Frieden on Global Capitalism

I like to camp out at the world’s greatest coffee shop here in downtown Palookaville with my copy of (all caps) Global Capitalism. As far as this crowd is concerned, I might as well be reading Your Inner Werewolf, or Child Abuse for Dummies. In fact, it is not quite as bad as they may think. In his absorbing 476-page narrative history (link), Jeffry (sic) Frieden makes it clear that he is a fan of global capitalism, but with reservations. It can bring huge benefits, he believes, but the benefits come with costs, and there is no particular virtue in letting those costs fall—as they so often do—on the innocent.

Frieden’s account is subtitled “Its Fall and Rise in the Twentieth Century.” The fall-and-rise point is dramatic: the world reached a high point of economic integration before World War I, then spiraled down into autarky through war, and depression, and another war—before embarking on the spectacular trajectory towards integration that we live with today. The “Twentieth Century” part is a more or less fair representation, but in fact Frieden fills in a lot of background—we get a potted history of the Gold Standard that runs all the way back to Isaac Newton.

The kind of reader who will pick up this book probably knows most of the basic facts in it (although I confess I had never heard of Edward Kemmerer before, and I don’t remember Rubber Dollar Warren). Still, I don’t know anybody who gives the economic story the same primacy, nor puts it in such perspective. As a sample of his breadth and concision, consider his thumbnail account of tropical staple farming:

Coffee, cotton, sugar, and rice together accounted for more than half of the tropics’ agricultural exports in 1913, and the impact on tropical societies could not have been more different. M In common lore, sugar and cotton were ‘reactionary’ crops, while coffee and rice were ‘progressive’ crops … The former were plantation products and created some of the world’s most inequitable and torpid societies; the latter were small-farm products and provided opportunities for extensive economic growth. Plantation owners usually farmed sugar and cotton with gang labor. Overseers drove rows of closely watched workers through the fields, with no need to reward individual initiative and motivation. … Large farms were more efficient than small ones, and small independent farmers could not compete with plantation owners.

Coffee and rice, on the other hand, were ideal smallholder crops. … Unlike in the case of sugar and cotton, large-scale gang labor was not practical. … And when the dominant crop was grown by independent smallholders, more broad-based and equitable patterns of political growth usually followed. …

The bitter aftertaste of sugar dominance was shocking inequality. A wealthy elite lorded over an impoverished labor pool, with little incentive to encourage economic, social, or human development, all of which would simply have bid labor away from the sugar plantations. … The economic and political orders reinforced the position of wealthy landowning and merchant classes with little reason to improve the quality of government, infrastructure, or schooling.

In contrast, Latin American’s coffee lands were among the great developmental successes of the decades before World War One. It is not coincidental that coffee, like rice or wheat, was easy to grow at very competitive costs on small farms.

Jeffry A. Frieden, Global Capitalism 98-100 (2006)

Afterthought: motivates me to read a history of coffee. Amazon lists several, none an obvious choice. Readers are invited to offer suggestions.