Ethical Content as a Commodity

It may not be intuitively obvious what American Apparel, fair-trade coffee, the Toyota Prius, and Monterey Bay Aquarium’s Seafood Watch have in common. The connection is hiding beneath the surface, and it signals what may well be a seismic shift in the function of free-market economies. The connection is this: each one of these products carries something in addition to the basic goods, some value added component that makes them marketable in spite of a higher initial purchase price: they have an ethical content.

Ethical content is becoming a market commodity. It is being advertised and sold as an integrated corollary to consumer transactions, something extra that you can purchase along with your coffee, or jeans, or car. At the Starbucks online store, a pound of fair-trade coffee costs $11.49, while a pound of houseblend costs $9.99. What am I buying for my extra $1.50? It seems to me that I’m getting at least the appearance of a more ethical process, a transaction that favors local growers more than it favors distributors and consumers. I am buying an ethical commodity.

The existence of the ethical commodity can be seen in the reverse, as well. Companies like Walmart are perceived as having a negative ethical content in their products. In pursuit of the lowest possible source-to-shelf costs, their economic and environmental policies are perceived as being detrimental to both local and global communities. In this case, the difference between paying $18 for Harry Potter and the Half-Blood Prince (Book 6) at your local book seller and paying $15.69 at Walmart is a negative ethical commodity. You’ve saved two bucks by not purchasing a more ethical process along with your savory teen fiction.

The idea of commoditized value in a transaction beyond the consumable goods is nothing new. Think about the difference between a $25 pair of shoes from Payless and a $225 pair of shoes from Nordies. Of course there are some differences in materials and in manufacturing, but most of the difference in cost between those two shoes has to do with the name Cole Haan, or Steve Madden, or Kenneth Cole. You’re buying a fashion commodity along with the piece of stitched leather. The value of the fashion commodity is demonstrated by the fact that people will buy $225 shoes. Think too about the difference between buying a mini-van and buying an SUV. For most people, the mini-van is more practical, and more economical, both in initial price and in long term ownership costs. But when you drive a mini-van, nobody thinks you might be on your way up to Yosemite for some base-jumping off of Half Dome. There is a lifestyle image that is commoditized with the SUV that doesn’t exist in the mini-van. When my wife and I bought a stroller for my daughter Sophia, we purchased one that had a higher safety rating than similar models. In addition to the cost of materials and assembly, we purchased a perceived safety commodity.

The emergence of an ethical commodity is a significant shift in economics. It is a redemptive use of one of the most powerful social forces around; free-market capital. The establishment of ethical content as a valuable commodity means that, rather than market forces driving consumers toward the lowest price, consumers can make decisions about whether or not to purchase a better process with their goods. In a commodified economy, this means that there are people who will want to purchase ethical content, and there are also people who will want to be perceived as people who purchase ethical content. For both groups, market forces will propel them toward goods and services with recognized higher ethical content (ordering Striped Bass instead of Black Sea Bass). As a raging free-market fanboy, you can see how this would make me ecstatic. Anything that accomplishes beneficial results within the community without sacrificing consumer choices or economic incentive is a good thing, and a robust thing.

I do, of course, have some concerns. First, I’m concerned that ethical content might be a fad. Introducing elevated market prices for fair-trade coffee growers in South America might be a good thing, but it can turn into a disastrous thing if those markets collapse when ethicism becomes unfashionable again. The farmer who made capital investments in equipment and stock on the basis of those inflated prices will be hardest hit when he can no longer sell his goods at $1.25 / lb. The same is true for the New England fisherman who invests in equipment to switch over to line-caught seafood, on the assumption that investing in a more ethical process will enable him to recoup that investment by marketing to ethical consumers. When those consumers are no longer willing to pay an extra $2 for his more ethical process, he is stuck bearing the costs of the market’s fadishness.

I’m also worried about the social perceptions that will trickle down to the poorest consumers. There are millions of people in this county for whom there is no real option; they can’t afford the two dollar difference between the cheapest item and the item with higher ethical content. American Apparel is not an option for them, the Walmart t-shirt is. In our striving for a more socially and environmentally aware marketplace, we need to make sure that we don’t denigrate those who can’t afford the commodity of ethical content.

We also need more accountability from independent organizations. As ethical commodity becomes a viable marketing tool, there will be companies that want the shine without the spit. There will be companies that appropriate the language and appearance of ethical content without the supporting processes. The Fairtrade Foundation and the Seafood Watch list are both examples of independent organizations with transparent goals and standards. We need similar organizations for apparel, sustainable farming, retail, and every other facet of this robust economic milieu. Consumers who are choosing to purchase ethical content with their goods need to do so in an informed way, and these sorts of accountability structures help ensure that.

So here we are. It has never been easier to make ethical choices as a consumer, and to do so within a coherent market structure that preserves consumer choice and economic incentive. I’m a fan.

16 thoughts on “Ethical Content as a Commodity

  1. aly hawkins

    Wow, Michael…great post. Content, content, content.
    .
    I, too, am concerned that the increasing availability of “ethical products” is a fad. Not being quite such as rabid fan of free-markets, however, I also fear that the fad will undermine and subsume the real issue: responsible consumerism in a global community. The reality is, the manufacture and trade/importation of ALL goods should conform to a basic standard of human rights, and those goods that do should not be isolated and glamorized. As long as we hold up “free” as a higher value than “fair,” the market alone will determine the value of the human component. It’s tragic, ironic, and horrifying that it’s taken savvy businessmen interested in making a bigger buck to draw attention to a vastly inequitable and unfair policy across the board.
    .
    As long as the WTO governs the world economy, “ethical content” will remain value-added, rather than seismically transforming.

  2. ash

    Aly, we must start somewhere… How might we work to ensure that this is not a fad?

    Mike, run for president.

    Chad, weigh in.

  3. Morphea

    Fundie-baiting. I like that.

    This is great stuff, Michael. Really good information. You probably know this already, but Seattle is the MECCA of ethical content buying and all that. At least, the part of Seattle I live in (almost downtown). You can’t even say “Target” without getting a sneer. Most of us on Capitol Hill are taking deep breaths and considering getting rid of our cars altogether.

    Mostly I kind of like it. But, yeah, I think maybe 40% or so of the people who buy ethically really give a damn about the little man. Maybe less, who knows. But even a fad will provide a little relief to someone. At least until we can topple the WTO and really screw with The Man.

    Cerise

  4. Chad

    Weigh in, is that a fat joke?

    Ok… seriously… look. This is something that I am only recently even aware of. Growing up, the only thing that made any difference to us regarding a corperation was if there was a rumor that the owners were Christians. In-N-Out, and Carl’s were good… everyone else, we tolerated anyways.

    All this to say… I actually think that things like this could be the redemption of Capitalism. I think the wealthy of the world (us) and the superwealthy of the world (Calvary people) all have to realize that paying a few more cents (or even dollars) per item to ensure that the region of the world where the product was produced is not in squalor is an acceptable and even GOOD part of doing business.

    Here’s the rub. Who’s gonna watch the corperations? I am sure that the extra $.60 we’re all paying in gas per gallon is all going to middle eastern peace efforts right?

    No?

    hmmm…

  5. Morphea

    Heh, Chad. I always think the same thing when someone asks me to ‘weigh in.’ Especially since I ill-advisedly attended Weight Watchers for a few months and they have what they call weekly ‘weigh-ins.’ Most troublesome.

    I also have trouble telling people that I’m a lightweight, though in an alcohol-consumption sense I most certainly am.

    Cerise

  6. ash

    No fat jokes, only respect. I think I may qualify as a heavy-weight when it comes to what they call “the imbibing”, but my highschool track coach used to refer to me as “chicken pecks”. Draw your own conclusion.

  7. Pingback: Ethical Consumption: Fad? Market Force? § Lean Left

  8. harmonicminer

    I bought a Prius because I ran the numbers. I drive a LOT. It made sense for me. Of course, part of that calculation was the tax consequences, which helped… and was NOT part of the operation of the market.

    I admit to enjoying the knowledge that by living far from where I work, I still do not pollute the air as much as people who commute for 15 minutes. Shoot, I’m considering buying a windmill for electricity for my home. (I know, I know… you think that’ll work better if I stand beside it and talk.)

    However… the fad element in all this is that it’s fashionably trendy to bash corporations of all kinds without real knowledge of their actual business practices.

    Touchstone: if you get your information primarily from the old media (also known as main stream media, or MSM), e.g., TV and newspapers and network radio news broadcasts, you’re probably hopelessly misinformed about the impact of practically any company or business practice or “ethical added value” in a price. That’s because reporting in these venues consists almost exclusively of “he said she said” without any independent verification of actual facts, and the leftward tilt of the MSM is enormous.

    Besides… my Prius talks to me. Really.

  9. aly hawkins

    My dad calls the GPS voice in his Prius “Lucy.” (No relation to our dog.) I think this has something to do with Narnia, but I’m not sure about the connection. My dad is even more random than I am, which is really saying something.

    Can I ask where you get your news, Phil?

  10. harmonicminer

    I use several different websites, correct for ideological predisposition (somes called “the lie of the green”, a golfing reference to how the ground slants, I guess), compare and check sources of items I find unlikely or incomplete, check what commentators (including bloggers I trust, mostly) have to say about the story and its factual predicate, blah blah blah. I know this sounds extreme, but it is literally what I do when I actually want to understand something.

    I trust NO ONE who pretends not to have an ideological predisposition… which is the case for MSM in its entirety, or very nearly.

    My general observation: MSM stories are rarely out and out lies (though that happens occasionally, too), but they frequently cherry pick their facts to support their preconceived world view, quote anonymous sources FAR more often than I find appropriate, attempt to “create news” by polls and provocative questions not designed to get useful info, just to get a quotable soundbite in reaction to some outrageous assertion, etc.

    It’s really common to have to read to paragraph 12 of a story to learn that things aren’t really as the first 11 graphs painted them, but those paragraphs are spent quoting sources whose agenda is perhaps not discussed, or not till the very end of the story.

    For example: regarding Islamic “moderates” being quoted in the news from an organization called CAIR, every single story involving spokespersons from that organization should first report that CAIR supports HAMAS financially, declared by the UN (hardly a big Israel supporter) as a terrorist organization. After saying this, anything said by a so-called moderate from CAIR can be filtered through the appropriate lense. This is a very specific example: but it’s very common in very many stories for essential information to be omitted that would invalidate much of the reason (and ideological presuppositions) for the story in the first place.

    How many times in the last 4 months has the MSM made it sound like the generals are all in revolt against Bush? Sure… about 6 of them, quoted endlessly and soft-ball interviewed in every MSM news outlet. Do you hear, in the very same story (necessary for context!), that they represent about 1%, and that many MORE other generals disagree, including large numbers who have no vested interest and are beyond Bush’s reach? Is it in the very next para after the negative-on-Bush generals, or is it in paragraph 12, after lots of folks have gotten bored and moved on with a different impression?

    The single worst kind of bias is in what stories get reported at all. Remember all the homeless reporting during Reagan/Bush years? Almost all of the breathlessly sympathetic homeless reporting disappeared during Clinton… and miraculously returned under Bush Jr.

    You get the idea.

    I wish that Public Communication at APU included more about detecting bias in reporting… but nearly all our communication profs are lefties… so they don’t think there is any.

    If you’d like a list of specific sites I read, I can give you that.

    Check this out:

    http://www.amazon.com/gp/product/0060520841/sr=1-1/qid=1150692479/ref=pd_bbs_1/104-9888513-4618318?_encoding=UTF8&s=books

  11. harmonicminer

    Some links:

    For news

    from the left, mostly

    http://www.ap.org
    http://www.reuters.com
    http://www.slate.com (ya gotta read Christopher Hitchens, a social lefty whose foreign policy perspectives I agree with)

    from the right, sometimes

    http://www.washingtontimes.com
    http://www.wallstreetjournal.com
    http://www.newyorkpost.com
    http://www.foxnews.com

    For opinion and news not covered above

    from the left

    http://www.dailykos.com/ (Most prominent left blog, or nearly so) Lots of links from here
    http://www.cpusa.org/ (communist party USA… about 85% of their rhetoric is same as Democrat party :-) ) (No… seriously)
    http://www.huffingtonpost.com/
    http://www.talkleft.com/
    http://dir.salon.com/topics/joe_conason/

    from the right:

    http://www.hughhewitt.com (a gazillion links from here)
    http://www.powerlineblog.com
    http://www.realclearpolitics.com (very solid political reporting, lotsa details)
    http://www.opinionjournal.com
    http://www.townhall.com

    On IRAQ and war on terrorism, stuff not even mentioned elsewhere, mostly (you already know why, don’t you?):

    http://www.austinbay.net/blog/
    http://fallbackbelmont.blogspot.com/
    http://www.blackfive.net/
    http://counterterrorismblog.org/
    http://www.michaelyon-online.com/ (very unique reporting)
    http://www.mudvillegazette.com/

    There are more… but you get the idea. I expect that I read (at least part of) all of these twice a week, and a few almost everyday.

  12. michael lee Post author

    This has nothing to do with the post, but I love the fact that doing a site redesign with WordPress and CSS means that all of the old content gets updated with the new look too. I love the internets.

    OK, enough commenting for one day. Back to work I go.

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