Supermarkets and global inequality

An important article appeared in The New York Times today, "Supermarket Giants Crush Central American Farmers". But this article gives us insight into much more than grocery shopping in Central America.

The nexus of agriculture and elite globalization is - along with the great migrations of industries and people that are part of the same process - the most important social development of our time. Its effects are everywhere: the way the global economy works, the globespanning power of multinational corporations from the rich world, the slums of Latin America, the factories of China, the steadily wasting environment, the cultural homogeneity spreading across the world.

The story told by reporter Celia W Dugger is rooted in Latin America. She writes

The transformation of Latin America's food retailing system began in the 1980's and accelerated in the 1990's as countries opened their economies, often to satisfy conditions for loans from the International Monetary Fund and the World Bank. As foreign investment flooded in, multinational retailers bought up domestic chains or entered joint ventures with them.

We can see here the tremendous power of free trade doctrine to expand the control of the already powerful: corporations from America and Europe. One terrible effect as been heavily subsidized food exports from the rich countries flooding into the newly opened economies, driving Latin American farmers from their land into the constantly expanding slums of São Paulo, Bogotá, México, Caracas, Santiago (as well as Manila, Mumbai, Dhaka, Jakarta, Mombassa, Lagos, Johannesburg...).

But the article highlights a different transformation, the trend of expanding supermarkets which is reinforcing the impact of foreign agricultural imports. Taking advantage of their massive scale and huge resources, and appealing to consumers' desire to be more "modern", supermarkets have been steadily destroying their smaller competitors. The process affects not just smaller food markets, but also those who grow the food in the first place. Supermarkets demand a steadiness of supply and a homogeneity of produce that only large producers can meet, so smaller producers are finding themselves with fewer and fewer outlets for their goods.

The implications are huge. First is the nature of agriculture in Latin America. Cash crops (coffee, sugar, coca) have long been organized as plantations, with one landowner employing many waged workers and reaping most of the profits. Increasingly this model is being extended to food crops as well, as small producers are driven out of business and the refugees of the small farm end up under the glower of the field foreman, in the slums of the city, or as illegal immigrants to the United States.

And the deepening poverty is not being mitigated by the growth of sweatshop jobs as it is in China, since what export factories existed in Latin America are leaving for the even cheaper labor of China.

The environmental effects, not mentioned in the article, are also important. The American style of large monoculture crops, maintained by the heavy use of chemicals, will follow as its organizational form spreads - poisoning and draining the land as it has in the USA. Moreover, supermarkets' use of centralized food distribution is also a problem ("At La Fragua's immense distribution center in Guatemala City, trucks back into loading docks, where electric forklifts unload apples from Washington State, pineapples from Chile, potatoes from Idaho and avocados from Mexico.") The environmental impact of moving such large amounts of food over such vast distances is not to be ignored.

The trends captured in the article apply not just to Latin America but to the entire world. The massive centralization of economic power in a handful of corporations from the rich countries is the face of a coin whose other side is the concentration of wealth and power, both within countries and between them. What drives this growing gap is the freeing of markets. Markets are built on inequality, and left unregulated they will naturally increase it as the winners use their greater resources to institutionalize their power and privilege and demand even further concessions from the losers.

The phenomenon is well understood by its victims. As one small farmer from Guatemala, on the verge of losing his livelihood, says, large supermarkets exploit their size by playing their suppliers off against one another. "There are a lot of competitors here," he said, "a lot of small farmers trying to sell to them, so the prices are low."

The same methods have allowed a handful of corporations from the rich countries to dominate the world's commodity markets (copper, diamonds, coffee, cocoa, &c) as the many small producers are at the mercy of a few buyers. (The only important exception is oil, whose price has been kept low in a different way, viz. the political domination of the USA over the Middle East.) The rich world buys cheap to supply its factories, but maintains its domination over industry by relentlessly attacking economic nationalism - the only force that has ever industrialized a country - and by maintaining ownership over those factories it builds in the poor countries. Thus the rich world continues to dominate the global economy 50 years after being forced to yield political control over its colonies.

In Dugger's article we can see the human face of these abstract forces. The weakest members of society are driven to destitution as the relatively privileged engage in Western-style consumerism. Faceless Western corporations move inexorably into a controlling position over the economies of countries in the global South. Expanding wealth is used not to help everyone but to reinforce the position and privilege of those who already have too much of both.

Things have been moving in this direction for the last 20 years. How much longer can it continue?