How Money Grows on Trees

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Review of 'Banana Wars', Gordon Myers, Zed £14.95

There has been an ongoing feud between the US and the European Union (EU), revolving round the banana trade. Though it has been overshadowed by the very real wars in Iraq and Afghanistan, the 'banana wars' have been a significant episode in the struggle to reshape capitalism, the project for a new American century. This makes Banana Wars: the Price of Free Trade, an interesting book.

The opening chapters give a brisk and engaging background to the eight-year legal dispute.

Bananas were not imported into Britain commercially until the 1880s. In 1901 Joseph Chamberlain, Secretary of State for the Colonies, decided to develop British outlets in Jamaica. It was part of a plan to create closer economic ties in the British Empire. World capitalism had moved from free trade to protectionism. The British government was merely following the trend.

The following year American company United Fruit bought a 45 percent share in Elders and Fyffes, the monopoly company forged out of the British import trade. Elders and Fyffes later became a wholly owned subsidiary of United Fruit.

This was fine until after the First World War, when loan repayments became an issue for British capitalism. Payments to the US cost Britain $35 million a year. The pound fell in value next to the new reserve currency, the dollar. This made it very difficult and expensive to hold an empire together.

The British government countered this by fostering Caribbean banana co-operatives that would trade in pounds, not dollars. Plantations were set up in the most unlikely places, notably the Windward Islands. They were maintained through the Second World War and beyond.

This leads Myers to the disputable claim that Britain ran a 'benevolent empire', maintaining tiny Caribbean communities. There was probably more than just altruism on the British government's part. With US imperialism advancing and British imperialism on the wane, leaving behind economic dependencies meant Britain could keep putting its oar into Caribbean politics.

After Britain joined the European Economic Community a number of old imperial concerns were bound together in the 'Lome Convention', guaranteeing quotas for ex-colonies. Meanwhile, the creation of the World Trade Organisation committed the community to phasing out such 'restrictive practices'.

The US and several Central American countries launched a suit against the EU, spurred on by Chiquita (formerly United Fruit). The Central American plantations held the overwhelming advantage. Built on flat, fertile land, with a greater pool of labour and having received much greater investment, they reaped huge economies of scale.

It's interesting to note the tortuous legal process the dispute went through, the diplomatic equivalent of trench warfare. The chapters on negotiations between the US and EU are undeniably dull, but they give a graphic lesson in the bureaucratic mess of modern capitalism.

One example - attempting to force the pace, in 1999 the US applied $520 billion worth of sanctions to the EU. After complaints and lobbying from US importers a formidable list was whittled down to nine products - handbags, pecorino cheese, electric coffeemakers, felt paper, folding cartons, boxes and cases, bath preparations, industrial batteries and bed linen.

In 2001 the antagonists reached agreement. In 2006 the quota system will end. In this 'transitional period' the large-scale producers have already reaped benefits, to the detriment of small producers.

Global capitalism preys upon less-developed economies. There are three solutions to the impoverishment of small producers: localism, which under capitalism is utopian and potentially reactionary; state protection, which Gordon Myers favours. This also seems unlikely given national governments have been the battering ram of globalisation.

The only progressive solution is the liquidation of global capitalism, replacing it with a system driven by need, not rapacious accumulation.