos sib le for con ven tion al com pan ies to buy dire ctly from small
farmers and get som e kin d of rew ard for that. .. but it did n't ma ke [conventional
companies] do it with ma ny small-f arm er organisations, especially the we ake r ones
with wh ich the y jus t did n't wan t to get involved. The y ten ded to pic k the ones tha t
were mo re capable, mo re able any way . An d tha t's not ver y dev elo pm ent al.. .In
som e ways [the fair trade bra nd model] was a dev elo pm ent al outlet in terms of
farmer opportunity . . .. An d then it was one of tho se things that was bor n out of total
frustration not from genius at all. I rea lise d quite early on that [the brand] was
wh ere you ma de mo ney . .. it was like 'oo ooh , bra nds ' ... eve ryb ody at the tim e
thought I was insane but now of course it looks mo re obvious ... (Au gus t 19, 2005,
per son al communication).

Tif fen' s com me nt describes well the ma rke t equ ilib rium tha t fair trade entrepreneurs
('ga me -pl aye rs') hav e disrupted wit h fair trade brands. As Tif fen 's com me nt illustrates,
fair trade bra nds wer e dev elo ped in the wak e of the Fai rtra de labelling sys tem due to fair
trade pio nee rs' ins igh t in the early 1990s tha t ma rke t pow er and value in wo rld ma rke ts is
distributed according to bra nd ow ner shi p ('I rea lise d quite early on that [the brand] was
wh ere you ma de mo ney '), and that the certification sys tem was una ble to annihilate this
pow er structure. Dia gra m 7.7 illustrates the limitations to FL O's cap aci ty to cha nge the
business env iron me nt thro ugh the certification model, and the gam e-p lay ers ' sub seq uen t
innovation wh ile Dia gra m 7.8 illustrates the evolution in entrepreneur ' s kno wle dge in
action:

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 Resistors ►1 Certification
I ►1 Product
I } FLO ' s system

Game-players r-- 1 Business model

I ►1 Bra nd
I
} Fair Trade
Pion eers '
Approach

Diagram 7.7: The different approaches to pursuing change adopted by the resistors and the game-players.
The latter approach is informed by the limitations of the former approach.

FLO
t Rev enue
Nati onal Initiative

Revenue

Rev enue

Coffee
Coffee ---Ill► Prod ucer --------- Bran d com pany/ __. Supe rmar ket
Producer Coo pera tive roasters Retailer

' ~ / ,
Com petit ion
Fair Trad e Bra~ d/Co mpa ny
~
Diagram 7.8: Fair trade pion eers ' means of by-passing MN Cs' market pow er in FLO 's system: the
introduction of fair trade brand companies .

Diagram 7. 7 sho ws tha t FL O' s mo del has bec om e stu ck at the lev el of pro duc t
development and certification. Giv en the lim ited sco pe for sim ply dev elo pin g new
commodities and cer tify ing the m, the dia gra m also sho ws how the gam e-p lay ers ' mo del
has sou ght to hav e gre ate r pot ent ial for cha nge by tran sce ndi ng this mo del wit h an
innovation in new bus ine ss mo del s that harness bra nd pow er. As exp lain ed earlier, gam e-
players are free from the con stra ints of FL O' s sys tem to con tinu e inn ova ting despite - and
because of - FL O's stagnation. Fai r trad e bra nds hav e aim ed to suc cee d com me rcia lly wit h
radical fair trade bus ine ss strn ctu res and mis sio ns in ord er to reta in ma rke t lead ersh ip m
setting the terms of ma rke t com pet itio n in the fair trade ma rke t.

Diagram 7 .8 shows how this inn ova tion in bus ine ss org ani sati on adv anc es pro duc er
em pow erm ent in the fair trad e market. The se mo del s com pet e directly wit h esta blis hed
market players. Since the ir com me rcia l mo del s are not des ign ed to rely on, but rath er
compete with, con ven tion al bra nd com pan ies , fair trade inn ova tors are at libe rty to pur sue

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this more radical mis sio n wit h the ir bus ine ss mo del s, und ete rred by MN Cs' interests and
conservatism. They, unl ike FLO, are not dep end ent upo n MN Cs for a rev enu e stream.
Her ein lie the gam e-p lay er's steps in the sym bio tic dan ce tha t was illu min ate d in Cha pte r 6.
Game-players are mo tiva ted to im1ovate in the conditions of ma rke t equ ilib rium tha t
resistors recreate.

The se data sho w that, wh ile mo re con ser vat ive org ani sati ona l actors and ind ivid ual s ma y
be coopted, gam e-p lay ers create new mo del s tha t imp rov e on pre dec ess ors ' wea kne sse s or
limitations. For instance, FL O's dep end enc e on, and cap ture by, MN Cs do not affect the
operation of a Div ine Cho col ate Ltd. or a Cafedirect. It also me ans tha t the mo vem ent 's
mo re radical elements can not be sile nce d by mo re con ser vat ive nod es (su ch as IF AT , see
Cha pte r 8). In addition, the net wo rke d gov ern anc e stru ctu res of this mo vem ent app ear to
allo w for con tinu ed inn ova tion and mu lti- dire ctio nal cha llen ges to status quo players who
cam10t buy off or con trol the entire mo vem ent by cap turi ng one ent ity or nod e (see also
Cha pte r 6). Net wo rks can not be captured. Thi s stru ctu re sup por ts a net wo rke d dyn am ism
tha t allows a mo vem ent to rem ain functional and rele van t ove rall in the face of ext ern al
attempts to und erm ine it. This inst itut ion al stru ctu re and dyn am ic bet wee n resistors and
game-players denotes an evo luti ona ry res ilie nce wh ich Cha pte r 8 exa min es in further
detail.

Fol low ing the inn ova tion in the first fair trad e bra nd, Caf edi rec t, the gam e-p lay ers
con tinu ed to innovate. Caf edi rec t' s mo del was sub seq uen tly imp rov ed upo n in fair trad e
brands that wer e des ign ed for oth er ind ustr ies, suc h as Div ine Cho col ate Ltd. Div ine
Cho col ate Ltd . has exp erim ent ed with, and sho wn the via bili ty of, a mo re uno rtho dox
gov ern anc e structure (wh ich Caf edi rec t has sub seq uen tly ado pte d as a model). As
Tra nch ell described:
Wh at was different abo ut our mo del [Di vin e Cho col ate Ltd.] was tha t we wer e the
nex t mo del alo ng in that pro duc ers wer e act ual ly goi ng to ow n shares. So alth oug h
Caf edi rec t was set up cle arly for the ben efit of farmers, it wa sn' t ow ned by them,
the y we ren 't em pow ere d by it, the y wer e me rely fina nci ally rew ard ed by it, wh ich
obv iou sly did n't em pow er the m in the sam e wa y (M ay 5, 200 5, per son al
communication).

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This com me nt reflects gam e-p lay ers ' style of per pet ual inn ova tion in res pon se to the
limitations in the ir existing models. Dia gra m 7 .9 captures the inh ere nt evo luti on in
knowledge that is not onl y req uire d for this pro ces s of con tinu al inn ova tion but also
dependent on con tinu ed innovation. Thi s con tinu um of inn ova tion marks the gam e-
players' uni que app roa ch to change:

Max Havelaar ) Caf edir ect ) Agr oFa ir ) Day Cho co late Co ) Kuyichi
st
Cert. system 1 .fair trade bra nd Bra nd company co- Bra nd company co- Bra nd com pan y co-
own ed by farm ers own ed by farm ers own ed by farm ers
(fruit sector) (chocolate sector) (co tton /textiles
sector)

(1989) (1991) (1996) (1998) (200 0)

Diagram 7 .9: Con tinu um of innovation. The fair trad e pion eers inno vate d in the Fair trad e cert ifica tion
system, then in fair trade bran ds, corp orat e gov erna nce structures and exp ansi on of thes e radi cal mod els
across different indu stry sectors. The se com pan ies rem ain the only 100 per cent fair trad e busi ness es and
brands in their resp ecti ve industries.

These em piri cal dat a on how kno wle dge evo lve s and is gov ern ed in the con tex t of gam e-
playing offer the insi ght tha t inn ova tion - der ive d from lear nin g - has a dec ide dly pol itic al
aspect. Har per (1996: 38) construes the ma rke t as an 'ins titu tion al lear nin g me cha nis m',
yet these dat a - com ple me nte d by the analysis in Cha pte r 6 - add refi nem ent to this
portrayal by sho win g tha t actors wit h div erg ent ma rke t interests occ upy this ins titu tion and
so 'lea rn' and beh ave acc ord ing to tho se interests . Specifically, the desire to rec ogn ise new
ideas and info rma tion is not universal, nor is the sub seq uen t desire to initiate inn ova tion
(see for exa mp le Cha pte r 6; see also Rob ert & We iss, 1988; Sch ape r & Va lery , 2002).
These data sho w that gam e-p lay ers - wh o pos ses a cap aci ty and desire to pro duc e, acq uire
and exploit new info rma tion - wie ld pow er in an info rma tion -ric h env iron me nt. The pow er
they wie ld derives from val ida ting - and cre atin g val ue aro und - unt app ed kno wle dge ,
thereby disr upt ing the ma rke t structure wh ich relies on orth odo xy (see Loa sby , 1999).
Perpetual inn ova tion - der ive d from new kno wle dge - enables gam e-p lay ers to reta in
leadership in stee ring the future dire ctio n of evolution, how eve r unc erta in that future ma y
be. This ong oin g lea rnin g stra teg y equips actors wit h the tools of influence. As
Nooteboom (2001: 45) describes:
... wh ile we can thin k of ma ny log ica lly pos sib le future worlds, we not onl y lac k
kno wle dge on the ir like liho od, but we hav e no wa y of kno win g wh eth er we hav e
tho ugh t of all pos sib le futures , and we can not be certain the futures we hav e tho ugh t

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 of conta in the actua l future ... the future is diffic ult to pred ict beca use actio ns will
have unfo resee n cons eque nces and there will be strate gic react ions to our actio ns
from others. We are play ing game s whos e parti cipan ts, strate gies and payo ffs are
revea led only as the game is playe d, and then shift in the proc ess. The future will
be diffe rent from any of the ones imag ined, but neve rthel ess one may have
deve loped a platf orm for viabl e strate gies, with capabilities in place to exec ute
them. This disco very goes beyo nd a searc h amon g exist ing optio ns, to inclu de the
creat ion of new options.

Noot eboo m's obse rvati on supp orts a centr al argu ment in this thesis: that the act of
inno vatio n liberates new know ledg e and in this way is a sourc e of powe r. More than this,
the game -play er exerc ises an ongoing capa city to influ ence chan ge throu gh perp etua l
innov ation . This is insig htful for post- liber al think ing on powe r, whic h seeks to bette r
unde rstan d how socia l actors exerc ise agen cy to chan ge to 'pow er over '. The data abov e
show that in the proc ess of perp etual inno vatio n, learning plays a key role in the game -
play er's strat egy for trans form ing 'pow er over '. Thro ugh the mark et expe rienc e of their
exist ing mode ls, the game -play ers refin e their know ledge of how to desig n mode ls that are
impe rviou s to captu re by prev ailin g mark et norm s.

Whil e these data elabo rate the micr o-pro cesse s of the game -play er's exerc ise of agen cy in
mark ets, the relat ionsh ip betw een this actor and broa der proc esses of chan ge rema ins
unclear. Post- liber al scho larsh ip has not elabo rated the micr o-pro cesse s need ed to
comp lete a theor y of how agen cy (the 'pow er with in') affects deep struc tural chan ge.
Evol ution ary econ omic s is no more insig htful on this point . For insta nce, Schu mpet er's
(1934) notio n of the entre pren eur's uniq ue 'hori zon' alludes to the signi fican ce of the
entre pren eur in effec ting chan ge, yet shed s no light on how the entre pren eur deve lops 'the
appr opria te ways to nego tiate the hurd les and over come the obsta cles' that stym ie othe rs'
attem pts at chan ge (Rob ert & Weis s, 1988: 21 ). This is a parti cular ly impo rtant poin t since
the foreg oing has high light ed that, orga nisat ional ly, game -play ers do not prom ote
cons ervat ive powe r relat ions and disco urses to enab le rapid mark et upta ke and acce ptanc e
amon g conv entio nal mark et actors. On the contr ary, the conti nual evolu tion of know ledge
in the game -play ing conte xt make s for incre asing ly radical, not cons ervat ive, adaptation.
Furth ermo re, game -play ers' mod els invo lve radic al mark et powe r relat ions to struc tural ly
empo wer alter nativ e know ledge , egali taria n netw ork relat ionsh ips that are, simu ltane ously ,
high ly cond ucive to inno vatio n (see Achr ol & Kotle r, 1999). This line of enqu iry conti nues

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 below to exa mm e how the gam e-p lay er's 'po we r wit hin ' leads to and influences the
broader - collective - process of em pow erm ent .

Social connec tion s: the pow er to ma terialise ideas and create sca le
According to Ma cm illa n et al. (2000), und erp inn ing the success of any innovation is
'leadership', the 'pro ces s of per sua sio n or exa mp le by wh ich an ind ivid ual or lea der
induces a group to pursue objectives hel d by the leader or sha red by the lea der and his or
her followers' (Gardner, cited in Goyder, 1998: 15). In the con tex t of ent rep ren eur shi p,
Goyder (1998: 15) posits that:
Wi tho ut leadership the ent rep ren eur can not create and con tinu ally develop
organisations wh ich deliver a new pro duc t or service. Wi tho ut leadership the
entrepreneur cannot hop e to inspire colleagues to unp rec ede nte d levels of
achievement in delivering solutions to the customer. .. Lea der s poi nt out to peo ple
wh at they hav e in com mo n, appealing to that par t of the ir ma ke- up that wants to
bel ong and contribute , and help a group to realise tog eth er a pot ent ial tha t the y
wo uld nev er achieve as com pet ing individuals.

And for Ma cm illa n et al. (2000), suc ces sfu l inn ova tion requires tha t the entrepreneur:
... engage the energies of everyone in the ir dom ain ... [and] inv olv e ma ny peo ple -
bot h inside and outside the org ani sati on - in their pur sui t of an opportunity.
[Entrepreneurs] create and sustain net wo rks of rela tion shi ps rath er tha n goi ng it
alone, ma kin g the mo st of the intellectual and other res our ces peo ple hav e to
offer. .. (p. 340) ... no ma tter how bril lian t you [the entrepreneur] are, you can rare ly
be as brilliant as a com pet itor wh o has lea rne d to mo bili ze the entire org ani sati on.
The act of brin gin g other peo ple into the entrepreneurial pro ces s is essential ...

The main thrust of these ideas on 'lea der shi p' is that successful ent rep ren eur shi p requires
the act of enrolment; entrepreneurs corral hum an resources to realise their ideas for
i1movation. As Ma cm illa n et al. (2000) em pha sise , in order for ent rep ren eur s to ma teri alis e
their ideas the y are dep end ent on others to actively sup por t the m to do so. The
materialisation, let alone success, of inn ova tion can not occ ur wit hou t it. The poi nt is tha t a
new model is not pow erfu l in and of itself. Rat her, it is a pot ent ial source of pow er tha t
only collective action can produce.

Two interrelated insights are rev eal ed by the sug ges tion that leadership wit h an inn ova tion
enable s the entrepreneur to successfully affect the bus ine ss environment. First, the
necessity of net wo rk leadership to generate pow er resonates wit h the social con nec tion s
model (see Chapter 1). This conceptual sch em e is bas ed on Lat our 's vie w of pow er as a

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product of enrolling ma ny actors to exercise influence. This enrolment activity parallels
business theorists ' concept of 'ent rep ren eur ial leadership ' . On the one hand, the social
connections model is at one with the concept of entrepreneurial leadership because it
depicts how innovations depend on game-players 'net wo rkin g networks ' to generate new
pow er flows (see Chapter 5). On the other han d, and in parallel with the not ion of
leadership above, is that the social connections mo del portrays how gam e-p lay ers ' models
act as the pow er circuit from which these new sources of pow er flow. Tha t is, only by
engagmg with the mo del can individuals and groups realise new forms of (positive)
freedom. This conceptual scheme of em pow erm ent is illustrated bel ow ( see also Cha pte r
1):

DE FIA NC E

~ ~
Pow er is SOC IAL CO NN ECT ION S
~
an - (CO LLE CTI VE LEV EL: DE FIA NC E GR OU PS)
outc o1n e

NE W CIR CU ITR Y OF PO WE R
(TR AN SNA TIO NA L LEV EL: INT ERC ON NE CTE D DE FIA NC E GR OU PS)

Gro ups / indi vidu als plu gge d into new circ uitr y pro duc e pow ers
('po wer wit h', 'pow er to' , 'pow er wit hin ', 'pow er ove r' stru ctur es)
and crea te new stru ctur es

Diagram 7 .1 0: Conceptual Model of Empowerment.

This scheme is the gam e-p lay ers ' par adi gm or 'len s' on pow er and how to liberate new
pow er sources. The ir now highly successful fair trade bra nd companies are indicative of
the pow er that 'net wo rkin g net wo rks ' (exercising leadership) activates. As game-players
described:
... with farmers , Tw in decided to launch a bra nd, wh ich to mo st people seems totally
crazy - 'in one of the mo st powerful sectors in the wo rld you 're going to launch a
bra nd wit h you r farm ers ?' but Tw in then got Ox fam , who had their alternative
shops, they had their campaigners, the n hoo ked up with Traidcraft wh o had the
church networks , and Equal Exchange wh o had the independent wh ole foo d stores
net wo rk, and they join tly created the com pan y called Cafedirect. An d the farmers
gave the first 3 containers [of coffee] on loan, because they trusted the idea. The n
- 219 -
 Ox fam cam pai gne d, the y cam pai gne d wit h it, the wh ole foo ds sto cke d the thing,
Ox fam shops sto cke d the thing, and it fina lly got into the sup enn ark et. An d tha t
was the gro wth of Caf edi rec t. No w tha t bra nd 12-14 years late r is the fastest
gro win g coffee bra nd in the UK by val ue, it's jus t. .. sol d sha res in it to the pub lic,
and the pro duc ers ow n it ... (Tu cke r, Jun e 16, 200 5 , per son al com mu nic atio n).

... the Fai rtra de Tow ns ide a has bee n a fan tast ic wa y to brin g tog eth er loo se gro ups
of peo ple wh o wo uld n't hav e oth erw ise com e tog eth er, bec aus e wh at hap pen s is in
tow ns out side Lon don , you get acti vist s tog eth er, but the y don 't me et reta il peo ple ,
and so reta il peo ple don 't hav e any con fide nce tha t the re mig ht be peo ple wh o wil l
use these [products] and the acti vist s - reli gio us activists, pol itic al activists - don 't
nec ess aril y cross pat hs and com e tog eth er ... so by star ting to brin g the m tog eth er
and bui ldin g a crit ical ma ss you can act ual ly cre ate a lev el of awa ren ess tha t's qui te
exc itin g (Tranchell, Ma y 5, 200 5, per son al com mu nic atio n).

These com me nts ani ma te the not ion of 'ent rep ren eur ial lea der shi p' as the cru cial fac tor in
det enn inin g the ma rke t suc ces s of inn ova tion . The first com me nt sho ws how a bol d ide a to
destabilise equ ilib rium in the cho col ate ind ust ry was ma de pos sib le by enr olli ng the
energies of a num ber of net wo rks (su ch as Ox fam , Tra idc raft and Equ al Exc han ge) . The
second hig hlig hts Go yde r's (19 98) poi nt tha t ent rep ren eur s eng age div ers e gro ups for a
common goa l or pur pos e in a wa y tha t sub lim ate s tho se act ors ' ow n ( com pet ing ) inte rest s
('lo ose gro ups ' of activists and reta iler s 'wh o wo uld n't hav e oth erw ise com e tog eth er') .
These dat a illustrate tha t the gam e-p lay ers ' abi lity to ma teri alis e and ma ke a suc ces s of
their inn ova tive mo del s hin ges on a vie w of pow er as the pro duc t of soc ial con nec tion s
between diff use or 'loo se gro ups ' act ing in con cer t to gen era te new sou rce s of pow er.
Indeed, sinc e the fair trad e pio nee rs do not pos ses s esta blis hed ma rke t pow er or abu nda nt
financial reso urc es, the y hav e had to net wo rk net wo rks - exe rcis e lea der shi p - in ord er to
gain sca le (see Cha pte r 5). Thi s ech oes the ide a of Ma cm illa n et al. (20 00) tha t
entrepreneurs 'sus tain net wo rks of rela tion shi ps' and mo bili se the m to ma ke im1ovation
possible and successful. Fro m this vie w, the gam e-p lay ers can be see n to exe rcis e net wo rk
leadership to ma teri alis e and ma ke a suc ces s of the ir mo del s. Gam e-p lay ers ' role in ma rke t
evolution as leaders of net wo rks , not sim ply ent rep ren eur s of rad ica l bus ine ss mo del s, is
examined in the foll ow ing chapter.

This ins igh t abo ut the pow er and sca le pro duc ed by this net wo rkin g pro ces s res ona tes wit h
post-liberal sch ola rs' con cep t of the 'po we r wit h' (se e Tow nse nd et al., 1999; Row lan ds ,

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1998; Eyben et al., 2006). This is the sec ond insight which relates to collective pow er - the
product of networking networks. Alternative pow er theorists describe the 'po we r with ' as a
'cap aci ty to achieve with others wh at one cou ld not do alo ne'. It 'inv olv es a sense of the
whole bei ng greater than the sum of the individuals, especially wh en a group tackles
problems tog eth er' (Williams in Rowlands 1998: 14). As Row lan ds (1998: 14) says of
'po we r wit h': 'on e per son standing up against an unj ust law is unl ike ly to achieve mu ch on
their own; ma ny people wo rkin g together, however, are mo re likely to pro vok e cha nge '. In
this sense, the gam e-p lay er's leadership can be seen to enrol and concentrate the 'po we r
wit h' - a collective capacity and sensibility to cause significant effects on the env iron me nt
for collective benefit. This conception of how pow er operates in the context of game-
playing resonates wit h business the oris ts' vie w that new ideas are not successful unless
supported by multiple networks.

The social connections model, wh ich incorporates alternative pow er the oris ts' categories of
power, provides the conceptual tools for dem yst ifyi ng the pro ces s of the materialisation and
expansion of radical innovation. It shows how, in a hostile and politically conservative
environment, social actors are not reliant on tho se wit h ma rke t power, nor are the y una ble
to exercise influence wit hou t these actors. In fact, the role of game-players is to 'lea d' the
creation and expansion of new structural arrangements through models wh ich will liberate
hum an capacities and power. The se models do not evolve in a conservative direction to
support market equilibrium. Rather, they inc rea sin gly disrupt the ma rke t as gam e-p lay ers '
knowledge of how to change the business env iron me nt matures. Con trar y to existing
pow er theories, then, these data off er insight into wh y and how gam e-p lay ing eludes
processes of capture: the gam e-p lay er's strategic wea pon of con tinu ed innovation.

Concluding Comments
This chapter has analysed the fair trade mo vem ent 's game-players. The chapter exa min ed
the fair trade pio nee rs' historical evolution and the role those actors had and have in the
movement. It detailed their discrete entrepreneurial nature and beh avi our ma nife sted in
revolutionising industrial norms by inn ova ting in business organisation, first in the Ma x
Havelaar certification system, then in com me rcia l ownership and organisational design in
brands across different industries. Dra win g on research on the psy cho log y of

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 entrepreneurship, the dat a sho wed how the gam e-p lay ers in the fair trade mo vem ent are not
'vic tim s' of 'po we r ove r'. Rather, the y are radically creative in res pon se to it; gam e-p lay ers
transcend existing discourses to liberate alternative ones tha t are sup pre sse d by pre vai ling
bodies of kno wle dge . For Sch um pet er (1934), this rev olu tion ary acto r pos ses ses a uni que
'ho rizo n' for per cei vin g and acting, the bou nds of wh ich are mu ch wid er and 'fre er' tha n
those of his /he r contemporaries. Wh at Sch um pet er des crib ed was an unu sua l degree of
human age ncy and structural free dom wh ich reso nat es wit h the not ion of the 'po we r
within'. A term use d by pos t-li ber al scholars of pow er (see for exa mp le Tow nse nd et al.,
1999; Row lan ds, 1998, 1997, 1995; Kabeer, 1994), the 'po we r wit hin ' is a not ewo rthy
internal cap aci ty and strength to tran sce nd the opp res siv e limits of the sta tus quo; the
ability to see the con fine s of one 's social role and self -ide ntit y as structural, not per son al,
and hen ce to cha llen ge tho se structures.

The min i portraits of the gam e-p lay ers and the ir inn ova tion s - suc h as Div ine Cho col ate
Ltd., AgroFair, Equ al Exc han ge (US) and CT M Alt rom erc ato - rev eal ed the uni que wa y in
which the gam e-p lay ers organise kno wle dge , and pow er thereby: that is, in dec ent rali sed ,
egalitarian net wo rk rela tion shi ps tha t are hig hly am ena ble to the free -flo w of info rma tion
and new ideas nee ded for con tinu ed inn ova tion (Achrol & Kotler, 1999; Sch ape r & Vo lery ,
2002; No ote boo m, 2001). Mo reo ver , the nature of the gam e-p lay ers ' inn ova tion ind ica ted
the inh ere nt pol itic s tha t bel ie this org ani sati ona l and gov ern anc e design; the gam e-p lay ers
do not create new mo del s wit h a vie w to evo lvin g into new 'fie fdo ms of pow er' (Ro ber t &
Weiss, 1988) in the ma rke t or to rep lica ting exi stin g ones.

Rather, the y create new mo del s lite rall y as mo del s for others to mim ic. The se mo del s
structurally em pow er alternative kno wle dge and exp and the capacities of others. To put it
another way, the gam e-p lay er's 'po we r wit hin ' is dire cted tow ard s ena blin g new cap acit ies
and possibilities by cre atin g new structures or 'po siti ve' free dom (see Ber lin, 1958). Wh ile
the ass um ptio n is tha t inn ova tion s bec om e less inn ova tive and ent rep ren eur ial as the y gro w
in size (Sc hap er & Vo lery , 2002; No ote boo m, 2001; Ach rol & Kotler, 1999), the dat a
illustrated tha t the gam e-p lay ers ' inn ova tion s thrive - tha t is, und erg o gro wth - and bec om e
more cha llen gin g for the status quo ove r tim e in ord er to ma inta in the ir role as ma rke t
agitators (see Dru cke r, 1985). Thi s obs erv atio n offe red the ins igh t that pat tern of

- 222 -
organisational evolution in markets is more deliberate a development than is portrayed in
evolutionary accounts of markets. Some actors - namely game-players - use pow er
consciously in alternative ways to the norm in order to ensure the process of change.

This story of innovative adaptation thus captured wh at post-liberal scholars are trying to
bring to the fore: the significant potential for actors to execise agency and realise
empowerment (see for example O'M alle y, 1996). Innovative adaptation counters
Fou cau lt's over-emphasis on the success of prevailing bodies of knowledge to discipline
'the whole social bod y' (Simons, 1995: 86-7), an over-emphasis which promotes a
conservative political process paralleling the market process of static adaptation (see
Chapter 6). Game-players are not constrained by inherited social practices and
subjectivities. The game-players possess a significant capacity to reject and transform
existing norms. No rm entrepreneurship is gam e-p lay ers ' strategic weapon: game-players,
like entrepreneurs, deftly deploy innovation to procure and maintain a position of market
leadership (see Drucker, 1985). Wh ile innovation itse lf is a seemingly spontaneous
occurrence (albeit informed), it confers pen nan enc e on game-players' leadership in guiding
the future of the market, or at the ver y least their capacity to influence that future (see
Nooteboom, 2001).

As revolutionaries who rem ain radical over time - that is, who elude capture and
pacification - game-players themselves mu st initiate the construction of the radical models
of social and economic organisation in their min d's eye. Conservative actors will not
willingly mim ic the game-players' avante-garde models, hence game-players mu st create
markets for these models. Business theorists term this propensity to initiate the creation of
innovation 'entrepreneurial leadership' (Goyder, 1998; Macmillan et al., 2000), or what I
call 'net wo rkin g net wo rks ' (see Chapter 5). It essentially refers to the process of enrolling
many groups of actors to exercise influence (see Latour, 1986). By generating flows of
'po we r wit h', net wo rk leadership enables game-players to materialise and expand their
models without conforming to the status quo in order to do so. The insight these data
offered was of the sequence that game-playing triggers: game-players' 'po we r within ' sets
in train the generation of 'po we r wit h'. These models, whilst capacious in their potential to
bring forth change with new structures , are mere conduits for the pow er generated in the

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enrolment process. The soc ial con nec tion s mo del - as a con cep tua l sch em e of this pro ces s
of em pow erm ent from the individ ual lev el of the gam e-p lay er to the col lect ive lev el across
societies - pro vid ed an exp lan ato ry bas is for the ope rati on of pow er in the gam e-p lay ing
context.

Together wit h Cha pte r 6, this cha pte r has exp lica ted the sym bio tic, evo luti ona ry dan ce
between the gam e-p lay er and the resistor. Wh ile the res isto r wai ts for the gam e-p lay er to
take the ' lea d' wit h im10vation in a new mo del and the n rev els in ma rke t stab ility, the
game-p lay er thrives on ma rke t vol atil ity to get the res isto r dan cin g. Ye t gam e-p lay ers
make an add itio nal mo ve in gui din g the ir dan cin g par tne r aro und the dan ce floor: the gam e-
player can cha nge the rhy thm of the mu sic. Tha t is, wh en the res isto r bec om es too fam ilia r
with one dan ce - to the poi nt of' goi ng to sleep ' (Ro ber t & We iss, 198 8) - the gam e-p lay er
changes the mu sic to put the res isto r on his/ her toes again. In eco nom ic term s, gam e-
players can force the pac e of evo luti on, cau sin g bro ade r ins titu tion al tran sfo rma tion . Thi s
institutional mo ve init iate d by the gam e-p lay er is the sub jec t of the foll ow ing cha pte r. It
examines the wa y in wh ich gam e-p lay ers , situ ate d ide olo gic ally and (pr edo min ant ly)
institutionally wit hin IFA T, are forc ing the evo luti on of FLO .

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 CHAPTER 8: Governance as 'Creative De str uct ion '

Acc ord ing to Sch um pet er (19 34) , ent rep ren eur s are eco nom ic rev olu tion arie s. The ir
inn ova tion s stim ula te 'gal es of cre ativ e des truc tion ' wh ich ren der exi stin g ideas,
tech nol ogi es and skills obs ole te and rep lace the m wit h new ma rke t inst itut ion s and
structures. 125
The se gales pun ctu ate the his tory of eco nom ic pro gre ss . Lik eni ng the
ent rep ren eur 's inn ova tion to the Dar win ian not ion of gen etic var iati on, evo luti ona ry
eco nom ists vie w the ma rke t as a me cha nis m for sele ctin g the 'fitt est' am ong com pet ing
species (see esp eci ally Nel son & Wi nte r, 1982). As in nat ure , sele ctio n me cha nis ms
'fav our one var iety ove r another, from wh ich one spe cies is elim ina ted and the oth er
pre vai ls bas ed on its ada pta bili ty'. Inn ova tion (ge net ic var iati on) is a sou rce of sele ctio n
pre ssu re, in res pon se to wh ich wea ker species ado pt the com par ativ ely sup erio r traits of the
'fitt est' spe cies (Ne lso n & Wi nte r, 1982: 9; Cas son , 1990: xvi i; Fos ter & Me tca lfe, 2001: 1-
2)12 6.

Cha pte r 6 illu min ate d, how eve r, tha t in less tha n two dec ade s MN Cs hav e fou nd the ir wa y
into FL O' s sys tem via the Nls (resistors) and are mo uld ing it to the ir ow n stra teg ic
com me rcia l pur pos es and ins titu tion al rules. Thi s ins igh t dem ons trat es how usi ng ma rke ts
to des ign new inst itut ion s for dev elo pm ent is sub jec t to qui te rap id evo luti ona ry shifts. It
hig hlig hts the ten aci ty and pow er of MN Cs to cap ture and pac ify thre ats to the ir
com me rcia l sys tem and sha pe the m acc ord ing to the bou nds of kno wle dge ins crib ed in the
ide olo gy of dom ina nt inst itut ion s. To put it ano the r way , MN Cs hav e not evo lve d into a
new org ani sm wit h the gen e stru ctu re of Fai rtra de. Rat her , we see tha t the acto rs wh o see k
to inst itut ion alis e new inn ova tion s can evo lve tho se mo del s to mim ic the dom ina nt
(ide olo gic al) mo del (see Cha pte r 6). In short, a Dar win ian acc oun t of ma rke t evo luti on is

125
Proponents of Sch ump eter 's (1934) theory (see for example Woodall, 1997) point to numerous historical
examples of Sch ump eter 's gales of creative destruction, whe reby revolutionary innovations have transformed
the way in which societies, let alone economies, operate: stea m pow er from the late eighteenth century to the
1840s; the railway from the l 840 s-l 890s, electric pow er in the l 890 s-l 930s; the motor car and oil from the
l 930 s-l 980s; info nna tion technology to the present (computers, software, telecommunications).
126
As Casson (1990: xvii) illustratively describes: ' ... variation occurs within a population of firms whe n one
of them adopts a new managerial practice or a new technology .. .The industry constitutes an environmental
niche in which the struggle [for survival] goes on. Imitation constitutes a social mechanism by which the
characteristics of the successful innovation are transmitted to rival firms. In the long run, only the fittest firm s
in the industry - those using best practice techniques - earn a non nal rate of profit and so surv ive '.
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 too simp lified to the exten t that it negle cts the real- worl d polit ical strate gies such as
symbolic imita tion (the prete nce of mode l-imi tatio n) and static adap tatio n that domi nant
species and instit ution s use to prote ct and manu factu re the cultu ral perce ption of their
evolutionary 'fitne ss'.

Together, symb olic imita tion and static adap tatio n are, respe ctive ly, salie nt instit ution al
responses to, and evolu tions in, mod el inno vatio n that entre pren eurs (gam e-pla yers) must
address if their busin ess mode ls are to succe ed. Unde rstan ding how game -play ers addre ss
these mark et cond ition s to bring abou t socia l trans form ation requ ires cons idera tion of the
role of (form al) instit ution s in the proc ess of selec tion. Inde ed, if inno vatio ns do not trigg er
market trans form ation alone but inste ad are acco mpan ied by new instit ution s that creat e the
conditions for them to thriv e (see Nels on, 2001 ), how game -play ers oper ate at an
institutional level beco mes perti nent to unde rstan ding the comp lete act of caus ing 'gale s of
creative destr uctio n'.

As a starti ng poin t for this analy sis, the evolu tiona ry proc ess can be seen as shap ed by the
127 128
relationship betw een instit ution s , know ledg e and powe r. Insti tutio ns refle ct bodi es of
knowledge, whic h in tum defin e the scop e of poss ible actio n and inter actio n (N ooteb oom,
2001 ). In this way instit ution s exert signi fican t influ ence over the mod els that are 'in use
and being deve loped ' (Nels on, 2001 ); whos e know ledg e instit ution s they favo ur and whos e
they supp ress is a mech anism for shap ing the mark et envir onme nt. In a post- indu stria l
society in whic h powe r relat ions are base d on the owne rship and contr ol of know ledg e
(Bell, 1978), this instit ution al mech anism is fund amen tally political: it defin es and contr ols

127
The tern1 'institution ' is define d in differ ent ways by differ ent disciplines (see Good in, 1996). In
economics, institutions refer to the 'rules of the game ' (Nort h, 1990), where as socio logy emplo ys a much
broader conce ption of socia l institutions as a 'stabl e, valued, recurr ing patter n of behav iour' which regula te
and constitute behav iour (Huntington, cited in Goodin, 1996: 21). In the spher e of econo mics, the marke t is
one such social institution: it 'regulates the produ ction, distrib ution and consu mptio n of goods and services
within any societ y' (Eisenstadt, 1968). In addition are forma l institutions, name ly forma lly const ructed
bodies or organisations that arise to gover n and stipulate rules of condu ct in a social institution. IF AT and
FLO are formal institutions gover ning the rules and evolu tion of the fair trade marke t (a social institution).
Formal institutions signif icantl y influe nce the social institutions they gover n by shapi ng the (social)
institutional incentive structure that causes some innov ations (mode s of activity) to succe ed and others to fail
(Goodin, 1996: 29).
128
Broadly conceived, 'know ledge ' includ es 'any menta l activity includ ing perce ption and value judge ments '
and social actors 'perce ive, interp ret and evalu ate the world accor ding to menta l catego ries (mental frames or
mental mode ls)' (Noot eboom , 2001: 42).
- 226 -
 the bou nds of hum an pot ent ial and ima gin atio n (see Hay war d; 1998; Gav ent a & Cor nw all,
2006). In this context, the sur viv al of the ent rep ren eur 's new inn ova tion app ear s to be
larg ely infl uen ced by his/ her cap aci ty to sha pe and infl uen ce ins titu tion al spa ces wh ere
kno wle dge gov ern anc e and pro duc tion occ ur (see Gav ent a, 1993). Evo luti ona ry
eco nom ists do not ma p the pol itic al traj ect ory tha t par alle ls ma rke t evo luti on to exp lain
how the ent rep ren eur ope rate s at an inst itut ion al level.

The key ins igh t in this cha pte r is tha t inst itut ion s act as a sou rce of sele ctio n pre ssu re wh ich
actors har nes s to sha pe the pac e and dire ctio n of evo luti on. Cha pte r 6 and the first sec tion
of this cha pte r hig hlig ht the wa y in wh ich resi stor s pro duc e a ben ign pre ssu re on the
dom ina nt ma rke t mo del by bui ldin g inst itut ion al mo del s of kno wle dge gov ern anc e tha t sui t
the status quo. The ma in ana lysi s tha t foll ow s in this cha pte r is of how gam e-p lay ers
res pon d to inst itut ion al opp osi tion to cha nge s in the org ani sati on of pow er (kn ow led ge)
relations. Thi s ana lysi s rev eal s stra teg ies tha t are additional to bus ine ss mo del inn ova tion
and relate to inst itut ion al net wo rk lead ersh ip. Giv en the ins titu tion al obs tac les tha t
ent rep ren eur s' inn ova tion s exp erie nce in atte mp ting to cha nge the ma rke t env iron me nt (see
Cha pte r 6), this cha pte r inte gra tes an ana lysi s of pow er ( as kno wle dge ) to und ers tan d how
ent rep ren eur s ach iev e the inst itut ion al com pon ent of the 'gal es of cre ativ e des truc tion ' tha t
the ir inn ova tion s are tho ugh t to cause. Wh ile evo luti ona ry eco nom ics pro pos es tha t a
ma rke t 'en viro nm ent ' doe s the sele ctin g bet we en ma rke t mo del s, this cha pte r sho ws tha t
thro ugh pol itic s, this env iron me nt - and the inst itut ion al sele ctio n pre ssu res tha t it exe rts -
can be changed. Wh ile ins titu tion al pow er is not ava ilab le to ins titu tion ally we ak actors,
net wo rks are, and the y are a key me cha nis m for forc ing ins titu tion al evo luti on in the
sele ctio n env iron me nt. Thr oug h net wo rks , gam e-p lay ers cha nge the pol itic s of the
inst itut ion al env iron me nt to force the pac e of evolution.

Static Adaptation: relieving selection pre ssu re via institutional ort hod oxy
For Pop per (1963), 'dis agr eem ent ' is an ess ent ial pre req uis ite for the gro wth of kno wle dge ,
an insi ght on wh ich evo luti ona ry eco nom ists dra w to con clu de the imp orta nce of
dem ocr acy for evo luti on (see esp eci ally Loa sby , 1999; see also Har per , 1996).
'De mo cra cy' is not, how eve r, a uni for m or stat ic con stru ctio n of col lect ive dec isio n-
ma kin g, nor are dem ocr atic inst itut ion s inh ere ntly imm une to abu se or una ble to sup pre ss

- 227 -
 disagreement (see Dz ur & Ols on, 200 4; Prz ewo rsk i, 1998; Gav ent a, 1993 , 200 6a;
Parkinson & Roc he, 200 4). Go ver nan ce, esp eci ally the gov ern anc e of kno wle dge in the
pos t-in dus tria l com ple x, is an une qua l pla yin g-f ield (see Dra hos , 200 2; Gav ent a, 199 3;
Bell, 1978; Hal l, 1981 ).

Pop per 's imp lici t pol itic al phi los oph y to inc rea se kno wle dge for the pur pos e of cha nge
nonetheless poi nts to the 'del ibe rati ve' sch ool of dem ocr acy . Del ibe rati ve dem ocr acy
refers to a mo del of dem ocr atic dec isio n-m aki ng gov ern ed by pub lic dis cus sio n and
collective rea son ing rath er tha n bar gai nin g and agg reg atin g pre fere nce s ( as in
'rep rese nta tive ' dem ocr acy ) (see Els ter, 199 8; Go odi n, 200 3; Dz ur & Ols on, 200 4; Pim ber t
129
& Wa kef ord , 200 1; Dry zek , 200 0; Par kin son & Roc he, 200 4) . Thi s mo del ass um es the
par tici pat ion of tho se affe cte d by dec isio n-m aki ng pro ces s (i.e. par tici pat ory dem ocr acy ),
and focuses spe cifi cal ly 'on the nat ure and qua lity ' of par tici pat ion in the pol itic al pro ces s
130
(Gaventa, 200 6b ) . Del ibe rati ve dem ocr acy is tho ugh t to effe ctiv ely poo l a div ers ity of
kno wle dge and exp and its bou nda ries by ove rco min g stru ctu ral info rma tion asy mm etri es
that wo uld oth erw ise nar row dec isio n-m aki ng pro ces ses (see Coh en in Bo hm an & Reh g,
1997; Dry zek , 200 0; Dz ur & Ols on, 200 4). Fur the rmo re, its pro pon ent s sug ges t tha t the
unique em pha sis on values fou nd in a del ibe rati ve mo del of dem ocr acy (Dz ur & Ols on,
2004) is a veh icle for soc ial tran sfo rma tion in ind ivid ual and col lec tive kno wle dge and
awareness, and for fos teri ng new cap abi litie s and pow er (Ha ber ma s, 1975; Lew in, 194 8;
Hall, 1981; Rah ma n, 1991; see Eyb en et al., 200 6).

Just as dem ocr acy is not imm une to abu se, how eve r, nei the r is del ibe rati ve dem ocr acy .
Specifically, the inst itut ion al spa ces in wh ich del ibe rati ve gov ern anc e ma teri alis es are not

129
Park inso n and Roc he (200 4: 507 ) obse rve that deli bera tive dem ocra cy is evo lvin g con cept with mul tiple
appr oach es .
130
'Par ticip ator y' and ' deli bera tive ' dem ocra cy are gen eral ly und erst ood as hav ing dist inct foca l poin ts and
criticisms (see Gav enta , 200 6b ). Wh ile paii icip ator y dem ocra cy emp hasi ses mor e dire ct invo lvem ent of
citizens in, and deep er eng agem ent with , subs tant ive poli tica l issu es, deli bera tive dem ocra cy focu ses on the
quality and natu re of coll ecti ve part icip atio n such that citiz ens 'add ress pub lic prob lem s by reas onin g toge ther
about how best to solv e them ' (Co hen & Fun g, cite d in Gav enta , 200 6b ). To the exte nt that deli bera tion
assumes part icip atio n, ther e is sign ifica nt ove rlap and sim ilari ty betw een the two app roac hes (see Cor nwa ll &
Gav enta , 2001 ). It is not poss ible , nor the focu s of this thes is, to canv ass thes e dist inct liter atur es. Rat her, the
inte ntio n is to draw on the mos t emp irica lly rele van t idea s from both liter atur es in orde r to und erst and how
different acto rs and inst ituti ons use both app roac hes as poli tica l stra tegi es to own , con trol and gov ern
kno wled ge.
- 228 -
 'valu e-fre e' (see Corn wall, 2002 ; Gave nta, 2006 a; Gave nta & Corn wall, 2006). Rath er, the
boun darie s of what is poss ible in 'spac es' or 'nod es' of gove rnan ce, who may enter them ,
and whic h disco urses are ackn owle dged , are issue s that spea k to the powe r relat ions that
define and shap e spac e (see Lefe bvre , 1991; Corn wall, 2002 ; Gave nta, 2006a). As
Lefe bvre ( cited in Gave n ta, 2006 a) obse rved:
Spac e is a socia l prod uct. . .it is not simp ly 'ther e', a neutr al conta iner waiti ng to be
filled, but is a dyna mic, hum anly cons truct ed mean s of control, and henc e of
domi natio n, of powe r.

As a cons eque nce, unde r the guise of 'dem ocra tic' instit ution s and in spite of 'deli berat ive'
or 'part icipa tory' proc edur es, delib erati on can fall short of its philo soph ical ideal of
trans form ing the self- inter est and level ling the diffe renti al powe r relat ions that exist more
wide ly in society. Park inson and Roch e (2004: 507) sugg est for insta nce that 'peop le may
initially agree to enga ge with each other, but if they perce ive they are not havi ng their way,
they will choo se other mean s of enga geme nt in whic h they calcu late their chan ces of
winn ing to be high er'. In parti cular , actor s will choo se other spac es and 'shif t' forums (see
Brait hwai te & Drah os, 2000). As Dzur and Olso n (2004: 102) obse rve, 'shar p diffe rence s
[emerge] betw een 'wea k' and 'stro ng' ... sphe res, wher e the form er mere ly voice or accla im
posit ions wher eas the latter truly have the pow er to enac t colle ctive decis ions' . The latter
are 'clos ed spac es' ( Gave n ta, 2006 a: 26) wher e decis ions [are] made by actors behi nd
close d doors with out any prete nce of broa deni ng the boun darie s of inclu sion' . In short,
actors cons truct and explo it insti tutio nal 'spac es', or 'nod es', to caus e effects (see for
131
insta nce Burr is et al., 2005 ) .

13 1
This chapter uses the concept of 'space s' (Gaventa, 2006a) and 'node s' (Burris et al., 2005)
interchangeably. Gaventa (2006a: 26) describes 'space s' as 'opportunities, moments and channels where
citizens can act to potentially affect policies, discourses, decisions and relationships that affect their lives and
interests'. To the extent that these are physical locations and opportunities for affecting the process of
governance, the idea of 'space s' can be seen to parallel what Burris et al. (2005: 37) define as a 'node ' within
the context of networked governance: 'a site of governance which mobilises diffuse knowledge, capacity and
resources that reside within networked arrang emen ts'.
- 229 -
 FLO 's Ins titu tion al Evo luti on
These ideas reso nat e wit h the em piri cal data on FL O's inst itut ion al dev elo pm ent 132
. As we
saw in Cha pte r 6, FL O's institutional structure has com e to refl ect pre vai ling ma rke t
discourse at the exp ens e of the bro ade r collective of fair trade pro duc ers and traders usi ng
the Fairtrade certification sys tem (see Dia gra m 8.1 ):

-FLO s;;k eho ld~ r - - ''

A~~~;AP1 /_ _ _ _ _ _ _ _ _ _-__ _ .___
Pr od uc er} // -
Net wor ks ',, For um ✓✓' .a -

8 FLO Boa rd of Dire ctor s

(6 Nls , 4 producers, 2 traders)
20 Nls in 21
cou ntri es

FLO Exe cuti ve Dire ctor

(Bo nn, Ger man y)
Standards & Poli cy Com mitt ee
(sets stan dard s)

FLO Pro duc er Sup port FLO Pro duc er Man ager s FLO Cert.
Net wor k (Bo nn; liais e amo ngs t
(sta ff in Bon n & prod ucer s, Nls and
prod ucer coun tries com mitt ees) Insp ecti on Staf f
acro ss Afri ca, Asia (wo rldw ide;
and Lati n Am eric a) insp ect
prod ucer s for
Fair trad e
com plia nce)
Tra de Aud it Staf f
(Bo nn & prod uce r
cou ntrie s; aud it sup ply Cer tific atio n
chai ns for Fair trad e Com mitt ee ( app rove s
stan dard s com plia nce) prod ucer s afte r
insp ecti on)
Diagram 8.1: FLO Gov erna nce Stru ctur e at 200 4/05. Sou rce: FLO , 200 5b.

Within this com ple x gov ern anc e structure, the circle in bol d depicts the ulti ma te dec isio n-
making pow er of the Me etin g of Me mb ers (M oM ) wh ere in the ma rke t-dr ive n interests of a
'sm all cadre of peo ple ' hav e coalesced. Sev era l res pon den ts obs erv ed this con cen trat ion of

132
This sect ion deal s with emp irica l mat eria l on FLO 's gov erna nce prio r to the FLO Boa rd Mee ting of
Nov emb er 200 6 at whi ch the Boa rd mad e stru ctur al chan ges to its gov erna nce stru ctur e. The anal ysis in this
section refle cts this form er state. The chan ges mad e to FLO ' s gov erna nce are exam ined in the fina l sect ion of
this Cha pter , whe re this revi sed stru ctur e will be anal ysed acco rdin gly.
- 230 -
 interests in the Mo M and the Mo M's dec isio n-m aki ng pow er wit hin FL O's model,
com me ntin g tha t the Mo M, not the Boa rd meeting, is the ulti ma te dec isio n-m aki ng forum
for FL O's operations (see Cha pte r 6). This is not surprising since the Nls legally 'ow n'
133
FLO . Eve n though the Mo M has had effective control ove r FLO, the Boa rd (until 2004)
has bee n dom ina ted by (market-oriented) Nls . The Nls hav e hel d a ma jori ty ove r pro duc ers
and traders in the FLO Bo ard 's dec isio n-m aki ng because, acc ord ing to FL O's Constitution,
the Bo ard 's Pre sid ent is elected by (and from among) the Nls and holds a casting vot e on
134
decisions . Des pite their dom ina nt influence ove r decisions that affect the lives of
thousands of pro duc ers and com mu niti es, the six NI Bo ard Directors are cho sen from
am ong the Nls the mse lve s and not by this wid er stak eho lde r group. In this context, the
Mo M has pro vid ed an alternative for um thro ugh wh ich bus ine ss-m ode l Nls hav e pur sue d
their interests on controversial issues uni mp ede d, som etim es in con trad isti nct ion to
decisions ma de by the Bo ard (see Cha pte r 6).

These data illu min ate the politics beh ind bui ldin g and evo lvin g new institutions to sup por t
new models. The dat a sho w tha t the res isto rs' design of FL O' s institution has ena ble d
the m to exercise 'po we r ove r' others thro ugh a mo nop oly on kno wle dge production. This
brings to light the concerns of Dz ur and Ols on (2004) tha t distributional discrepancies in
kno wle dge and dec isio n-m aki ng pow er in soc iety ma y reassert the mse lve s in new
institutions (see also Par kin son & Roche, 2004; Cor nw all & Gaventa, 2006: 126). The
nod es wit hin this hierarchical net wo rke d institution refl ect the pow er relations ope rati ng
wit hin them. For instance, wh en one nod e (such as the FL O Boa rd) does not pro duc e the
kno wle dge tha t reinforces the ir wo rldv iew , the y activate alternative 'clo sed spa ces ' (i.e. the
Mo M) to override the authority and val idit y of the decisions pro duc ed by the FL O Board.
By com par iso n wit h the res isto rs' pow er and ow ner shi p in FL O' s institutional structure,
ma rgin alis ed pro duc ers and FTO s par tici pat e in wh at Cor nw all (2002) describes as 'inv ited
spa ces ' wh ich pur por t to ope n up gov ern anc e pro ces ses to bro ade r participation. In
contrast to the Mo M and FL O Board, the FLO Sta keh old er For um does not hav e

133
This legal stru ctm e has bee n changed in response to the tensions this chapter examines. The details of
these changes to FLO 's Constih1tion are analysed in the final section of this chapter. The presentation of
relatively outdated data in this way serves a deliberate purpose of clarity in the chronological sequence of the
empirical story and concephial argument of this thesis.
134
This Constitutional design has also changed und er the new Constih1tion.
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 comparable dec isio n-m aki ng infl uen ce (dep icte d by the das hed circle in Dia gra m 8 .1) 135
.

Rather, the For um has ser ved as a per iod ic me etin g gro und for tho se actors wh o are critical
of, and disillusioned by, FL O's dec isio n-m aki ng on hig hly con trov ersi al issues - and a
platform for voi cin g their collective dis app rov al of FL O (De igh ton , Ap ril 20, 2006,
personal com mu nic atio n; Earley, Jun e 23, 200 5, per son al com mu nic atio n). As one
respondent described, 'the re's a hug e crit icis m abo ut FL O now from pro duc ers ... [that]
there is par tici pat ion [of pro duc ers in FL O's sys tem ], but wh en it com es to decision-
making, the y [producers] are in a minority, bec aus e the Nat ion al Init iati ves hav e this
majority'. Com me nts from pro duc ers and traders illu stra ted this point:

Small pro duc ers exp ect to ser iou sly par tici pat e in FL O' s gov ern anc e; not onl y from
the top -do wn [in the FLO Board] but bot tom up as well. If FL O is for eve ryo ne,
then eve ryo ne sho uld be inv olv ed in its dec isio n ma kin g. We kno w that som e of
the Nat ion al Initiatives (NI) thin k tha t FL O is theirs - and in the ir defence, the
[legal] statutes [of FLO] say so. Nev erth ele ss, the sma ll pro duc ers don 't thin k this
is right. The y bel iev e tha t all 'Fa ir Tra de' actors sho uld be the ow ner s of the
system, rath er tha n the Nis that, acc ord ing to the sma ll pro duc ers , hav e tak en ove r
FL O's ownership. The sma ll pro duc ers say tha t FL O's byl aws (statutes) sho uld be
cha nge d in ord er to ach iev e wid er par tici pat ion in its dec isio n ma kin g (De nau x,
No vem ber 25, 2004).

We (Producers) got rea lly ups et wh en we got to kno w tha t Nes tle bec am e [a]
me mb er of FLO. The y [Nestle] are one of the big ges t exp loit ers in the coffee field
and are pay ing rott en pric es to the farmers. The am oun t of Fai rtra de coffees the y
[Nestle] are pro pos ing to do is alm ost not hin g, but [Nestle] hav e cre ate d a smo ke
screen [by bec om ing a me mb er of FLO ] to get rid of the pro test mo vem ent s aga ins t
the pol icie s of Nes tle et cetera. It is sad to see this hap pen ing also bec aus e of the
complete lac k of dem ocr atic dec isio n ma kin g in FLO . The y [Nis] nev er con sul ted
the pro duc er/f arm er org ani sati ons [abo ut the dea l wit h Nes tle] (Va nde rHo ff
Boersma, Dec em ber 23, 2005, per son al com mu nic atio n) .

. . .the fair trade mo vem ent [in Italy], inc lud ing Tra nsf air Ital y [the Ital ian NI], has
bee n sho cke d abo ut the new s tha t the Fai rtra de Fou nda tion in UK has giv en the
Fairtrade label to Nes tle .. .in the last three wee ks, the re are mo unt ain s of com me nts
internally and in the new spa per s, wh ich are disc uss ing , mo stly ver y crit ica lly, this
issue (Dalvai, No vem ber 9, 2005, per son al com mu nic atio n).

We tho ugh t this fair trade wo uld hel p us esc ape the pra ctic es of com pan ies like
Nestle. Ho w can it be tha t the y are now a fair trad e com pan y, buy ing a tiny am oun t,

135
Chapter 6 documented the removal of producers from the governing bod y of the Max Hav elaa r labeling
organisations whe n FLO was established .
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 wh ile the ir pra ctic es on the wh ole rem ain as exp loit ativ e as ever? (Manji, cite d in
Tuc ker , 2006).

The se com me nts ind icat e how , des pite the ir ma jori ty on the Bo ard, the Nls hav e by- pas sed
formal gov ern ing me cha nis ms and fora to ach iev e the ir aim s wit hou t the con sen sus of the
entire Bo ard or wid er me mb ers hip . Thi s has had the effe ct of ma kin g the Boa rd pow erle ss
or sym bol ic in fun ctio n wh en its dec isio ns hav e bee n inc om pat ible wit h the ma rke t-dr ive n
Nls ' interests, yet ser vic eab le wh en the y have. The obs erv atio ns sup por t Gav ent a' s ( 199 3)
arg um ent tha t me re 'par tici pat ion ' in inst itut ion al dis cou rse is ulti ma tely me ani ngl ess ;
wit hou t a cha nge in pow er rela tion ship s, 'par tici pat ion ' mig ht add a mo re dem ocr atic face
to the status quo and the 'illu sio n of inc lus ion ' (Ga ven ta & Cor nw all, 200 6), but it does not
pen etra te the und erp inn ing stru ctu ral rela tion s tha t ulti ma tely det erm ine wh ose kno wle dge
pre vai ls (see Gav ent a, 1993; Gav ent a & Cor nw all, 200 6). As Gav ent a posits:
Wh ile par tici pat ory , it is still bas ed upo n gai nin g acc ess to and con trol ove r
kno wle dge tha t has alre ady bee n cod ifie d by others. It is an acc ess to a par adi gm
wh ich the peo ple had little par t in creating.

By sha pin g new inst itut ion s in way s tha t ena ble the m to exe rcis e 'po we r ove r' oth ers,
resi stor s can be see n to use inst itut ion al kno wle dge as a pol itic al me cha nis m to rein for ce
the ma rke t con diti ons in wh ich the dom ina nt ma rke t mo del thrives. Thi s is Ber lin' s (19 58)
'neg ativ e libe rty' in action: resi stor s me rely pre ser ve pro duc ers ' exi stin g ran ge of
pos sibi litie s and opp ortu nity wit hin the ma rke tpla ce, but do not exp and the ir hum an
freedoms. Res isto rs curb suc h pot ent ial in ord er to serv e the ir ow n inte rest s (see Cha pte r
6). Em piri call y, the resi stor s hav e mo bili sed inst itut ion al kno wle dge -pr odu ctio n as an
ins trum ent of 'po we r ove r' by infl uen cin g operational dec isio ns on issues suc h as new
136 137
pro duc t dev elo pm ent , Fai rtra de min imu m pric e cha nge s , and the cer tifi cat ion of

136
The market-oriented Nls ' influence over prod uct development has at times directed FLO 's resources
toward developing standards for products that dominant mar ket players view as potential con sum er markets
but which are of limited developmental impact for small-scale producers (Douglas, April 12, 2005, personal
communication).
137
Bas ed on a study commissioned by the Latin American Pro duc er Net wor k (CLAC) in FLO 's Stakeholder
For nm revealing the increased cost of production since 1994 (when coffee prices were last set), the CLA C
requested at the FLO Boa rd Meeting of Nov emb er 2006 a rise in the Fairtrade Min imu m Pric e for both
organic and non-organic coffees, and the Fairtrade Premium. The Boa rd endorsed the request, com mis sion ing
the Standards Unit to undertake a review of Fairtrade coffee prices and for the Standards Committee to make
a decision (see FLO, January 19, 2007; FLO, January 16, 2007). The price-ri se request was denied by the
Standards Committee for the time being on the basis of a lack of consensus among different stakeholder
groups about the need for a price-rise. Making the same request to IFAT, IFAT trader FTOs have
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 plantation-farms (see Paulsen, 2005). Us ing the last as an illustrative example , FL O has
begun the practice of certifying pla nta tio ns be ca us e the ma rke t-o rie nte d Nl s vie w this
policy as ne ce ssa ry to me et co nv en tio na l tra de rs' de ma nd s for large volumes. In their
view, insufficient su pp ly or a po lic y of no plantations wi thi n the sy ste m co uld po ten tia lly
restrict the growth of Fairtrade pro du cts in the ma ins tre am ma rke t (see Pa uls en , Ju ly 7,
138
2005) . So me conventional traders ha ve also ap pro ac he d Nl s wi th the pro po sit ion of
having their ow n pla nta tio ns certified by FL O (such as Ch iqu ita ap pro ac hin g Tr an sfa ir
USA). Re sp on de nts ' co mm en ts hig hli gh ted ho w these decisions ov er the de ve lop me nt of
the Fairtrade certification sy ste m circumscribe the po ssi bil ity of pro du ce r em po we rm en t in
favour of conventional ma rke t po we r relations:
... in the past, the FT Os ha ve su pp ort ed the pro du ce rs to be able to ex po rt by
themselves. No w, wi th FL O activities gro wi ng fast, the y do no t ha ve the time to
em po we r pro du ce rs an d bri ng the m to a lev el [at wh ich the y can] ex po rt directly.
Therefore exporters are needed. Often the exporters are ve ry large co mp an ies
wh ich in the pa st ha ve no t ha d an y int ere st in supporting the small [producer], and
mo st pro ba bly still do no t ha ve an interest. Of ten the interest of FL O au tho ris ed
exporters is 'bu sin ess ' an d tha t's it. Th e mo st critical thi ng I see in this
de ve lop me nt is that the sm all pro du ce rs are again de pe nd en t and ha ve no t ch an ge d
[their ma rke t power] to gro w by the ms elv es (Dalvai, Fe bru ary 2, 2007, pe rso na l
communication) .

... no t only ha ve pa rtn ers hip s be tw ee n bu ye rs and pro du ce rs be en red uc ed in the

[FLO] fair trade mo ve me nt, the y'r e no lon ge r ass um ed to be direct. 'A s so on as the
bu ye r and the sel ler do no t kn ow each other, a co mp let ely different relationship
exists. Tr ad itio na l fair trade relationships req uir ed a pe rso na l relationship. W ith ou t
this, the bu ye r puts price or su pp ly pre ssu re on the mi dd le person, wh o often mu st
transfer this pre ssu re to the sel ler ' (Harris, President, Co op era tiv e Coffees, cit ed in
Hood, Fe bru ary 22, 2007).

. . .it does see m tha t Tr an sfa ir [USA] is inv est ing an awful lot in trying to solve the
pro ble m of 'ho w is it that Ch iqu ita can ma ke a go in the Fairtrade [banana]
ma rke t?' , ins tea d of trying to solve the pro ble m of 'ho w is it that existing [small-
scale] Fai1irade ba na na coops ca n ma ke it in this ma rke t?' . I thi nk that tha t's

commenced paying a higher price on the basis that 'aft er 14 years of the same price, a price increase is
justified' (Dalvai, February 7, 2007, personal c01mnunication). Supporter groups from the broader fair trade
c01mnunity have publicly criticised the decision and threatened a 'ba ckl ash ' (see for example USFT, February
7, 2007), some pointing to the pow er relationships among the Standards Committee as the basis for the
decision (USFT, February 6, 2007).
138
Whereas in some product sectors such as coffee, global production is based heavily on small-scale
fanning, in other sectors such as tea or bananas, plantation-based production is the norm. Hence, in the eyes
of market-driven Nls, FLO should adopt 'flexibility' when it comes to its standards for different product
sectors to suit market conditions (see Paulsen, July 7, 2005).
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 wrong-headed ... if they [Transfair] continue to go forward [with this] in the way that
they are, they will find that they wo n't get support [from the movement] (Gorman,
July 12, 2005, personal communication).

I would like to not give up the idea that you can still do things with more small-
holders, and that delivers more benefits to some of the poorest people on the planet.
And tha t's actually what we 're talking about, because it's [fair trade] about
empowerment in the relationship - do you properly deliver that in your plantation
model? (Tranchell, Ma y 5, 2005, personal communication).

The impression I have of information on tea and banana plantations is that the
owner has become a very good patron: gives medicine, school opportunity, spends
money for betterments of housing of workers etc. Instead of a 'revolutionary
workforce' the system could create benign patron-worker relations which takes
away the bargaining possibilities because 'the boss is so good for us'. Mo st
workers do not have a clue that the boss is creating a good image with money from
Fairtrade. What did we gain: better situation for the workers, but no empowerment
(VanderHoff Boersma, cited in Paulsen, July 7, 2005: 5).

As these comments highlight, the market-driven Nis ' decision to support the certification of
plantations is not a naturally or universally evident course of action for expanding the fair
139
trade market. Rather, it is a political jud gem ent . For game-players and FTOs for
instance, certifying MN Cs' plantations is an 'eas y' or acquiescent response to existing
market conditions. It is 'the path of least resistance': resistors supply the volumes the
market demands by allowing the certification of plantation farms, but in their haste to
conform, divert investment in smallholder groups who have high potential but who nee d
the initial capacity-building support to get their products on the market 140
. It also
contradicts the raison d'e tre of Fairtrade to em pow er marginalised small-scale producers in
141
international trade who are often displaced by plantation-farms .

As sociologists and political scientists wo uld tell us, part of the reason that industrial
evolution does not follow a spontaneously-occurring pattern is that the discourses ('re alit y')
that market models and institutions expound, and the cultural value ascribed to them, are

139
For instance , the decision to support the entry of an MN C like Nestle was made without the consent of
producers (Va nde rHo ff Boersma, cited in Paulsen, July 7, 2005).
°
14
FTOs are continuing to fulfil this need and have developed highly successful commercial business mod els
to prove this point (see Chapter 7).
14 1
In Chapter 6 I made the observation that FLO 's certification of plantations creates one of two barriers to
market entry for marginalised small-scale producers. In this first barr ier, small-scale producers are already
made marginal to large-scale plantation farming. The second barr ier is FLO 's prod ucer fees (paid by
producers who already are in dire economic circumstances).
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 socially-constructed phe nom ena (see Cha pte r 1; see also Eyb en et al., 2006: 5; Nav arro ,
2006). Fro m this vie w, dom ina nt bus ine ss mo del s and the rules the y ope rate und er do not
possess an intr insi c evo luti ona ry stre ngt h or 'va lue ' as evo luti ona ry eco nom ists wo uld
suggest (see Nel son & Wi nte r, 1982). Cha pte r 2 for inst anc e doc um ent ed the way s and
means of the hig hly sop his tica ted mo dem adv erti sin g ind ust ry to effe ctiv ely ma nuf act ure
the cultural val ue of glo bal bra nds . In this sense, the abo ve dat a sho w tha t actors use
institutions to infl uen ce and def ine the per cei ved (so cia lly- con stru cte d) val ue of mo del s,
and to the ext ent tha t the ir infl uen ce is suc ces sfu l, the cap aci ty of tho se mo del s to succeed.
Through con trol ove r inst itut ion al discourse, the ma rke t-or ien ted Nls ' con sen t of the
authority and val ue of con ven tion al ma rke t nor ms (i.e. the ir inte rna lisa tion of 'po we r ove r')
is dim inis hin g the val ue of a mo re rad ical fair trade pro pos itio n and thu s its per cei ved
evolutionary 'fit nes s' (see Nav arro , 200 6; Gav ent a, 1993: 29- 30) . Em erg ent inst itut ion s
can wea ken a new mo del 's cha nce s of sur viv ing in its orig ina l form, and can alte r the
model rath er tha n que stio n the leg itim acy and val ue of the cur ren t 'rul es of the gam e' (se e
142
Loasby, 1999) . Thi s illu min ates the pol itic s of the evo luti on of ins titu tion al kno wle dge
that evo luti ona ry eco nom ists ove rloo k in exp lain ing how ind ust rial tran sfo rma tion occurs.

Furthermore, it raises the que stio n of the ext ent to wh ich inst itut ion s, as hum an
constructions, can ulti ma tely bre ak free from acc ept ed his tori cal /cu ltur al way s of see ing the
world (see Cha pte r 1; see bel ow ). In this con tex t, the que stio n of wh eth er the con ven tion al
corporate mo del of bus ine ss is 'fitt er' for sur viv al tha n the gam e-p lay ers ' rad ica l bus ine ss
model is con ting ent on the cap aci ty for new inst itut ion s not onl y to pro mo te the ir ow n
institutional rules ove r tim e but also (an d imp orta ntly ) to wit hst and dom ina nt ins titu tion al
pressure to con for m to the status quo.

Contrary to a bio log ica l acc oun t of the pro ces s of sele ctio n (see Nel son & Wi nte r, 1982), at
base 'sel ect ion ' can be und ers too d as a pol itic al con test ove r the effi cac y and ow ner shi p of
discourse. The se dat a hav e dem ons trat ed how new mo del s can face pol itic al threats to the ir

142
Loasby (1999) infers the difficulty entrepreneurs face in attempting to mak e their models affect the
institutional environment: 'mo st imaginative conceptions which succ eed are substantially cha nge d along the
way ... selection is mainly rejection, but .. . it sometimes takes the form of adaptation and rede sign , leading to
another set of trials, whi ch may result in further adaptation, or eventual reje ctio n'. Loa sby 's poin t is that
innovations will fail to pen etra te the broa der institutional env irom nen t more than they will succ eed outright.
In other words the norm is for institutions to remain intact and for innovations to adapt.
- 236 -
 survival from the institutions that emerge to support their growth. The inte gra tion of pow er
dynamics into an analysis of the process of selection in this section leads to a more nuanced
and complex account of the evolutionary process as dependent on the organi sational design
of institutional knowledge relationships (as pow er relationships), which prescriptions of
' disagreement' or ' democracy ' do not get at (see for example Pop per, 1963 ; Loa sby , 1999).
This point is significant: how pow er relationships are organised, who designs them, and
who governs their evolution, are issues that pla y a defining role in determining the direction
and pace of change. Indeed, through Braithwaite ' s (forthcoming) lens of defiance we see
how resistors exploit the design of new institutions in ways that safeguard and perpetuate
dominant ideology and so frustrate the process of change. Tha t is, more needs to be said of
the necessary conditions for democracy to prevail bot h over time, and in a genuine - non-
symbolic - manner. The following sections examine such conditions through an
examination of how game-players and the bro ade r mo vem ent navigate and respond to the
conservative political trajectory that frequently occurs in the evolutionary process (see
Chapter 6).

Go verning 'ma rket transformation ': deliberative networks and the 'people 's science '
According to Gaventa (1993) , when 'the peo ple ' become disempowered within and by
dominant institutions, they nevertheless possess the collective pow er ('po we r with ') to
create their own discourse , of developing their ow n bod y of knowledge. As he proposes:
A ... strategy evolves as the powerless develop, create , and systematise their ow n
knowledge , and beg in to define their own science.

The idea here is that in the face of dominant institutions, pow er resides in the collective ' s
capacity to create and ow n new governance institutions, and within them, systematise their
143
own knowledge system (Gaventa, 2006a: 26) . Inherently, and as the abo ve has
established, such an achiev ement involves collective deliberation and decision-m aking, and
an institutional structure which perpetuates this dialogic process over time to evolve
knowledge and action (see Rah ma n, 1991 ). Ho w institution al structures supporting the
'people 's science ' are designed to evade capture becomes a pertinent factor in the analysis

143
Similar to Gaventa 's notion of the 'peo ple' s scie nce ' is O'M alle y's (1996: 313) concept of 'ind igen ous
governa nce ', which locates governance 'in the everyday, voluntary interactions or commonalities of interest
of. . .individuals ' (see Chapter 1).
- 237 -
if new institutions, how eve r dem ocr atic or del ibe rati ve the y orig ina lly inte nd to be, can
ultimately rein forc e stru ctu red pow er rela tion s (see Gav ent a, 200 6a) . For this rea son ,
deliberative dem ocr atic theorists hav e ten ded to con cen trat e on pri nci ples for des ign ing
power rela tion ship s suc h as equ ity bet wee n par tici pan ts, equ al spe aki ng time, and
participation in dec isio n-m aki ng (see for exa mp le Par kin son & Roc he, 200 4). Ye t this
focus bec om es ina deq uat e for aid ing an und ers tan din g of how acto rs wil l or mig ht res pon d
when, despite the app lica tion of des ign prin cip les, stru ctu red pow er rela tion s res urf ace as
those institutions evolve.

Regulatory and org ani sati ona l the oris ts off er initial insight. For Ha yek (19 60) , a wel l-
known the oris t of kno wle dge gov ern anc e in ma rke ts, the abu nda nt and diff use dis trib utio n
of hum an kno wle dge wit hin com ple x soc ial sys tem s pos ses ses its ow n my ster iou s
('sp ont ane ous ') cap aci ty for syn the sis, a pro ces s wh ich cen tral ised ins titu tion al con trol and
organisation onl y frustrates. Rat her tha n spo nta neo us, reg ula tory sch ola rs of 'ne two rke d'
and 'no dal ' gov ern anc e sho w tha t gov ern anc e is in fact pur pos ive ly pro duc ed thro ugh
multiple nod es in dense net wo rk con figu rati ons (see Bur ris et al., 200 5; She arin g & Wo od,
2003; Bra ithw aite , 2004). Fro m an org ani sati ona l per spe ctiv e, like Hay ek, Ach rol and
Kotler (1999) obs erv e tha t the 'ne two rk org ani sati on' is in fact sup erio r to hie rarc hy and
centralisation for gov ern ing dis per sed kno wle dge :
The net wo rk org ani sati on is ... a sup erio r lea rnin g org ani sati on ... [com par ed with]
hie rarc hy [which] cre ates stro ng ties wit hin and am ong fun ctio nal units. Str ong ties
cau se me mb ers to thin k and act alike, and thu s, info rma tion tha t flows in the sys tem
bec om es larg ely red und ant ove r time. In con tras t, net wo rks cre ate den se but we ak
ties wit h me mb ers wit h diff ere nt functions, inte res ts and kno wle dge bas es. Eac h
link tran smi ts new and diff ere nt info rma tion , and for the net wo rk as a wh ole , this
me ans sup erio r kno wle dge ass imi lati on (Ac hro l & Ko tler , 1999: 147).

The key ide a her e is tha t the dec ent rali sed and net wo rke d gov ern anc e of kno wle dge is
superior to hie rarc hy pre cise ly bec aus e it lev els pow er rela tion shi ps am ong nod es or
participants vis-a-vis kno wle dge cre atio n and its use. Tha t is to say tha t new info rma tion is
produced and sha red thro ugh out the net wo rk and exp loit ed for the pur pos e of con tinu ed
evolution, not con cen trat ed and con trol led by a sing le ins titu tion or elite gro up to exe rt
'po wer ove r'. The net wo rk org ani sati ona l stru ctu re tha t Ach rol and Ko tler des crib e refl ects
the distinct ope rati on of pow er in net wo rke d kno wle dge gov ern anc e - the re is no sou rce of
authority or hie rarc hic al org ani sati on but ins tea d nod es tha t coo rdin ate and facilitate
- 238 -
infor mati on flows. Netw orke d know ledge gove rnan ce is colle ctive know ledge gove rnan ce.
Philo soph icall y, these ideas on netw orke d and noda lly-c oord inated gove rnan ce reson ate
with delib erati ve/po pula r demo cracy wher ein colle ctive know ledge is pool ed and used in
ways that bene fit the collective. As Cham bers describes:
From plann ing, issui ng orders, trans ferrin g techn olog y and supe rvisi ng, they shift to
conv ening , facilitating, searc hing for what peop le need , and supp ortin g. From
being teach ers they beco me facilitators of learning. They seek out the poor er and
weak er, bring them toget her, and enab le them to cond uct their own appr aisal and
analysis, and take their own action. The domi nant uppe rs 'hand over the stick ', sit
down, listen and them selve s learn (cite d in Gave nta & Corn wall, 2006 : 123).

The polit ical emph asis on the majo rity in delib erati ve gove rnan ce is analo gous to the abov e
regu lator y ideas that emph asise both the shift from the 'cent re' to the cons titue nt parts of
the whol e syste m in the owne rship and prod uctio n of new know ledge , and its distin ctly
non- hiera rchic al design. Insti tutio nally , this orga nisat ional shift redef ines powe r: the
horiz ontal prod uctio n of know ledge reall ocate s and redef ines powe r as a colle ctive ly
44
prod uced and owne d resou rce 1 . As Gave nta (1993: 38) sugg ests, 'pop ular prod uctio n and
recov ery of.. .kno wled ge is ... a mean s of gaini ng stren gth'. Thes e ideas on the desig n of
colle ctive gove rnan ce as deliberative and netw orke d offer insig ht in this secti on, whic h
exam ines the desig n of instit ution al structures that actors use as a tool for empo werm ent to
force the pace of change; indee d, these spac es beco me 'a resou rce for chall engin g the
hege mon y of the domi nant ideas ' (Gav enta, 1993 ). It illum inate s the role of orga nised
delib erati ve netw orks in settin g up the preco nditi ons for new, coun terva iling selec tion-
press ures that force chan ge on the exter nal mark et envir onme nt.

145
IFAT's Institutional Governance
Toge ther with the other 290 Fair Trad e Orga nisat ions (FTO s) that exist in 67 coun tries, the
fair trade game -play ers (see Chap ter 7) form a globa l netw ork of tradi ng orga nisat ions
repre sente d by the Inter natio nal Fair Trad e Asso ciati on (IFAT). IFAT 's miss ion is to
'imp rove the livel ihoo ds and well- being of disad vanta ged prod ucers by linki ng and
prom oting Fair Trad e Orga nisat ions, and spea king out for great er justi ce in worl d trade '

144
This idea cones ponds with the notion of social capital as a collective good; social capital is not the
possession of an individual nor is it an individual trait. However social capital is of benefit to individuals (see
Putnam, 2000; Lin, 2001; Szreter, 2001).
145
A brief version ofIFA T's institutional structure was presented in Chapter 3.
- 239 -
(IFAT, 2006a). IF AT was estab lishe d in 1989 to bring toget her exist ing fair trade netw orks
and FTO s arou nd the worl d, and more signi fican tly, to foste r stron ger repre senta tion and
leadership from Sout hern prod ucer orga nisat ions in this glob al netw ork. IF AT' s three main
areas of work inclu de deve lopin g the mark et for fair trade, build ing trust in fair trade
(through the FTO Mon itorin g Syste m), and advo cacy (spea king out for great er justi ce in
world trade). In so doing, IF AT has playe d a cruci al role in nurtu ring the deve lopm ent of,
and conn ectio ns betw een, FTO s that do not have FLO certi ficat ion (see Nich olls & Opal,
2005). This work has been inval uable for incre asing marg inali sed smal l-sca le prod ucer s'
power in the market: by orga nisin g smal l-sca le prod ucers into coop erati ves, the viabi lity of
cooperative busin ess struc tures is main taine d and the struc tural atom isatio n and socia l
dislocation they expe rienc e is allev iated (ibid., 2005). IF AT has also supp orted the
deve lopm ent and capa city- build ing of Sout hern regio nal and natio nal prod ucer groups.

To date, the fair trade mov emen t has been Nort hern -cent ric in its strate gic deve lopm ent and
lacked Sout hern parti cipat ion and influ ence (see Nich olls & Opal , 2005: 253). In this
context, IF AT' s orga nisat ional prero gativ e to stren gthen prod ucer voice s and owne rship in
the instit ution al gove rnan ce of fair trade has been a defin ing and prog ressi ve feature of the
institution (Dalvai, Apri l 13, 2005 , perso nal comm unica tion; see also Nich olls & Opal ,
2005: 253). Prod ucer- respo nden ts desc ribed IFAT as a 'stro ng ally' for farm ers and that
'beca use of the stron g impa ct of the Sout h in [IF AT' s] appr oach , [IF AT] is not only
flexible in its appr oach but also has a stron g attac hmen t to the caus e of the Sout h'
(Van derH off Boer sma, Janu ary 7, 2006 , perso nal comm unica tion) . By contr ast, FLO has
main taine d a Nort hern persp ectiv e and impl emen tatio n of fair trade (Den aux, Nove mber
25, 2004). Caro l Will s, form er Exec utive Dire ctor of IFAT , conv eyed IFAT 's prod ucer-
oriented instit ution al outlo ok in her comm ent that 'IF AT will neve r agree to some thing
[with FLO] that it [IF AT] belie ves will let down the smal l prod ucer ' ( cited in Nich olls &
Opal, 2005).

- 240 -
 .... Internation al
...
Sub-commit tees Working group s
I """ ~

I
A~ Secretariat
(4 staff+ volunteers)

•
Executive Committee
(I regional represen tative from 5 regions: Latin America,
Africa, Asia, Europe, North America & Pacific Rim)

I
•
General Assembly
I
Global
Level
_.j L A~
--------- --------- ---- --------- --------- -------- --------- --------- --------- -----

Regional
Level
National & Regional National & Regional National & Regional (Asia, Latin
Platforms Platforms Platforms America,
(Executive Council) (Executive Council) (Executive Council)
Africa,
• •
I • Europe,
Pacific Rim
Associates Member Organisatio ns Associates (Individuals ) &Nth
(Organisatio ns)
America)

Diagram 8.2: IFAT Governance Structure.

By contrast with the hierarchi cal and centralise d organisat ion of FLO (see Chapter 6),
IFAT's institutio nal governan ce structure reflects its South-ce ntric outlook (see Diagram
8.2). IFAT's structure has sought to reflect 'the networke d nature of the fair trade
movemen t and operation s with a small Secretari at. .. and a number of sub-Com mittees and
international working groups' (IF AT, 2003: 7). This democrat ic organisat ion comprise s
three key groups, each of which contribut es to the overall networke d structure and its
functions. The first group is IF AT' s members hip from five regions (Asia, Latin America,
146
Africa, Europe, North America and the Pacific Rim) . These regional groups occupy the
147
lower half of Diagram 8.2 . Two thirds of the IFAT members hip is comprise d of
Southern members from Asia, the Middle East, Africa and South America. IF AT members
in Asia, Africa and Latin America have establish ed regional platforms (the Asia Fair Trade

146
IFAT's membership includes 'members' (FTOs, fair trade networks and fair trade support organisations) ,
'associates' (donor organisations and national/international agencies that support trade justice efforts),
'individual associates' (scholars, writers and the general public who have an interest in and intention to
promote fair trade) and ' honorary members' (individuals of notable service to humanity, society or the fair
trade movement specifically). Only IFAT ' members' have voting and speaking rights at IFAT AGMs.
Whether producer cooperatives and associations, export marketing companies , importers, retailers,
national/regional fair trade networks or financial institutions, all share a commitment to Fair Trade principles
and IFAT's mission as part of their formal membership of the global network (!FAT, 2006h).
147
Due to space constraints, this diagram reflects only 3 of these network platforms, and collapses within
them national platforms (see below). Local associations and members feed into and are part of both national
and regional networks.
- 241 -
Forum (2001), the Cooperative for Fair Trade in Africa (COFTA) (2005), the Associacion
Latino Americana de Commercio Justo (2006) and soon, Europe (Wills, February 26, 2007,
personal communication). At present, regional networks are autonomous bodies with full
control of their decision-making in relation to regional activities such as networking,
market access, promotion of intra-trade between IF AT members, fundraising, advocacy,
148
capacity-building and promotion of membership (IF AT, 2006e) . The lower half of the
diagram also includes national network platforms, which have developed rapidly and exist
in most countries in which IFAT has members, including ECOTA Fair Trade Forum in
Bangladesh, Fair Trade Group Nepal, Associated Partners for Fair Trade Philippines, Fair
Trade Forum India and Kenya Federation for Alternative Trade (KEFAT). Situated at the
base of the diagram are local level organisations, individuals and FTOs that participate in
149
both national and regional platforms . In order to emphasise this networked governance
structure which spans micro local networks feeding into national, regional and international
network connections, IF AT aims in coming years to further 'support its members to create
regional forums in order to boost cooperation and collaboration in each region' as well as to
'continue to encourage the creation of more national networks ' (IFAT, 2003: 7-10).

These regional and national developments illustrate IF AT' s deliberate decentralisation of

its institutional structure in order to strengthen regional - rather than central/'N orthern' -
bases of the fair trade movement (IFAT, 2003). One respondent described for example that
IF AT had undergone a 'process of regionalising much more to build up regional platforms
in order to decentralise control to these groups' (Deighton, April 20, 2006, personal
communication). This process has occurred most strongly in the South rather than in the

148
At the present time of writing, the Memorand um of Agreement between the IFAT Secretariat and the
formal regional networks is under review (Wills, February 26, 2007, personal communication; see also IFAT,
2006e).
149
Formal sub-c01m11ittees are appointed by the Executive Committee to further specific projects of
impmiance to the entire membership and make reco1mnendations to the Executive Committee: advocacy,
finance, market access and developme nt, standards and monitoring, and membership accreditation (IFAT,
2003: 8). IFAT members with knowledge in these particular areas are invited to join sub-co1mnittees, their
'expertise' deployed as a collective resource to benefit the broader membership (IF AT, 2007a: 2). The
international working groups likewise are voluntary groups of IFAT members who work together on relevant
projects through long-distance phone and email communication. They advance specific projects in market
development, advocacy, and strengthening the Monitoring System to build credibility for Fair Trade (IFAT,
2007a). IFAT members' level of volunteering is very high and an organisational strength, and the means by
which much ofIFAT's operations are conducted (IFAT, 2006f).

- 242 -
North in response to the growing proportion of IF AT' s Southern members, involving the
establishment of Southern secretariats and their networks (Shimizu-Larenas, June 9, 2006,
personal communication). These decentralised bases have enabled enhanced functioning in
each region since then; for instance, regional issues affecting producer groups can be
responded to directly and more accurately from these local platforms (Shimizu-Larenas,
June 9, 2006, personal communication). IF AT is seeking to support this organic
development based on the belief that 'the development of the regions will strengthen IF AT
globally and make it more effective in pursuing its goals' (IFAT, 2006e: 2).

Given their predominance amongst IF AT members, Southern region representatives make

up the majority of IFAT's Executive Committee (each of whom are members of their
150
regional Boards or Councils) . The Executive Committee is the second key group in
IF AT. It is a voluntary Committee comprised of five members elected by, and from
among, the IFAT membership to lead IFAT. Convening two to three times per year (Wills,
February 26, 2007, personal communication), the Executive Committee develops and
151
implements the directive agreed by the IF AT membership at each biennial AGM ; makes
152
policy; and decides on membership applications. IFAT's Secretariat is the third group .

The Secretariat is a contact point for members worldwide, facilitating and coordinating
members' initiatives and activities, and uses its position at the centre of a global network to
make links between, and disseminate information to, individuals, groups and networks
153
(IFAT, 2006c) .

150
This provides the formal link between international and regional nodes (Wills, February 26, 2007, personal
co1mmmication).
151
The election ofIFAT Executive Committee representatives also takes place at the AGM.
152
The Executive C01mnittee appoints the Executive Director of the IFAT Secretariat, who appoints any other
central office staff recruited to cany out IF AT business. At the time of writing, the Executive Director
combines the role of general secretary with that of Chief Finance Officer and fund-raiser (Wills, February 26,
2007, personal communication). The Secretariat employs four office staff based in Culemborg (the
Netherlands), and more broadly, three staff and four formal volunteers.
153
IFAT promotes infonnation sharing and relationship-building. For instance, IFAT publishes Trade Post, a
quarterly member newsletter; an annual database of information on members (the IF AT Member Directory); a
fortnightly member e-news updates; and maintains a section of its website for members' information. As the
organisation promotes, 'IFAT is about building partnerships within the Fair Trade movement. We encourage
our members to get into the habit of regular c01mnunication - share your news, your stories, your
experience ... ' (IFAT, 2007a).
- 243 -
 In distinct con tras t to FL O' s inst itut ion al form , the se dat a sho w that IF AT has esta blis hed
institutional arra nge me nts in a hor izo nta l net wo rke d stru ctu re for mu tua l gov ern anc e
between pro duc ers and traders ove r glo bal fair trade. IF AT ' s gov ern anc e is stru ctu red
around inc lusi ve spa ces tha t tie tog eth er a series of inte rde pen den t net wo rks . The dat a
suggest tha t the des ign of this net wo rke d inst itut ion al stru ctu re is hig hly del ibe rati ve and
porous, wit h ma ny voi ces and ide as giv en a hea ring thro ugh IF AT ' s mu ltip le nod es and
networks. The re are num ero us layers and nod es of inte rco nne cte d par tici pat ion and
influence for actors in IF AT ' s gov ern anc e stru ctu re at local, nat ion al, reg ion al and
international levels. As one exa mp le, bie nni al inte rna tion al and reg ion al con fere nce s are
meeting pla ces for net wo rkin g and deb ate for IF AT me mb ers wh o per son ally me et wit h
one ano the r and disc uss issues of con cer n. The y are (for ma l) ven ues 'for deb ates ,
154
discussions, sem ina rs and Fai r Tra de fair s' (IF AT , 200 7a: 1-2) . Mo reo ver , the
membership (the ma jori ty) controls and det erm ine s IF A T's ins titu tion al dire ctio n and ma jor
decision-making thro ugh the AG M.

Diagram 8 .2 above, sho win g IF AT ' s stru ctu ral and pro ces sua l em pha sis on the
participation, ow ner shi p and dec isio n-m aki ng pow er of pro duc ers , can also be see n to ma rk
a genuine shift in the gov ern anc e of kno wle dge and its pro duc tion . Acc ord ing to Gav ent a
(1993: 31), any atte mp t to gen uin ely alte r sta tus quo pow er rela tion s in the pos t-in dus tria l
complex inv olv es a shif t in not onl y the con ten t of pre vai ling kno wle dge , but also by and
for wh om it is pro duc ed. The dire ctio n of the arro ws ind ica tes the flow of
kno wle dge /inf orm atio n from me mb er org ani sati ons /ass oci ate s tha t cre ate a for war d driv ing
force for the Sec reta riat and Exe cut ive Com mit tee . Thi s sho ws how pro duc ers ' kno wle dge
is priv ileg ed and IF AT ' s disc our se is con stru cte d pre dom ina ntly by the m and to serv e
them. Indeed, the me mb ers hip 's col lect ive dis cou rse dire cts and pro pel s the inst itut ion .
These dec ent rali sed inp uts of info rma tion can thu s be tran slat ed as diff use inp uts of pow er
that, collectively, pro duc e 'po we r wit h' to effe ct change.

154
At international conferences (held in odd-numbered years), the entire international membership ofIF AT is
invited, and the AGM is held for full members of IF AT to take decisions on key issues and collectively decide
future priorities and direction for IF AT. The regional conferences, in even-numbered years, take place in
Europe, Asia, Africa, Latin America and North America/Pacific Rim , where members in those regions meet
to discuss and debate issues of especial regional relevance as well as issues raised for discussion and feedback
by working groups and sub-committees (IFAT, 2007a).

- 244 -
 Importantly, these nodes of information and action are illustrati ve examples of Ga ve nta 's
(2006a) ide a of 'cr ea ted ' spaces, or Co rnw all 's (2002) 'or ga nic sp ac es' , which are 'cl aim ed
by less powerful actors' and 'cr ea ted more autonomously by them '. Fo r Cornwall (2002),
these nodes 'em erg e out of sets of co mm on concerns or identifications' and 'co ns ist of
spaces in wh ich like-minded pe op le joi n together in co mm on pu rsu its '. IF AT can be seen
to have emerged, grown and be co me an institution built on ma ny spaces or nodes created
autonomously by like-minded actors with similar concerns and values. This institutional
design places structural value on the knowledge of this community. De sp ite their be ing in a
majority in FL O' s 'in vit ed sp ac es' of participation (i.e. the Stakeholder Forum), producers '
actual influence in FL O' s formal - and informal - decision-making procedures and fora is
pre ve nte d (see above; see Ch ap ter 6).

Fr om a 'po we r ov er' perspective, in co mp lex systems an authoritative , controlling actor is

needed in ord er to create and maintain political order (see for ex am ple Hobbes, 1991;
W oo d & Shearing, 2007: 8-9). Fr om this view, the decentralisation of po we r and control
causes fragmentation and a loss of control. The da ta here throw up a contradiction wi th this
vie w of po we r in governance: IF AT ' s process of decentralisation has not led to its
unravelling or a reversion to top -do wn 'co ntr ol' mechanisms. On the contrary, IF AT is
gaining strength through increasing decentralisation. Th e data above sh ow for ex am ple that
the IF AT Secretariat does no t 'co ntr ol' the network, bu t sim ply facilitates and coordinates
the activity and learning of producers and serves the needs of this constituency. Similarly,
the Executive Committee functions to im ple me nt the directive that the me mb ers hip
collectively defines at AGMs. These data suggest that in deliberative networks of
governance, governing po we r resides with 'th e pe op le' (i.e. the membership), no t an
authoritative central node or actor; the majority is ha rne sse d as a resource in IFAT. It
supports Ch am be rs' emphasis on the political ph ilo so ph y to increase the po we r of the
majority through a decentralised system of knowledge governance. Moreover, these data
suggest that IF AT 's organisational inclination is to foster a 'po sit ive fre ed om ' (Berlin,
19 5 8) among producers and pro du ce r networks in the sense that IF AT provides groups and
individuals the 'po we r to' do ne w things. By bu ild ing ne w capacities among em erg en t
nodes to network, lobby, organise, gain market access and ne w skills, IF AT generates ne w
po we r flows and 'po sit ive fre ed om ' (see Berlin, 1958).

- 245 -
 In the ab sen ce of an au tho rit ari an no de tha t ho lds 'po we r ov er' IF AT , the wa y in wh ich the
IF AT structure does ma int ain co he sio n offers em pir ica l ins igh t into the mi cro -pr oc ess es of,
and institutional de sig n for, co ord ina tin g an d em po we rin g ho riz on tal ly- dis tri bu ted po we r
(knowledge). As W ills suggested:
It' s be ing in an int ern ati on al vo lun tar y me mb ers hip associat10n of lik e-m ind ed
org an isa tio ns an d ha vin g op po rtu nit ies to me et an d sh are ex pe rie nc es an d lea rn
from each other, to lea rn from sp ec ial wo rks ho ps tha t are pu t on all ov er the wo rld
all the time, to be pa rt of yo ur na tio na l an d reg ion al set up , to me et pe op le fro m
oth er pa rts of the wo rld .. .It 's ve ry dif fic ult to say wh at ne tw ork s rea lly bri ng , bu t I
thi nk the va lue of ne tw ork s has be en gro ssl y un de r-e sti ma ted by a lot of pe op le.
W e can be in tou ch wi th ea ch oth er in a ma tte r of sec on ds rou nd the world; it's ve ry
sel f-s up po rti ve , sel f-s us tai nin g an d pe op le he lp ea ch oth er ou t in all kin ds of
situations - pro du ce rs an d traders ( cit ed in Ni ch oll s & Op al, 20 05 : 254).

... the ne tw ork s an d ne tw ork ing ho ld the mo ve me nt together. Pe op le are so tie d up

in the ir ow n en ter pri ses , wi th the ir ow n int ern al org an isa tio na l ch all en ge s, tha t the
fair tra de ne tw ork s off er a bre ath ing sp ac e wh ere pe op le ca n go to tal k ab ou t the
issues tha t co nc ern the m wi th lik em ind ed friends an d wo rk ou t ho w to mo ve
for wa rd tog eth er (N ov em be r 4, 20 05 , pe rso na l co mm un ica tio n).

These co mm en ts off er ins igh t int o IF AT 's co he siv en ess . W ill s viv idl y de scr ibe s ne tw ork s
of deliberation that 'ho ld the mo ve me nt tog eth er' an d ma ke for a 'se lf- su sta ini ng ' sy ste m.
Deliberative ne tw ork ing - thr ou gh ph ys ica l an d vir tua l co nv ers ati on , dis cu ssi on an d
deliberation - is the lif eb loo d of IF AT ' s go ve rna nc e str uc tur e an d acts as so cia l glue.
Coordination thu s be co me s a co ns tan t, hig hly de lib era tiv e pro ce ss of ne tw ork ing .
Deliberative ne tw ork ing all ow s for a typ e of de lib era tiv e co nv ers ati on ab ou t va lue s
(' .. .lik e-m ind ed friends wo rk ou t ho w to mo ve for wa rd tog eth er' ). Ind ee d, no t on ly are
deliberative ne tw ork s sites of dis cu ssi on , de ba te an d co lle cti ve pro ble m- so lvi ng ov er
diverse issues tha t pro du ce no ve lty in inf orm ati on flows ('p eo ple are so tie d up ... wi th the ir
own int ern al org an isa tio na l ch all en ge s') , bu t the y are also sp ac es in wh ich me mb ers ' sen se
of collective pu rpo se in fair tra de is rea ffi rm ed . Th is ref lec ts the va lue s-o rie nte d na tur e of
deliberative go ve rna nc e (se e Dz ur & Ol so n, 20 04 ) wh ich , in ne tw ork ed structures, bin ds
the overall ne tw ork . Th ese da ta hig hli gh t tha t de lib era tiv e ne tw ork s pro du ce 'po we r wi th' ,
not 'po we r ov er' . Ad dit ion all y, the da ta po int to the ce ntr al rol e tha t de lib era tiv e ne tw ork s
play in go ve rni ng the de ve lop me nt an d ev olu tio n of an alt ern ati ve ma jor ity -kn ow led ge
system.

- 24 6 -
IFA T's Mo del
It is through this unique deliberative structure that the fair trade mo vem ent has developed
and is nurturing the growth of an alternative bod y of knowledge - its collective knowledge.
At an ideological level, the rapid growth of FLO certified products in mainstream markets,
and FLO ' s growing institutional domination of the mo vem ent, has created a hostile
environment for the IFAT com mu nity 's shared knowledge. As FTOs and game-players
articulated:
I emphasise [to] FLO that they [should] recognise that Fai r Trade
Organisations ... have a different status [from MN Cs within FL O's system], that they
[Fair Trade Organisations] are not jus t another big company but are doing
something different. I don 't want Fair Trade Organisations to have the same status
in FLO as Chiquita - at the mo me nt it is like that ... FLO still does not recognise
this. Especially the Board [of FLO], they do not care about it (Dalvai, April 13,
2005, personal communication).

IF AT tried several times in the pas t to get the FLO Bo ard to recognise IF AT
members - FTOs - as different from conventional traders. Eac h time we 've heard
no response. No t even 'no '. Just nothing. FLO doe sn't really view IF AT as relevant
(Deighton , April 20, 2006, personal communication).

... Equal Exchange is one of the leading [fair trade] organisations pushing bac k
against Tra nsf air' s direction - which they have really embraced - this notion of
corporation reform - which has som ew hat aba ndo ned the Fair Trade
Organisations ... (Rosenthal, July 6, 2005, personal communication).

It's the added value and pow er that fair trade brings to producers - bey ond just
getting a better price - that is und er threat. The certification of huge privately
owned plantations (as opposed to small farmers' co-ops) for new products, the
recent introduction of a substantial licence fee charged to producers wanting to
qualify for the mark, the alleged squeezing of non-accredited producers (who
perhaps can no longer afford the license fee) out of potential marketplaces - all
these dev elopments raise questions as to whether fair trade 's mo ve into the
mains tream is still meeting poo r pro duc ers ' aspirations (Tucker, 2006).

... We are the centres of excellence for trading , and our leadership is being
challenged. Fair trade is currently being redefined at the product level, displacing
the definition at the organi sational level, so the FTO Ma rk needs to be strengthened
(IF AT, 2006i: 13).

These comments viv idly illu stra te Ga ven ta's (1993: 37-38) observation that the legitimacy
of alternative discourses developed by those affected by ideolo gy will 'con stan tly ... [be]
devalued and suppre sse d by the dominant scie nce '. Un til the 'po we rles s' bui ld their own
- 247 -
 institutions and the 'pe op le' s sci en ce ' (a 'kn ow led ge in pra cti ce ' that is not written down
but is collectively shared), genuine influence in governance remains elusive. In this sense,
the 'pe op le' s sci en ce ' is a source of 'po we r wi th' . The development of the 'pe op le' s
science' as a source of countervailing po we r is illustrated empirically. In 2004, the IF AT
community sought to strengthen the credibility and value of fair trade and FTOs with the
outside world by launching the IFAT Fair Trade Organisational (FTO) M ark (see Figure
8.1):

I
~>
~

FA IR
TR AD E
0RGANII-Z.A110N

Figure 8.1: IF AT Fair Trade Organisational (FTO) Mark.

The development of the FTO M ark at this time acknowledges the desire for, and ne ed
among, FTOs to differentiate the unique value of their business models from conventional
traders selling FLO certified Fairtrade products and to gain international recognition of
their value (Dalvai, April 13, 2005, personal communication). The FT O Mo nit ori ng
system provides a certification ma rk for 100 pe r cent Fair Tr ad e Organisations,
organisations whose core function is fair trade 155
. Th e FT O M ark represents a symbol of
FTOs' collective knowledge of a wa y of doing business and trade that produces
developmental outcomes. As one respondent commented:
So it's not like Carrefour, or no w Chiquita, or like McDonalds, or like Starbucks,
which have some of the ir products wh ich are Fairtrade ... we as Fa ir Trade
Organisations have 100 pe r cent of ou r business as fair trade ... W e are no t jus t
selling some Fairtrade products, there are ma ny responsibilities and activities we do
in supporting a pro du ce r organisation. Th ere are ma ny pro du ce r organisations
which without us ... wo uld be ve ry insignificant an d small ... So we are pa rt of the

155
The FTO Mark is a monitoring system for companies/organisations, not products (IFAT , 2006j). As such,
the FTO mark can be used to promote the organisation's Fair Trade status in marketing activities and on
organisational resources such as letterheads, posters, websites and facilities , but not on products. While many
FTOs produce products that do carry the Fairtrade label, these organisations also produce a wide range of
other fair trade goods for which FLO does not have standards, handcrafts being one example (IFAT , 2006j).
As a further example, some FTOs sell non-certified handcrafts as well as products for which Fairtrade product
standards exist but do not seek FLO certification for this latter group of products (such as CTM Altromercato
in Italy). This latter group of products has nonetheless been produced and traded according to fair trade
principles and terms, which is signified by the organisation ' s FTO certification status.
- 248 -
 fair trade family, tog eth er wi th FL O, bu t there is so me thi ng mo re [that we do]. If
yo u loo k at the fair trade de fin itio n 'fa ir trade is ... ', an d then 'fa ir trade
organisations are su pp ort ing pro du ce rs, ca mp aig nin g to ch an ge int ern ati on al rules,
and, and, an d'. Th is is no t wh at the no rm al traders - all the FL O co mm erc ial
licensees - do, the y are no t do ing this (Dalvai, Ap ril 13, 2005, pe rso na l
co mm un ica tio n).

Da lva i' s co mm en t sh ow s that FT Os ha ve a un iqu e ca pa cit y to tra de in a wa y tha t pro du ce s

organisational de ve lop me nta l an d ne w hu ma n ca pa cit ies ('th ere are ma ny activities tha t we
do in su pp ort ing a pro du ce r org an isa tio n ... . wh ich wi tho ut us wo uld be ve ry ins ign ifi ca nt
an d sm all '). Da lva i de scr ibe s he re a skill an d kn ow led ge wh ich co nv en tio na l traders
inv olv ed in FL O' s sy ste m do no t po sse ss an d ha ve no int ere st or ins titu tio na l inc en tiv e
wi thi n FL O' s ins titu tio na l sy ste m to em ula te ('W e are no t jus t sel lin g so me Fa irt rad e
pro du cts ') (see Ch ap ter 6). As Da lva i em ph asi ses , FT Os pla y a ve ry dif fer en t role in fair
trade ma rke ts that ch all en ge s the ins titu tio na l status quo su pp ort ed by FL O an d
co nv en tio na l M NC s ('T his is no t wh at the no rm al traders - all the FL O co mm erc ial
licensees - do, the y are no t do ing thi s') . FL O' s rea sse rti on of the ins titu tio na l rules by
wh ich co nv en tio na l M NC s pla y creates a disincentive to ch an ge (see Ch ap ter 2 an d 6).

Gi ve n their un iqu e kn ow led ge an d skill in pro du cin g de ve lop me nta l ou tco me s thr ou gh
bu sin ess , the FT O bu sin ess mo de l - sy mb oli sed by the FT O M ark - carries ma rke t value.
An im po rta nt asp ec t of this mo de l tha t co ntr ast s FL O' s ce rti fic ati on sy ste m is its
156
participatory nature , wh ich inv olv es a thr ee -ti ere d pro ce ss for gu ara nte ein g qu ali ty ba sed
on self-assessment, mu tua l rev iew (se co nd -pa rty co nfo rm ity ass ess me nt) an d a sam ple
ex ter na l ve rif ica tio n (se e Di ag ram 8.3):

156
Par tici pat ory mo nit ori ng foc use s on inv olv ing the 'lea st pow erf ul, vis ibl e and ass ert ive act ors in
eva lua tio n'. It em pha sis es a pro ces s of lea rni ng ( at ind ivi dua l, org ani sat ion al and ins titu tio nal levels) in
wh ich sel f-e val uat ion ena ble s ind ivi dua ls to ass ess and fur the r the ir ow n org ani sat ion al cap aci ties , a pro ces s
thr oug h wh ich ind ivi dua l and col lec tiv e lea rni ng pro duc es a res pon siv ene ss to the nee ds and con tex tua l
spe cifi citi es of ind ivi dua ls' cir cum sta nce s (Es tre lla & Ga ven ta, 199 7). It is for the se num ero us ben efi ts vis-a.-
vis dev elo pm ent tha t pai iici pat ory mo nit ori ng and eva lua tio n has bec om e inc rea sin gly pop ula r as an
alte rna tiv e to a trad itio nal , ' top -do wn ' app roa ch to mo nit ori ng and ass ess me nt (Es tre lla & Ga ven ta, 199 7).
- 24 9 -
 : ·: ·: · Extemai:
Fai r Tra de Org ani sat ion · · : Ve rifi cation
(IFAT Me mb er)
r-- --- --- --- ---
...... .

Re gis tra tio n

:::~n~p:~c:ti~~: ::
.:::~ :R~:pqi1 ::
sub -co mm itte e
I
L _ _ _ _ _ _I

Re que st for add itio nal

inf orm atio n

IFAT Exec. Co mm itte e Rec01mnendation for

reg istr atio n

Diagram 8.3: IFA T Re gis tra tio n pro ces s ofF TO s.

The first level inv olv ed in the au dit of an FT O see kin g ce rti fic ati on is a Se lf- As ses sm en t
Report, wh ere by a fair tra de org an isa tio n ass ess es its pe rfo rm an ce ag ain st the sta nd ard s for
Fair Tr ad e Or ga nis ati on s (de ve lop ed in 2001 at the IF AT bie nn ial co nfe ren ce in Ta nz an ia) .
IFAT me mb ers are ob lig ed by the IF AT Co ns titu tio n to co nd uc t a Se lf- As ses sm en t Re po rt
every two years, wh ich inv olv es co ns ult ati on wi th sta ke ho lde rs, set tin g im pro ve me nt
targets, an d fee din g this inf orm ati on to IF AT (sp eci fic all y, the Re gis tra tio n Su b-
co mm itt ee ). Th e sec on d step in the au dit ing pro ce ss is a Mu tua l Re vie w (sh ow n as a
shaded bo x in Di ag ram 8.3) wh ere by an FT O sha res its Se lf- As ses sm en t Re po rt wi th its
trading pa rtn ers . This pro vid es an op po rtu nit y for the tra din g pa rtn ers to co rro bo rat e, an d
co mm en t on, the sel f-e va lua tio n co nta ine d in the Se lf- As ses sm en t Re po rt. Th ird , ex ter na l
verification of FT Os is ba sed on ran do m sel ec tio n of a pe rce nta ge of IF AT me mb ers . An
independent ex ter na l ins pe cto r assesses an d ve rif ies the Se lf- As ses sm en t pro ce du re of an
FTO to en su re the cre dib ilit y an d rel iab ilit y of the FT O' s Se lf- As ses sm en t Re po rt. Th is
external ve rif ica tio n inv olv es int erv iew ing tra din g pa rtn ers , cro ss- ch ec kin g do cu me nts an d
conducting on -si te pro ce du res /fa cil itie s (IF AT , 20 04 ) 157
. Th e IF AT Re gis tra tio n sub-
committee ov ers ees the FT O Mo nit ori ng Sy ste m pro ce ss an d pu ts for wa rd
rec om me nd ati on s for reg ist rat ion s to the Bo ard . Me mb ers aw ard ed the M ark be co me
registered FT Os wi th the en titl em en t to us e the FT O Ma rk. Or ga nis ati on s ca rry ing the
FTO Ma rk inc lud e the ga me -pl ay ers in the fair tra de mo ve me nt su ch as Ca fed ire ct, CT M
Altromercato and Di vin e Ch oc ola te Ltd. (see Ch ap ter 7).

157
An FT O seeking the FT O Ma rk certification can not app ly for cer tifi cat ion until it has bee n ope rat ing for at
least 2 years.
- 25 0 -
 This par tici pat ory gov ern anc e sys tem sho ws how the creation, jud gem ent and allo cati on of
the ma rke t val ue of a pro duc er or trad er is co- pro duc ed thro ugh 'rel atio nal ' me cha nis ms of
gov ern anc e rath er tha n a trad itio nal app roa ch tha t util ises me cha nis ms of 'au tho rity ' and
'co ntro l' (see No rma nn & Ram irez , 1993). Tra der s sup por t pro duc ers to dev elo p
org ani sati ona l cap acit ies and bus ine ss skills tha t ena ble the m to bec om e via ble bus ine ss
mo del s in the ma rke tpla ce. Mo re tha n this, bot h pro duc ers and trad ers hav e cre ate d the
FTO stan dar ds, the y assess eac h oth ers ' per for ma nce and pro gre ss, and in so doi ng are
inv olv ed in the allo cat ion of the Ma rk. In fact, a rec ent rev iew of the FT O Mo nito ring
Sys tem hig hlig hte d tha t the sys tem 's stre ngt h was bas ed on the 'de mo cra tic pro ces s
thro ugh wh ich it evo lve d'. The rev iew not ed tha t the Sys tem is gra fted ont o IFA T's
structure, itse lf 'co mp rise d of a net wo rk of me mb ers wh o kno w eac h oth er well, and are
thus able to par tici pat e in mo nito ring eac h oth er in a pee r rev iew sys tem , kee pin g cos ts
dow n' (IF AT , 200 6d: 2). Res ear ch on IFA T's Mo nito ring Sys tem also sug ges ts tha t the
adv ant age of this par tici pat ory mo del from a dev elo pm ent al per spe ctiv e is tha t it mo re
eas ily targ ets pro duc ers in gre ate st nee d, is mo re res pon siv e to mu tua lly- ide ntif ied issu es
and nee ds, and it ma xim ises the val ue retu rne d to pro duc ers by rem ovi ng the exp ens e of
ind epe nde nt lab elli ng org ani sati ons ' mo nito ring and cer tifi cat ion cos ts (Ta llon tire,
158
200 2) .

Thi s is wh at Gav ent a (19 93) call s the 'pe opl e's scie nce '. Thi s kno wle dge sys tem -
sym bol ised by the FT O Ma rk - lies in the han ds of the ma jori ty to def ine and to ben efit
from (ibi d., 1993). Inte rest ing ly, IFA T's par tici pat ory sys tem is crit icis ed for its lac k of
'str ing enc y' by com par iso n wit h FL O's mo del - FL O's 'ind epe nde nt' pro duc t cer tifi cat ion
bas ed on thir d-p arty con for mit y-a sse ssm ent (Ni cho lls & Op al, 2005: 102). At the sam e
tim e we hav e see n tha t the Nls exe rt sig nifi can t infl uen ce ove r FL O' s (typ e of) pro duc t
stan dar d- and pol icy - dev elo pm ent , pric e-se ttin g, and inc rea sin gly , the pre fere ntia l
allo cati on of the cer tifi cat ion Ma rk to large con ven tion al ma rke t pla yer s (see Cha pte r 6).
This illu min ates the pow er tha t acto rs hav e at the ir disp osa l by ow nin g the inst itut ion al

158
Chapter 3 documented FLO 's change in legal strncture which saw it split into two organisational
structures. Specifically, certification became independent and separate from the rest of the organisation for
the purpose of impartiality in monitoring and assessment. One consequence of this change, noted in Chapter
6, has been the introduction of FLO e.V. 's producer certification fees associated with independent labelling,
which has presented a significant barrier to entry for small-scale producers.
- 251 -
 process of new knowledge production. Illustrating this po we r discrepancy, FLO ' s model is
criticised by producers as a system governed by Northern actors who 'do ' Fairtrade to
producers in the South in an authoritarian and top-down manner, and who 'co ntr ol'
certification (Wills , April 29, 2005 , personal communication; Bretman, M ay 3, 2005,
personal communication; Deighton, April 20 , 2006, personal communication). Given the
power that the ownership of knowledge production confers, one respondent suggested that
IF AT ' s participatory process for developing the FTO standards and system offers an
ex ample for FLO of ho w to empower producers by developing standards on the basis of
producers ' direct involvement and decision-making (Van Beuningen, April 11 , 2005 ,
personal communication).

The data in this section offer empirical insight into the operation and organisation of a
deliberative networked governance structure through which disempowered actors have
developed a system and symbol representing their own collective 'sc ien ce '. This
development of 'po we r wi th' has potentially significant repercussions; as Gaventa (2006a:
27) describes it, gaining po we r 'in one space through ne w skills, capacity and experiences,
can be used to enter and affect other sp ac es' . This section has provided an empirical
account of the unique institutional governance structures that have supported this hu ma n
and organisational development to produce ne w sources of 'po we r wi th' . The following
sub-section shows how game-players recharge themselves through participation in
deliberative networks and mobilise this collective po we r to trigger institutional effects.
Through an analysis of ho w the game-players mobilise these alternative networked
institutions of knowledge as a means of placing ne w selection pressure on the environment,
the rest of this chapter shows ho w the ga me -pl ay ers ' 'po we r wi thi n' is recharged by the
power of the collective.

Mobilising de lib erative networks 'w ith in' an d 'without': for cin g (institutional) 'creativ e
des tru ction '
Noted elsewhere in this chapter, institutions significantly shape and determine the market
env ironment (see Ne lso n, 2001) and reflect dominant bodies of knowledge. Those of
hierarchical, centralised organisation lack receptivity to ne w information and ideas and
instead seek to preserve privileged interests and existing knowledge. In contrast ,

- 252 -
 dec ent rali sed net wo rk stru ctu res thri ve on new info rma tion ; kno wle dge flo ws are swi ft and
uni nhi bite d and lear nin g is rap id (see Ach rol & Ko tler, 199 9). Giv en the se dist inc t con tex ts
or con figu rati ons of hum an org ani sati on in wh ich kno wle dge pla ys the role of pro duc ing
stasis or rap id evo luti on and em pow erm ent res pec tive ly, net wo rks can be see n as
pot ent iall y des tab ilis ing for ma rke t equ ilib rium and the hie rarc hic al inst itut ion s tha t
acc om pan y and nur ture it (see Cas tell s, 200 0; Bra ithw aite , 200 4).

The se ide as sug ges t tha t net wo rk ent rep ren eur shi p, not jus t mo del inn ova tion , bec om es a
stra teg y for affe ctin g the dom ina nt inst itut ion al env iron me nt. The role of net wo rks in
forc ing the pac e of eco nom ic evo luti on is little exp lore d in the evo luti ona ry eco nom ic
literature. Giv en the lim ited ana lysi s of net wo rks tha t evo luti ona ry eco nom ics pro vid es of
how acto rs cau se the pol itic al uph eav al tha t und erp ins gal es of cre ativ e des truc tion , the
pur pos e of this sec tion is to sho w tha t gam e-p lay ers are not onl y ent rep ren eur s of bus ine ss
mo del s, but also lead ers of net wo rks . The gam e-p lay ers ' stra teg y of 'ne two rkin g net wo rks '
for sca le is a cas e in poi nt (see Cha pte r 5). Fol low ing on fro m the pre vio us sec tion , this
sec tion sho ws a sec ond net wo rk stra teg y for the pur pos e of ins titu tion al uph eav al: gam e-
pla yer s' par tici pat ion in and mo bili sati on of deliberative net wo rks . Thi s typ e of net wo rk
con trib ute s a rap idly evo lvin g cou nte r-k now led ge and sou rce of pow er to the pro ces s of
soc ial cha nge . As a seri es of mu ltip le and ong oin g con ver sati ons abo ut sha red val ues ,
del ibe rati ve net wo rks can not be tam ed by the dom ina nt pol itic al env iron me nt. Ind eed , the ir
alte rna tive dis cou rse is the ir col lect ive stre ngt h and uni que ide ntit y in this env iron me nt. As
wil l be see n, gam e-p lay ers lea d the se del ibe rati ve net wo rks to des tab ilis e the ma rke t
env iron me nt in wh ich status quo acto rs find the mse lve s, in so doi ng forc ing the pac e of
cha nge . Thi s ana lysi s brin gs to ligh t the role of net wo rks in the pro ces s of ind ust rial
tran sfo rma tion .

Th e pol itic al state offair trade today

Acc ord ing to fair trad e pio nee rs, the fair trad e mo vem ent is cur ren tly at a ' cro ssro ads ' and
the pio nee rs are ass ess ing wh eth er to ma ke a dec isiv e 'spl it' from FL O and the N ls
(Ro sen tha l, cite d in Ho od, Feb rua ry 22, 200 7) . Sin ce cre atin g the init ial cer tifi cat ion
sys tem , the pio nee rs hav e gon e on to bui ld suc ces siv e hig hly suc ces sfu l '10 0 per cen t fair
trad e' com pan ies and sup por t the dev elo pm ent of a larg e-s cal e inte rna tion al net wo rk of

- 253 -
FTOs (see Cha pte r 7). Yet the ma rke t they have bui lt has become populated with
conventional traders wh ose business models do not subscribe to or mim ic fair trade
principles but wh o have nonetheless gained access to the fair trade ma rke t by selling a
token amount of Fairtrade-labelled products. For the pioneers, mo vin g conventional traders
into Fairtrade is an important par t of changing the market, but as No rth (cited in Hood,
February 22, 2007) poi nte d out, 'Yo u wan t the m to get on boa rd at a hig h-b ar level, and not
at a low-bar lev el.. . Un for tun ate ly we 've seen the tokenism ... '. Importantly, the resistors
(the Nls and FLO) have encouraged this tokenistic response from dom ina nt ma rke t actors
to the fair trade market, enabling resistors to 'cas h in' on the mo del 's gro wth (see Cha pte r
6). As fair traders and observers described:
... [FLO and the Nls have] taken their eye off the bal l on some of the bro ade r goals
and [focused] solely on growth ... In so doing they have sold the label too cheap to
transnational companies ... (Earley in Hood, Feb rua ry 22, 2007).

Fair trade is a Eur ope an phenomenon. It's jus t replacing the mid dle ma n, so tha t
now middle-class NG Os can get a piece of the capitalist action. Perhaps 'fai r trad e'
is a description of the col our of their skin? (Manji, cited in Tucker, 2006).

... there are com pet ing models of social change. The re's the Fai r Tra de
Org ani sati ons ' mo del of social change wh ich is transforming wh at it means to be in
business and who you 're accountable to as a business. Tho se [companies] wo uld be
Equal Exc han ge and ma ny oth er small mis sio n-d rive n [fair trade] companies. The n
the re's the corporate refo rm mo del of social change, wh ich is Trans fair US A
signing up Starbucks to do 1 per cent of the ir coffee as Fairtrade, chipping awa y bit
by bit - but wo rkin g wit h large companies.

This political evolution bet we en resistors and game-players illuminates that causing ma rke t
transfom1ation is not straightforward. Tha t is, it is not sim ply an issue of innovating once,
or a num ber of times, in new business models. Rather, ensuring those innovations have the
cumulative political effect of annihilating dom ina nt institutions and mo del s is an ong oin g
game involving a strategy tha t goes bey ond perpetual business mo del innovation (see
Chapter 7). The data brin g this poi nt to life. To support their radical fair trade pro pos itio n
in this status quo institutional environment, the game-players have beg un to imp lem ent a
networked strategy to 'rec laim ' their leadership status, their vision of fair trade, their
'mo vem ent ' (Rosenthal, cited in Hood, February 22, 2007). This net wo rke d strategy is
empirically demonstrable in two key ways, reflected in wh at one respondent described as

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 'tw o schools of tho ugh t' am ong the IFA T/F TO com mu nity (Deighton, April 20, 2006,
personal communication).
The first is a strategy of net wo rk cooperation wit h FL O by har mo nis ing the respective
IF AT and FLO certification systems in ord er to pro tec t the fair trade ma rke t from
competing 'fai r trad e' labels that pos ses s little credibility but mu ch ma rke ting pow er 159
•

This objective is in the interests of bot h FLO and IFAT, bot h resistors and game-players.
On the one hand, FLO is see kin g legal pro tec tion of the term Fai rtra de for the pur pos e of
retaining con sum er trust in the fair trade ma rk sho uld com pet ing labels em erg e in the
ma rke t (Zonneveld, cited in Nic hol ls & Opal, 2005: 247).

Wh ile IF AT shares an interest in pre ven ting the loss of con sum er trust in the credibility and
legitimacy of fair trade, legal pro tec tion of the term wo uld sim ulta neo usl y exclude
significant num ber s of IF AT me mb ers from the fair trade ma rke t. Thi s is the counter-
160
argument to the legalisation of the Fairtrade lab el . At present, som e fair trade producers
are FLO certified and others are not. Tho se tha t do not hav e FL O certification are typ ica lly
producers of handcrafts and oth er non -food pro duc ts. The se are pro duc ts for wh ich FL O
certification does not exist, but for wh ich lon g-s tan din g trad ing links wit h FT O traders hav e
pro vid ed markets and dev elo pm ent al gains (Wills, April 29, 2005, per son al
communication). Ma ny ofI FA T's pro duc er me mb ers fall into this category, as do sev era l
trader FTO s suc h as CT M Alt rom erc ato in Ital y and Just Cof fee in the US A, wh o hav e
chosen not to use the Fairtrade lab el (see below). The logic is tha t if the FL O and IFA T
systems cou ld be har mo nis ed to inc lud e all pro duc er and trad er FTO s (wh eth er or not the y
are registered as Fai rtra de pro duc ers or traders), legal pro tec tion of the fair trade term

159
Wh ile the focus of their coo pera tion is thro ugh the harm onis atio n of the two systems, FLO and IFA T are
also eng agin g in coo pera tion und er the ausp ices of F.I.N .E. The acro nym 'F.I .N.E .' repr esen ts the four
netw orks that support, man age and fund this orga nisa tion , FLO , IFA T, NEW S! and EFT A. F.I.N.E. is a
discussion foru m for these four inte rnat iona l asso ciat ions whi ch coll ecti vely real ised the nee d for strategic
coo pera tion and coordination. F.I.N.E. exists to facilitate coo pera tion betw een thes e mem bers and their
netw orks on issues of adv ocac y/ca mpa igni ng and Fair Tra de stan dard s and mon itor ing (IFA T, 200 6b ).
Thr oug h F.I.N.E, IFA T and FLO hav e dev elop ed a shar ed defi nitio n of fair trade, and hav e also reac hed
agre eme nt on a join t mis sion to imp rove the live liho od oflo w-i nco me prod ucer s (Wills, Nov emb er 4, 2005 ,
pers ona l com mun icat ion) (see Cha pter 3).
160
Ano ther is the com mer cial aspe ct of cert ifyin g the han dcra fts that IFA T mem bers prod uce. Suc h items
already have mar kets - thro ugh wor ld shop s, gift shop s and so on. Con sum ers buy ing thes e prod ucts do not
need guarantees that the prod uct is fair trade since the trust is in the sho p's bran d itself. As Luu k Zon nev eld,
Pres iden t of FLO , observed, 'The additional cost and adm inis trati on invo lved in cert ifica tion of these goo ds
wou ld not be off-set by an additional incr ease in sale s' ( cited in Nic holl s & Opa l, 2005: 246-7) .
- 255 -
would be possible. Thus the harm onisa tion proje ct aims to prod uce an 'effic ient, low- cost
Fair Trad e certi ficat ion and regis tratio n syste m whic h is acce ssibl e to smal l-sca le hand icraf t
producer groups, smal l-hol ders, as well as to empl oyee -base d oper ation s' (IFA T, 2007 b ).
These data show a strat egy of netw orke d gove rnan ce with FLO over the fair trade mark et.

How ever (and secon dly), the harm onisa tion proje ct - the strat egy of netw ork coop erati on -
agitates an ideol ogica l fissure betw een IF AT and FLO (see Chap ter 6). Irres pecti ve of the
harm onisa tion initiative, a num ber of IF AT mem bers view FLO as a cons train t on, and
impe dime nt to, their capa city to bring abou t mark et change. As respo nden ts expla ined:
The integ rated moni torin g syste m is incre dibly diffic ult beca use not all Fair Trad e
Orga nisat ions are sure they want to be assoc iated with the FLO certi ficat ion mark
beca use it's carri ed by the likes of Starb ucks and other s and our mem bers say: 'We
are not Starb ucks and we don' t want to be assoc iated in the mind s of cons umer s
with the Starb ucks of this world. We belie ve that those orga nisat ions givin g the
impr essio n that they are Fair Trad e some how dilut e Fair Trad e (Wil ls, cited in
Nich olls & Opal, 2005: 246).

We parte d ways with Tran sfair USA [TFU SA] over a year ago beca use we belie ved
that we could do a bette r job guar antee ing fair trade stand ards with other allies in
the fair trade move ment . We belie ve that TFU SA does a great job with many
aspects of their miss ion, in parti cular the mark eting of fair trade to the publi c.
How ever, we also feel that many of TFU SA's licen sees are wate ring down the ethic
of fair trade and misu sing the TFU SA label at the expe nse of comm itted fair traders.
We, and other 100 per cent fair trade roast ers like Cafe Cam pesin o, Dean 's Bean s,
and Larry's Bean s, have mov ed on to try to raise the bar for the indu stry (Earl ey,
June 23, 2005 , perso nal comm unica tion) .

That game -play ers and FTO s have begu n to 'mov e on to try to raise the bar for the
indus try' dove tails the seco nd netw ork strat egy and 'scho ol of thou ght' with in the IFAT
community: netw ork mobi lisati on outside FLO to force the chan ge in the exter nal mark et
envir onme nt that FLO is not prod ucing . As these data show , game -play ers and the wide r
FTO mov emen t view FLO and the Nls as unde rmin ing FTO s' strate gic appr oach to
changing the mark etpla ce ('we belie ved we could do a bette r job guar antee ing fair trade
stand ards' ).

The strate gy of netw ork mobi lisati on is demo nstra ted amon g IF AT mem bers who are
strengthening indep ende nt alternative netw ork structures and cons titue ncies at natio nal,
regional and inter natio nal levels. Thes e emer ging advo cacy -base d cons titue ncies -

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del ibe rati ve net wo rks - are pub licl y and act ive ly agi tati ng and org ani sing for new fair trad e
gov ern anc e stru ctu res and a mo re 'pri nci ple d' ver sio n of fair trade (see for exa mp le Ho od,
Feb rua ry 22, 200 7; Tuc ker, 200 6; Low & Dav enp ort, 200 5). Var iou s net wo rks of stud ent s,
trad er FTO s and pro duc er FTO s hav e wri tten letters of dis app rov al to FLO , as well as
pub lish ed pre ss and inte rne t arti cles tha t que stio n and exp ress con cer n ove r the dec isio ns
ma de by the Nls and FLO . E-z ine s and con fere nce spa ces hav e bee n esta blis hed to deb ate
the 'dil utio n' of fair trad e and the infl uen ce of con ven tion al MN Cs in the sys tem in wh ich
the pio nee rs' voi ces feature stro ngl y (see Ne w Inte rna tion alis t, 200 6; Dev Net , 2006).
Aca dem ic pap ers , sho rt doc um ent ary films, and new spa per articles by var iou s jou rna list s
are inc rea sin g on the issu e of the 'cor por atis atio n' of the fair trad e ma rke t, and sha red
aro und inte rne t net wo rks (see Ran som , Oct obe r 17, 200 5; Bli zi & Bez enc on, 200 6; Frid ell
et al., fort hco min g; Ho od, Feb rua ry 22, 200 7). The se mu ltip le inp uts of critical
info rma tion , res ear ch and new ide as into del ibe rati ve net wo rks are fue llin g furt her deb ate
and acti on in way s tha t imp act on FLO and the Nis .

To be sure, the ir agi tati on has led to stra teg ic mo bili sati on. For inst anc e, reg ion al net wo rks
wit hin FL O's Sta keh old er For um , suc h as the Lat in Am eric an Pro duc er Ne two rk, CL AC ,
hav e thre ate ned to lea ve FLO if it does not giv e pro duc ers a sea t at the dec isio n-m aki ng
table and add ress the ir nee ds. 'Th is is a rea lly sig nifi can t sig n tha t CL AC wan ts out [from
FL O]' obs erv ed one res pon den t, 'CL AC rep res ent s tho usa nds of pro duc ers across Lat in
Am eric a'. The CL AC has sin ce also app lied for FT O reg istr atio n wit h IFA T (De igh ton ,
Ap ril 20, 200 6, per son al com mu nic atio n).

Ma rke t-or ien ted Nls hav e also fac ed crit ical deb ate at the nat ion al lev el from nat ion al and
reg ion al fair trad e net wo rks abo ut the ir lice nsi ng dec isio ns and dec isio n-m aki ng stru ctu res
as FTO s stre ngt hen coa litio ns and net wo rks to cou nte r the Nls ' dom ina tion ove r the
nat ion al fair trad e ma rke t and me ssa ge (see Equ al Exc han ge, Oct obe r 7, 200 5; Ran som ,
Oct obe r 17, 200 5; Tuc ker , 200 6). In the US , Equ al Exc han ge and oth er fair trad ers are
con tinu ing to pub licl y que stio n and deb ate Tra nsf air US A' s mo tiva tion for giv ing the
Fai rtra de lab el lice nse to sev era l MN Cs, and for enc our agi ng Fai rtra de cer tifi cati on of

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 16 1
coffee plantations (in which small-scale producers represent the majority) . This critical
debate about Nis - and because of them, FLO - has also bee n cross-national in direction.
For instance, the Italian fair trade platform and 'ba ckb one ' of the Italian fair trade
movement , AGICES , together with Transfair Italy, dem and ed that FLO explain to
producers, FTOs and civil society its criteria for certifying products, in light of the UK NI
(the Fairtrade Foundation) awarding Nestle the Fairtrade label license for its 'Pa rtn er's
I 62
Blend' bra nd (Dalvai, No vem ber 9, 2005, personal communication). Game-players
described the pow er of the strategy of organising and agitating deliberative networks in an
attempt to influence FLO and the Nis:
[the wid er movement] too k a collective leap in org am smg and ambition. The
mo vem ent here bad ly nee ded and needs some counterbalance to Transfair. The
NGOs [advocating fair trade] are also com ing together in a new wa y ... Transfair has
brought fair trade to a whole new level [in the US] and the y hav e done so in a
ma nne r that has alienated ma ny pro duc er organisations and activists. The y
[Trans fair] are wo rkin g to change their ways and me nd the rift. .. (Rosenthal,
October 26, 2005, per son al communication).

Mu ch like producer groups, we [fair traders and our supporters] nee d to organise
groups, realising wh at our pow er is in the mo vem ent , and ope n up the certification
aspect to a more democratic process ... It's ver y und em ocr atic and not transparent -
the re's no accountability ... Transfair US A is run like a corporation ... It has a
CEO ... [and] a boa rd appointed by the CEO. It has no democratic accountability
(Earley, in Hood, Feb rua ry 22, 2007).

... the re's a whole group of people [in the fair trade mo vem ent ] wh o have com e
together to critique - and raise their voices about - wh at actually comes dow n to
governance. Because if we don 't like the way som eth ing is run, or wh at's bei ng
decided, one thing to say is 'we ll how is this thing bei ng dec ide d?' , 'wh o's ma kin g
these decisions? ... wh o do you rep res ent ?' (Tiffen, Au gus t 19, 2005, personal
communication).

These data show that by agitating and mo bili sin g networks of deliberation, the wid er
movement is gaining increasing capacity as a force to influence the external environment.
This dataset illustrates the ide a that pow er and skills built in alternative nodes can be use d
to disrupt dominant institutions (see Gaventa, 2006a), and offer a vie w of the unique actors
- game-players - in this process who do the strategic mo bili sin g of those nodes and

161
See N01ih, February 10, 2006; 2003b.
162
AGICES , Nov emb er 11, 2005.
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networks. Gam e-p lay ers are usi ng this collective pow er ('po we r wit h') to reju ven ate the ir
radical vis ion ('po we r wit hin ') and enrol it to cha nge the ext ern al ma rke t env iron me nt.

By wa y of em piri cal illustration , FL O' s gov ern anc e mo del has rec ent ly und erg one
sign ific ant res truc ture and Con stit utio nal changes (partly) in res pon se to the gro wth of
critical deb ate - par ticu larl y from FL O's Sta keh old er For um - ove r the lac k of dem ocr atic
par tici pat ion and dec isio n-m aki ng in FL O' s system. Sev era l NI res pon den ts des crib ed
FL O' s cha ngi ng gov ern anc e stru ctu re and the nee d for it in the con tex t of gro win g crit icis m
ove r the dom ina nce ofN is ove r FLO:
The pro ble m wit h [FLO] is tha t it's not a dem ocr acy , it's not bal anc ed ... so the
future of Fai rtra de is ... how are we goi ng to bro ade n ... tha t's the eternal pro ble m of
NG Os is how are we goi ng to inv olv e other stak eho lde rs tha n the cla ssic al ones in
our dec isio n ma kin g pro ces ses ... we are qui ttin g the mo nop oly and we don 't kno w
wh at to do wit h this ... this is difficult. Thi s is really difficult ...

... wh at's bec om ing unt ena ble is wh ere the re's so mu ch dec isio n ma kin g [by Nls ] in
the No rth abo ut issues and pol icie s, and som etim es it still feels ... like eve ryb ody
signs up to this definition abo ut fair trad e bei ng a par tne rsh ip and bla h bla h blah,
but it actu ally ofte n feels like Fai rtra de is som eth ing tha t com es from som eth ing we
do in the No rth to peo ple in the South, we don 't do it with them.

... things can 't con tinu e wh ere Nls eith er hav e - or are per cei ved to hav e - all the
pow er wit hin the system. Pro duc ers hav e not felt suf fici ent ly trus ting of Nls
bec aus e the y felt Nls wer e bei ng dra wn onl y by the ma rke t, and tha t Nls did not
trust pro duc ers bec aus e the Nls felt tha t pro duc ers wer e bei ng ver y ide olo gic ally
mo tiva ted in all the decisions. It's a mu lti- stak eho lde r Boa rd, but we 've red uce d
the num ber of Nls on tha t Bo ard rec ent ly so tha t there is now no one stak eho lde r
group wh ich can out -vo te eve ryo ne else alto get her - as was the cas e in the pas t wit h
Nls . Bef ore , there was a Bo ard of twe lve me mb ers , six of the m Nls , wit h the
cas ting vot e for the Pre sid ent wh o cou ld onl y be ele cte d by the Nls - tha t obv iou sly
was a blo cke d system. We do nee d to put tha t in the per spe ctiv e of wh o the
me mb ers of FL O wer e before, and wh ere the y wer e corning from, and to wh at
ext ent the y wer e rela tive ly wa ry abo ut ope nin g up the sys tem and pot ent iall y hav ing
decisions tak en wh ich the y felt cou ld be dam agi ng to the ir ma rke ts ... So we 've now
ins tall ed a Bo ard wh ich is the hig hes t dec isio n-m aki ng bod y wh ich can no longer be
trumped by the Mo M. An d wh at that me ans is act ual ly a cha nge in the structure
and the ownership structure, wh ich me ans that Nls wil l no lon ger be the sol e ow ner s
of the org ani sati on def inin g the stan dar ds and pol icie s - FLO . That is the cru x of
the matter, cha ngi ng the gov ern anc e system. It is fun dam ent al to dea ling wit h all
the diff ere nt que stio ns abo ut how we wo rk wit h mu ltin atio nal s and wit h pla nta tion s
and wh at the pla ce of tho se diff ere nt actors wit hin the sys tem is.

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 These comments illuminate ho w FL O' s governance structure is changing in response to a
changing political en vir on ment wi thi n its system. Ac co rdi ng to one ob ser ve r, the changes
can be 'qualifie d as historic in the sense that the y enshrine FL O as a truly multi -stakeholder
organisation with producers, traders, Nl s and independents corning together constituting
FLO 's mo st senior decision -m ak ing bo dy ' (S him izu-Larenas, June 9, 2006 , personal
communication). Fo r the first time in FL O' s organisational history, FL O' s membership
extends be yo nd the Nl s to include producers, traders and independents. The current Bo ard
Chair is no t an NI -representative, an d future election of Bo ard Chairs mu st give preference
to an independent Bo ard Direc tor (FLO, 2006b: 10). W he the r the se developments at the
level of FL O' s governance bri ng ab ou t significant change in FL O' s operations remains to
be seen (Meckel, Ma rch 30, 2007, pe rso na l co mm un ica tio n). bu t these data nonetheless
suggest that the external envir on ment in wh ich FL O an d the Ni s no w operate is be ing
shaped by active delib erativ e networks agitating for change. Indeed, at the national level,
market-oriented Nl s su ch as Tr an sfa ir US A are ha vin g to co ns ide r ho w to inv olv e a wi der
stakeholder ba se from the fair trade mo ve me nt tha n the ir 'im mu ne ' governance mo de l bas
to date allowed (Tiffen, Oc tob er 25, 2005, pe rso na l co mm um ca tio n; Ea de y, June 23 , 2005
personal communication; Rosenthal, Oc tob er 26, 2005 , pe rso na l co mm un ica tio n). As one
game-pl av er observed of the effect of netw ork mobilisation:
... I thi nk Transfair did rea lis e fro m the Co nfe ren ce an d the un ity of "th e res t" [of
he fair trade mo ve me nt in the US ] ... that the y co uld no t ste am rol ler things
:h rou gh ... Transfair ha s rea lis ed tha t if the y [Transfair] do no t wo rk W lT H the 200+
[fair trade] businesses - the y ha ve stu dio us ly ign ore d the Fa ir Tr ad e Fe de rat ion
[Federation of fair trade businesses] thi s las t 18 mo nth s - the y ris k ma kin g the m
[the FT F] indifferent or even enemies of the [Farrtrade] mark! (Tiffen, Oc tob er 25 ,
2005. personal communication).

These data indicating FL O' s rec en t ev olu tio n in response to a new external en vir on me nt
highlight the im po rta nc e of ga me -pl ay ers to the ongoing pro ce ss of social change. Th at is,
for institutions to be captured bv conservative interests and for those
institutions to ne w forms of co ns tra int game -pl ay ers po sse ss a un iqu e skill in
leadershio. a cap o mo bil ise delib ne tw ork s tha t destabilise status qu
insti s. Indeed. game -pl ay ers are rad ica l entrepreneurs of no rm s and
leaders of networks. Th ev are int en t on ma ran sfo rm ati on . disrupting established
jo ns in order to su ith the last section, the da ta here
sho llv . su ding in the ir obj s necessitates a hig hly deliberati
- 26 0 -
 environment found in horizontal network structures that make optimal use of ne w
knowledge (see Achrol & Kotler, 1999). This analysis offers deeper understanding of the
political structures and micro-processes that market evolution requires (see for instance
Loasby, 1999). Moreover, it reveals the pivotal role of networks, and game-players'
mobilisation of them, for influencing the process of economic transformation.

Concluding Comments
This chapter has shown ho w actors use institutions to force the pace of change.
Institutional structures reflect the bodies of knowledge they support in the ma rke t
environment. Those that are successful bu ild hierarchies and the institutional selection
pressures they exert help to maintain those dominant discourses (see Achrol & Kotler,
1999; Schaper & Valery, 2002; Nooteboom, 2001). Significantly for evolution, this
institutional design stifles the growth of knowledge, up on wh ich ma rke t evolution depends
(see Loasby, 1999). The result is ma rk et- and knowledge - equilibrium (see Popper, 1963 ;
Loasby, 1999). While evolutionary economists propose that a ma rke t environment
conducts the selection be tw ee n different market models, this chapter has sh ow n that politics
changes the institutional pressures exerted on the market environment through networks.

Through Br ait hw ait e's (forthcoming) defiance framework, the chapter revealed a set of
micro-processes that are involved in the en tre pre ne ur' s act of causing transformational
change, and are additional to business model innovation. This captured ho w institutionally
weak actors exercise po we r - by exploiting ne tw ork politics to alter selection pressures.
The chapter first charted the political evolution of FLO to show ho w institutional evolution
affects the capacity for ne w innovations to succeed by exerting conservative selection
pressures on the market. The chapter then analysed ga me -pl ay ers ' counter-strategy in this
environment: mobilising deliberative networks to force change to institutional selection
pressures. As foundations of alternative institutions (for which IF AT pro vid ed illustration),
deliberative networks play a ke y role in shoring up ne w - untapped - sources of collective
power, or in other words, collective knowledge. Th eir porous ne tw ork ed structure and
values-orientation supports the development and rapid evolution of a majority-knowledge
system that, when agitated and mobilised strategically by the entrepreneur, forces the pace
of change in the external environment.

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 Predicting the future succe ss of the game -play ers to bring abou t mark et trans form ation is
difficult. The simp le empi rical exam ple of the comp arati ve retail value of Cafe direc t and
Nestle for insta nce show s that the road ahea d of game -play ers is long (see Tabl e 8.1 ):

UK Hot Drinks 2001 2002 2003 2004 2005

Brand Comp any % retail value % retail value % retail value % retail value % retail value
Nestle 22.1 21.2 21.4 20.8 20.4
Cafedirect 0.2 0.2 0.3 0.4 0.5
Table 8.1: Comp arativ e retail value of Cafed irect and Nestl e in the UK marke t. Source: Globa l Mark et
Information Datab ase (GMI D), Augu st 14, 2006.

The size of the gap betw een Cafe direc t and Nest le illum inate s the size of the proje ct that
game-players are unde rtaki ng. For an atypi cal busin ess mod el that now, after fifteen years ,
is the fourth large st coffe e bran d in the UK, Cafe direc t is doin g rema rkab ly well (see also
163
Chapter 7) . This exam ple of incre asing succ ess aside, it cann ot be assum ed that the fair
trade mov emen t will make linear prog ress. In fact, the histo ry of the glob alisa tion of
business regu latio n show s that glob alisa tion follows a non- linea r dyna mic wher eby agen das
can regress as much as they can prog ress (see Brait hwai te & Drah os, 2000 ). The notio n of
incremental prog ress is perh aps best suite d to game -play ers' work: socia l chan ge occu rs in
a series of ebbs and flows (or small, cumu lativ e victo ries or losse s) rathe r than one
revol ution ary mom ent (see Druc ker, 1985: 253) . This is parti cular ly the case in a
netw orked worl d in whic h the gove rnan ce and reali satio n of outco mes is noda lly-p rodu ced
(Johnston & Shea ring, 2003). Irres pecti ve of the chall enge of pred ictin g the cour se of
change, this chap ter has prov ided an empi rical ly-gr ound ed acco unt of the micr o-pro cesse s
by whic h game -play ers (entre pren eurs of norm s) respo nd to instit ution al resis tance in orde r
to conti nue as stew ards of future mark ets.

163
The comp any now intends to enter into the US marke t and take on the US coffee mono lith, Starbucks
(F01ison & Veevers, 2007) .
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CONCLUSION: Game-playing: the key to glob al empowerment

This thesis has engaged with the problem of theorising powe r in the process of market
evolution. In contemporary society, pow er is distributed according to who controls the
construction and evolution of prevailing discourses (see Foucault, 1977; Gaventa, 1993;
Bell, 1978; Hall, 1981). Chapter 2 showed how this control lies overwhelmingly in the
hands of the mod em global brand corporation: dominant brand companies monopolise the
construction and evolution of global subjectivities by harnessing market resources and
institutional mechanisms (such as TRIPS). In this heavily structured environment, how is it
possible that in the context of a global coffee crisis in which three or four roasters dominate
the entire market, a small-scale coffee farmers' Union (comprised of some 90,000 coffee
growers) in Kagera, Northern Tanzania: (1) has been able to sell an increasing amount of its
coffee under favourable Fairtrade terms and prices; (2) has gained more than $US7 million
in additional revenues for business and community development projects; and (3) now
owns majority shares in the regio n's instant coffee production factory which it plans to use
to sell instant coffee nationally (FLO 2005b: 5)?

Similarly, how can it be that small-scale coffee farmers in Africa, South America and Asia
own five per cent of the shares in, and sit on the governing board of, the UK's largest fair
trade hot-drinks brand company, Cafedirect (one of the largest coffee brands in the UK
market)? Cafedirect coffee farmers produce coffee for the comp any's 'Cafedirect 5065 '
brand (one of the fastest growing brands in the UK instant coffee market with a 3 .9 per cent
164
value share and retail sales value of UK8.6 million pounds) . Being the primary
beneficiaries of the business, Cafedirect producers receive not only a (higher-than-market)
minimum price and a social premium per poun d of coffee, but also dedicate additional
company investment for capacity-building projects, to the tune of 86 per cent of the
comp any's 2004/05 operating profits (UK574,000 pounds) (Cafedirect, 2005). Chapter 3
documented the historical development of the fair trade movement and its increasing scale
and maturation.

164
'Cafe direct 5065' is one of 41 brands offered by the comp any in the UK market (Cafedirect, 2005).
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Given the structural constraints they face, how do traditionally 'weak' actors use markets to
bring about such profound social change? Schumpe ter (1934) attributed to the
entrepreneur the capacity to annihilate existing market structures and institutions, yet he
did not grapple with the micro-processes by which the entrepren eur achieves deep
structural change. Market evolution is a dynamic process, and thus difficult to capture and
analyse. Evolution ary economists since Schumpe ter have portrayed the market's cycle of
evolution as not only naturally-occurring but also 'spontane ous' (see Nelson & Winter,
1982; Hayek, 1960). Approach ing the workings of the market as a 'natural' phenome non,
Schumpeter and Hayek tum agency into a mystery. They do not really capture the different
actors, mechanis ms and resources that are necessary and responsib le for the 'gales of
creative destructio n' that trigger large-scale social change. Contemp orary social scientists
with an interest in power for the purpose of social change have emphasis ed the need for a
deeper theoretical account of agency to better understan d its potential to achieve this end
(see Chapter 1). Braithwa ite's framewo rk of defiance, and the specific category of game-
playing, contributes to this agenda: it adds greater dimensio n to how different individuals
defy institutional structures and the effect that those various expressions of defiance cause.
Having elaborated the particula r category of game-pla ying to the collective and
transnational levels, the thesis has offered insight into the micro-pro cesses through which
large-scale change is caused and the way in which power and agency operate in this
context.

Around the particular psycholo gical construct of the 'game-pl ayer', who is an entrepren eur
of norms (Chapter 7), I develope d a theoretical framewo rk of power that originate d with the
game-player and generated collective and transnational sources of power to bring about
large-scale change. Using this conceptual framewo rk of power, I looked to the growing
success of the fair trade movemen t to explain how social change occurs through markets -
how agency has shifted structure. By focusing on game-pla ying and game-players, this
empirical analysis revealed the micro-fou ndations of market-b ased social change in which
agency is neither mysterious nor natural, and market outcomes can be more complete ly
explained. This chapter summaris es these findings for the purpose of addressing the under-
development of theory about agency in the social scientific literature.

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Chapter 5 examined how social actors produce scale in markets . For social theorists,
networks are a principal source of power to cause large scale effects in the knowledge
society (Castells, 2000); networks are valuable for actors because they coordinate diffuse
information and resources and capacities to facilitate action. The capacity of networks to
spread new ideas and action percolating in disparate parts of the system is attributed to
decentralised, horizontal or 'weak' network relationships as opposed to centralised,
hierarchical or 'strong' ones (Granovetter, 1973; see also Putnam, 2000). From a Latourian
perspective, this capacity has everything to do with the power of numbers; the more actors
enrolled in supporting an idea or form of action through the network, the more power
generated. 'Weak ties' enrol a greater number and diversity of people into their
composition than do 'strong ties' (Granovetter, 1973). While Hayek suggested that this
process of network coordination and resulting social order was spontaneous, regulatory
scholars have since shown the non-spontaneous nature of market outcomes (Braithwaite &
Drahos, 2000; Burris et al., 2005), as evidenced by the strategic activity of nodes where
information is translated into purposive human action. The data in this thesis support this
idea of the non-spontaneity of market outcomes.

While this lineage of ideas on networked and nodal governance supports an understanding
of the reasons and means by which networks facilitate and coordinate action, the data
presented in Chapter 5 offered insight into a sophisticated network strategy that social
actors exploit to trigger expanding circles of enrolment (COE): networki ng networks. This
goes beyond the idea of building networks (see Burris et al., 2005) to one of activating
existing networks to supp01i a particular idea and set of actions. There was nothing
'spontaneous' about triggering this process of diffusion for scale. On the contrary, the
process of networking networks for scale is an empirically-grounded conceptualisation of
how conventionally 'weak' actors bring grand change through markets.

In terms of explaining the operation of power in this process, the fair trade activists in this
movemen t have exercised the cumulative power of many smaller and diffuse sites of
human action, rather than exerted power through a centralised bureaucracy in which power
is concentrated. The fair trade pioneers have innovated in the act of social protest, creating
a market tool for consumers to reveal their (political) preferences via the market. This tool

- 265 -
has enabled individuals and groups to behave (produce , trade and consume) in new ways;
by engaging with this system or tool, they have acquired the 'power to' affect markets. By
engaging many actors in this model - achieved by networking networks - the pioneers have
linked or harnessed individual 'power to' to generate collective , indeed transnational,
'power with'. This is the social connections model of power in action; this model captures
conceptually how large-scale effects originate with the act of game-playing, and the
subsequent levels and types of power that game-playing produces along the path of change.

Given the political implications of networking networks, the network networkers in this
movement - the fair trade 'missiona ries' - are of particular conceptual significance.
Skilled in the art of persuasion, these actors keep collective action alive and expanding:
they spread the knowledge and message about game-pla yers' models across diverse
networks and 'translate ' the meaning of those models to provide special value and
relevance for those groups (see Latour, 1986). Indeed, a fundamental condition of the
success of game-players' innovative models is that the model has sufficient normative
appeal to motivate actors to take direct action. Hence to the extent that the cultural
meaning and value of business models, markets, brands or products - as discursive texts -
is built through communication (Fiske, 2000; Holt et al., 2004), the movemen t's intensive
investment of human resources into constant network networki ng (a many-to- many model
of marketing) has been a bottom-up counter to commercial corporate advertising and
marketing communications for gaining market share. Importantly, this chapter illuminated
that networks allow for greater agency and freedom in social structures than is accounted
for in 'power over' theories. Networks enable action and unleash marginalised discourses
as long as two-way flows between nodes are socially and institutionally sustained. In this
context, 'power over' recedes in theoretical relevance and accuracy as an explanation of
outcomes by comparison with other categories of power developed here: the 'power with' ,
the 'power to' , the 'power within'. The social connections model of producing new power
structures adequately captures this sequence of how power operates to alter the capacity of
individuals and groups to influence the structures that constrain their lives. All together,
this chapter indicated the following conditions for causing large-scale change through
markets:
1. A social connections view of the world is a precondition for agency to change structure;

- 266 -
2. Game-players draw on the 'po we r wit hin ' (unique capacity for creating new models) to
create models that connect networks;
3. Net wo rk networkers help new groups to translate new models into direct action and
access 'po we r to';
4. Networks offer a source of 'po we r wit h'; and
5. Net wo rkin g networks leads to large-scale diffusion and change.

The subsequent empirical analysis in Chapters 6-8 turned to examining mo re closely the
actors and mechanisms that begin and evolve these new ma rke t processes. Chapter 6
analysed the institutional dev elo pm ent of the FLO certification system and institutional
structure. For evolutionary economists and business theorists, new innovations possess only
a temporary pow er in the market, but lose it relative to a 'na tur al' organisational evolution
into a hierarchical and vertically-organised business structure (N ooteboom, 2001;
Ma cm illa n et al., 2000; Rob ert & Weiss, 1988). In this phase of maturation, the capacity to
acquire and res pon d dynamically to new ideas and ma rke t feedback wan es (N ooteboom,
2001; Ma cm illa n et al., 2000; Robert & Weiss, 1988). The ma rke t pow er of innovation is
wea ken ed by resistors' tendency to exhibit a lesser capacity for critical reflection on and
rejection of inherited ma rke t discourse than their game-playing counterparts. Res isto rs'
exercise of, and expression of, agency is not homogeneous. The het ero gen eity am ong the m
in this case reflects different dimensions of agency (Be vir & Rhodes, 2005; Nygren, 1999)
situated along an ideological spectrum ranging from the radical to the conservative - some
resistors for instance wer e aware of, and struggled to cope with, their organisational
contradictions and sought to mo ve bey ond the status quo. Situated within capitalist ma rke t
institutions, resistors find it difficult to completely shrug off rec eiv ed ma rke t norms, values
and processes, to instead envisage and pur sue radically different ideas and approaches; the y
perceive prevailing norms, structures and institutions as ultimately the only 'rea list ic' wa y
in which to achieve scale wit h new models.

Evolutionary economists do not offer an account of how pow er and agency operate in the
institutional sequence of static adaptation; static adaptation simply evolves as a reflection of
market success. Adopting the lens of defiance, the data pre sen ted in Cha pte r 6 filled this
conceptual gap. First, they sho wed that 'res isto rs' set in train the institutional sequence of

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static adaptation thro ugh the gov ern anc e and imp lem ent atio n of gam e-p lay ers ' mo dels.
Forming 'str ong ties ' (kn ow led ge hierarchies) in FLO 's gov ern anc e from the out set (which
mimic pre vai ling liberal mo des of dec isio n-m aki ng control), the pra gm atic ma rket-orien ted
Nls sha ped FL O' s inst itut ion al evo luti on to ena ble the rap id upt ake of the mo del by
conventional traders. Thr oug h FL O' s financial and gov ern anc e mo del resistors har nes sed
the pow er of bra nd cor por atio ns in wes tern con sum er ma rke ts as a type of 'po we r with ' to
assert institutional 'po we r ove r' others. Thi s 'po we r wit h' was pre mis ed on MN Cs '
institutional 'po we r ove r' resistors, or in oth er wo rds , res isto rs' inst itut ion al dep end enc y on
MN Cs for growth: the Nls tha t em bra ced bra nd cor por atio ns ' pow er and its inh ere nt bel ief
system , exe rted the gre ate st pow er ove r FL O. Nls tha t did not em bra ce the pra gm atic
market wo rldv iew , or did so to a less er degree, wer e we ak in FLO .

Secondly, the dat a hig hlig hte d tha t the evo luti on of FL O' s gov ern anc e mo del in sup por t of
the con serv ativ e dis cou rse of ma rke t-or ien ted Nls was pos sib le eve n in net wo rked
configurations: in net wo rke d structures, resistors con stru cte d nod al hierarchies as
mechanisms of 'po we r ove r'. Wh ile it is not a new ins igh t tha t nod ally -co ord ina ted
networks can pro duc e neg ativ e or ine qui tab le out com es (see Bur ris et al., 2005), the se dat a
show that for net wo rke d gov ern anc e to live up to its rep uta tion as a sup erio r me ans for
acquiring new and diff use info rma tion and coo rdin atin g action, a pre con diti on is tha t two-
way flows of info rma tion bet wee n nod es of con tex tua l kno wle dge wit hin the net wo rk are
socially and ins titu tion ally sustained.

Networks can nev er be com ple tely cap ture d and in fact allo w for con tinu ed innovation.
This was sho wn em piri cal ly in the fair trad e case study. The fair trade pio nee rs beg an to
innovate in bus ine ss mo del s tha t con ferr ed ma rke t pow er - ow ner shi p of inte llec tua l
property - to sma ll-s cale pro duc ers to exe rt greater pol itic al pre ssu re tha n FLO ' s mo del on
status quo traders to change. This dev elo pm ent and dyn am ic sho wed tha t the
organisational pha se of con sol ida tion is pro duc ed by actors wh o see k to ins titu tion alis e new
models into the existing ma rke t stru ctu re, not annihilate tho se dom ina nt ins titu tion s.
Net wo rk structures allo w gam e-p lay ers the free dom to inn ova te in res pon se to - and in the
context of - res isto rs' inst itut ion al cap ture . The dat a pre sen ted in this cha pte r also
illuminated how social actors use net wo rks and nodes stra teg ical ly to beg in and eng age in

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 institutional sequences to achieve outcomes. This illuminates the significance of a nodal
and networked conception of governance for explaining social outcomes and the wa y in
which social actors perceive and operate in their social environment.

Overall, this chapter added com ple xity to understanding how pow er operates in the process
of market change. 'Po we r ove r' is not as easily annihilated in the market environment as
Sch um pet er's not ion of entrepreneurship implicitly proposes. For instance, actors located
in existing institutional structures (resistors) recreate structures of 'po we r ove r' within new
institutions, yet even among resistors there is heterogeneity (i.e. some accept traditional
market norms mo re readily than others do). Different actors pursue different ideological
and organisational pat hw ays wh ich pro trac t and ma ke com ple x the ma rke t battle bet wee n
hegemonic discourses and the em pow erm ent of alternative ones in the market. The ability
to accommodate and capture these real-world differences and dynamics of pow er in
conceptual terms highlights the value of Bra ithw aite ' s conceptual framework of defiance.
In sum, the chapter revealed the actors and som e of the processes that precipitate and
evolve new ma rke t processes:
1. Resistors pla y the role of triggering new institutional sequences in evolution;
2. Resistors harness new forms of pow er that trigger new institutional trajectories;
3. These new forms of pow er are gen era ted by usi ng 'po we r wit h' status quo actors;
4. Harnessing 'po we r wit h' institutional actors re-produces 'po we r ove r';
5. Ne w forms of institutional 'po we r ove r' stymie ma rke t transformation, leading to new
political tensions;
6. Game-players create new mo del s und er conditions of ma rke t equilibrium to disrupt that
equilibrium; and
7. No des of resistance and gam e-p lay ing co-exist symbiotically in ma rke t-ba sed attempts
to bring about change.

Chapter 7 pur sue d the analysis of the fair trade mo vem ent 's pioneers/innovators mo re fully.
These actors are on a mission to achieve radical change through markets. Evolutionary
economists portray entrepreneurs as ma ster min ds and drivers of ma rke t transformation
(Schumpeter, 1934). Entrepreneurs are convention-defying (Cauthorn , 1989: 15) ,
possessing an ability to critically per cei ve and 'tra nsc end ' existing cognitive frameworks

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(Kirzner, 1985: 7). Their resulting im1ovations usher in new market relations and
conditions. In fact , the entrepreneur is seen as something of a revolutionary with a unique
capability to disrupt the rules of the game and demolish the barriers that structure markets
in their current form (Macmillan et al., 2000). Bra ithw aite ' s 'ga me -pla yer ' is a novel and
unique social actor with entrepreneurial qualities: the game-player is an entrepreneur of
norms: he/she redefines and innovates in regulatory rules, transcends social norms, and
thinks and acts boldly, 'ou tsid e the square' . While he conceptualised agency as an ongoing
possibility, Foucault considered mo dem regimes of knowledge to be repressive and
durable: prevailing discourses will re-emerge in future alternative regimes and thus
permanently entrap social actors (Simons , 1995: 86-7). Given this , wh at is the basis of the
game-player's agency that defies 'po we r ove r' in the first instance, and continues to do so
over time? This is a question to do wit h the permanence of pow er structures which
Schumpeter and subsequent evolutionary economists do not grapple with, and which
contemporary theorists in the social sciences hav e only recently beg un to address more
fully (Simons , 1995; O'M alle y, 1996; Tow nse nd et al., 1999; Bev ir & Rhodes, 2005).

Given that this class of actor is portrayed as responsible for revolutionising the market, the
chapter use d the defiance framework to examine in detail how pow er operates in the game-
playing context. The analysis of the fair trade mo vem ent 's innovators revealed a set of
unique psychological and behavioural traits that post-liberal pow er theorists link to an
individual pow er known as the 'po we r wit hin '. The 'po we r wit hin ' refers to an 'internal
capacity' and 'str eng th' to question and reject social norms and values , to eschew
normative constraints on one 's own social environment, and to locate those constraints in
structural rather than individual inadequacies (Kabeer, 1994; Tow nse nd et al., 1999;
Rowlands, 1995, 1997, 1998; Eyben et al., 2006). Importantly, the analysis of the game-
pla yer 's 'po we r wit hin ' in Chapter 7 revealed more significant potential for the deliberate
exercise of agency for the purpose of social change than is traditionally captured in social
scientific literature on power.

In other words , game-playing does not follow the same political and economic trajectory as
static adaptation. Game-players respond to market concentration by innovating to ensure
that alternative discourses continue to be liberated from those that dominate. In this way,

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game -play ing ensures that the process of genuine empo werm ent continues. Business
theorists describe the p erpetuity of the act of innovation as the entre pren eur's ' offensive'
weap on to topple domi nant, bette r financed opposition (Dru cker, 1985; Robe rt & Weis s,
1988; Mac milla n et al. , 2000), or in other words, to escape and make irrelevant the
constraint of 'pow er over '. As in the case of the entrepreneur, the data show ed that the fair
trade pion eers' ongo ing search for, and exploitation of, new know ledge gives these game-
players conti nuin g powe r to unlea sh new/ alternative discourses and capacities that brea k up
mark et concentration. Thei r in-bu ilt prop ensit y to innovate and gain new know ledge puts
them ahea d of recal citra nt and resistant mark et actors in defining the terms of future
markets. This uniq ue evolu tion of powe r - as more politically radical over time - was
demo nstra ted empi rical ly in the pion eers' 'cont inuu m of inno vatio n' in fair trade busin ess
models.

Importantly, this chall enge d the notio n that the evolution in busin ess structures towa rds a
hierarchical design is 'natu ral'. The data high light ed that there was noth ing temp orary
about game -play ing since cont inue d innovation is the game -play ers' source of power.
Gam e-pla yers are polit icall y resilient. It is also the basis for othe rs' empo werm ent: the
game -play er's individual powe r, whic h mani fests in new mode ls, triggers subtle proc esses
of social chan ge in the mere act of sugg estin g the poss ibilit y of othe r ways of actin g and
think ing (Moscovici et al., 1994), thus acting as a catalyst for collective ques tioni ng of, and
critical reflection on, the statu s quo.

The data in Chap ter 7 adde d further expla nator y insight into how the game -play er triggers
mark et change at a broa der cultural and institutional level. In his focus on the effect of
entrepreneurship, Schu mpet er did not actua lly articulate how the entre pren eur materialises
new innovations. It is one thing to come up with a new and controversial idea, but
materialising it - and in gran d prop ortio ns - is anoth er matter. This begg ed the ques tion of
how the entre pren eur actua lly materialises his/h er mode ls with such success as to annihilate
dom inant mark et actors and structures. Som ethin g of an expla natio n has been offer ed by
subs eque nt business theorists who emph asise that an entre pren eur can have success with an
inno vativ e idea only if he/she exercises entrepreneurial 'lead ershi p' of his/h er social
networks (Goy der, 1998; Mac milla n et al., 2000); entrepreneurs need to enrol their

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 net wor ks as acti ve sup por ters of the new inn ova tion in ord er for it to suc cee d. Thi s pro ces s
of em olm ent is gra fted ont o the gam e-p lay ers ' ma p of the wo rld in pow er term s:
net wo rkin g net wo rks unl eas hes new sou rce s of pow er.

In short, stra teg ic net wo rkin g of net wo rks ena ble s the gam e-p lay er to ma teri alis e his /he r
models. Hen ce the 'po we r wit hin ' unl eas hes 'po we r wit h' but is itse lf dep end ent on the
'po wer wit h' to cau se effects. Thi s is a Lat our ian exp res sio n of pow er wh ere in ulti ma te
pow er to cau se effe cts lies wit h col lec tive acti on, not an ind ivid ual . To cau se effe cts,
intense enr olli ng and enl isti ng is nee ded (La tou r, 1986). The ana lysi s of gam e-p lay ing in
this cha pte r dem yst ifie d the age ncy and pow er in ent rep ren eur shi p to trig ger ma rke t
tran sfo rma tion and doc um ent ed its me tho dol ogy for cha nge :
1. The bas is of gam e-p lay ers ' pow er is a uni que 'po we r wit hin ';
2. The 'po we r wit hin ' beg ins a seq uen ce of cha nge tha t pro duc es ben efit s for oth ers;
3. Gam e-p lay ing inv olv es per pet ual inn ova tion ;
4. Inn ova tion - and the org ani sati ona l stru ctu res tha t sup por t it - is a pur pos ive pol itic al act
to exp loit ma rgin al disc our ses . It is not nat ura lly- occ urr ing ;
5. The soc ial con nec tion s fram ewo rk is gam e-p lay ers ' ma p of the wo rld and how to libe rate
new sou rce s of pow er; the 'po we r wit hin ' is a pre req uis ite for oth ers ' pow er and is
dep end ent on the se new sou rce s of 'po we r wit h' to brin g cha nge s in ma rke ts; and
6. Gam e-p lay ers link per pet ual inn ova tion wit h net wo rk ent rep ren eur shi p to trig ger new
seq uen ces of bro ade r soc io-p olit ical and eco nom ic beh avi our .

In ligh t of res isto rs' cap ture and MN Cs' rec alc itra nce to foll ow gam e-p lay ers ' pat h of
inn ova tion (Ch apt ers 6 and 7), Cha pte r 8 turn ed to exa min e how the gam e-p lay er - the
ent rep ren eur of nom1s - infl uen ces the ins titu tion al env iron me nt. Evo luti ona ry eco nom ists
such as Nel son and Wi nte r (19 82) por tray sele ctio n as som eth ing tha t the ma rke t
'env iron me nt' con duc ts; the env iron me nt ma kes a sele ctio n bet wee n com pet ing 'spe cie s'.
Ho wev er, the dat a in this the sis ind ica ted tha t ins titu tion al ma rke t acto rs acti vat e
institutional stra teg ies suc h as static adaptation and model-imitation to pro tec t the
per cep tion of the ir 'na tura l' evo luti ona ry stre ngt h and des irab ility . An evo luti ona ry
acc oun t of ma rke ts lack s an app rec iati on of inst itut ion al pow er and the pol itic s of
inst itut ion al sele ctio n-p ress ure s and the ir role in pro duc ing ma rke t out com es.

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 Th e em pir ica l ins igh t tha t em erg ed fro m this ch ap ter was tha t ma rke t actors ha rne ss
institutions as ne w sources of sel ec tio n-p res su re to su pp ort the ms elv es to thr ive in
ev olu tio na ry struggles. Ins titu tio ns ref lec t an d pro mo te pa rti cu lar bo die s of kn ow led ge
(N oo teb oo m, 20 01 ) wh ich in tum sh ap e the ma rke t co nd itio ns in wh ich bu sin ess mo de ls
operate an d em erg e (N els on , 20 01 ). Co ntr ol ov er the kn ow led ge tha t ins titu tio ns pro du ce
is thus a me ch an ism of po we r tha t en ab les actors to de fin e the ter ms or 'ru les of the ga me '
tha t are at pla y in the ma rke t. Ba sic all y, this is an ide olo gic al co nte st to de fin e so cia l
rea lity an d its bo un da rie s - wh at is po ssi ble an d wh at is not, wh o has po we r an d wh o do es
no t (see Ga ve nta , 20 06 a; Ga ve nta & Co rnw all , 20 06 ; Hall, 1981; Ra hm an , 1991; Ha yw ard ,
1998). Th e analysis of the ev olu tio n of the Fa irt rad e sy ste m rev ea led tha t actors ha rne ss
spa ces or no de s wh ere ins titu tio na l kn ow led ge is go ve rne d an d pro du ce d in ord er to pu rsu e
the ir ide olo gic al int ere sts an d in this wa y de ter mi ne sel ec tio n-p res su res . Th is ill um ina ted
ho w the ba ttle s for ev olu tio na ry 'se lec tio n' are an yth ing bu t na tur al in the ir ou tco me ;
sel ec tio n is an on go ing po lit ica l co nte st ov er the ow ne rsh ip of ins titu tio na l kn ow led ge .

Th is ins igh t be ca me the ba sis of an im po rta nt co ntr ibu tio n to un de rst an din g ev olu tio n in
institutions an d the ir rel ati on sh ip to tri gg eri ng ch an ge in ma rke ts: thr ou gh po liti cs, the
sel ec tio n-e nv iro nm en t ca n be ch an ge d. Ev olu tio na ry ec on om ist s pa y ins uff ici en t att en tio n
to the rol e of ne tw ork s in ev olu tio na ry pro ce sse s an d the po liti cs of ins tit uti on al sel ec tio n
me ch an ism s. In the co nte xt of ins titu tio na l kn ow led ge hie rar ch ies , ho we ve r, the ga me -
pla ye r ex erc ise s str ate gic lea de rsh ip of de lib era tiv e ne tw ork s to force the pa ce of ch an ge in
the ma rke t en vir on me nt. Deliberative networks are so cia l ne tw ork s that, ph ys ica lly an d
virtually, are the site of, an d ve hic le for, a typ e of de lib era tiv e co nv ers ati on ab ou t sh are d
concerns, va lue s an d issues. Th is is an ev olv ing an d res po ns ive po liti cs in (ne tw ork ed )
action. Ins titu tio ns of de lib era tiv e ne tw ork s ref lec t collective ow ne rsh ip of ins titu tio na l
kn ow led ge , or in oth er wo rds , of ma rke t sel ec tio n pre ssu res . Mo reo ve r, the se ne tw ork s
ca nn ot be tam ed by the do mi na nt po liti ca l en vir on me nt. On the co ntr ary , ga me -pl ay ers
dra w on the m to force ch an ge in the sel ec tio n en vir on me nt.

In this wa y this ch ap ter off ere d a co ntr ibu tio n to un de rst an din g ho w the ma rke t
en vir on me nt is ch an ge d by ne tw ork s to fav ou r alt ern ati ve bu sin ess mo de ls an d ma rke t
principles. Th e ch ap ter sh ow ed tha t thr ou gh de lib era tiv e ne tw ork s ne w ma jor ity -

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kno wle dge sys tem s are dev elo ped and can be use d to cha nge inst itut ion al sele ctio n
pressures. Net wo rks giv e ins titu tion ally we ak acto rs pow er to brin g cha nge in dom ina nt
institutions. Thi s is bec aus e net wo rks and net wo rke d inst itut ion s are con stru ctio n sites for
building the cap acit ies and stre ngt h of ma rgin alis ed disc our ses to effe ct cha nge in the
external sele ctio n env iron me nt. Ind eed , gam e-p lay ers del ibe rate ly eng age in and pro vok e
deliberative net wo rks , trig ger ing live ly del ibe rati on and deb ate to dis rup t the inst itut ion al
environment. The cha pte r cap ture d the em piri cal exp res sio n of this pro ces s in the fair trad e
pio nee rs' stra teg ic agi tati on of fair -tra de- acti vist and FTO net wo rks , inv olv ing inc rea sin g
discussion tha t que stio ned , del ibe rate d and rea ffir me d the mo vem ent 's sha red prin cip les
and the ir mo bili sati on.

The ina bili ty of hie rarc hic al inst itut ion s to com ple tely cap ture net wo rks and pla cat e the ir
disruptive infl uen ce ma kes esta blis hed inst itut ion s vul ner abl e to shifts in net wo rk pol itic s.
This cap aci ty to effe ct ins titu tion al cha nge was dem ons trat ed in FL O' s inst itut ion al
evolution in res pon se to the wid er mo vem ent 's mo bili sati on of net wo rks of del ibe rati on.
The em piri cal poi nt is not sim ply tha t dis cou rse can be ena blin g for ma rgin alis ed actors
(O' Ma lley , 1996; Bev ir & Rho des , 200 5; Dry zek , 200 0) but tha t networks stre ngt hen tho se
discourses and can be har nes sed to trig ger pol itic al inst abi lity in the status quo. Gam e-
players exp loit this net wo rk cap aci ty to force the pac e of change. Thi s seq uen ce can be
sum ma rise d thus:
1. Act ors use inst itut ion s as new sou rce s of ma rke t-se lec tion pre ssu re;
2. The pac e and dire ctio n of evo luti on is affe cte d by net wo rks of del ibe rati on;
3. Gam e-p lay ers are lea der s of del ibe rati ve net wo rks ;
4. Del ibe rati ve net wo rks are the stru ctu ral and pro ces sua l bas is of inst itut ion s of col lect ive
kno wle dge ow ner shi p;
5. Del ibe rati ve net wo rks can not be cap ture d and pos ses s free dom from resistors;
6. Lea der shi p of net wo rks allo ws for con stan t cha nge ; and
7. Cap ital ism req uire s del ibe rati ve ins titu tion al stru ctu res in ord er to evolve.

Dra win g on Bra ithw aite 's (fo rthc om ing ) 'de fian ce' fram ewo rk, the thesis has off ere d a
unique ana lysi s of pow er for und ers tan din g how ma rke t actors brin g abo ut change. Usi ng
this con cep tua l fram ewo rk, the thesis has sho wn tha t mo dem 'po we r ove r' is nei the r

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 im mu tab le no r ine vit ab ly rec rea ted in ne w discourses, wh ile the po ten tia l for ag en cy , by
contrast, has be en sev ere ly un de res tim ate d (see Be vir & Rh od es , 2005; O 'M all ey, 1996).
In fact, a ne tw ork ed wo rld en ab les po we r to be ge ne rat ed ou tsi de the ex ist ing ins titu tio na l
structure. Th os e wi th no org an isa tio na l po we r or ins titu tio na l co ntr ol ca n transcend
ins titu tio na l po we r an d the co ns tra int s of ex ist ing so cia l str uc tur es thr ou gh a un iqu e set of
dy na mi c strategies of bu sin ess mo de l inn ov ati on an d ne tw ork en tre pre ne urs hip . Th e
for me r articulates alt ern ati ve su bje cti vit ies wh ile the lat ter ha rne sse s the so cia l res ou rce s
wi th wh ich to glo ba lis e the m. Em bo die d in the ac t of ga me -pl ay ing , the se str ate gie s ex plo it
the wo rld of ne tw ork ed an d no da l go ve rna nc e to free str uc tur es fro m the ir pre sen t
ins titu tio na l mo ori ng s. Th e ga me -pl ay er relies on a so cia l co nn ec tio ns vie w of po we r to
ca us e this effect. Th e pro du ct of free str uc tur es is a ne w typ e of po we r wh ich ca n be
ref err ed to as 'po we r be yo nd ' ( or 'po we r ov er' ex ist ing structures). 'Po we r be yo nd ' refers
to the eff ect of creating ne w str uc tur es an d ins titu tio ns wh ich no on e ind ivi du al ca n cre ate
alone, an d which cannot be cre ate d by or through existing institutional structures. By
wo rki ng aro un d - an d ind ep en de ntl y of - ins titu tio na l po liti cs to bu ild ne w str uc tur es,
ga me -pl ay ers are no t rel ian t on tho se wh o ex ert 'po we r ov er' to be wo n over. Ins tea d,
ga me -pl ay ers ma ke po ssi ble the ex erc ise of 'po we r be yo nd ' by uti lis ing ne tw ork
op po rtu nit ies an d co nn ec tio ns to bu ild mo de ls of em po we rm en t as ne w so urc es an d flows
of po we r tha t cau se lar ge -sc ale ch an ge .

In this way, so cia l str uc tur es ca n be co ns ide red as 'fr ee '. Th e co nc ep t of 'fr ee str uc tur es'
injects into the no tio n of str uc tur e gre ate r fluidity, lat itu de , op po rtu nit y an d po ten tia l for
ing en uit y tha n is rea dil y ca ptu red in ex ist ing the ore tic al ac co un ts of po we r. 'Fr ee '
structures co nn ote str uc tur es tha t ca n be ch an ge d be ca us e the y are in the pro ce ss of
co ns tan t cre ati on - or cre ati ve de str uc tio n - by so cia l actors. At the he art of this pro ce ss of
hu ma n cre ati on are ga me -pl ay ers an d ga me -pl ay ing , an d it is in the se co nc ep tua l ter ms tha t
the mi cro -pr oc ess es of ma rke t tra ns for ma tio n ca n be un de rst oo d. Th e mi cro -pr oc ess es
ex pli ca ted in the the sis off er so cia l sci en tif ic sch ola rsh ip a mo re so ph ist ica ted the ore tic al
ac co un t of ag en cy an d po we r in the pro ce ss of so cia l ch an ge .

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Ap pe nd ix A

Fair Tr ad e on the Po lit ica l Ag en da

2006
• The European Parliament adopts a resolution on Fa ir Trade, recognizing the benefits
achieved by the Fair Tr ad e mo ve me nt, suggesting the development of an EU -w ide
policy on Fa ir Trade, defining criteria that ne ed to be fulfilled un de r Fair Trade to
protect it from abuse and calling for greater support to Fair Tr ad e (EP resolution
"F air Trade and development", 6 July 2006).
• The Fr en ch chapter of ISO (AFNOR) adopts a reference do cu me nt on Fair Trade
after five years of discussion.
• A Fair Trade La w is be ing discussed in Belgium.

2005
• th
Fair Tr ad e Fa ir and Sy mp os ium in Ho ng Ko ng he ld during W TO 's 6 Ministerial
Conference in December.
• Opinion of the Eu rop ea n Ec on om ic and Social Committee on Ethical Trade and
Co ns um er Assurance Schemes, focusing on the ne ed to pro tec t consumers against
misleading ethical claims (REX/196, 27 October 2005).
• A law is pa sse d in France, pro po sin g to establish a Co mm iss ion to recognize Fa ir
Trade Organisations (article 60 of law no. 2005-882, Small and M ed ium
Enterprises, 2 Au gu st 2005).
• Co mm un ica tio n from the Eu rop ea n Co mm iss ion on "P oli cy Coherence for
De ve lop me nt - Accelerating progress towards attaining the Mi lle nn ium
De ve lop me nt Goals", (COM(2005) 134 final, 12.04.2005). Fa ir Tr ad e is me nti on ed
as "a tool for po ve rty reduction and sustainable development".
• The European Parliament serves exclusively Fair Trade coffee and tea at meetings.
• French De pu ty, Mr. An toi ne Herth , issues the report "40 proposals to sustain the
development of Fair Tr ad e".

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 2004
• The European Union adopts the "A gricultural Commodity Chain s, Dependence and
Poverty - A proposal for an EU Action Plan ", with a specific reference to Fair
Trade movement which has "b ee n setting the trend for a more socio-economically
responsible trade." (COM(2004)0089).
• Fair Trade symposium at the X lt h United Nations Conference on Trade and
Development in Sao Paolo, Brazil. Rubens Ricupero, then UNCTAD Secretary
General, said "I am convinced that F ai r Tr ade can on ly go in one direction :
upwards. B ec au se p eople un de rs ta nd increasingly the injustice o f this w orld an d
w an t to do so m et hi ng against it. "

2003
• A Trade Fair and Sustainable Symposium in Cancun at the 5th W T O Ministerial
Meeting show-cases the experience of Fair Trade.

2002
• Communication Trade and Development. Assisting Developing Countries to
benefit from Trade (COM(2002) 513 final, 18.9.2002: "T he E U also intends to
continue to w or k on fair trade and trade in environmentally friendly goods and
organic products, particularly from developing countries."

2001
• The Green Paper on Corporate Social Responsibility and the Communication on
Social Development in the context of Globalization from the European Commission
express an increasing legal recognition of the Fair Trade movement and its
standards, in particular on labour practices.

2000
• The Cotonou Agreement, new Partnership Agreement between the Afric an ,
Caribbean and Pacific states and the European Union , makes specific reference to
the promotion of Fair Trade in article 23 g) and in the Compendium . Also, th e
"Directive 2000 /36/EC of the European Parliament and of the Council relatin g to

- 277 -
 cocoa and chocolate products intended for hu m an co ns um pt io n" suggests pr om ot in g
Fair Trade.
• Public institutions in Europe start pu rc ha sin g Fa ir Tr ad e coffee and tea.

1999
• The European Parliament adopts a "C om m un ic at io n from the Co m m iss io n to the
Council on 'F ai r Tr ad e" ' CO M (l9 99 ) 619 final , 29.11.1999.

1998
• The European Pa rli am en t adopts the "R es ol ut io n on Fa ir Tr ad e" (OJ C 226/73 ,
20.07.1998).

1997
• The European Pa rli am en t adopts a resolution on the ba na na sector, calling on the
Commission to facilitate access of ne w Fair Tr ad e operators.
• The European Commission publishes a survey on "A tti tu de s of EU consumers to
Fair Trade ba na na s" , concluding that Fa ir Tr ad e bananas w ou ld be co m m er ci al ly
viable in several EU M em be r States.

1996
• The Economic and Social Co m m itt ee of the Eu ro pe an Co m m un iti es adopts an
"O pi ni on on the Eu ro pe an 'F ai r Tr ad e' m ar ki ng m ov em en t" .

1994
• The European Co m m iss io n prepares "M em o on alternative trade" in w hi ch it
declares its support for strengthening Fa ir Tr ad e in the So ut h and N or th and its
intention to establish an EC W or ki ng Group on Fa ir Trade.
• The European Pa rli am en t adopts "Resolution on pr om ot in g fairness and solidarity
in North South trade " (OJ C 44 , 14.2.1994).

Source: F.I.N.E. 2006

- 278 -
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