The CREDO Dispatch #004

Welcome back to The CREDO Dispatch #004. Last time we took a look at the Name Your Price system we used to have in an effort to critique the way its Philosophical Idealism was misaligned with material reality and the nature of the impact this misalignment had on our customers, our company, and our relationships with coffee producers. In this Dispatch we’re staying in the philosophical realm, but shifting to seek an understanding of value— what it is and where it comes from. We’ll explore the concept of Commodity Fetishism and how human labor is applied to commodities to transform them and generate value. Understanding these concepts and their implications on our economic realities is what ultimately led me to dissolve the Name Your Price system at CREDO. I found the contradictions we explored last time to be problematic, but tolerable enough to not justify the termination of the system that set CREDO apart as unique. The concepts we explore today, however, illuminate a contradiction that, by my estimation, completely undermines the principle aim of the Name Your Price system (namely: for customers to value the work of the coffee producers) to such an extent that, once uncovered, its continuation was incompatible with its origin.

I’ve laid out some vocabulary and concept definitions (Commodity, Use Value, Exchange Value, Commodity Fetishism, and Qualitative change) so we can synch up and speak the same language as we move through this Dispatch, but I put them at the bottom because this is gonna be a long one already and I didn’t want to clutter the opening. Check them out now, or later, or not at all— but they’re there to supplement and clarify if you need!

Ok…you ready? Let’s dive in.

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Our Name Your Price system was designed to have customers critically consider the amount of labor it takes to produce coffee and to encourage them to assign a price that would reflect and honor the hard work and dedication of the producers who grew the plants that we enjoy as delicious beverages. This is a very heartfelt sentiment, but an overwhelming task for many. We did our best to guide people’s decisions –to make their choice easier with ranges and suggestions– but we were resolved to have the choice lay firmly with the consumer, forcing them to engage in our system of impact-making, removing their agency in a slight of hand that appeared as if we were the ones surrendering our agency. Naming a price for a cup of coffee is, understandably so, a difficult decision to make. I worked on the barista’s side of the interaction for so many years that I often lost touch with how difficult it can be to make that decision in a short time frame, and how shocking it often is to be forced to do so. These difficulties aside, the very act of naming a price undermines the very real value that the coffee holds, negating the original intention of having customers value the labor of the producers. To truly understand this, we must explore why any particular thing, or a commodity (see Terms below for more), holds value to begin with.

Value cannot be assigned ex nihilo (out of nothing) because it does not exist in itself nor for itself, nor as an innate property of any natural (nor synthetic) thing. To do so would be to practice Commodity Fetishism (see Terms at the bottom for a definition) by assuming there is some innate value to a thing and attempting to define it somewhat arbitrarily, trusting the “free market” to “regulate itself.” But when we dissect and examine the physical or even metaphysical properties of any given thing, at no point do we find a US Dollar value presenting itself to us. Value comes to a commodity from the outside, as a property bestowed to it through the application of labor.

Labor is what creates value. Man dedicates a finite amount of time from his finite life, sacrificing time he could otherwise use to deepen his own humanity and experience thereof, to bestow his skill and energy—a part of himself—into a commodity, qualitatively transforming it (see Terms below for more) in the process. This is where commodities obtain the value we see on a price tag—from a quantified amount of the aggregate human labor it took to produce it, its component pieces, and the labor necessary to produce any other elements necessary for its production. This process, sometimes more or sometimes less complex, applies to every product we’ve ever bought or consumed, but we’ll obviously focus solely on coffee as our case study here.

Coffee is initially harvested as a ripened cherry. In that form, it has no Use Value (see Terms below for more) to a consumer, barista, or roaster. As such, it has no Exchange Value (see Terms below for more) — not to say that the price is $0, but that it is simply not tradeable whatsoever. The producer must use their knowledge and apply their labor to the coffee cherry, and that labor applied qualitatively changes the thing itself and subsequently changes the Use Value of the coffee.

This first change from coffee cherry to coffee seed introduces an Exchange Value to the commodity as it now has a use to a roaster, though it is not yet of use to a consumer or barista. The Exchange Value introduced at this stage varies in relation to a few different characteristics, some of which are inherent in the coffee (varietal scarcity or quality), others influenced by outside forces (international economic policy, exchange rates, banks and cartels), and still others determined by the quality of labor that was applied by the producers. A higher quality of care by the producers and processors translates to a higher quality of product to be sold at market. The bean itself fulfills the needs of humans and therefore holds a certain Exchange Value now that labor has been applied to qualitatively change its natural properties, but the higher levels of applied labor now fulfill the desires of humans (higher quality, clearer notes, more vibrant flavors), further increasing the Exchange Value of the coffee. Still, the coffee must undergo more changes before it can be consumed, so it has not yet reached its final form nor highest value.

Even at this initial phase, exploitation has already entered the equation. As the world’s second most traded commodity, the starting point for coffee pricing is controlled by the Global Price Index of all Commodities on the stock market, specifically through coffee futures on what we call the “C-Market”, and a majority of coffee pricing and contracts are future contracts set on a “+/- differential” in relation to the C-Market. This means that most coffee producers are not at liberty to assess their costs to run a farm, costs of living, and costs of social development (education, infrastructure, healthcare) to determine a price to sell their coffee on the market that would cover those costs, let alone clear a profit: many are forced to sell at a loss from time to time or even year after year as they are subject to the C-Market, the quality of their coffee and processing, and their social connections to better markets. All this to say: already there are hard-set values for the coffee with regard to cost of production that are not respected, and producers are subject to the demands and whims of banks, international traders and financiers. The material foundation for what we believe to be a “free market” is the continued and relentless exploitation of the global south. As we’ll see moving forward, we in the imperial core are able to assess costs and adjust the Exchange Values of commodities accordingly, but the foundation of our ability to do so is laid by the Commodity Fetishism of the bankers and traders on Wall Street who have the ability to create and control the price floor with blatant disregard for the livelihood and well-being of workers who produce our commodities in raw form.

After this, merchants (for simplicity, “merchants” here are inclusive of exporters, importers, naval and trucking logistics companies, or any other party involved in moving the coffee from the farm to a roaster’s facility) then move the coffee from its origin to a roaster. Notably, no qualitative change is affected in this transition from point A to point B, yet many resources and much labor are applied to complete the transfer, consequently raising the total Exchange Value of the product. Merchants have their own expenses, but they are not subject to any equivalent to the C-Market and therefore have no difficulty extracting profit for themselves for their involvement. Though no qualitative change is made to the coffee, roasters shoulder the burden of the cost of transport, insurance, and the merchant’s profitability, absorbing the merchant’s costs of operation and profitability into their own cost of goods, factoring into an increased Exchange Value when they turn around to sell the commodity to a consumer.

Still, the green coffee has no Use Value to a consumer or a barista. A roaster must apply their craft to the commodity and through their labor applied, the seeds undergo a second qualitative change. Transforming from a dehydrated green seed to a brown roasted coffee bean, this qualitative change has opened up the Use Value of the coffee. Like the merchant who can quantify their costs of operation to then markup for a profit, roasters are able to do the same. Only the producers are strictly subject to commodity market traders and financiers, largely unable to determine their end point Exchange Value (pricing) to guarantee a profit. At this point, the coffee has undergone enough qualitative changes for it to be of use to the average consumer, which greatly increases its Exchange Value. Through this process, the value of the coffee has increased from an average of $2-8/lb to anywhere from $9-27/lb. The Use Value of the coffee at this point is at its peak, able to be transformed to a wide variety of products; most obviously drip coffee, espresso, and cold brew, but further applications extend into beer and spirits (coffee stouts, espresso martinis), pastry baking (tiramisu, espresso puffs, or coffee ice cream), and even the occasional BBQ rub.

In the café, labor is applied to the coffee once more for a final qualitative transformation before consumption, this time incorporating other commodities that have gone through their own processes of change. As workers labor with the coffee to grind, extract, and add syrups and milk, a bean is transformed into a consumable beverage. Again, costs in the café are known and quantifiable, just as they are on the farm level and in the roastery. The savvy café owner can understand their costs to such a degree that will reveal the increase in Exchange Value of the coffee, though most assign prices to coffee drinks based on market research and then work backwards to control their operating costs and maintain an appropriate profit margin. Whichever way it’s accomplished though, the fact that a profit margin exists is evidence of two things: an increase in Exchange Value due to qualitative changes in the coffee finally rendering it as a consumable beverage, and the exploitation of labor.

As we have seen, the Exchange Value of the coffee increases at each phase of transformation (or transportation) through labor. In that increased amount, the difference between costs of goods and the revenue received is traditionally called profit but can also be understood as Surplus Value: the value received in surplus to the aggregate cost of production. This surplus value exists due to the transformative power of labor, and therefore by all rights ought to belong to those workers whose labor transformed the commodity from one form to the next or transported it from one place to the next. Not rendering to the workers the total value that their labor produces is nothing short of theft, revealing the exploitation of labor that is present at every exchange point described herein. First, at the farm level: international finance controls the price of commodities in such a way that often prevents workers from covering their basic costs, let alone allowing their labor to generate a surplus value that they might have the agency to determine for themselves how to invest in themselves and their communities. Second, with the merchants, whose private (individual) claim to the surplus value robs dock workers, sailors, and truckers, whose labor it is that materially transfers the product from point A to point B, of the value they created.

Finally, in a roastery and café, surplus value can be (and almost always is) withheld from the workers in much the same way as the merchants mentioned above, but I here prefer to first bring our attention to less commonly identified thieves of the surplus value that workers generate with their labor: landlords and financial institutions. It is undeniable common knowledge that business owners exploit their workers. While this is an internal contradiction that must be addressed, it is paramount that we do not ignore that small businesses and small business owners are subject to that same exploitation of labor via landlords and financial oligarchs, exacerbating their conditions and contributing to their impulse to pass the exploitation down to their employees. Through the predatory interest rates of loans, credit cards, and paying rents to occupy properties they will never own, a financial class seizes funds wherefrom their labor did not materially contribute to their creation. They may have fronted capital to the business, but it is that capital that generates more capital for themselves; not by means of their own labor, but by means of appropriating the surplus value generated by the labor of the workers. The interest paid on loans robs workers and business owners of billions of dollars annually that ought to be kept by those who generated the value. Further, those financial institutions double-dip; first into the accounts of the businesses on a corporate level, and then again into the accounts of the workers through rents and debts on personal levels. This robs our communities from having more dollars in circulation to enrich lives, those dollars instead disappearing into already wealthy cities and into the bank accounts of financial oligarchs who will buy sixth vacation homes off the labor of those who may have never seen a proper vacation.

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There are a number of important foundational principles that we can take from examining this journey of coffee as it has undergone qualitative changes from seed to cup. Like the importance of working directly with producers so they aren’t subject to the whims and exploitation of C-Market prices. Or, assuming that eliminating exploitation in our value chain is a guiding principle (or at least minimizing it to the best of our ability), the importance of equitable distribution of the value created by the workers to the workers. Or the way that the exploitation that we experience as employees (and even small business owners) is orchestrated by the same individuals and organizations that orchestrate the exploitation of producers in the global south. 

Even further things can be gleaned by implication if we reflect long enough, like recognizing the way that seemingly unrelated industries are integral parts in the coffee supply chain. This simple commodity of coffee that we often take for granted as it sits on our counters and jumpstarts our mornings goes through relatively few qualitative changes as it comes to you (as is with many agricultural products) yet its availability is predicated on a long line of laborers who each contribute to their own value chain and experience their own exploitation. Miners extract ore that will be made into the steel that will be wrought by shipwrights into the vessel that transports containers of coffee across oceans from dock to dock. Rubber producers (these days synthetic) put tires on trucks that haul coffee from place to place. Lumberjacks cut trees that become truck beds, pallets, and paper on which is printed shipping manifests and invoices. And on, and on, and on. The cost of production of all of these components and operations are, to some fraction of a degree, wrapped up in the cost of a cup or bag of coffee. If it takes a village to raise child, it takes a nation to bring you a cup of coffee.

Each transaction appears to us as an economic exchange, but what underlies that exchange is a social connection and interdependency: our economic well-being is intricately connected to our social well-being. Though it may not always seem like it, we are each of us connected one to another to bring about the most mundane of things we rely on every day of our lives.

So…how exactly does all this build to an irreconcilable contradiction with the Name Your Price system? CREDO was once a place for the consumer to practice the same Commodity Fetishism that the bankers practice from their high towers, somewhat arbitrarily assigning prices to a cup of coffee as the bankers (through more complex processes) assign values to the C-Market from the outside. In an effort to have consumers consider the impact of their choices, CREDO ironically provided an opportunity for those consumers to become the very thing they sought to challenge. If our aim is to challenge systemic exploitation of farmers, we cannot do so by functioning in the same way the system of exploitation functions. The system must be up-ended, turned on its head; revolutionized. We reject Commodity Fetishism. It’s worth stating one more time— your coffee has undergone changes in its form from seed to cup, changing in its Use Value and increasing in Exchange Value at each stage, absorbing within that Exchange Value all the costs of production of all the processes and labor required to enact the qualitative changes. That means the price of coffee is a hard fact. It does not come to it arbitrarily and cannot be assigned on a whim, ad hoc. Leaving the decision of pricing a cup of coffee to the consumer at the point of sale not only affects the consumer more than the producer as discussed in Dispatch #003, but it also completely disregards the economic laws that govern our society and ultimately de-values the concrete work of the producer by prioritizing the feelings of the consumer. It gives primacy and undue power to the consumer; true power lies in production and the capacity to produce or withhold productive activity, not in consumption and the capacity to consume or withhold consumption.

For the labor of the producers to be truly honored, the final Exchange Value must be constant, reproducible, and set for optimal return so that there is a guaranteed surplus value with which we can make informed decisions and further investments. For the social relations that bind us to grow deeper, the economic relations must be strong in foundation and unwavering. If we are to confront systemic problems, they must be clearly identified, and we must find their source to root them out.

I’ve changed how we understand and approach the problems we see in our world. After 15 years, our strategy and tactics are due for renewal. But the CREDO still guides our steps. Together, we say:

Life is worth living. We refuse to merely exist. We pursue a life of meaning and purpose, fulfillment and joy. The world is not yet as it ought to be. Neither is our city. Neither are we. Yet, we reject apathy and despair. We engage the world, our city, and each other to make an impact for good. We are not alone. We press through narcissism, isolation and self-sufficiency striving to live in authentic community.

These are our foundations, and they will continue to guide us forward.

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Goodness this was (deservedly) long. If you made it this far you definitely deserve a little sweet treat: use code ExchangeValue to get 10% off your order! If you’ve found this Dispatch long after it was written, don’t worry— this one doesn’t expire, but each person can only use it once.

Buy our coffee, and next time you brew it, think not only of the farmers, roasters, and baristas, but of the whole productive system of commodities that had to move in turn and in tandem to bring that beautiful brew to your cup. It’s astounding, isn’t it?

Until next time,

Nate

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Terms:
Commodity- a commodity is a thing that has been produced with the intent to be sold. There are things that we produce for own consumption or enjoyment, such as a crops from a backyard garden, or products of our hobbies such as art or ceramic pottery. But the moment these items cease to exist for solely for our consumption or enjoyment, they become commodities; they are commodified. In the world we live in, anything can be commodified— even our thoughts can be turned into “intellectual property.” In fact, as we are increasingly alienated (made separate, foreign, unrecognizable) from the products of our labor, Capitalism encourages us to commodify every aspect of our lives, even those that ought to exist for our own enjoyment- our data, our hobbies, even our bodies are sacrificed to the lords of Capital for the sake of our survival against ever increasing economic pressures.

Use Value- Use Value is the potential for use which a thing holds, specifically with respect to its ability to fulfill a human need or desire. In its most basic form, a commodity can have a nearly infinite potential Use Value, but many of those uses are locked behind qualitative changes in the commodity. Take copper, for example: we can find copper in any number of everyday items; plumbing pipes, electric wiring, pennies, pots, and pans are just a few things that come to mind. But copper comes out of the ground as a rock, of sorts. Its initial Use Value is limited in scope but opens up after being smelted, processed, purified, stripped, spun, or soldered.

Exchange Value- Exchange Value is somewhat self-explanatory. We could get much more technical, but with the development of international trade and the US Dollar’s present and long-standing dominance since the aftermath of WWII, for our purposes here it is sufficient to understand it as, or at least as represented in, a price in US Dollar amounts.

Commodity Fetishism- this is a concept in two parts. Commodity is defined above, and Fetishism is a word that originally comes from an anthropological context of religious studies, used to describe the practice of ascribing supernatural importance or powers to a material object. That is, taking outside and independent immaterial properties to be innate within a material thing. Taken together, Commodity Fetishism isn’t so much a religious practice —though with our culture of consumerism such an argument can be made— as much as it is the default assumption that the Exchange Value of a commodity is innate within a thing and can therefore be arbitrarily determined by any given vendor. We pick up a coat off a display rack and give no thought to why it costs $50. We order a latte with no consideration of how our total came to $4.25 before tipping, only stopping to scratch our heads when the following season the same coat costs $80 and one morning the same latte suddenly rings in at $6.80.

Qualitative change- as opposed to quantitative change (turning 1 into 0.25 by division, 3 into 6 by addition or multiplication) qualitative change is a transformation in the properties of a thing, material or not. For instance: a tree experiences several qualitative transformations until it can present itself to us in a dining room as a table, or in our hands as a pencil. These two items are similar insomuch as they share the quality of wooden objects, but outside of this shared quality, the properties of a table are qualitatively different from the properties of both the tree and the pencil. See the definition of Use Value above for a further example of Copper.