Theories and Commodity History

            The editors of From Silver to Cocaine discuss why it is important to study the history of commodities in their conclusion.  They link commodities to globalization, a concept they find “pervasive,” but they admit that “globalization is an imprecise term.” (352)  The editors promote the use of commodity chains to get a more complete representation of the history of a commodity.  They suggest this approach is more effective than the older approach of core-periphery analysis.  A commodity chain goes beyond production and demand to address all the intermediary steps: purchasing agents, transportation, refining processes, marketing, that link a commodity with a consumer.  Globalization is best understood by using commodity chains because frequently supply and demand reside in different parts of the world.  Locations far from a commodity’s origin may become new centers of production, and current export leaders can be replaced by countries a hemisphere away.  Today Brazil is the largest exporter of coffee, a commodity which originally came from Ethiopia, but the second largest exporter is Vietnam.  Throughout the commodity chain individuals seek ways to minimize costs, and they use their influence to secure personal profit.

            The editors suggest three areas of emphasis for future historical analysis of commodity chains.  The first is to focus more on the consumers of commodities, and to pay attention to how consumer preferences change over time.  The second is to look at the social history of production and distribution of commodities.  What are the behaviors of the various people involved in all the steps leading to the consumer?  A third area of focus should be on the actions of the state as it attempts to gain value from the commodity chain through state policy, taxes, intervention and sometimes control of the chain.  The editors state “political decisions are typically key to the constitution and destruction of commodity chains.” (358)

            The editors argue that the essays in From Silver to Cocaine demonstrate “the need to integrate history with theory.” (360)  They conclude that historical analysis without theoretical tools diminishes it and places it in a position below that of other social sciences.  Economists use models all the time to explain relationships between consumers and producers, and relationships among producers working in a competitive environment.  In The Social Life of Things the editors are using theories to come up with social and cultural definitions, models, to describe commodities independent of a particular history.  Models help people form, test, and defend causal relationships.  I think historians continually propose causal relationships.  Mintz proposed that slavery was an essential, original element of capitalism.  I think he has created a model and selected historical data to support his model.  Mintz is not alone.  We look for the thesis of a history book, the author’s preferred causal relationship which his book attempts to prove through his arguments.  Is there a difference between a thesis, a theory, or a model?

            The specific essays on coffee, cacao, bananas, and other commodities in this book do discuss the three areas the editors recommend: consumer preferences, something about the lives of the workers, and more detail than we have seen previously about the various steps required to get a commodity to the consumer.  The essays also discuss the activities of the states in the export and import locations.  Even in modern times in capitalist countries, politically motivated state intervention in the market is a commonplace.  These essays describe global commerce.  But it isn’t clear to me what the theories are that the editors want historians to utilize, unless they are the basic theories of modern economics.  That would be helpful.

From Silver to Cocaine

I mostly agree with James concerning the quality of Carlos Marichal’s essay; although I expect we would still disagree over monetary policy.  The strengths here are the combination of a brief history with a basic historiography.  Some of his weaknesses are likely related to the succinctness, in that he brings us some histories without critiquing, for example Artur Attman’s balance of trade history.  But he also seems to miss out on the quantity theory of money or not understand certain economic ideas.  James also mentioned the possibility for research on the decline of the Silver Peso; I wonder if the decline of silver was in any way related to the short lived Latin Monetary Union.

Just as Marichal misunderstands remittances, the joint introduction by Frank, Marichal and Topik misuses ‘political economy,’ which they define as “the mix of politics and economics.”  This may derive from a misconstruction of public choice theory.  ‘Political economy,’ entails the study of economics where the country is the base unit of analysis.  Overall this confusion dilutes the argument in the introduction.  Effectively they are arguing against ‘political economy,’ by describing how histories that focus entirely on one country tend to miss the global context.

Overall, From Silver to Cocaine is similar to The Social Life of Things, in the sense that both books consist of non-economists trying to draw conclusions about the interplay between culture and the market.  The difference is that From Silver to Cocaine is largely successful, possibly because the academics writing in The Social Life of Things tried to write their works without any economic understanding.  In some places From Silver to Cocaine shows a lack of economic depth, for example on page nine the authors say, “We see markets not as natural laws that impose themselves on humans, but rather as human constructs that are determined by social and political values and institutions.” Here they are setting up a straw man, but probably do not realize it.  Nonetheless, most of the vignettes here are well founded and provide a much needed departure from other works.

Carlos Marichal's Superb Essay

One cannot speak highly enough of Carlos Marichal's opening chapter, "The Spanish-American Silver Peso: Export Commodity and Global Money of the Ancien Regime, 1550-1800," in the book which he co-edited, From Silver to Cocaine.  

Marichal's superb analysis has, no doubt, to do with the subject discussed, the commodity par excellence, money, which, in this case, is the Spanish-American  peso

which became the Western world's universal currency between the sixteenth and eighteenth centuries.

Money is the most important commodity for without it any type of society above barter could simply not exist.  Without money, the division of labor and specialization to any degree cannot take place, leaving mankind in primitive hand-to-mouth existence.  And, as Marichal so incisively points out, the sounder that money is (as was the peso for so long) the more prosperous and culturally advanced a society will become.  Without the Spanish-American peso and its high quality, the tremendous economic advancement in the West could have never been achieved.  It is also of no coincidence that when money becomes corrupted (debased) a society will degenerate both economically and culturally.   

Marichal rightly acknowledges Spain's role in the peso becoming a world currency:

     

      One of the most striking features of the Spanish imperial monetary 

      regime was the extraordinary stability of the standards and units of

      account of the metallic monetary system over a period of three 

      centuries. . . . it was the high quality of the silver coins of the 

      Spanish Empire that generated an intense and constant international 

      demand for them. . . . This impressive continuity helps explain the 

      wide acceptance of the silver peso.  p. 30 

A potential area of further research, which Marichal only briefly discussed, was the peso's decline in the latter half of the nineteenth century due, in part, to the Western world and the new fledgling Latin American states' gradual abandonment of metallic systems of money for that of paper.  Although he does not mention it, the huge inflations and currency crackups which became endemic throughout Latin America was a direct consequence of the adoption of irredeemable paper money.  The abandonment of commodity money also affected Europe and North America as they suffered through reoccurring cycles of booms and busts and eventually a "Great Depression." 

As the monetary induced financial crisis continues to grip the West and as Latin American states routinely debase their currencies, policy makers should consult Carlos Marichal's essay on the magnificent history of the Spanish-American peso for potential remedies to their economic woes.