Information, Finance, and the New International Inequality: The Case of Coffee

Authors

  • John Talbot Colby College

DOI:

https://doi.org/10.5195/jwsr.2002.269

Abstract

This paper argues that a ?new? international inequality has been superimposed over the ?old? international inequality, and that this superimposition can help to explain the increasing degree of inequality in the world economy today. The old international inequality was based on the colonial division of labor, in which the periphery provided raw materials to core-based industries. The new inequality is based on control over ?ows of information and ?nancial capital by core-based transnational corporations (TNCs). This argument is illustrated using the empirical example of the world coffee market, comparing the responses of market participants to twosevere frosts in Brazil, which significantly disrupted the market. Following the first frost, in 1975 under the ?old? international inequality, TNCs responded gradually amidst uncertainty over the frost?s impacts, allowing coffee-producing countries to reap windfall profits during an extended period of high prices. TNCs responded immediately to the second frost in 1994, due to their access to information about the severity of the frost and their control over financial instruments used to set the world market price of coffee. This quick response enabled them to capture most of the excess profits resulting from a much shorter period of high prices.

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Published

2002-08-26

How to Cite

Talbot, J. (2002). Information, Finance, and the New International Inequality: The Case of Coffee. Journal of World-Systems Research, 8(2), 215–250. https://doi.org/10.5195/jwsr.2002.269

Issue

Volume 8, Issue 2, 2002

Section

Global Inequality Part II

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