Nowhere is this fantasy more apparent than in debates about the global coffee industry, where it is frequently assumed that the current conditions of the industry are the outcome of market forces of supply and demand (as opposed to power and politics) and that the economics of coffee can be understood with politics and ideology left out.
The politics of coffee
To challenge the dominant understandings of the free trade package, this book offers a political assessment of what would often be seen as primarily economic forces at work in the coffee industry. The chapters of the book are arranged with this goal in mind. Chapter 2 offers a brief history of coffee from colonial times until today. Its focus is the long historical process through which coffee became a major global commodity, driven by conscious effort on the part of colonial and imperialist states. The process involved creating the original conditions for a highly unequal system of coffee production, trade, and consumption and ensuring that these conditions were maintained, often through brutal force. States have not only protected – and in some cases opposed – unequal distribution of coffee land and resources, but have also worked to ensure a specific set of social relations around commodity production for export and the separation of the economic and political spheres, a central characteristic of a capitalist economy. On the basis of this history, I argue that the economic and political inequality that plays itself out in the coffee industry today cannot be resolved through market adjustments alone, but rather requires attention to the ways in which coffee statecraft has forged these deep structural roots.
Chapter 3 focuses on the rise and fall of the ICA, from 1963 to 1989, a quota system signed by all major coffee producing and consuming countries, designed to stabilize and increase coffee prices by holding a certain amount of coffee beans off the global market to avoid oversupply. Given the “imperfect” market conditions of the real-world coffee economy, I argue that the ICA, despite its shortcomings, was superior to the official “free trade” regimes that preceded and followed it. The ICA resulted in higher incomes for coffee farmers and offered greater “social efficiency,” measured not strictly on the basis of a narrow definition of economic efficiency, but on the broader needs of society as a whole.24 Both “regulated” and “free trade” coffee markets have involved significant state management, only some management has been more “socially efficient” than others.
In chapter 4, I discuss the current era of “free trade” in the coffee industry and argue that coffee statecraft has continued to play a central role in shaping the global coffee market. The chapter focuses on the worst years of the global coffee crisis, from 1998 to 2002. The crisis is frequently understood as the outcome of the decline of state regulation and the unleashing of market forces after the collapse of the ICA. While I agree with the overall assessment of the impact of the end of the ICA, I argue that economic statecraft remained a primary driver of the coffee market before, during, and after the crisis. It is generally noted that one of the primary causes of the crisis was the rapid entrance of newcomers into the coffee market, especially Vietnam, which developed from an insignificant coffee exporter to the world’s second largest by the end of the 1990s. This did not occur as a result of spontaneous market forces of supply and demand, however, but out of a conscious effort by the Vietnamese state to promote coffee production and export – engaging in coffee statecraft to meet its own territorial and capital logics, with mixed success. The end of the ICA did not mark the beginnings of a golden era of free trade, but rather a shift from a degree of collective action among coffee states to intensified competition between them. Increased competition remains to a significant degree driven and managed by coffee statecraft, in a manner that sparked the global coffee crisis and continues to drive coffee markets to this day.
Chapter 5 shifts the focus to two significant trends in major Northern consumer markets since the late 1970s: the growing power of giant roasters and retailers, which have pushed the industrialization, mass distribution, and homogenous consumption of international brands; and the growth of the specialty coffee industry, which has offered niche markets for those seeking better ethical, environmental, and health standards, including various forms of fair trade, organic, and sustainable coffee. Much has been written in recent years assessing the strengths and weaknesses of fair trade and corporate social responsibility. In this chapter, I summarize some of the major conclusions of this work, paying specific attention to the growing convergence and conflict between the two market-driven projects. While fair trade has historically been a “bottom-up” project whose participants have been highly critical of “top-down” corporate social responsibility, since the 2000s there has been a growing convergence between the two as corporations have begun to give token support to fair trade – in Starbuck’s case, around 8.1 percent of their beans were certified fair trade in 2012 – as part of their overall corporate branding strategy.25 This convergence has at times broken out into significant conflict; in 2011, Fair Trade USA broke with the rest of the fair trade system and now seeks to develop itself as a more pro-corporate global certification body. The chapter concludes reflecting on the limits of both projects, which naturalize market rule, offer a form of neoliberal privatized governance that cannot match previous efforts at social regulation by states, and obscure the continued pervasiveness of coffee statecraft in managing the coffee chain.
The final chapter highlights some of the new and emerging trends within the global coffee industry. Competing states continue to conduct coffee statecraft to meet the needs of their territorial and capitalist logics in varied ways, only in a manner that has turned away from more robust visions of the “developmental state” in favor of a “non-developmental state” that perpetually denies the ability of the state to act in the broader social interest. Consequently, the dominant historical patterns within the industry have remained more or less intact, even while significantly impacted by emerging trends in the world system, including the cost-price squeeze, the financialization of coffee, and the intensification of environmental crises. Perhaps the newest and most unanticipated trend has been the “rise of the South,” with a number of larger Southern countries experiencing unprecedented rates of economic growth and gradual improvement in most major social indicators. This has sparked new forms of cooperation and competition within the coffee industry, and afforded poorer and more vulnerable countries greater policy and ideological space to rethink coffee statecraft in subtle but important ways, as evidenced by the Ethiopian trademarking initiative and by the rise of fair trade South, headed by the Latin American and Caribbean Network of Small Fair Trade Producers (Coordinadora Latinoamericana y del Caribe de Pequeños Productores de Comercio Justo, or CLAC).
At the end, I reflect on the alarming coffee leaf rust crisis in Central America, which has cost hundreds of thousands of jobs and hundreds of millions of dollars in lost income. The roots of the crisis are not about coffee leaf rust alone, but are deeply interwoven with coffee’s everyday crises of inequality, poverty, and vulnerability. Ultimately, major changes to the coffee industry are required that would put more income and resources into the hands of farmers and workers through state-supported education, health, and agricultural programs, land reform, and a revival of international price regulation.
Conclusion
Extreme market volatility and corporate oligarchy remain two central pillars of the global coffee industry. These pillars, however, have underneath them a foundation: a highly uneven world system, cut through by global and domestic economic, social, and political inequalities, ultimately underpinned by the power of states in an interstate system. In this book, I emphasize the geopolitics of coffee statecraft to demonstrate the central role states have played in the shaping of the global coffee economy, even in the era of “free trade”; the pitfalls of neglecting, overlooking, or downplaying this role; and the possibilities for compelling states to adopt more socially and ecologically just forms of coffee statecraft – possibilities that do exist, h
owever difficult it might seem.
CHAPTER TWO
Making coffee
Despite coffee’s special place in the hearts of consumers as a source of warmth and comfort, it has often been observed that coffee has a long, dark history, and is grown under conditions far removed from the upbeat and sexy imagery employed on café walls and in multimillion-dollar advertising campaigns. Making coffee requires far more than scooping beans into a coffee machine, or the more elaborate ceremonies of coffee aficionados. Long before roasters turn coffee into the dark brown beans familiar to most consumers, green coffee beans must be grown, processed, traded, and shipped; but where, by whom, and under what conditions? The long historical process through which these decisions were made was a world apart from the free trade ideal of a neutral market exchange between relatively equal market agents, and the political process that guided it was not generally democratic, open, or participatory.
The historical process through which coffee became a major global commodity bears heavily on the world of coffee today. Coffee statecraft played a significant role in this process, especially statecraft conducted by colonial and imperialist powers that developed and policed an unequal system of coffee production and exchange, often through brutal violence aimed at the local population or at weaker, subordinated states. States have not only protected inequalities in power and resources in the coffee industry, but have also worked to ensure a specific set of social relations around commodity production for export and the artificial separation of the economic from the political that is central to a capitalist economy. This historical argument differs from the free trade package, which tends to downplay history and its relevance to the current state of the world. Two trends particularly dominant in conventional economic thinking have immense significance for how trade policy is envisioned in the coffee world and beyond.
First, in place of systematic history, trade economists often offer vague depictions of capitalism as the inevitable outcome of the natural human desire to trade freely in a market economy. The 99 percent of human history under which the world lived prior to capitalism (the vast majority as hunting and gathering communities) is seen as the lead up toward the realization of people’s true nature today. This vision of capitalist history tends to overlook and distort some of its central characteristics. Capitalism is depicted as being primarily about trade, as opposed to a specific set of social relations that underpin production and trade. The capitalist market, as Ellen Meiksins Wood has observed, is depicted entirely as a place of “opportunities,” as opposed to also being a place of “imperatives” – to find a job, to stave off bankruptcy, to produce more at an ever-faster pace, to exploit finite resources. And finally, the modern state is portrayed as the antithesis to the market, whereas in fact capitalism has given birth to the largest states in human history to codify and regulate the “unregulated” market.1
Second, mainstream economists have tended to not only offer a thin understanding of history, but also repudiate its relevance. Renowned economist Jeffrey Sachs, in his highly influential book The End of Poverty, morally condemns the brutality and racism of the colonial era, but suggests there is no basis for the assertion that “the rich have gotten rich because the poor have gotten poor.” Over the past 200 years, both rich and poor regions have experienced increased economic growth, and in today’s world the “[b]ad policies of the past can be corrected. The colonial era is truly finished.”2 The effect is to turn the past into a strictly moral affair – one at which we can all now wag our fingers – while denying its continuing relevance to this day.
Yet, while all countries may have seen some gains in economic growth over the past 200 years, this tells us little about how different countries have been inserted into the global economy in very different ways – with dominant states managing dynamic, highly industrialized and high-technology economies, while former colonies have been left with weak, vulnerable economies frequently dependent on the export of commodities of lesser economic value. Those who have received only a shred of the economic gains of the past 200 years are expected to now compete against the economic giants that have taken the lion’s share of the wealth. Thus Uganda, which relies on coffee exports for 20–30 percent of all foreign exchange earnings, and has a GDP per capita of $470 and a life expectancy at birth of 54 years, is expected to compete in the global economy with its former colonial master, the United Kingdom, which has a GDP per capita of $38,818 (over 82 times that of Uganda) and a life expectancy of 80 years (26 years more than Uganda, significant not only in moral terms, but economically and politically as well). Far from a lingering shadow of the past, the history of coffee must be central to our understandings of the coffee world today.
A brief history of colonial coffee
Coffee became a major global commodity through a long and complicated historical process lasting centuries and entailing the gradual expansion of production and consumption, alongside new developments in international transportation, shipping, processing, and grading. Whereas North America and Europe emerged as the core coffee consuming regions in the nineteenth century, for nearly three hundred years prior to that, the expansion of the international coffee trade was dominated by Indian and Arab merchants linking growers in Ethiopia and Yemen with major markets in the Middle East and North Africa. Yemen in particular dominated the production of coffee beans for export from the fifteenth to the eighteenth century. Coffee was grown in Yemen predominantly by peasants who combined farming subsistence crops with growing small amounts of coffee beans for sale on the market. The main coffee consumers were middle-class Muslims in regions where alcohol consumption was prohibited as a result of Islamic laws, making coffee all the more desirable. Through the gradual expansion of production and consumption centered largely on North Africa and the Middle East, coffee first became a global commodity integrated into the expanding world trading system.3
It was not until the middle of the seventeenth century that coffee gained notable popularity in Europe, although mostly as a luxury crop for wealthy consumers. Muslim countries continued to dominate coffee consumption well into the eighteenth century. Europe did, however, begin to play a more central role in meeting the demand for coffee. The Dutch Empire was the first European power to get significantly involved in coffee, initiating coffee growing in the colony of Ceylon (today Sri Lanka) in the 1650s and then expanding to Java, Sumatra, and other colonies in the South and South East Asia by the end of the century. Coffee was grown primarily by local peasants, each of whom was forced by decree to plant several hundred coffee trees on their land and sell the beans to the Dutch East India Company at set (and very low) prices. The combination of expanded cultivation and exploited peasant labor allowed the Dutch to expand their penetration of Middle Eastern and North African coffee markets while also encouraging the growth of coffee markets in Europe aimed at the emerging urban middle classes.
Demand for coffee continued to grow throughout the eighteenth century, part and parcel of the general expansion in demand for a range of tropical commodities. European colonial states played an ever-increasing role in this expansion, granting imperial monopolies along with economic and military support to mercantilist trading companies that extended colonial domination and expanded the Atlantic slave trade.4 Originally, the slave trade had been developed by the Portuguese Empire in the fifteenth and sixteenth centuries to provide hyper-exploited labor for colonial sugar plantations. The slave trade grew substantially in the eighteenth century in response to the increasing demand for tropical commodities. In the eighteenth century alone, European colonial powers forcibly exported around six million African slaves, more than three and a half times the number of the previous two and a half centu-ries.5 The British Empire took the lead in the slave trade at this time, emerging as the world’s largest slave trader and profiting substantially from the cheap commodities that helped fuel industrialization back home.
While the British Empire benefited significantly from the slave trade, as
well as from its general colonial conquests, these imperial activities did not in and of themselves spark the industrialization in England that would come to transform the world system. Imperial Spain, for example, in the eighteenth century had been a dominant colonial power for more than 300 years, yet did not emerge as the leader in industrial capitalism. For the large-scale and rapid industrialization such as that experienced in England to occur, a fundamental transformation had to take place in the mode of production, involving a shift from a feudal to a capitalist one. Feudalism, which had dominated Europe for centuries, centered on a system wherein the elite extracted surplus wealth from the peasantry, or from conquered territories, through direct military coercion. This required endless expenditure on state building and warfare, reducing the resources available for investing in consumption and production and resulting in limited productivity.
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