Imperialism and your cup of coffee

Over the next several weeks we will be running three or four synopses of parts of the opening chapter of John Smith’s Imperialism in the 21st Century (New York, Monthly Review Press, 2016).  The synopsis and commentary below is written by Phil Duncan.

Marx began Capital not with a sweeping historical survey but with an examination of the humble  commodity.  He did this because the commodity is the cell of capitalism and within a single commodity can be found the key contradictions of capitalism as a whole socio-economic system of production.  Especially the contradiction between value (which takes the form of exchange-value) and use-value.

In his work on imperialism today, John Smith begins in a similar way.  Not with the humble, single generic commodity but with three specific commodities: the cup of coffee, the t-shirt and the iPhone.  He chooses these three because they are good examples of the globalisation of commodity production today.  Specifically, these are commodities produced in the Third World and largely sold in the First World, and the companies that exercise domination over their production, distribution and exchange are First World companies.

They are emblematic of the internationalisation of commodity production, distribution and exchange.  They also point up the continuing division of the world into the imperialist centres (including New Zealand) and the countries oppressed and super-exploited by imperialism (the Third World).

This division, which began in the late 1800s, is of vital political importance to people wanting to bring about fundamental social change.  Redline is based in imperialist New Zealand and, while our readership is increasingly global,  the majority of our readers and most of our writers are still based here.  So we are primarily concerned with the super-exploitation of the Third World by the First World and how this impacts on the standard of living, and thus the consciousness, of workers in these imperialist countries.  Imperialism essentially plunders the Third World economically and ensures that bourgeois democracy cannot fully develop there.  At the same time, it provides First World workers with a standard of living which restricts the development of class consciousness and genuinely anti-capitalist politics (as opposed to national welfarism and crude anti-Toryism).

John notes, for instance, how tariffs placed on garment imports from Bangla Desh bring in more money for the US government than the total wages received by the garment workers of Bangla Desh who actually make these goods (p14).  This money is then used by the federal government to help finance its wars and invasions in Third World countries, but also health care and social security for US workers.

John cites Tony Norfield’s point that low wages in the Third World help explain why First World countries “can have lots of shop assistants, delivery drivers, managers and administrators, accountants, advertising executives, a wide range of welfare payments and much else besides.”  Tony has bluntly concluded, “oppression of workers in the poorer countries is a direct economic benefit for the mass of people in the richer countries” (p14).

Let’s turn now to looking at how this works in relation to a cup of coffee.

Coffee is particularly interesting as almost all coffee beans are grown in the oppressed/super-exploited countries.  While it is predominantly grown on small family farms, the trade in coffee is dominated by four massive monopoly outfits.  And their mark-up is incredible.

In the first decade of the 2000s it was almost 430 percent – ie compared to the world market price, there was a 429 percent mark-up in nine imperialist countries, according to International Coffee Organisation stats (p31).  In fact, the real mark-up is much higher.  As John reports (using US dollars and cents), “. . . a barista typically obtains 60 shots of espresso per pound bag of coffee, that is, approximately 15c per shot.  Adding another 15c for milk, sugar and a disposable cup, the $3 price represents a 900 percent markup over the cost of its ingredients” (p32).

Mark-ups continue to rise, moreover,  even when the world price of coffee beans falls.  For instance, world prices fluctuated widely in the 1980s and 1990s, but the mark-up rose from 235% in the 1975-89 period to 382 percent in the 1990-99 period in the nine imperialist countries mentioned above (pp31-32).

In 2002, the world market price of coffee beans was 83 percent lower than in 1980, but mark-ups ensured continued fat profits for the monopolies controlling the trade while coffee farmers’ incomes collapsed to just $44 a year! (p32)

John notes too: “In 2009, according to the International Coffee Organisation, the roasting, marketing and sale of coffee added $31bn  to the GDP of the nine most important coffee-importing nations, more than twice as much as all coffee-producing nations earned from growing and exporting it. . . this does not include the value-added captured by cafes and restaurants” (p34).

Moreover, the source of profits for cafes, supermarkets and other sellers of coffee in the imperialist world is mystified: “. . . all of (the cafes’) profits appear to arise from their own marketing, branding and retail genius, and not a penny can be traced to the impoverished coffee farmers who handpick the fresh cherries” (p34).

The second piece will look at imperialism and your t-shirt.