Interstate competition and Chinese ascendancy: The political construction of the global cotton market,1973

Abstract

This article argues that interstate competition over the organization of the world economy shapes the spatial configuration of commodity chains. This departs from much of the literature that emphasizes firm- and sector-level dynamics. To illustrate this argument, we use formal network methods in conjunction with a historical analysis to examine the evolution of the global cotton trade between 1973 and 2012. Through this analysis, we demonstrate that changes in the spatial configuration of the cotton market were shaped by changes in the nature of competition among the most powerful states in the world economy. While the cotton trade was once characterized by a bipolar network reflecting the nature of interstate competition under the Cold War, by the early 2000s China’s accession to the World Trade Organization and the end of the Multi-Fiber Arrangement had dramatically reshaped the global cotton market. The result was a binodal network in which trade flows were increasingly concentrated between China and the United States.

Keywords

China cotton global commodity and value chains interstate competition markets networks Soviet Union states trade United States

Introduction

If states have the capacity to reshape the global market, what kind of market do they make? This question is at the center of a broad range of recent scholarship on global inequalities and the relationship between state and market in the global economy (e.g. Bair, 2008; Block and Evans, 2005; Chorev, 2007; Fligstein and Merand, 2002; Jorgenson, 2006). These concerns became increasingly prominent in light of arguments regarding the shifting structure of markets under globalization (Clark and Beckfield, 2009; Fröbel et al., 1980; Kim and Shin, 2002; Mahutga, 2006; Mahutga and Smith, 2011; Smith and White, 1992; Wallerstein, 1976). As the weight of the global economy progressively shifts toward Asia in general and toward China in particular, debates are intensifying over the degree to which newly industrialized countries can harness shifting trade networks to strengthen their power and dominance in the world economy.

The case of the global cotton trade is illustrative. Between 2003 and 2012, China imported more than one-third of all raw cotton traded on the global market. Not only was this nearly four times the market share of the next largest importer, but it also represented more than a fivefold increase in China’s market share over the previous three decades. It is perhaps not surprising that a country such as China would come to monopolize raw cotton imports as apparel and textile industries are considered stepping stones to upward mobility in the international division of labor. What is surprising, however, is that, in doing so, the structure of the cotton market was transformed from a bipolar network centered around the United States and the Soviet Union (USSR) as major exporters and competitors to a binodal network in which the United States and China were by far the dominant trade partners and rivals for trade dominance. Whereas the cotton trade once comprised two relatively distinct groups of states, each of which represented a side in the familiar Cold War rivalry, it is now organized around a single pair of states trading directly with one another.

Recent efforts to explain the shifting spatial configuration of commodity markets, or commodity chains, emphasize firm- and sector-level dynamics (e.g. Bair and Gereffi, 2001, 2002; Gereffi, 2001; Gereffi et al., 2005; Gereffi and Korzeniewicz, 1994). In this article, we shift the focus to the broader historical and institutional settings in which these processes are embedded. We argue that interstate competition over the organization of the world economy shapes the structure of markets for particular commodities. To illustrate this argument, we use formal network methods in conjunction with a historical analysis to examine the evolution of the global cotton trade between 1973 and 2012. Through this analysis, we demonstrate that changes in the spatial configuration of the cotton market were shaped by changes in the nature of competition among the most powerful states in the world economy. Specifically, we find that, from 1973 to 1992, the geopolitical demands of the Cold War shaped the opportunities and constraints facing states and firms in the cotton market. The result was a bipolar network organized around a divide between the United States and the Soviet Union, both of whom sought to dominate the export market. In this context, the ability of the United States and the Soviet Union to control the export of cotton was part of a broader competition to extend their respective spheres of influence. With the collapse of the Soviet Union, however, the Cold War conflict was replaced by rivalries between the United States and emerging competitors, most notably China. The result was a binodal trade network in which an increasingly large share of cotton flowed from the United States to China. As a result, China came to exert considerable control over the import market, threatening to transform the role of importer into a position of leverage and dominance in the global cotton market more generally. These findings contribute to an emerging line of research that returns the commodity chain literature to its roots in the world-systems approach (e.g. Bair, 2005; Moore, 2009, 2010; Quark, 2008, 2014; Talbot, 2004).

Interstate competition and the world economy

While prominent scholars take issue with Wallerstein’s (1974) model of the state (e.g. Skocpol, 1977; cf. Arrighi, 1998), his world-systems perspective nonetheless provides an undeniably political account of the spatial organization of transnational production and exchange. For Wallerstein (1974), the capitalist world economy is characterized by an ever-present division of labor among core, peripheral, and semi-peripheral regions integrated through unequal relations of commodity production and exchange. The dynamic reconstruction of this division of labor over time is achieved primarily through conflict within the interstate system (see also Hopkins and Wallerstein, 1977). States with unequal power compete with one another through political, economic, and military means in order to reconfigure the international division of labor and enhance their share of the benefits of commodity production and exchange. This interstate conflict is shaped by – and can, in turn, shape – conflicts within each state as state managers broker among competing class factions and other groups vying to advance their specific interests in global capital accumulation. While later research fleshed out the role of other actors, such as firms and social movements operating transnationally (see, for example, Gereffi and Korzeniewicz, 1994; Moghadam, 2009; Silver, 2003), the founding work in the world-systems tradition demonstrated the critical role of interstate conflict in the successive reconfiguration of the capitalist world economy.

Capturing the intersection of transnational production and interstate conflict was also central to the development of a methodology for studying the capitalist world economy. Toward this end, Terence Hopkins and Immanuel Wallerstein (1977) focused on what they referred to as ‘commodity chains’. In the simplest formulation, a commodity chain is ‘a network of labor and production processes whose end result is a finished commodity’ (Hopkins and Wallerstein, 1986: 159). Working backward from final product to raw materials, one can trace the geographic division of both labor and value in commodity chains. Moreover, analyzing commodity chains as objects of contention at multiple points in time makes it possible to ask questions regarding the expansion, contraction, and restructuring of the world economy through interstate competition, all of which occupy a central place within world-systems theory more generally.

Many scholars use the commodity chain approach to good effect, as evidenced by work on the production of sugar (e.g. Moore, 2009, 2010, Tomich, 1990), coffee (e.g. Talbot, 2004), shipbuilding (e.g. Özveren, 2000), grain flour (e.g. Pelizzon, 2000), and cotton textiles (e.g. Quark, 2008, 2014). At the same time, a wide range of scholars use commodity chain analysis but divorce it from the larger theoretical framework from which it came (Bair, 2005; Collins, 2005). This is evidenced most clearly by work on global commodity chains (e.g. Bair and Gereffi, 2001; Gereffi, 2001; Gereffi and Korzeniewicz, 1994) and, more recently, global value chains (e.g. Gereffi et al., 2005). Scholars within these traditions emphasize the important organizing role of powerful, transnational firms within commodity chains. However, as discussed at length by Bair (2005), global commodity/value chain research is oriented toward questions regarding firms and sectors, largely to the exclusion of Hopkins and Wallerstein’s focus on the evolution of the world-system more generally. These approaches thus tend to deemphasize the historical and institutional setting in which these chains are embedded. This includes, among other things, interstate conflict over the organization of the capitalist world economy. With this in mind, we situate our analysis of changes in the global cotton trade in terms of a broader discussion of the relationship between geopolitical conflict and the structure of the world economy.

Cycles of interstate conflict

We return to the guiding concerns of world-systems research in order to explore how interstate conflict shapes the spatial configuration of commodity chains over time through successive rounds of political competition. At the most basic level, we argue that interstate conflict shapes the spatial configuration of commodity chains through two interrelated processes. First, states adopt general strategies vis-à-vis their competitors that involve political and economic calculations across a broad range of sectors. These general strategies shape the opportunities and constraints faced by states and firms concerned with the spatial configuration of specific chains. For example, the US state agreed to liberalize its long-protected apparel and textile sectors as part of a broader calculation to convince rival states to establish the World Trade Organization (WTO). This broad geopolitical strategy thus shaped the opportunities and constraints facing firms and states concerned with the spatial configuration of the textile sector and the cotton trade in particular. Second, given the opportunities and constraints created by the broader dynamics of interstate conflict, states and firms develop specific tactics for reconfiguring individual chains to their advantage. For instance, the Chinese state and Chinese textile manufacturers ramped up textile production to take advantage of the liberalization of the textile trade. These tactics have the potential to influence the dynamics of interstate conflict overall insofar as they have implications for the ability of states to secure benefits from the world economy. In this way, we see how conflict within the interstate system is both constitutive of and constituted by conflict over the spatial organization of individual commodity chains.

While interstate conflict is a constant feature of the capitalist world economy, it can take different forms at different historical moments, with different implications for the spatial configuration of commodity chains. This idea was central to the work of Hopkins and Wallerstein (1977) who focused on three distinct forms of interstate conflict: imperialism, rivalry, and hegemony. As imperialism refers to the direct and indirect processes through which strong states come to politically dominate weaker ones, most critical for our purposes is the distinction between rivalry and hegemony. A rivalry exists when interstate conflict is organized around two equally matched groups of states. While Hopkins and Wallerstein (1977) define hegemony as a situation in which a single state is capable of economically dominating all other states, we follow Arrighi’s Gramscian-inspired definition of hegemony – that is, a period in which a dominant state or group of states and related business groups establish leadership in the world economy by gaining consent to their rule from others in the interstate system. This is critical as it does not assume the absence of consequential interstate conflict during periods of hegemony, as Hopkins and Wallerstein’s definition implies. Rather, it recognizes that hegemonic leadership is constructed through interstate conflict as the hegemonic coalition must materially and discursively reorganize patterns of political and economic competition, including dominant axes of interstate conflict. For example, as Arrighi (1994) notes and as discussed in more detail below, the US state constructed its hegemony within the capitalist world economy both materially and discursively in relation to the Cold War conflict with the Soviet Union.

World-systems scholars argue that the ebb and flow of global political history is marked by cycles of hegemony, rivalry, and chaos in which patterns of conflict organized by a hegemonic coalition emerge and then break down. For example, British hegemony depended on, among other things, successfully organizing interstate competition around the notion of ‘free trade’ as the sine qua non of the global economy. As described by Arrighi (1994: 55–56, 58), the latter innovation was especially important, in that states voluntarily exchanged sovereignty for capital, thus legitimating Great Britain’s ability to control would-be competitors by manipulating the flow of money. Not surprisingly, such innovations tend to benefit the innovator. As competitors adapt to the rules of the game, however, hegemony slowly gives way to rivalry or periods in which more equally matched states struggle to reconstitute the rules of the game so as to improve their position in subsequent rounds of play. Such was the case in the late-19th and early-20th century when competition at the top of the world-system was characterized by a three-way contest between Great Britain, Germany, and the United States. This rivalry, of course, eventually devolved into the systemic chaos that was the First World War. The resulting crisis was not fully resolved until the end of the Second World War at which point the United States emerged as a hegemonic power, in part by organizing interstate conflict along Cold War fissures.

Shifts in the dominant form of interstate conflict thus provide states with opportunities to actively reconfigure the commodity chains that make up the world economy. In the analysis below, we focus in particular on the way in which the collapse of the Soviet Union contributed to the progressive reconfiguration of the global cotton market since the decline of US hegemony in the early 1970s. Whereas the political conflict of the Cold War era once served as a clear organizing force in the world economy, the emergence of new challengers over the past two decades raised significant questions regarding hegemonic succession. Foremost among them is whether China will supplant the United States as the dominant power within the world-system.

From the Cold War to Chinese hegemony?

As discussed by Arrighi (1994: 295–301), US hegemony was consolidated after World War II by organizing interstate conflict around the Cold War divide. The US state used Cold War politics – lasting from roughly 1947 to 1989 − to legitimate the expansion of its political and economic power on a global stage. The dominant form of interstate conflict during the height of US hegemony and throughout the Cold War era can thus be understood as the product of an anti-systemic movement on the part of the Soviet Union – that is, a state-led movement in opposition to capitalist world economy and its reigning hegemon. While eschewing integration into the capitalist world economy through networks of transnational production and exchange, the Soviet Union continued to participate in the interstate system, thus shaping the geography of transnational production and exchange (Chase-Dunn, 1982). As this anti-systemic movement shaped the broader geopolitical calculus of the United States and the Soviet Union as the most powerful states, it profoundly affected the spatial organization of commodity chains, the division of labor, and the distribution of benefits in the global economy. Talbot (2004) notes, for example, that Cold War conflicts changed the way that the coffee trade was governed. The United States was willing to stabilize prices through the International Coffee Agreement in order to prevent major coffee producers from orienting themselves toward the Soviet bloc. This approach was part of a more general attempt to curb Soviet influence through the expansion of trade. As we will show, the effects of this strategy can also be seen in the cotton market where both the United States and the Soviet Union exported cotton as a way to support textile industrialization in strategic countries and thus expand their respective spheres of influence. The result was a bipolar trade network that comprised two distinct groups of states.

Following the collapse of the Soviet Union in 1989, the geopolitical strategy of the United States shifted toward neoliberal expansion, which ultimately allowed the rise of new competitors and made rivalry the new dominant form of interstate conflict. Rather than following the Soviet strategy of rejecting capitalism altogether, contenders in the post-Soviet era sought to increase their share of surplus value by controlling the world economy. As a result of the unique separation of economic and military power in this period, this conflict was waged politically and economically (Arrighi, 1994). By the early 2000s, China appeared to be the most significant contender to US dominance. Indeed, as David Harvey (2005) suggests, ‘the spectacular emergence of China as a global economic power after 1980 was in part an unintended consequence of the neoliberal turn in the advanced capitalist world’ (p. 121). China’s mobility within the world economy is due, in large part, to the growth of the country’s textile industry and, relatedly, its ability to control the cotton market. Far from occurring naturally, the Chinese state actively sought to secure access to cheap and reliable sources of cotton while simultaneously reducing its dependence on US supply. The result is a binodal trade network in which China’s growing power directly threatens the United States’ ability to dominate the sector.

Data and methods

In general, we are interested in understanding how concerted political action on the part of competing states contributed to the progressive reconfiguration of the global cotton market in the period between 1973 and 2012. Following examples in both world-systems analysis (see Breiger, 1981; Mahutga, 2006; Mahutga and Smith, 2011; Nemeth and Smith, 1985; Smith and White, 1992; Snyder and Kick, 1979) and economic sociology more generally (see Baker, 1984; Burt, 1992; Granovetter, 1974; Leifer, 1985; Podolny, 2001; Uzzi, 1996; White, 1981), our analysis builds on the idea that markets can be meaningfully described in terms of the structure of relationships around which they are built. States sought to influence the spatial configuration of the global economy in general, and of the global cotton market in particular, as a means of maintaining or improving their position in relation to other states. The implications of these struggles are thus defined not by the content of state strategies per se, but by the relationships they helped to construct. With this in mind, we use network methods to generate snapshots of the global cotton market at different points in time.

Our analysis draws on export data collected by the International Cotton Advisory Committee (ICAC). For each year t in question, we construct an N × N matrix A _t depicting patterns of pairwise exchange between 129 countries or country areas.¹ Ties within any given year-specific network are both valued and directional, in that each cell a^ijt is equal to the amount of cotton sent from country i to country j at time t. In this context, the amount of cotton exchanged between any two countries is expressed as a share of the total volume of cotton exchanged between all ij pairs at time t (i.e. aijt is equal to the number of metric tons of cotton sent from country i to country j at time t divided by the total number of metric tons of cotton exchanged between all country-to-country pairings observed during that time). Following the example of Campbell and Allen (2001), the resulting data were periodized using hierarchical cluster analysis (HCA). In this context, the goal of HCA is to group year-specific data according to the empirical comparability of the underlying patterns of exchange. The expectation is that data that are temporally proximate are likely to be clustered together due to the continuity of trade over time. The ability to meaningfully periodize the data is, by and large, a function of the degree to which relational discontinuities are induced by virtue of fundamental changes in the dynamics of trade. The degree of discontinuity between any given pair of years q and r is measured in terms of the Euclidean distance $d_{q r} = \sqrt{\sum_{i} \sum_{j} {(a_{i j q} - a_{i j r})}^{2}}$ . We then used HCA to analyze the resulting T × T dissimilarity matrix.

The results shown in Figure 1 point to the existence of noticeable breaks between 1992 and 1993, as well as between 2002 and 2003, with the pre- and post-2002 divide emerging as the more prominent of the two. In other words, we identify three distinct clusters of years: 1973–1992, 1993–2002, and 2003–2012. While it would be ill-advised to make too much out of mechanistic forms of data reduction, the temporal consistency here is striking, in that we do not observe any anachronistic pairings across the three major clusters, despite the fact that the algorithm we used explicitly allows for the clustering of non-contiguous years. That is, the resulting clusters are temporally insular, meaning that all years falling within a given set of bounds also fall into the corresponding cluster. For example, all of the years between 1973 and 1992 are grouped with the 1973–1992 cluster. Perhaps even more importantly, the resulting periodization corresponds to what we would expect given known historical events, most notably the collapse of the Soviet Union in 1989 and China’s accession to the WTO in December 2001. The fact that these events precede these between- and within-cluster breaks, respectively, lends further support to the idea that the results of the clustering algorithm are genuinely tapping into the effects of these transformative events.

Figure 1.

Hierarchical cluster analysis (HCA) of year-specific trade data, 1973–2012.

In this case, clusters were defined so as to minimize within-group variance (see Ward, 1963). While other methods of clustering produce slightly different results, they all point to a similar story: the pre-1993 and post-2002 periods are characterized by distinct trade regimes, with the period between 1993 and 2002 constituting a transition phase between the two. The differences between pre-1993 and post-2002 regimes are apparent in the trade networks shown in Figure 2. Whereas trade patterns in the earlier period gave rise to a bipolar network organized around Cold War-era rivalries, the latter period was marked by the emergence of a binodal network in which a previously unprecedented volume of trade was carried out exclusively between the United States and China.

Figure 2.

Cotton exchange network, 1973–1992 and 2003–2012.

Our goal is to explain how these changes came about. We focus in particular on the way in which market structures changed in response to events within the broader political and institutional environment, namely, the collapse of the Soviet Union and China’s accession to the WTO. Toward this end, we integrate formal network analysis into a narrative account of the evolution of the global market between 1973 and 2012. These measures help us to capture changes in the structure of the global cotton market over time and, more specifically, to highlight the differences between the pre-1993 and post-2002 regimes.

Network measures

While our narrative analysis covers the entire period from 1973 to 2012, our explanatory focus is on the differences between the 1973–1992 period on the one hand and the 2003–2012 period on the other. For each period p in question, we construct an N × N matrix A _p which, like matrix A _t described above, depicts patterns of pairwise exchange among the countries listed in the ICAC data. Unlike A _t, the amount of cotton exchanged between any two countries is now expressed as a share of the total volume of cotton exchanged between all ij pairs across the entire period p. Dyadic trade flows serve as a common building block for both country-level measures of market share and dependence, as well as network-level measures of monopolization.² As noted above, the data are directed, as reflected in the distinction between exporters and importers. Consequently, measures of market share, dependence, and monopolization used here are necessarily tied to a given role. That is, we can distinguish, for instance, between a country’s share of the import market from that same country’s share of the export market. For the purpose of expository simplicity, we define each measure with respect to exporters. The same measures can be comparably defined for importers by simply transposing A _p. Our results are based on a discussion of measures for both importers and exporters.

In the analysis below, we draw an important distinction between power, which is measured in terms of market share, and dependence, which is measured in terms of the diversity of trade flows across a given set of partners. Formally speaking, export market share Cip is defined in the following way:

C_{i p} = \sum_{j} a_{i j p} .

(1)

Whereas aijp is equal to the share of the market contained in a single dyad, the row sum given above is equal to the total share of the export market captured by country i. Yet, exporters who are tied almost exclusively to a single importer occupy a far more precarious position than exporters who send a comparable volume of goods to a range of partners. As such, we are interested not only in the extent to which countries are able to capture the market but also in the extent to which they are dependent on a given set of partners. Consistent with recent work by Bothner et al. (2010), we measure dependence D_ip using a local Herfindahl index:

D_{i p} = \sum_{j} {(\frac{a_{i j p}}{C_{i p}})}^{2} .

(2)

This measure is local insofar as it captures the extent to which goods sent by a single exporter tend to be concentrated among a given set of importers.

In addition to considering changes in the position of individual countries with respect to both market share and dependence, we also examine changes within the structure of the market as a whole. We focus in particular on the extent to which trade tends to be monopolized by a given set of actors. Export monopolization M_p is calculated in the following way:

M_{p} = \sum_{i} C_{i p}^{2} .

(3)

where M_p refers to a global Herfindahl index depicting the concentration of trade across all exporters, as opposed to the concentration of trade across the set of importers tied to a given exporter, as described above. Export monopolization can thus be derived by first squaring each country’s share of the export market and then taking the sum of squared market shares across the set of exporters. In other words, network-level measures of monopolization are a direct reflection of the distribution of market share across countries.

The evolution of the global cotton market

Bipolar trade and the Cold War, 1973–1992

Many accounts suggest that, from the 1970s onward, transnational markets were shaped most significantly by the rise of powerful firms that could organize sourcing and distribution networks globally (e.g. Gereffi and Korzeniewicz, 1994). Indeed, in the cotton trade, US and European cotton merchants played a significant role in expanding the transnational trade in cotton by linking geographically dispersed cotton producers and textile manufacturers. Yet, the case of the cotton trade reveals that a narrow focus on transnational firms can overlook the significant imprint of interstate conflict on the spatial configuration of the cotton trade network.

As shown in Figure 2, during the period between 1973 and 1992, the global cotton market was characterized by an almost completely bifurcated trade network, with Japan emerging as the only major link between the United States and the Soviet Union.³ While the United States tended to dominate the Asian export market, trading with partners such as China, Hong Kong, Taiwan, Thailand, Indonesia, and South Korea, their Soviet counterparts traded almost exclusively with Eastern European countries such as Poland, Bulgaria, Romania, East Germany, Yugoslavia, Czechoslovakia, and Hungary. These results suggest that the cotton trade, much like the global economy more generally, was perhaps most fundamentally shaped by the Cold War and the resulting patterns of interstate competition over the structure of trade networks. Emerging as rivaling superpowers following World War II, the United States and the USSR sought to expand their influence by using trade to support the industrialization of countries deemed politically important. The textile industry, and thus the cotton trade, played a central role in this competition.

This is not to say that interstate competition trumped the role of transnational cotton merchants in organizing the cotton trade network. Rather, transnational cotton merchants competed with other class factions to shape states’ geopolitical strategies. During this time, the United States sought to contain Soviet influence by expanding the capitalist world economy. This geopolitical strategy was directly affected by patterns of political contestation among actors in the domestic apparel, textile, and cotton sectors. Whereas US textile manufacturers preferred protectionist policies, US cotton merchants, who had been expanding transnationally in competition with UK merchants since the late 1800s, sought to rebuild their distribution networks abroad. While the United States took measures to protect textile manufacturers, Cold War concerns also compelled the US state to help expand the reach of US cotton merchants and US cotton exports in both Europe and Asia. A representative of the largest cotton merchant firms at the time, William Clayton, served as Undersecretary of State and played a prominent role in crafting the Marshall Plan, which helped to rebuild European textile industries and created new markets for US cotton exports (Dunn, 1992). Similarly, the United States deemed it geopolitically expedient to modernize textile industries and provide market access for countries of greatest strategic importance in the Cold War: first Japan and later Hong Kong, South Korea, Singapore, and Taiwan (Rosen, 2002), all of which, with the exception of Singapore, appear as key importers in Figure 2. This included providing loans and grants to import agricultural commodities such as cotton to over 25 developing countries through Public Law 480 (PL-480), which proved highly profitable for cotton merchants (Brown, 2000; Dunn, 1992; Winders, 2009). In short, the strategies of transnational firms and the geopolitical concerns of the US state intersected to extend the transnational trade in cotton and, in doing so, extend the US sphere of influence.

To pursue its own geopolitical interests, the Soviet Union played a similar game, using support for textile industries as a tactic to expand its sphere of influence in opposition to the US-led capitalist sphere. From the 1920s to the 1980s, the Soviet Union expanded cotton production in the Central Asian Soviet Socialist Republics (SSR). This was especially true in the case of the Uzbek SSR, where forced cultivation became a means of supporting textile-based industrialization (Spoor, 1993). Cotton produced in the Uzbek SSR was primarily consumed by textile manufacturers in either Russia or the Ukrainian SSR. Any surplus was subsequently exported throughout Eastern Europe under barter arrangements intended to encourage industrial development within the Soviet sphere (Baffes et al., 2004; Graziani, 1981). The resulting trade pattern can be clearly seen in Figure 2 which, as noted above, illustrates the economic affinity between the USSR and Eastern European states. This confluence of political and economic contention among competing states meant that global trade would evolve within the framework of two starkly differentiated regimes.

As shown in Table 1, the United States emerged as the dominant exporter in the global cotton market, with US producers laying claim to nearly one-third of all exports. While the Soviet Union was able to capture roughly 20 percent of the export market, the level of competition declines rapidly thereafter, as suggested by the magnitude of the corresponding measure of monopolization. For example, whereas the Soviet Union’s share of the market is just over 60 percent of that of the United States, the market share of the next most prominent exporter – Pakistan – is only 23 percent of that of the United States. In general, Table 1 shows that even among the top exporters, the distribution of market share exhibits a strong right skew, with the United States coming out well above its competitors. US dominance during this period was largely due to two factors: the domestic agricultural subsidy regime in the United States, and the Multi-Fiber Arrangement (MFA) and similar bilateral trade agreements between the United States and China. Together, these institutional arrangements reflected efforts by the US state to balance competing interests among diverse domestic actors within the broader geopolitical context.

Table 1.

Market share, dependence, and monopolization for the top 10 exporters and importers, 1973–1992.

Exporter			Importer
	Market share	Dependence		Market share	Dependence
United States	0.325	0.116	Japan	0.160	0.241
USSR	0.199	0.072	South Korea	0.082	0.645
Pakistan	0.075	0.085	China	0.062	0.264
Australia	0.040	0.212	Taiwan	0.055	0.243
China	0.040	0.144	Italy	0.049	0.100
Turkey	0.039	0.089	Hong Kong	0.048	0.187
Sudan	0.037	0.087	West Germany	0.044	0.088
Egypt	0.033	0.081	Indonesia	0.039	0.257
Syria	0.026	0.088	Thailand	0.035	0.179
India	0.019	0.103	Poland	0.034	0.669
Monopolization	0.161		Monopolization	0.056

The US agricultural subsidy regime was established through the Agricultural Adjustment Act (AAA) of 1933, which offered price supports to wheat, corn, and cotton producers as an incentive to cooperate with acreage controls designed to combat declining agricultural incomes resulting from overproduction and declining commodity prices (Friedmann and McMichael, 1989; Winders, 2009). At first, the AAA reduced cotton production, limiting US producers’ share of the export market. By the 1940s, however, cotton producers began to use government subsidies to finance the mechanization of cotton picking. When combined with the introduction of synthetic fertilizers, insecticides, and herbicides following World War II, the transition to mechanized cotton production effectively undermined attempts to restrict the supply of cotton and allowed the United States to regain its competitive position on the export market (Mann, 1987). While supporting farm incomes in the United States, these policies thus indirectly served to artificially lower the international price of cotton, discouraging international production and competition.

In many respects, the MFA – which regulated trade in apparel and textiles from 1974 to 1994 − was a byproduct of the geopolitical strategy described above. As the US state had provided support and market access to geopolitically strategic countries like Japan, Korea, Taiwan, and Hong Kong (all of which appear among the top five importers listed in Table 1), the textile and apparel manufacturers in these countries grew quickly and began to undercut Western manufacturers in their own markets. Not surprisingly, US manufacturers and union leaders sought protection from these new, low-cost competitors (Chorev, 2007). US textile and apparel importers and retailers, in contrast, opposed protectionism, which would limit their access to cheap imports from Asian suppliers who had the advantage of relying on much cheaper, non-union labor (Rosen, 2002). Ultimately, the protectionist camp largely prevailed in the short-term.

Through the MFA, states established individual quotas specifying the precise quantities of different textile and apparel products that could be exported from one country to another. Western countries were to gradually open their markets to exports from the global South, while maintaining safeguards to minimize ‘disruptions’ in their domestic markets. In practice, however, quotas became more rather than less restrictive as the United States and European Union (EU) sought to protect their domestic manufacturers and ‘play politics’ with textile and apparel quotas (Dicken, 2007). Although not a party to the original MFA, China – which appears as a key importer in both Figure 2 and Table 1 – subsequently signed bilateral agreements with the United States, which established MFA-style export quotas. Re-entering the world market in the 1970s, the Chinese government began investing heavily in the development of globally competitive textile and apparel industries. The Chinese government took full advantage of possibilities to expand their textile and apparel exports, manipulating the quota regime where possible (Rosen, 2002). Yet, China’s continued expansion, like that of many MFA countries, was constrained due to limited access to Western markets.

Together, the MFA, along with bilateral agreements between the United States and China, had critical implications for the logic of trade in the textile and apparel sector and thus for the geography of the global cotton trade. While ostensibly aiming to protect US textile manufacturers, the MFA gave Western apparel firms and retailers incentives to build complex and geographically diffuse subcontracting networks abroad by piecing together export quotas from a broad range of countries (Collins, 2003). This, in turn, indirectly reinforced the power of US cotton producers by limiting the quantity of cotton imported by any one country and thus minimizing their dependence on any one cotton importer. This asymmetry is evident in the results reported in Table 1, which indicate that the degree of concentration within the export market was nearly three times that of the import market and that levels of dependence among the top 10 exporters tended to be much lower than levels of dependence among the top 10 importers. While subsidies ensured US producers’ dominant position in the cotton market, the MFA and bilateral trade agreements with China indirectly ensured that they would not be overly dependent on any one importer.

This is not to say that the MFA quotas determined the size of a country’s cotton imports, which were influenced by, among other things, domestic cotton supplies, domestic consumer demand, and competition with synthetic fibers. Nonetheless, the quota regime had a significant influence over the geography of the cotton import market. Apparel and textile import quotas influenced which countries would import cotton, as well as how much they would import. The MFA, for example, compelled Western apparel firms to establish textile and apparel industries in countries that did not grow cotton, such as Tunisia, in order to access quotas. As noted by Dicken (2007), ‘the entire clothing industry of some developing countries was, in effect, created by MFA quotas’ (p. 261). Perhaps most critically, the MFA limited the apparel exports of non-cotton-producing countries like Japan, South Korea, Hong Kong, Taiwan, and Singapore who would have otherwise claimed a much greater share of major international apparel markets – and a much greater share of the cotton import market – by outcompeting manufacturers in the United States and Europe (Dicken, 2007: 261). The MFA thus indirectly reinforced the construction of the cotton market as an exporters’ game with US cotton producers coming out on top.

In sum, concerted political action on the part of powerful, competing states significantly shaped the spatial configuration of the cotton market during this period. This does not mean that transnational firms played no role in the construction of the market. Transnational cotton merchants championed the expansion of trade as part of the Cold War offensive, as well as the decentralized trade regime created by the MFA, both of which created opportunities for them to service buyers around the world. Established cotton merchants from the United States and Europe, as well as a set of highly capitalized grain merchants diversifying into new commodities, competed to take advantage of the shifting geography of textile production (see Quark, 2013). At the same time, however, the geographical expansion of cotton merchants was limited by the contours of the Cold War conflict. From this perspective, cotton merchants did shape the spatial configuration of the market by constructing global sourcing and distribution networks. Perhaps more consequentially, however, cotton merchants shaped states’ geopolitical strategies in ways that would further their interests, such as the provision of support to textile industries abroad.

The emergence of binodal trade, 2003–2012

As can be seen in Figure 2, the structure of the global market in the period between 2003 and 2012 differs significantly from the period leading up to the end of the Cold War, during which time the market was largely structured around a pair of competing exporters, namely, the United States and the Soviet Union. As the dominant form of interstate conflict in the world economy shifted from an anti-systemic movement against the reigning hegemon (i.e. the United States) to rivalry among declining and potentially ascendant hegemons, the trade network underlying the global cotton market was reorganized. While the United States continued to maintain marked ties to old trading partners such as Thailand, Taiwan, and South Korea, it also strengthened ties with countries such as Pakistan, Thailand, Turkey, Mexico, Vietnam, and Indonesia. Most importantly, however, the United States increased the share of exports going to China. During this time, China emerged as an organizing force within the network, gaining control over the import market. By 2003, the days of an export-driven market polarized around Cold War-era rivalries were gone. In its place, we find evidence of a binodal network in which trade is increasingly concentrated in a single dyad that comprised the United States on the one hand and China on the other, thus putting the top exporter and the top importer in direct contention with one another.

This outcome was shaped by two major shifts in the broader dynamics of interstate competition in the world economy. First, the collapse of the Soviet Union in 1989 led to a decline in the production of cotton textiles in former Soviet states throughout Eastern and Central Europe (International Cotton Advisory Committee (ICAC), 2007). This encouraged a number of former SSRs to seek out new buyers in Western Europe, East Asia, and Latin America. The effects are evident in Figure 2, which shows that, in the period between 2003 and 2012, the former Soviet Union maintained strong ties to countries such as China and Bangladesh. Second, the end of the Cold War prompted the United States to adopt a new geopolitical strategy. More specifically, the United States and its allies sought to ‘shift the balance of global forces and geopolitical alignments in ways beneficial to transnational capitalism’ (Gill, 2012: 16). These efforts eventually led to the creation of the WTO in 1995. The product of more than 7 years of negotiation during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the WTO was the culmination of US-led efforts to reorganize interstate conflict within a framework of binding rules designed to promote the dual principles of free trade and freedom of investment (Chorev, 2007; McMichael, 2004; see also Panitch et al., 2011).

To benefit its most globally competitive firms, the United States initiated the Uruguay Round with the goal of including trade in services, foreign investment, and intellectual property rights under the regulatory umbrella of the GATT (Chorev, 2007). In order to gain commitment on these issues from countries in the global South, however, the United States was compelled to promise the liberalization of trade in sectors such as textiles and agriculture. Most critically, key apparel importers, including the United States, the EU, and Japan, agreed to replace the MFA quota system with the new Agreement on Textiles and Clothing (ATC), which would progressively phase out quantitative restrictions on apparel imports over the course of 10 years between 1995 and 2005.⁴

Over time, these changes would increasingly bring the United States and China into direct competition with one another. The full impact of these changes would not be felt, however, until China’s accession to the WTO in 2001 and the final phase-out of MFA quotas in 2005. To put it another way, China was anything but a bystander in the competition to reconfigure the organization of the global economy generally and of the cotton market in particular. In the negotiations over its WTO accession, the Chinese state gained the support of the United States and the EU by committing the country to ‘unprecedented liberalization’ (Wang, 2002: 20). Cotton, textiles, and apparel were critical to these discussions and revealed the trade-offs this geopolitical strategy would require. While Chinese textile and apparel manufacturers stood to benefit from economic integration, concerns were raised in the cotton sector that, insofar as it was likely to bring agricultural liberalization, accession to the WTO would effectively force Chinese producers to compete with their highly subsidized US counterparts. In the end, the final accession agreement served to strengthen the power of the Chinese state vis-à-vis Chinese cotton producers. For the Chinese leadership, commitments made at the WTO became ‘external sticks’ they could use ‘to enforce marketization and reform’ against domestic resistance (Breslin, 2003: 214, original emphasis; see also Alpermann, 2010). In this respect, the WTO provided the Chinese state with a political tool for intervening on behalf of textile and manufacturers at the expense of domestic cotton producers.

This was part and parcel of an ongoing development program oriented around a concerted expansion of the textile and apparel sector. In anticipation of the end of the quota system on 1 January 2005, China ramped up production, tripling its total industrial output value in textiles between 2000 and 2007 (Alpermann, 2010: 163). As in other sectors, the Chinese government created vibrant industrial districts composed of clusters of suppliers, manufacturers, and contractors to allow economies of scale. This was achieved by opening land for industrial parks, offering tax benefits to businesses, building transportation networks and other infrastructure, and subsidizing utilities (Appelbaum, 2009: 77; Gereffi, 2009). The effect on the global textile and apparel market was significant. China more than doubled its share of global apparel exports from 15.2 percent in 1995 to 33.2 percent in 2008, a year in which China’s share of apparel exports was more than twice that of the next six largest apparel exporters combined (Gereffi and Frederick, 2010).⁵ This growth was fueled by a steep increase in imported cotton. While China was the largest producer of cotton in the world, with domestic production continuing to grow through the 2000s (Alpermann, 2010: 170), a finite supply of arable land, as well as competition between cotton and food crops, made continued production growth difficult – particularly growth that could meet skyrocketing demand in the wake of the MFA phase-out. On average, cotton consumption outstripped production in China by around 30 percent from 2003 to 2010 (US Department of Agriculture (USDA), 2011). To fill this shortfall, the Chinese state was thus forced to import cotton to supplement its textile and apparel sectors.

China’s cotton imports increased dramatically following the country’s accession to the WTO. According to ICAC export data, China went from receiving approximately 116,000 metric tons in 2001 to nearly 3,627,000 metric tons in 2005. In the course of just a few years, China had become the largest producer of textiles and apparel – and thus the largest importer of cotton – in the world. The results are apparent in the comparison between Tables 1 and 2. Between 2003 and 2012, China controlled 36 percent of the import market, more than five times its market share during the 1973–1992 period and almost four times that of its closest competitor. China’s increasing dominance in the import market undoubtedly contributed to the centralization of trade within the import market as a whole, with the level of monopolization increasing dramatically between 1973–1992 and 2003–2012. Despite these changes, trade within the import market remained less concentrated than in the export market.

Table 2.

Market share, dependence, and monopolization for the top 10 exporters and importers, 2003–2012.

Exporter			Importer
	Market share	Dependence		Market share	Dependence
United States	0.414	0.175	China	0.363	0.255
India	0.144	0.378	Turkey	0.093	0.409
USSR	0.112	0.244	Bangladesh	0.076	0.352
Australia	0.081	0.289	Indonesia	0.073	0.204
Brazil	0.071	0.108	Pakistan	0.052	0.211
Greece	0.033	0.255	Thailand	0.044	0.223
Burkina Faso	0.028	0.295	Mexico	0.040	0.993
Côte d’Ivoire	0.013	0.146	South Korea	0.031	0.285
Pakistan	0.013	0.182	Vietnam	0.029	0.273
Egypt	0.012	0.146	Taiwan	0.025	0.321
Monopolization	0.219		Monopolization	0.162

The flip side of the tremendous growth among Chinese textile and apparel manufacturers and their dominance in the cotton market was, of course, the continued decline of textile manufacturers in the United States, as well as those around the world. While US textile manufacturers’ consumption of cotton peaked in 1997, it fell by over 65 percent by 2010 (USDA, 2011). In the broad calculus of the United States’ neoliberal geopolitical strategy, US apparel and textile manufacturing was sacrificed to more globally competitive firms, not least of which were US-based apparel and textile retailers who could now globally source apparel and textiles unhindered by the quota system (Chorev, 2007; Rosen, 2002). As apparel and textile production and demand for cotton shifted to China, many domestically oriented cotton producers began to shift their sights toward the export market. This was especially true in the case of the United States where the volume of cotton exported grew dramatically as the US textile industry declined. While the United States exported an average of 46 percent of its cotton between 1973 and 2002, this figure reached around 75 percent in the period between 2003 and 2010 (USDA, 2011). In this respect, Chinese ascendance in the import market was closely related to continued US dominance in the export market. As seen in Table 2, the United States controlled 41 percent of the export market, up nearly 9 percentage points from the Cold War era.

US producers’ continued dominance in cotton exports was sustained in large part by the United States’ recalcitrant behavior vis-à-vis the 1995 WTO Agreement on Agriculture (AoA). Insofar as the AoA required universal reductions in trade protection, farm subsidies, and government intervention in agriculture more generally (McMichael, 2004), it threatened to undermine the political foundations of US dominance. Analysts estimated that the removal of US production and export subsidies would reduce US cotton production by 20 percent and US exports by 50 percent, which would increase the international price of cotton in the short-term and shift production and export dominance to other countries in the long-term (Baffes et al., 2004). However, rather than forfeit their position in the global cotton trade, the United States retained cotton subsidies at the expense of the much larger farm populations in the global South who continued to face an artificially depressed international price for cotton. This is not to say that the export market did not change. India in particular became an important player by significantly increasing its cotton production after 2003. By 2006, India had eclipsed the United States as the second largest cotton producer after China, and by the following year, India was vying with Uzbekistan to be the second largest cotton exporter after the United States (ICAC, 2010). Yet as we see in Table 2, India still lags far behind the United States, which, as noted above, not only continues to be the most dominant exporter but also increased its share of the market between 1973–1992 and 2003–2012. This contributed to an increase in the overall level of monopolization among exporters.

The emergence of a binodal network is evident in Figure 3, which depicts changes in both the total volume of cotton exported from the United States and the total volume of cotton imported by China. More importantly, it shows changes in the share of the cotton market concentrated specifically within the US-China dyad. So, while we see more evidence of increasing dominance on the part of both the United States and China in the late 1990s and early 2000s, we also see that these increases are attributable, in large part, to the fact that the two states became more tightly coupled. Moreover, the amount of dyadic concentration attributable to trade between the United States and China skyrocketed from just 5 percent in the period between 1973 and 1992 to nearly 53 percent in the period between 2003 and 2012, a level exceeding the degree of concentration attributable to the next closest pair of trading partners by more than 36 percentage points.⁶

Figure 3.

Volume of cotton exchanged, 1973–2012.

Figure 3 shows that insofar as trade was increasingly concentrated within a single dyad, the relationship between the United States and China began to approximate the structure of the market as a whole. In the period between 2003 and 2012, the volume of cotton exchanged between the United States and China constituted roughly 15 percent of the global cotton market, up from just 3 percent in the period between 1973 and 1992. Note, however, that while US cotton made up roughly 47 percent of Chinese imports in the pre-1992 period, this same volume of cotton comprised just 9 percent of US exports during this same period. As China rose to prominence in the import market, these figures began to equalize, suggesting an increasingly symmetrical relationship between the two countries. Whereas China’s reliance on US cotton in the post-2003 period decreased slightly compared to the pre-1992 period, with 42 percent of Chinese imports now coming from the United States, US reliance on China grew dramatically, with over 37 percent of US exports now going to China. In other words, while the share of Chinese imports coming from the United States stayed more or less the same across these two periods, the share of US exports going to China more than quadrupled.

Not surprisingly, when we examine the measures reported in Tables 1 and 2, we see an increase in US dependence between 1973–1992 and 2003–2012. We also see a similar trend when examining changes in the level of dependence among other key exporters. In general, as the level of concentration within the import market went up, exporters saw their goods concentrate in the hands of a relatively select set of importers, China being the foremost among them. So, while importers tended to exhibit higher levels of dependence than exporters, the trend is toward a growing parity between the two sides of the market. As we suggest above, this outcome was the result of changes in the broader pattern of interstate conflict in the world economy and the specific opportunities and constraints this created for particular states to shift the institutional foundations of the global cotton market. As patterns of interstate conflict shifted following the end of the Cold War and the transition toward neoliberal competition through the WTO, US cotton producers were able to increase their cotton exports and maintain export dominance. These same events, however, also created opportunities for new rivals like China. Taking advantage of the liberalization of the textile and apparel trade, China quickly gained control of the import market, such that the conflict between exporters and importers is now embodied by the growing rivalry between the United States and China.

Recognizing the powerful influence of this rivalry does not negate the role of cotton merchants in shaping the spatial configuration of the cotton market during this period. Both the fall of the Soviet Union and the liberalization of the apparel and textile trade at the WTO created new opportunities for merchants to expand insofar as these events increased the volume of transnationally traded cotton within the capitalist sphere. Indeed, the competition to control this expanded trade, to operate effectively in new markets in Asia, and to weather the increase in market volatility associated with the 2008 financial crisis contributed to consolidation among transnational cotton merchants and thus their growing influence in the market. While precise data on firm market share are difficult to obtain, industry players report that half of all trade in the transnational cotton market is handled by just four firms: Louis Dreyfus, Cargill, Olam, and the Noble Group (Carpenter, 2009).

The composition of this group, however, also reveals the broader impact of interstate competition and China’s ascendancy in the cotton trade. Louis Dreyfus and Cargill are US-European conglomerates whose cotton divisions are headquartered in the United States. In contrast, Olam is a Singapore-based company established in 1989, and the Noble Group is a Hong Kong-based multi-commodity merchant who entered the cotton trade during the tumult of the 2008 financial crisis (ICAC, 2010). The latter two companies rose to prominence by taking advantage of the growing role of China in the global cotton trade. Olam, for example, began by linking cotton producers in Central Asia and Africa with textile manufacturers in Asia and particularly China and began to expand its operations to include major cotton-producing regions in Australia, the United States, and Brazil in 2007 (Pearson, 2007). That same year, Olam’s expansionary strategy intersected with the efforts of the Chinese state trading company, Chinatex, to extend its control in a liberalized environment. Olam and Chinatex entered into a joint venture, through which Chinatex guaranteed Olam a contract to supply 30 percent of its import volume, as well as a supply and trading network in China’s domestic market (Olam, 2007: 21). In short, while a relatively small number of firms consolidated control over the global cotton market, the ascendance of China also created opportunities for non-Western cotton merchants to gain significant market share at the expense of US and European merchants as firm strategies intersected with the Chinese state’s efforts to leverage greater control over cotton sourcing.

Conclusion

The results of this analysis suggest that closer attention should be paid to the way in which political action on the part of competing states contributes to the progressive reorganization of commodity chains over time. In this article, we examined the interplay between competitive state action and country-to-country trade flows within the global cotton market between 1973 and 2012. Through this analysis, we demonstrated that changes in the spatial organization of a given commodity chain are constituted by, and constitutive of, broader shifts in the dynamics of interstate conflict in the global economy.

In the process of pursuing their own interests, states adopt general strategies for organizing the global economy. In doing so, they influence the opportunities and constraints faced by states and firms concerned with the spatial configuration of specific commodity chains. As these general strategies change, so do the opportunities to reconfigure the commodity chains in question. Toward this end, states and firms develop new tactics, which, if successful, have the potential to affect the competitive dynamics within the world-system. We saw that the structure of the global cotton market from 1973 to 1992 was strongly influenced by the nature of interstate competition. Conflict among states steeped in the demands of Cold War politics generated a bipolar trade network organized around the Soviet Union and the United States. Once the Soviet Union collapsed and neoliberalism became the organizing principle behind both geopolitical and economic competition within the world economy, the United States was faced with a powerful new rival as the Chinese state developed novel tactics to operate within the opportunities and constraints of this new environment. Out of these new dynamics of interstate competition, a binodal trade network emerged in which China’s increasing power threatened the United States’ dominant position in the sector.

The ongoing conflict between China and the United States is indicative of a more general pattern in which powerful states compete to capture the most profitable links of commodity chains within their borders, as well as to secure access to raw materials (Arrighi, 1994; Bunker and Ciccantell, 2005). Historically, the effects of these contests are most pronounced in moments of systemic chaos when the only way out is to reconstitute the capitalist world economy on new and enlarged foundations (Arrighi, 1994). During these periods, we expect the spatial configuration of commodity chains to be significantly redrawn. Recognizing how changing forms of interstate competition shape the spatial configuration of commodity chains thus has a number of implications for research on global commodity/value chains.

Attention to interstate conflict adds new insights into our understanding of how power dynamics in commodity chains change over time. Global commodity/value chain research highlights how power in a commodity chain derives from controlling key points of leverage (Hamilton and Gereffi, 2009). However, which nodes of the chain provide such leverage can change over time (Gibbon and Ponte, 2005; Quark, 2011; Topik, 2009), and this change is shaped by conflict among the most powerful states. In particular, our findings raise the question of whether China can, as some analysts predict (Friedmann, 2005; McMichael, 2000), transform the United States’ position as a major exporter from a source of power to a source of dependency and vulnerability. There are several indications that this may be the case. For one, other cotton-producing countries are using the WTO to challenge the United States’ long-standing subsidy regime, threatening to reshape the structure of the cotton market to serve their own interests. In 2002, Brazil filed a complaint against US cotton subsidies through the WTO’s Dispute Settlement Mechanism (WTO, 2002). Three years later, the WTO ruled in favor of Brazil, calling for the United States to either remove its subsidies or face trade sanctions. In response, the US government eliminated its Step 2 program, a federal subsidy paid to exporters and textile companies who purchased US cotton even when it was not price competitive. Some analysts suggested that the loss of Step 2 made the United States the ‘supplier of last resort’ in the international market (The Blade, 2007). In addition, as these changes were deemed only minor adjustments to the broader subsidy programs, the WTO authorized Brazil to implement retaliatory sanctions in 2009, and the United States became concerned that the WTO ruling made their subsidy regime vulnerable to broader challenges (Schnepf, 2009). While the US Congress largely repackaged cotton subsidies in the form of an insurance program in the 2014 Farm Bill, the political sustainability of the subsidy regime is unclear (Brezosky, 2014).

Moreover, the Chinese state is actively attempting to reduce its dependence on the United States by diversifying its cotton suppliers. The Chinese state is strengthening ties with African countries to secure key extractive and agricultural resources (Mitting, 2011), as well as its direct investment in cotton-producing countries. For example, the China Development Bank Corporation financed direct contracting relationships between a Chinese firm and a Zimbabwean cotton procurement company (Banya, 2011). The Chinese state also backed Chinese firms constructing cotton gins in Tanzania (Cotton 24/7, 2013), and Chinatex, the state-owned import-export company, invested in cotton farms in Australia (Chinatex, 2010; Chong, 2003). Working in conjunction with the China Cotton Association, a quasi-private trade association, the Chinese state also took an active role in monitoring foreign government policies that could harm efforts to diversify supply. For example, the China Cotton Association formally protested Indian export bans that promised to restrict the flow of Indian cotton to China (Dhara and Parija, 2012; Krishnan, 2012). Perhaps most critically, the China Cotton Association and the Chinese state challenged the United States for control over the governance of trade, going so far as to create their own quality standards and rules for contracts and dispute arbitration in the transnational trade (see Quark, 2013). These dynamics suggest that competition from China is threatening to transform the United States’ particular form of export dominance into a source of dependency by constructing cotton importing as a key point of leverage.

Bringing interstate conflict back into the discussion of commodity chains further requires us to revisit the commonly held assumption in global commodity/value chain research that transnational firms are the lead actors organizing commodity chains. Transnational firms undoubtedly play a significant role in the organization of commodity production and distribution by virtue of strategic decisions regarding buying and investment, as well as coordination through contracts and standards. What this approach underemphasizes, however, is that interstate conflict shapes the playing field upon which these strategies are developed. For example, until the 1990s, US- and European-based transnational cotton merchants’ expansionary strategies were geographically circumscribed by Cold War politics. While Western firms across a range of sectors were eager to increase trade with the socialist states given the contracting capitalist world economy (Chase-Dunn, 1982: 41–42), these expansionary aspirations were limited by geopolitical tensions. Once these divides were wiped out following the fall of the Soviet Union, there was considerably more room to maneuver. This is not to say that states operate independently from firms. Rather, it suggests that mobilizing state actors is an important part of the organizing role played by transnational firms.

Moreover, the competitive dynamics among firms themselves are profoundly influenced by the dynamics of conflict among the most powerful states. Historically, the success of US and European cotton merchants during the 19th and early-20th centuries – a period characterized by the transition from British to US hegemony – was predicated on the ability to ship US cotton to textile manufacturers in the United States and Europe (see Quark, 2013). The subsequent decline of US and European textile producers, along with the ascendance of Chinese competitors, created new opportunities for Asia-based merchants to present a significant challenge to their US and European counterparts, in some cases through formal alliances with the Chinese state. This suggests that transnational cotton merchants indeed played a critical role in linking geographically dispersed producers with manufacturers in East Asia and especially China. At the same time, however, the most successful transnational firms pursued their interests by developing tactics that were consonant with the dynamics of interstate conflict.

Finally, set against the backdrop of a world economy in crisis, our analysis provides a lens through which to consider the possibility of a hegemonic transition within the cotton, textile, and apparel sectors as a whole - a transition constituted by, and constitutive of, broader hegemonic struggles within the world system (see Quark, 2014). This is especially true if we begin to link our findings to the literature on the creation and distribution of value along the apparel and textile commodity chains. Indeed, China’s growing clout in the cotton market feeds into shifting power dynamics in the apparel and textile trade. As is the case with other East Asia transnationals, Chinese-based manufacturers are gaining power vis-à-vis their clients – major retailers in the US and European markets – due in part to the efforts of the Chinese state to foster their growth. Within this ongoing contest, control over the supply of cotton is one among a range of strategies that these ‘big suppliers’ are using in their efforts to challenge the dominance of major Western retailers and the buyer-driven dynamics which have traditionally characterized commodity chains in the textile and apparel sector (Appelbaum, 2009: 68–71; Gereffi and Frederick, 2010). For example, in China, we see both state-owned and privately owned firms working to establish vertically integrated supply chains by investing directly in cotton farms, as well as developing their own brands and/or acquiring Western brands (Appelbaum, 2009; Chinatex, 2010; Chong, 2003).

Rising labor costs and growing unrest pose new challenges as the Chinese state attempts to maintain its desirability as a site of low-cost investment for Chinese and non-Chinese firms alike. Nonetheless, Chinese firms may enjoy a competitive advantage in the burgeoning Chinese consumer market that has until recently been protected from foreign retail competition. The slump in US/EU demand after the 2008 financial crisis led Chinese firms to focus on their domestic market – a trend that could further challenge the dominant role of Western transnational retailers in the world economy as US and European consumer markets lose importance (Gereffi and Frederick, 2010). Through these processes, we may be witnessing the replacement of the hegemonic coalition led by the US state and US/European-based transnational firms with a new hegemonic coalition in which both the Chinese state and Chinese/East Asia-based transnational firms play a major role (see also Quark, 2014).

In sum, shifts in the axes of interstate conflict over the organization of the world economy have important implications for the spatial configuration of specific commodity chains. At the same time, struggles over which nodes of a given commodity chain can be constructed as critical points of leverage can, in turn, shape the balance of power in broader interstate conflicts. From this perspective, attention to the contemporary conflict between the United States and China sheds light on both the competitive tactics designed to reorganize the cotton market and the way in which these tactics contribute to the broader dynamics of interstate competition and the possibility of hegemonic transition.

Footnotes

Funding

This research was supported by the Suzann Wilson Matthews Summer Research Award, College of William & Mary.

Notes

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Interstate competition and Chinese ascendancy: The political construction of the global cotton market,1973–2012

Abstract

Keywords

Introduction

Interstate competition and the world economy

Cycles of interstate conflict

From the Cold War to Chinese hegemony?

Data and methods

Network measures

The evolution of the global cotton market

Bipolar trade and the Cold War, 1973–1992

The emergence of binodal trade, 2003–2012

Conclusion

Footnotes

Funding

Notes

References