Saturday, December 11, 2010

Rwanda: How Capitalism Caused the Genocide

In the last year or two I wrote an article for a University journal on the generous contributions by the modern international financial system and markets to causing the Rwandan genocide.  From the machinations of colonial powers and corporations to anti-communist militarism to the Bretton Woods institutions, none of these basic causes are discussed amongst the popularized images of Hutu-Tutsi conflict made for the disaster capitalism of the film Hotel Rwanda.
      Here is a selection from the introduction:

Because of the externalization of costs and asymmetries of power and resources between market participants, the cause of these disparities can be examined in the way commodities are priced. In fact, commodity pricing in markets has deviated from the theoretical assumptions of market behavior as discussed by Adam Smith. For example, free and efficient markets require symmetrical buyer and seller participants who do not influence the price of goods. Another free market principle says that sellers must be responsible for the entire cost of their product, and this must be reflected in the price.10 When pricing is efficient, bargaining allows producers to meet their costs. In actual practice, however, and in the case of commodities like coffee in particular, powerful participants manipulate the market to pay a price which ultimately disregards small producers’ costs, such as corporations in the London commodity markets. In addition, limitations of infrastructure and resources in the supply chain create these power dynamics even for relatively smaller participants, such as brokers who buy from small farmers in Asia, Africa, or Latin America. An end result is that many of these small producers have been receiving prices insufficient to meet their expenses. In fact, most global problems are linked to these market asymmetries and inefficiencies. While this paper will examine the circumstances of the 1994 Rwandan Genocide, many familiar problems occur for similar reasons, include corporate crime,11 environmental degradation, the 1994 Chiapas, Mexico uprising of the same year,12 the Darfur conflict and genocide,13 drugs,14 domestic and international immigration pressures,15 and urban slums.16 This paper proposes that the policies of fair trade have made important progress in addressing the source of these problems, and can make significant further strides towards solving them.


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