Abstract

Adam Smith envisioned a world of small shopkeepers and farmers, all of them individual entrepreneurs. Though Smith never visited Ethiopia, the coffee trade in Ethiopia approximates the world that Smith envisioned, with 95% of Ethiopian coffee produced by small farmers. It is good coffee, some of the best in the world. That, however, did not spare farmers in Ethiopia from economic disaster when a glut of coffee on the world market put coffee prices in a freefall with prices hitting a one-hundred year low when adjusted for inflation. With their incomes plunging, many farmers switched to other crops, chief among them khat, a leafy narcotic that sells for as much as $200 a pound in the United Kingdom and the United States, where it is illegal. Smith believed that market-driven shifts in production would contribute to the wealth of nations, resulting in everyone being better off. The experience in Ethiopia suggests otherwise. This paper examines ways of dealing with the human dimensions of this economic catastrophe. Among them are new marketing initiatives such as the Oromia Coffee Farmers Cooperative Union headed up by Tadesse Meskela and efforts of Oxfam and other organizations to appeal to the moral sentiments of consumers and executives of companies such as Starbucks and Sara Lee to encourage them to purchase coffee produced in Ethiopia and elsewhere that provides a fair return to the farmers who produce it. The latter offers some interesting parallels with Smith’s theory of fellow-feeling, which he developed in The Theory of Moral Sentiments, published in 1759 — seventeen years before the much better known An Inquiry into the Nature and Causes of the Wealth of Nations. The paper concludes by examining possibilities for and limitations of cooperative marketing initiatives and moral suasion as means of ameliorating the human costs of market economies.