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Solving the “Coffee Paradox”: Understanding Ethiopia’S Coffee Cooperatives Through Elinor Ostrom’S Theory of the Commons

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Solving the “Coffee Paradox”: Understanding Ethiopia’S Coffee Cooperatives Through Elinor Ostrom’S Theory of the Commons University of Massachusetts Amherst ScholarWorks@UMass Amherst Open Access Dissertations 5-13-2011 Solving the "Coffee Paradox": Understanding Ethiopia's Coffee Cooperatives Through Elinor Ostrom's Theory of the Commons Susan Ruth Holmberg University of Massachusetts Amherst, [email protected] Follow this and additional works at: https://scholarworks.umass.edu/open_access_dissertations Part of the Economic Theory Commons Recommended Citation Holmberg, Susan Ruth, "Solving the "Coffee Paradox": Understanding Ethiopia's Coffee Cooperatives Through Elinor Ostrom's Theory of the Commons" (2011). Open Access Dissertations. 379. https://scholarworks.umass.edu/open_access_dissertations/379 This Open Access Dissertation is brought to you for free and open access by ScholarWorks@UMass Amherst. It has been accepted for inclusion in Open Access Dissertations by an authorized administrator of ScholarWorks@UMass Amherst. For more information, please contact [email protected]. SOLVING THE “COFFEE PARADOX”: UNDERSTANDING ETHIOPIA’S COFFEE COOPERATIVES THROUGH ELINOR OSTROM’S THEORY OF THE COMMONS A Dissertation Presented by SUSAN RUTH HOLMBERG Submitted to the Graduate School of the University of Massachusetts Amherst in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY May 2011 Department of Economics © Copyright by Susan Ruth Holmberg 2011 All Rights Reserved SOLVING THE “COFFEE PARADOX”: UNDERSTANDING ETHIOPIA’S COFFEE COOPERATIVES THROUGH ELINOR OSTROM’S THEORY OF THE COMMONS A Dissertation Presented by SUSAN R. HOLMBERG Approved as to style and content by: _________________________________________ James K. Boyce, Chair _________________________________________ Léonce Ndikumana, Member _________________________________________ Frank Holmquist, Member ________________________________________ Gerald Epstein, Chair Department of Economics DEDICATION To Tom and Thea, in loving memory of my mother Carolyn Ann Holmberg, and to the farmers and families of the Oromia Coffee Farmers Cooperative Union. ACKNOWLEDGEMENTS I am so grateful for all the support and encouragement throughout this process from my family, friends and dissertation committee. I would especially like to thank my chair advisor, James K. Boyce, for his guidance, support, and feedback not only through this dissertation process, but throughout my time as his student and research assistant. I would also like to thank Leonce Ndikumana for his support, especially during my fieldwork in Ethiopia, and my outside committee member, Frank Holmquist, for encouraging my interest in cooperatives. To my sister Kathy Pachan and my brother Andy Holmberg, a special thanks for your patience, encouragement, and for always looking out for me. To my mother, Carolyn Holmberg, who was not only a dear and loving mother, but especially nourished my intellectual passions. I thank my daughter Dorothea Hilbink, for offering such a fun, spontaneous, and spirited balance to my life and to this process. Lastly, exceptional thanks go to my husband, Tom Hilbink, without whose endless love, patience, and delicious meals I could not have written this dissertation. v ABSTRACT SOLVING THE “COFFEE PARADOX”: UNDERSTANDING ETHIOPIA’S COFFEE COOPERATIVES THROUGH ELINOR OSTROM’S THEORY OF THE COMMONS MAY 2011 SUSAN R. HOLMBERG, B.A. UNIVERSITY OF MONTANA, MISSOULA M.A. UNIVERSITY OF MONTANA, MISSOULA Ph.D., UNIVERSITY OF MASSACHUSETTS AMHERST Directed by: Professor James K. Boyce This dissertation evaluates the applicability of Elinor Ostrom’s theory of the commons to other forms of collective action by mapping it on a case study of the Oromia Coffee Farmers Cooperative Union in Ethiopia and its efforts to overcome the vast disparities that have long structured the global coffee commodity chain (the “Coffee Paradox”). The conclusions I draw are the following. While Ostrom’s theory has serious omissions, it also sheds much needed light on the struggles of Ethiopia’s coffee farmers to overcome their poverty. Both the design principles that Ostrom identifies for governance rules and her list of predictors for successful common property resource management institutions suggest that Ethiopia’s coffee cooperatives could be in peril. However, by expanding Ostrom’s governance framework to incorporate a broader enabling role for governments as well as supportive roles for civic organizations, NGOs, and social movements, we see greater potential for the success of the Oromia Coffee Farmers Cooperative Union. vi CONTENTS Page ACKNOWLEDGEMENTS……………………………………………………………….v ABSTRACT……………………………………………………………………………...vi LIST OF TABLES…………………....………………………………………….……..viii LIST OF FIGURES………………………………………………………………………ix CHAPTER 1. INTRODUCTION……………………………………………………………………...1 2. DETAINING POTENTIAL: ECONOMIC THEORIES OF COLLECTIVE ACTION……………………………………………………………………...……….…14 3. INTERNALIZING “SOCIAL DISTANCE:” COOPERATIVES AND THE GLOBAL JUSTICE MOVEMENT…………………………………………………………………31 4. OSTROM’S THEORY OF COLLECTIVE ACTION………………………..............50 5. CASE STUDY PART 1: THE POLITICAL ECONOMY OF COFFEE……………. 69 6. CASE STUDY PART 2: THE POLITICAL ECONOMY OF THE OROMIA COFFEE FARMERS COOPERATIVE UNION…………………………………………………..88 7. UNDERSTANDING COOPERATIVE GOVERNANCE: LESSONS FROM OROMIA……………………………………………………………………………….108 APPENDICES A. GENERAL BACKGROUND STATISTICS……………………………………….146 B. ROCHDALE PRINCIPLES………………………………………………...………149 WORKS CITED……………………………………………………………..…………151 vii LIST OF TABLES Table Page 1. Membership of Oromia Coffee Farmers Cooperative Union……………………..…106 2. Volume (in tons) and Value of Output Sold by the Union in Years…………………106 3. The Percentage of Women in OCFCU’s Cooperatives……………………………...134 viii LIST OF FIGURES Figure Page 1. Ethiopia’s First Cooperative Proclamation……………………………………………89 ix CHAPTER 1 INTRODUCTION It took a global crisis for anyone to point to the dismal state of the dismal science. The heroes of the mainstream economics profession and supporters of free markets and financial regulation were forced to admit mistakes. The bail-outs and recovery programmes have been multibillion-dollar lessons that mainstream economics is unrealistic. Economists such as Keynes and Minsky came to the fore again to explain the crisis. It is time that the economics perspectives of nonmainstream economists are given an ear (Mohamed 2010). In 2009, Elinor Ostrom won the Nobel Memorial Prize in Economics, becoming the first woman to do so in the forty-year history of the award. When the Nobel committee announced their landmark decision, they stated that Ostrom, who is actually a political scientist by trade, won the prize “for her analysis of economic governance, especially the commons” (Royal Swedish Academy of Sciences 2009). Beginning with her 1990 magnum opus, Governing the Commons: The Evolution of Institutions for Collective Action, Ostrom’s research career has focused on challenging the argument that groups cannot use and manage natural resources collectively and sustainably. In other words, Ostrom’s research shows that the “tragedy of the commo ns” is actually not such a tragedy, but a problem—one that many communities all over the world have been solving for centuries. Ostrom won the Nobel Prize during a time when the broader public, overwhelmed by the encroaching front of existing environmental problems, has been ripe for hearing her message. Instead of the widespread but stale belief that solving our environmental 1 problems is limited to two very disparate paths—the market or the state 1—Ostrom’s research has the potential to empower people and communities to collectively devise solutions to these pressing issues. What is less known about Ostrom’s work, even in academic circles, is that her underlying purpose has long been to develop a broad theory of collective action, one that moves beyond the cases of communities managing watersheds and forests, to other examples of group self-organization. “My choice of the CPR [common-pool resource] environment for intensive study was based on a presumption that I could learn about the processes of self-organization and self-governance of relevance to a somewhat broader set of environments” (Ostrom 1990, 27). Furthermore, What is missing from the policy analyst’s tool kit—and from the set of accepted, well-developed theories of human organization—is an adequately specified theory of collective action whereby a group of principals can organize themselves voluntarily to retain the residuals of their own efforts…I hope this inquiry will contribute to the development of an empirically supported theory of self-organizing and self-governing forms of collective action (Ostrom 1990, 25). If Ostrom’s claim is true, that the framework she developed for her research on the environmental commons can be applied to other examples of collective action, then her work has the potential to shape debates about the disheartening state of our economy and the burgeoning efforts to build economic alternatives that enhance the well-being of people and the environment. The fallout from the global financial crisis, dovetailing with the longer-term overgrowth of a neoliberal varietal of globalization, has created a public cry for fundamental changes in our economic system. 1 Either the market will achieve the best possible outcome via private property rights or the market is so addled with inefficiencies that environmental quality can only be achieved by state regulation. 2 This wake-up call is inspiring unprecedented numbers of people to take action to bring forth
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