In Guatemala, economic and political inequalities have led to similar historical patterns of authoritarian government and violence. A beacon of hope did emerge during the “Ten Years of Spring,” when Guatemala experienced two democratically elected, socially reformist governments from 1944 to 1954. Given that 72 percent of the country’s agricultural land was owned by just over 2 percent of the farms, and the substantial majority of the population was rural, meaningful social reform necessitated some land redistribution. When president Jacobo Arbenz attempted such redistribution in 1952, his presidency was brought to an end by a CIA-backed military coup two years later. After Arbenz, the reforms were reversed and the country was led for decades by a series of brutal dictatorships, each one receiving political and economic support from the United States. From 1966 to 1990 these dictatorships massacred an estimated 200,000 indigenous people through a campaign of genocide. A peace accord with rebel groups was signed in 1996, and the state has since carried out liberal democratic reforms without touching the country’s huge inequalities in wealth and resources. Consequently, Guatemala remains plagued by daily violence and social injustice, and work and living conditions remain poor for the majority. In one revealing instance, a 2000 survey of coffee farms in the country determined that not a single one paid the required minimum wage – the majority did not even pay half – even though it was so low that the government considered it to cover only 40 percent of a person’s basic needs.11
An important exception to this general trend in Central America, and much of the coffee world, has been Costa Rica, a small country with a population of around 4.7 million people. Due to a socially reformist, state-led development strategy beginning in the 1940s, Costa Rica has developed as one of the most efficient coffee economies in the world. Moreover, many of its citizens enjoy living standards higher than those of most Southern states and comparable to those of many wealthier nations – Costa Rica’s life expectancy at birth in 2011, for example, was 79 years, the same as the United States. With higher living standards have come comparatively low levels of social and political violence, and Costa Rica has stood out among Central American nations for its relative peace and stability. In fact, while it maintains a national police force, its standing army was abolished in 1949 – something few countries in the world can claim – allowing Costa Rica to avoid the high social and economic costs of militarization and military spending.
More can be said about the Costa Rican case than can be delved into here, and indeed its uniqueness has been the subject of much debate and analysis.12 Of key importance, however, is an understanding of some of the distinctive aspects of its historical evolution. To begin with, during colonial times Costa Rica was a relatively neglected part of the Spanish Empire, due to its lack of gold and silver, and was sparsely settled – although the settlers who did arrive moved quickly to wipe out its comparably small indigenous population. The result was that Costa Rica differed significantly from the rest of Central America in terms of land and labor: whereas the rest of Central America tended toward relatively scarce land and abundant cheap labor (enslaved indigenous and black workers), Costa Rica tended to have fairly abundant land and a lack of cheap labor. As a result, a substantial class of small and medium-sized farmers along with a more highly paid rural workforce emerged in Costa Rica over time. While a powerful coffee elite still also developed, their lack of dominance over land led them to favor monopolizing the processing, marketing, credit, and export of coffee. Politically, this meant that the Costa Rican agrarian elite developed in a manner less tied to authoritarian rule than did other elites in the region, where state-managed violence was often called upon to protect and reproduce intense inequality and discipline a highly exploited labor force.
The centuries’ long evolution of Costa Rica’s distinct social and political conditions was combined in modern times with a unique set of historical conditions that emerged to push the political and economic elite toward accepting democratic and social reforms. When the Great Depression of the 1930s, followed by World War II, led to a collapse of coffee prices, small and medium farmers turned increasingly toward radical politics that sought to eliminate elite monopolization over processing and credit. Fearing the political power of masses of independent farmers, the coffee elite felt they had no other choice but to support the more moderate reformist Social Democratic Party (Partido Social Demócrata, or PSD), under the leadership of José Figueres Ferrer, which seized control of the Costa Rican state by force in 1948. Once in power, the PSD proved adept at maneuvering between radical popular movements and the agrarian elite, carrying out liberal democratic reforms and forging state institutions capable of delicately balancing territorial and capitalist logics.
Central to Costa Rica’s reformist project was the modernization of the coffee sector. The PSD was able to carry out an agrarian reform without the glaring need for land redistribution apparent in other Central American countries. Instead, the state ramped up taxation on coffee revenues, which it then plowed back into new infrastructure, credit, technology, and agricultural extension services in a manner that gained support from the rural elite, small and medium farmers, and rural workers. Simmering tensions between small and medium farmers and the elite was smoothed by the creation of the state-run Coffee Office, which required wealthy processors to offer minimum prices for coffee beans and loans to farmers under favorable terms. These reforms proved highly effective, and Costa Rica moved rapidly from having a relatively inefficient coffee industry in the 1940s to one of the world’s most advanced by the 1970s.
Reforms to the coffee sector were accompanied by key economic, social, and political reforms on a wider scale. Politically, the PSD introduced universal suffrage and a general strengthening of democratic institutions. Economically, an array of new state-run organizations and regulations were created to manage domestic food prices, provide guaranteed prices for farmers growing products other than coffee, and subsidize retail prices for consumers. Socially, the new state imposed higher wages and stronger labor rights for workers along with a variety of publicly provided services, including health care, education, and social assistance. The outcome was the creation of an effective developmental state with a broad popular support base throughout the country, relative stability and peace, and social indicators well beyond its neighbors and most of the coffee world.
Costa Rica’s impressive successes have not, of course, been without shortcomings. While not as unequal as its neighbors, social inequality has remained high in Costa Rica and has become much worse since the early 1980s. Paralleling global trends, the state has gradually abandoned support for social reform in favor of neoliberal policies, cutting public spending, privatizing state assets, reducing crop and food supports and subsidized credit, granting corporate tax breaks, and enthusiastically embracing the rise of new export crops – in particular pineapples, which have come to eclipse coffee since the early 2000s as a source of export revenue – that generally provide low-wage, flexible jobs. At the same time, the Costa Rican welfare state still survives and provides high living standards and important lessons for those concerned with combating poverty and inequality in the coffee industry.
While the unique conditions of the Costa Rican experience mean that it cannot merely be replicated, its history does offer two very important general lessons: first, that a central role for the state in managing the modernization of the coffee sector alongside democratic social reforms can provide significant developmental gains; and second, that the state, under the right conditions, can be made to play this role. These lessons are especially astounding when one considers Costa Rica’s relatively small size, historical dependence on a limited range of exports, and lack of geopolitical and economic power compared to larger Southern states – all of which suggests that most states could do a great deal more to protect and defend the interests of poor coffee workers and farmers than they often tend to do.
Constructing coffee consumption
Coffee consumptio
n has been inextricably linked with the dynamics of coffee production, developing through a long historical process with politics and social power as central driving forces. Production and consumption played off one another, with intensified production frequently driving down prices, inspiring more consumption, in turn sparking more production. Throughout the nineteenth century, these dynamics caused general oversupply and downward prices, which often hit rural workers and small farmers hard, while inspiring Northern workers to increase consumption. By the start of the twentieth century, coffee had become a common component of Northern diets, especially in the United States, which had emerged as the world’s largest coffee consuming country. Coffee sales then steadily increased throughout the course of the century, with coffee proving to be particularly well suited for capitalist consumption patterns and the rise of a mass consumer society. Coffee was a small luxury affordable to most social classes, providing energy and “pep,” and gained popularity as more localized tastes rooted in class, ethnicity, and geography became replaced with more standardized tastes, aimed at mass-produced commodities from faraway places; coffee from halfway around the world could now be sold as a generic product in chain stores with little popular awareness of where it came from or how it was grown.
While coffee does have certain intrinsic qualities that have made it such a popular drink, it is important to keep in mind that so do many other products. Major marketing efforts on the part of Northern coffee companies and Southern producing states, perhaps mixed with a bit of luck, were required to spur coffee’s success, which was not inevitable or guaranteed through market dynamics on its own. Coffee’s desirable intrinsic qualities stem primarily from caffeine, a stimulant that provides a temporary boost of energy, although it can also make people irritable and cause dehydration, upset stomach, short-term headaches, and short-temperedness. Recent research has suggested that “excessive” coffee drinking of more than 28 cups per week may result in higher death risk for adults under the age of 55.13 At the same time, coffee is generally considered to have milder effects than competing drugs, such as alcohol, which is connected to major health problems and known to induce aggressive behavior. As a result, over time coffee has emerged as a less socially regulated and more broadly acceptable stimulant than other, harder drugs.
Coffee has still had many competitors, however, in the “mild” drug category, and coffee promoters have played a key role historically in coffee’s international prominence and sales growth, using their economic weight to expand mass consumption by funding expensive marketing campaigns aimed at normalizing coffee addiction and popularizing daily coffee rituals. The twentieth century marked the rise of modern corporate marketing, with ever more expensive advertising campaigns utilized to drive consumer preferences and expand consumption to previously unimagined, and in many ways ecologically unsustainable, levels. The coffee industry, especially in the United States, was a major player in the marketing race, symbolized by the decision of General Foods to spend an unprecedented $2.5 million advertising Maxwell House coffee in 1949. This sparked the rapid escalating of marketing campaigns as corporate competitors rallied with their own massive advertising efforts. Today, the global coffee industry is dominated by giant transnational companies that spend tens of millions of dollars each year on major marketing efforts and hugely expensive branding campaigns.14
Alongside the work of Northern-based corporations, coffee states also played significant roles in expanding coffee consumption through economic statecraft, not just through managing increased production but also through direct involvement in marketing campaigns of their own. One particularly famous campaign has been a long-standing one since the late 1950s to promote consumption of Colombian coffee through the fictional character of “Juan Valdez,” a campaign funded by Colombia’s quasi-state agency, the National Federation of Coffee Farmers (Federación Nacional de Cafeteros, or FNC). Even more famous is the very idea of a “coffee break,” which did not emerge spontaneously out of popular culture, but rather was created and promoted by a major advertising campaign in the United States launched in 1952 by the Pan American Coffee Bureau – an organization formed and funded by a handful of Latin American coffee states. From the 1930s to the 1960s, the Pan American Coffee Bureau exerted considerable effort in promoting and expanding coffee consumption. Not all of their campaigns were as successful as the coffee break. In the 1960s, the Bureau launched a “Mugmates” campaign to win over the youth market by asking adolescents to decorate their personal coffee mugs. The campaign failed, steamrollered by more effective and expensive campaigns from the soft drink industry, which also offers highly caffeinated beverages. Soft drinks emerged as one of coffee’s great competitors in the twentieth century, winning the youth market and establishing a norm wherein children generally consume soft drinks while adults drink coffee, even though there is nothing particularly natural or healthier about this outcome.15 The end results were those of marketing battles, waged by coffee states and coffee companies, which have expended considerable resources to ensure coffee’s pre-eminence as a daily commodity.
Conclusion
The brief history of coffee provided here offers only a snapshot of the significant patterns in the long history of coffee’s production and trade. Its purpose has been to challenge the history offered by free traders, which generally involves a vague depiction of capitalism as the inevitable outcome of the natural human desire to “free” trade and participate in a market economy. In contrast, the expansion of the world system and the emergence of the global coffee industry entailed a conflict-ridden and contradictory history, one in which massive amounts of political and military force were employed by dominant classes to forcibly create a specific set of social relations around production and trade that were far from free. These social relations, then, invariably provided the greatest benefits to the landed elites, slave owners, colonial merchants, and agrarian capitalists who steered their evolution, while reproducing poverty, inequality, vulnerability, violence, and political and economic marginalization for the vast majority.
Statecraft has played a key role in the history of coffee, in particular with the growing involvement in coffee production and trade by colonial states in the eighteenth and nineteenth centuries, gradually eclipsed by modern capitalist states. These states did not merely determine outcomes in a “top-down” manner, but rather had to manage territorial and capital logics under constant pressure “from below.” The result was a perpetual “tug of war” between dominant and subordinate groups that forged the basis of a fluid, continually changing “hegemonic consensus” ultimately “skewed” in the interest of dominant groups.16 History was made through this tug of war, often with painful or incomplete results: Haitian slaves freed themselves from the bondage of the French Empire, although they still pay the price for their rebellion to this day; Salvadorians and Guatemalans, through rebellion, civil war, and surviving genocide, extracted important, yet still inadequate, liberal concessions from oppressive states; and Costa Ricans were able to attain a reformist compromise through the state, with substantial social welfare benefits.
Contemporary patterns of trade and social relations of production have deep roots in coffee’s historical legacy. Consequently, unequal distribution of land and resources cannot be dealt with merely by imploring coffee farmers to adopt expensive new technologies and diversify (into what, and at what cost?), or by recommending poor coffee workers to seek alternative jobs elsewhere (unless these can be proven to exist, under better conditions). Similarly, the historically determined, highly vulnerable and dependent position of weaker coffee economies in the international division of labor cannot be altered by beseeching policy makers to diversify and enhance their country’s comparative advantage, unless it can be demonstrated how to do this in a highly competitive global economy dominated by larger, richer, and more powerful states. Historically determined patterns of inequality and injustice ultimately require redress from the very states that have been central in
creating them. States have seldom stepped up to play this role, least of all as a collective group, but they can be compelled to do so under the right conditions, as chapter 3 reveals.
CHAPTER THREE
Pro-poor regulation
Perhaps one of the most powerfully held notions of the free trade package is the belief that all attempts to regulate international markets have been total failures. This notion is generally accepted without rigorous historical analysis and is frequently employed to silence or dismiss alternative perspectives on trade, development, and the state. In defense of alternative perspectives, and to gain a greater understanding of the power of coffee statecraft, this chapter will reassert the importance and current relevance of the complex history of state-managed trading initiatives that emerged throughout the twentieth century. A central idea in the analysis that follows is that all markets are managed by states. This makes the popular distinction between “regulated” and “unregulated” markets difficult to use and in many ways misleading. One way to address this is to make a distinction between the ways in which states regulate markets every day, driven by their territorial and capitalist logics and often without regard for the social and environmental impacts of their actions, and “social” regulation, by which is meant state action conducted in the interests of maximizing welfare for society overall, and in particular with a “pro-poor” bias.1
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