University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln Nebraska Anthropologist Anthropology, Department of 1997 Starbucks vs. Equal Exchange: Assessing the Human Costs of Economic Globalization Lindsey M. Smith Follow this and additional works at: https://digitalcommons.unl.edu/nebanthro Part of the Anthropology Commons Smith, Lindsey M., "Starbucks vs. Equal Exchange: Assessing the Human Costs of Economic Globalization" (1997). Nebraska Anthropologist. 111. https://digitalcommons.unl.edu/nebanthro/111 This Article is brought to you for free and open access by the Anthropology, Department of at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Nebraska Anthropologist by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. Starbucks vs. Equal Exchange: Assessing the Human Costs of Economic Globalization Lindsey M. Smith This paper discusses the impact of economic globalization on human populations and their natural environment. Trends leading to globalization, such as multilateral and bilateral trade 8fT88ments which reduce trading barriers between countries, are discussed. According to the economic principle of comparative advantage, all countries which specialize in what they can produce most efficiently should benefit equally from fair trade. Developing countries must increasingly rely on cheap labor and low environmental standards to compete for foreign investment and capital in the global economy. Observers argue that the market is not free enough to conect the long-term damage associated with export policies like this. Poverty, misery and social stratification are increasing in many developing countries as a result. A case study of the coffee industry in Latin America provides evidence of the consequences of globalization policies on the most vulnerable populations. NAFTA and the collapse of the Intemational Coffee Ag-eement contributed to environmental degradation and Joss of livelihoods in Chiapas, Mexico. The result was increased social unrest, which led directly to the Zapatisla uprising of 1994. Responses to the impacts of globalization are considered. International regulation of labor and the environment in trade agreements, voluntary codes of conduct for multinational corporations, and the alternative trade movement, in combination, provide the best mechanisims to address the human cost of economic globalization. Starbucks va. Equal Exchange Western-skewed economic climate, they The term "globalization" is used must increasingly bid their human with increasing frequency in late populations and natural resources into twentieth century political, economiC, an untenable and unsustainable "race to and social discourse. Institutions such the bottom" by continually lowering labor as the Wor1cl Trade Organization and environmental standards to (WTO), the General Agreement on compete for investment by multinational Tariffs and Trade (GATT), and the North corporations seeking low production American Free Trade Agreement costs and limited regulations (Compa (NAFTA) are part of the intemational 1993). movement towards a global free market. While the long-term viability of Whether a nation-state and its citizens such economies may be seriously will benefit from or lose out under the undermined, the business and terms of these agreements depends on govemmental elite in these countries where that state falls on the intemational often do benefit, enormously, from such scale of development, and on how those foreign investment partnerships and benefits and losses are measured. global free trade agreements. Stanley Industrialized nations tend to Korten describes this phenomenon, benefit economically from the trade which he has observed in locations as liberalization process that has become varied as Pakistan and the Philippines, the goal of post Wortd War II as that of "growing islands of great intemational trade regimes. Developing wealth in poor countries" (1995:114). As countries are often trapped in the the managers and owners become proscribed roles of primary commodity increasingly privileged, they become producers. If these nations do attempt isolated from the populations who work industrialization in the heavily in the factories and on the plantations 68 that are so attractive to foreign factors beyond those envisioned in investment and contracts. As economic economic theory. A perfect and equal globalization gathers steam, the global market does not exist; subsidies communitarian interest, which used to and other domestic trade barriers bind the rich and poor together in pursuit abound on goods and services in of their nation's economic growth, is industrialized, as well as developing giving way to "a melding of the world's ... nations (Madeley 1992:9). But the trade elites into a stateless community in the liberalization being sought in the clouds" (Korten 1995:114), while the multilateral trade negotiations of the poor face an increasingly borderless 1990's is derived directly from the world of sweatshops, environmental and unrealistic concept of comparative societal exploitation, and despair. advantage operating in a perfect market. This paper examines the impacts For much of the post World War of the current mode of economic II era, the ability of governments in both globalization on producer populations in developing and industrialized states to the developing world, and evaluates the adjust market inefficiencies through responses to these impacts currently protection of domestic economies had a proposed by economists, governments, compensatory effect on the impact of multilateral agencies, and grassroots or trade liberalization efforts (Oxfam non-governmental organizations. Web-Site). However, trade agreements like NAFTA and the most recent GATT An Overview of the Process negotiations have dramatically reduced In theory, international the power of governments to· intervene competition in a global market can be in their own export trade; instead, beneficial. According to the economic economic power rests increasingly in theory of "comparative advantage", if all the hands of the powerful multinational nations specialize in what they produce corporations, who will always choose ''to most efficiently, and trade with their locate production in sites of maxirnurn export earnings for everything else, all profitability-that is, where labour is nations should benefit, (Madeley, cheapest and ... standards are lowesf' 1992:3-4; Buchsbaum 1997). However, (Oxfam Web-site). Madeley goes on to emphasize that The Uruguay Round negotiations comparative advantage works only of the GATT, which ended in 1993, were when "trade is between countries which by far the most comprehensive set of are roughly equal" (Madeley 1992:6). multilateral trading agreernents ever This is not the case in the current global concluded (Lawrence 1996:3). Because system, as the structure of international of the aforementioned historical trade still reflects the nineteenth century economic imbalance between pattern which was based on the developing economies of the global production of manufactured goods in the south and the developed nations of the industrialized countries, while their global north, the Uruguay Round of the colonies depended on primary product GATT was dominated by the interests of exports to generate any foreign the industrialized nations (Lawrence, exchange for imports (Madeley 1992:7). 1996:6). The accords essentially Although Madeley (1992:11) and codified the status quo, that is, Lequesne (1996:25) do not deny the increased trade liberalization through occasional benefit of international trade reduction of trade barriers for all nations for all countries involved, both question in areas of key interest for the north the applicability of the theory of regardless of differing levels of national comparative advantage to a global development (Lequesne 1996:6). The economic system affected by many industrialized nations ernerged as 69 benefi~ries from the negotiations, with investment In many cases, with economiC gains estimated at $500 "hundreds of miHions of people billion per year by 2005 (Lequesne desperate for any kind of job the global 1996:9). economy may offer" (Korten 1995:229), On the other hand the the governments of many poor nations developing nations were more h~rt than are being forced to depend heavily on helped by the Uruguay Round what has been called their comparative agreements in their hopes to enter the advantage. global economy on an equal basis with the industrialized north. The ...the fact of (their) poverty: in particular, negotiations did not substantially cut cheap labor and a greater tolerance of protective tariffs globally on primary pollution (standard Deviation 1994). commodities, sum as precious or According to the aforementioned strategic minerals and tropical hardwoods which are major exports for ths?ry of comparative advantage, many poor nations (LeQuesne 1996:13). nations that specialize in their most However, the negotiations did lift most efficient resource as an economic import restrictions on agricultural strategy should be realizing gains from international trade comparable to other products, making it easier for nations which also specialize to industrialized nations to inexpensively export their substantial agricultural maximize their profits. If unregulated surplus. At the same time, the 1993 labor and pollution havens are the legitimate comparative advantage for GATT accords required reduced domestic