The Agrarian Question and Coffee in Costa Rica

Abstract

This article traces the agrarian transition to capitalism in Costa Rica to identify the factors and dynamics that have contributed to the current persistence of the coffee producing peasantry. The case study reveals that the agrarian transition to capitalism and the persistence of the coffee commodity producing peasantry are both products of certain historical and political circumstances. The pro-smallholder politics of the post-revolution Costa Rican state and its emphasis on a particular form of agro-input-substituting industrialization, combined with the unique and historically contingent relations that have developed between landed agrarian and industrial capitalist classes and the peasantry, have led to an agrarian class structure which lacks a substantial landed capitalist coffee producing class. Instead agrarian capital has relegated itself to the processing and input spheres where the ‘real’ subsumption of nature and the ‘formal’ subsumption of peasant labour to agrarian capital occurred.

Keywords

Agrarian change coffee Costa Rica formal subsumption of labour real subsumption of nature the agrarian question

Introduction: Agrarian Questions and Capitalist Transitions

This article unpacks the national and historical contexts that inform the processes of agrarian change and peasant coffee farmer persistence in Costa Rica. Attention is given to establish and contextualize the role of agriculture and especially coffee in national economic development and industrialization, and the identification of historical and structural factors that led to the persistence of the coffee producing peasantry through the end of the state-led national development project in the late 1970s and into the twenty-first century. The research question guiding this analysis is the following: how did the agrarian transition to capitalism unfold within Costa Rica and what factors and dynamics have contributed to the persistence of the coffee producing peasantry? The history of agrarian class relations within the Costa Rican coffee sector between 1800 and 1980 are outlined and the role of coffee production in priming the development of capitalist relations in society is explored, both of which have implications for the current persistence of the coffee producing peasantry.

Theoretical Framework

In order to interpret the macro-structural as well as contingent historical processes of agrarian change contributing to Costa Rican national deve-lopment and peasant persistence, this research critically employs a rich body of work in classical political economy that evaluates the relationship between agriculture, the state and capitalist development through the analysis of shifting relations between capital, labour and peasant social classes. Marx theorized that the social and labour relations, technologies and laws governing capitalist industrialization applied equally to agriculture and that the peasantry existed as a temporary social class soon to be enlisted into either the ranks of the proletariat or bourgeois (Marx, 1967). This was an essential piece of his revolutionary theory, which hinged upon a full structural change towards capitalism in all sectors of society, agriculture included, as a precursor to socialist transformation of the entire economy. The central variable propelling these dynamics of agrarian change is the movement towards partial wage labour within the landed peasantry and the transformation of this wage labour to full labour power through dispossession of their land. The classical agrarian transition is the process by which a majority peasant agricultural sector is transformed into a sector dominated by a rural proletariat and agrarian capitalists. This would lead to rural class polarization, the proletarianization of the peasantry and the eventual full capitalist transformation of the economy, accomplished by the accompanying large intersectoral labour transfers of capital and labour from agriculture, a major source of productive wealth in pre-industrialized societies. These precious resources were put to the expensive and labour intensive process of industrialization, which was a necessary precursor to a socialist revolution theorized to liberate the now proletarianized former peasantry (Bernstein, 1996; Byres, 1996; Kautsky, 1988; Lenin, 1964; Marx, 1967).¹

The classical agrarian transition assumed that pre-capitalist social relations consist of a landless peasant labouring renter class and a class of surplus extracting feudal landowners. Thus, in feudal, pre-capitalist Europe, the surplus labour of peasants was appropriated primarily through labour rent. Acts of primitive accumulation² marked the transition to capitalism as well as created the market dependence that necessitated commodity production. Following the introduction of commodity relations, agrarian classes formed and differentiated, resulting in an agrarian proletariat class alongside both landed and industrial agrarian capitalist classes. Market-driven competition within and between the capitalist agrarian and landed classes resulted in technical and social innovations in agricultural production which increased labour productivity and crop yields. The surplus generated by this increased productivity then became available for transfer to the industrial sector. These deve-lopments, especially the gains in agricultural productivity, hastened the dispossession of the peasantry, causing a feedback loop that released the labour needed for industrial development. Finally, additional gains in the agricultural productivity of staple crops lowered food costs for the industrial proletariat, which allowed industrial capital to depress real wages, with the effect of accelerating capital accumulation in the service of industrialization. A full resolution of the classical agrarian question was achieved in Western Europe through this transition that transformed agricultural technologies and rural social relations and in the process fueled industrialization.

The velocity and relative ease by which different European nations travelled this transitional path has been shown to be contingent upon the historical position of the peasantry within national agrarian class formations (Kautsky, 1988). Probably due to the fact that his investigations were motivated by the normative desire to promote the agrarian transition to capitalism and eventual state socialism, Kautsky focused much of his inquiry into agrarian transition on the identification of factors that slowed this process; he particularly focused on the detection and classification of factors that stopped large capitalist farms from replacing small peasant farms. This led him to formulate the following ‘agrarian question’; ‘[I]n what ways is capital taking hold of agriculture, revolutionizing it, smashing the old forms of production and of poverty and establishing the new forms which must succeed?’ (1988; p. 46). Kautsky observed that while peasants sell some of their labour, they still kept their land and with it their access to the means of production, contrary to both Marx and Lenin’s theories (Hussain & Tribe, 1981). First recognized by Kautsky, this phenomenon of semi-proletarianization practiced by petty-commodity producers is documented below and is a major factor influencing the persistence of peasant agriculture in Costa Rica.

This theoretical framework at the core of classical agrarian political economy has inspired scores of empirical case studies documenting processes of class differentiation and agrarian change in a diversity of national contexts and rural landscapes, leading to what is an extensive and constantly growing body of research recording the diversity of different class forms, assemblages and types of social relations established between them (Akram-Lodhi, 1998; Akram-Lodhi & Kay, 2010; Banaji, 1976; Bernstein, 2004; Byres 1996; Friedmann & McMichael, 1989; Goodman & Redclift, 1981; Harrison, 1977; Hussain & Tribe, 1981; McMichael, 2004, 2008; O’Connor, 1996; Patnaik, 1987; Scott, 1998; Seligson, 1980). In turn, this has led to the ongoing reflection, refinement and reformulation of the original, rather deterministic laws of motion and agrarian questions laid out by the classical agrarian political economists.

Analysts have revealed that the dynamic stages inherently assumed as the tendencies or even laws driving the classical agrarian transition outlined above are themselves products of the specific political economic history of capitalistic development in Western Europe (Goodman & Redclift, 1981). The classical agrarian transition assumes that processes of wage labour and agrarian capital formation have been steadily and equally proceeding everywhere in the world when in fact this process is highly contingent on when the introduction of commodity relations takes place and the modes of production, social relations and agrarian politics present during the historical epochs of the transition process. This has important implications for ‘peripheral’ regions developing later and with unique classes of capital and labour defined by different types of pre-capitalist relations and demographic conditions. This has particular resonance for understanding resolutions to the agrarian question characterized by widespread petty-commodity agri-cultural production alongside the predominance of capitalist social relations within the agricultural sector and society at large, such as the one explored in this article.

Methods

In order to effectively portray agrarian transitions within Costa Rica, the analysis is prefaced by an account of national factions, elites and classes. Existing Costa Rican agrarian historiographies provided one set of sources (especially Facio, 1972; Gudmundson, 1986; Hall, 1976; Samper, 1990, 2003; Seligson, 1980; Winson, 1989). These were complimented by statistics derived from a variety of databases including the Economic Commission on Latin America and the Caribbean (CEPAL), the World Bank and the United Nations Food and Agriculture Program (UN-FAO).

Coffee and the Agrarian Transition to Capitalism in Costa Rica

Emergence of Agrarian Capitalism During the Coffee Agroexport Era (1820–1948)

The 1808 introduction of coffee quickly led to increasing commodity relations, market dependence and a particular agrarian structure dominated by smallholder peasant production, part-time wage labour and a relatively small, landed, agrarian-capitalist class. First entrenched in the Central Valley, coffee commodity production was soon spatially reproduced throughout the highlands of Costa Rica and the initial prevalence of family-operated smallholdings was maintained (Hall, 1976). In 1831, 10 years after acquiring independence from Spain, a governmental decree established land-title rights for anyone who planted coffee on unclaimed lands. Many of the lands acquired during the initial expansion that followed were already under some type of colonial-era land tenure arrangement, either as communal indigenous or mestizo village lands (Samper, 2003). These were the easiest lands to dispossess, with parts or all of them already cleared and their dimensions and characteristics mostly known. By 1860, however, the primitive accumulation of all remaining indigenous and settler communal properties was complete (Samper, 2003). Peasant settlers soon turned to uninhabited regions North and South of the Central Valley, where the agricultural frontier remained open until the twentieth century. With indigenous communal lands and their peoples not nearly as numerous as many other nations within Latin America, the newly formed coffee sector lacked easily conscripted, abundant and cheap commoditized labour power. This labour shortage was brought on by the colonies’ remoteness, sparse population and lack of a sizeable indigenous population to coerce (Edelman, 1992; Gudmundson, 1986; Samper, 2010; Seligson, 1980; Winson, 1989). While large estates did exist during this era, they were never as numerous or large as in other Central American nations. The existing estates depended greatly upon both landed and landless peasant labour which were paid relatively well because of the shortage in supply. This made the relatively equitable distribution of land politically feasible as well as economically sensible in the highland coffee zones of Costa Rica. The historical shortage of labour limited the number of large estates that could form as it made haciendas or plantations expensive to operate and very risky in times of market downturns. This left coffee production to largely establish on smallholder family-farms instead of large plantations. Relatively high agricultural wages encouraged smallholders to sell some of their labour, contributing to the increasing semi-proletarianization of the coffee producing peasantry (Gudmundson, 1986).

Emergence and Concentration of the Agrarian Capitalist Class

Some measure of class formation and stratification was already in place within pre-coffee Costa Rica (Gudmundson, 1986; Samper, 1990). However, while exploitative tribute, tax and labour relations were present in pre-capitalist Costa Rican society, there is no evidence for the existence of a feudal landowning class such as that assumed in the pre-capitalism of the classical agrarian transitions of Western Europe. Accordingly, the larger estates of the colonial elite were unable to capture many of the benefits that followed the introduction of coffee commodity production precisely because their claim to peasant labour on the eve of introduction was not based on coercion. Instead, what Gudmundson called the ‘quasi-Yankee’ form of farm-household agricultural organization³ was transformed into a petty-commodity producing form following the introduction of coffee (1986). This early entrenchment of a majority petty-commodity producing sector has historically shaped the development of Costa Rican agrarian capitalism and peasant persistence up to the present day.

Agrarian capital evolved and consolidated most quickly in the processing sphere, after which it branched out into export, credit and input markets. The key institution throughout the historical development of agrarian capitalism in Costa Rica has been the beneficio humedo or ‘wet processing mill’. In this system, smaller producers haul their ripe coffee cherries to the nearest mill, usually owned by a fairly large-scale plantation, where the pulping, fermenting, washing, drying, storing and curing are all performed, alongside a large surplus extraction from smaller producers by the mill owners. The mills have played a significant role in disintegrating the supply chain and capturing added-value above and beyond what processors could manage in other coffee producing countries. Even up to the present day, the wet processing mills constantly employ new capital intensive technological advances to their various stages of mechanical and biological processing. This capital barrier has ensured, since first deployed, their ready availability primarily to the existing elite (Samper, 2010). Not surprisingly then, these mills display a historic tendency towards concentration; in 1887 there were 256 coffee mills reported in Costa Rica and by 1940 this dropped to 221 (Seligson, 1980). In 1938, 193 exporting firms were in business, many of them coffee mill owners and smallholder credit providers as well. After the US organized the Inter American Coffee Agreement, which fixed prices for its allies, avoiding a price meltdown in the wake of the disappearance of the European market due to the Second World War, this number was reduced to just 19 firms, of which just six American firms controlled over 80 per cent of the nation’s coffee exports (Winson, 1989). By the end of the 1930s this oligarchy of coffee ‘barons’ was in control of credit, input sales, processing and exportation within the country’s top economic sector, as well as seated in the most important political positions. Their stranglehold on the agroindustrial sector allowed surplus value extraction at many sites, stages and activities of production including some, such as the wet processing mill, which did not emerge in the historical development of national coffee sectors elsewhere.

The collapse of coffee prices due to the Great Depression led to heightened class tensions between an already suspicious peasantry and the conservative oligarchy of the agrarian capitalist coffee barons. In the case of the depression era crisis, low international coffee prices were accompanied by inflationary pressures negatively impacting all parts of the economy. Interestingly, this ‘price squeeze’ probably hurt the oligarchy more, as it was magnified by hired-labour costs that were significantly higher than the flexible and ‘free’ farm-family labour of peasant production. In addition, peasant producers of this era were able to retain a large portion of their subsistence from fruits and crops intercropped within the coffee agroecosystems, a practice uncommon on the larger estates of the oligarchy (Chayanov, 1986; Samper, 2003; Samper, Naranjo, & Sfez, 2000). The endogenous characteristics of the 1930s coffee agriculture in Costa Rica—an easily intercropped agroecosystem with high labour needs in a nation with a limited and expensive labour supply—were combined with the exogenous forces of low international coffee commodity prices and high domestic inflationary pressure, creating a vulnerable situation for those coffee barons still involved in the production sphere. This contributed to the steady retreat of agrarian capitals and their strategic refuge within the agroindustrial sphere of processing, exporting and financing. The weakened position of large, landed capitalist coffee producers during the Great Depression established a recurring trend of smallholder persistence, if not resurgence in the face of generalized commodity price crisis at the expense of large-scale capitalist operations (Babin, 2015; Samper et al., 2000). In this case the flexibility of peasant production units, as well as the high relative labour costs and adaptability of coffee agroecosystems were key factors contributing to peasant persistence.

Agro-industrialization and the Welfare State (1948–1980)

Smallholders had limited options in their choice of processors, as there existed little competition among the mill owner oligopoly, who were most often their input supplier, creditor and exporter as well. There was no government oversight of the coffee mills and the entire economy was almost completely unregulated and untaxed prior to the 1948 revolution. Exploitation was widespread and high tensions existed between the peasant and processor classes as mill owners set high interest rates for loans and often paid below what was the going market price in nearby countries for the coffee cherries. This combination of low international coffee prices and domestic exploitation resulted in the passing of a law entitled, La Defensa de Café de Costa Rica or ‘The Costa Rican Coffee Defense Law’ in 1933 (Sick, 2008). This law eventually grew into its own organization, becoming the Costa Rican Coffee Institute (ICAFE), which has since 1933 regulated the relationship between coffee farmers and coffee mill and export companies. In 1952, an amendment to the law, still in effect, limited the maximum proportion of profits that a mill could make at 9 per cent while requiring mill operators to pay an annual 7 per cent tax to the state (Winson, 1989). In this manner, the state appropriated and redirected a sizeable portion (7%) of the agrarian surplus. This appropriation was taken at the expense of the oligarchy and, as described below, redirected for use in the national development project. While this is a significant surplus historically leveraged by the state, it is important to point out that the coffee defense law also assured that agroindustrial capital would earn 9 per cent profit year in, year out. The law provided no such similar protection for producers, who have remained exposed to annual fluctuations in the global coffee price (Winson, 1989).

Indeed, this agrarian power struggle, combined with a contested presidential election whose results were nullified under dubious conditions, led to an armed rebel insurrection that battled and defeated government forces in under 2 weeks. The 1948 Costa Rican revolution ushered in an interventionist social-welfare state intent on using coffee as an engine of national growth. The rebel junta that would rule for a year and a half was closely tied with middle class urban and peasant coffee producer interests and was intent on eating into the elite coffee barons’ power (Winson, 1989). The junta nationalized the banking system to more directly allocate funds to development projects and created a state owned electricity company in order to develop the infrastructure for future economic growth. The junta evolved into a political party, the Partido Liberacion Nacional (PLN), that won elections following their year and a half in power, and which came to dominate national politics for decades to come.

Coffee Modernization Era

Rodrigo Facio’s highly influential historical analysis of coffee and class in Costa Rica was used to formulate the reforms that would come during the state-led modernization project analyzed below (Facio, 1972). His main arguments, from a political economy and agrarian change perspective, were:

Peasant coffee production was a manifestation of the egalitarian, smallholder society that was the nation’s heritage from the colonial era.

Peasant society, as a source of progressive politics, had to be considered the cornerstone of future national economic development.

The agrarian capitalists, or ‘coffee barons’, were an unholy alliance of estate owners, unregulated usurious lenders and a processing and exporting oligarchy that quickly arose following the introduction of coffee commodity production.

Exploitation by the unregulated and monopolistic coffee barons had jeopardized the potential for equitable national democratic development.

Only major reforms and heavy state intervention could salvage the progressive, smallholder model of coffee agriculture key to national development.

Facio’s arguments for reform were transformed into a plan aimed at boosting agricultural productivity growth, especially within the peasant dominated coffee production sector. In neoclassical and Marxian development economics, productivity growth in agriculture is often considered a structural precondition to industrialization; similarly, countries with high productivity growth in agriculture are posited as the most likely to complete a successful industrialization process (Stern, 1989). Beginning in 1952, revenue from the 7 per cent tax on coffee processing mills was used to fund important infrastructure and industrialization projects as well as the government agricultural investigation and outreach organizations that would later be the source of most national economic growth (Edelman, 1999; Winson, 1989). The central component of the new state’s infrastructure, agriculture and industrialization projects revolved around a coffee modernization plan aimed at drastically increasing yields (Luetchford, 2008).

Prior to the modernization program, Costa Rican coffee production, especially those of peasants, was cultivated in polycultural intercropped systems that included fruit shade-trees such as avocado and oranges, firewood and nitrogen fixing shade-trees as well as annual and biannual crops such as sugar cane, bananas, plantains, manioc, taro, beans and corn. Coffee yields in these systems were much lower than in the technified monoculture systems described below, but polyculture coffee systems provided food for family consumption as well as for market sale (Samper et al., 2000). While attuned to the necessities of the family farm, the low yields precluded the Costa Rican state from extracting the sizeable surpluses required for industrialization and the future economic progress of the country. To enhance yields, a combination research and extension program was initiated by the Costa Rican government, with financial and technical the support from the USA (Romero, 2006). Some of the principal goals of this modernization plan were (Luetchford, 2008):

To develop high yielding disease tolerant coffee varieties.

To produce seeds of these high yielding varieties and to supply credit so farmers replace all existing coffee plants.

To experiment with different fertilizer application regimes and ‘require’ the purchase of fertilizers subsidized by more than 30 per cent.

To provide annual credit for input purchases (herbicides, pesticides).

Between 1960 and 1970, average productivity growth in agriculture was 5.2 per cent in Costa Rica, which was the second highest growth recorded among 37 Latin American countries for that decade (Ludena, 2010). Coffee productivity growth due to the state-led modernization project was very impressive, more than tripling from 6 fanegas⁴/hectare in 1960 to 20 fanegas/hectare in 1970 (Romero, 2006).

Peasant Cooperative Sector as State-led Agrarian Reform

During the late 1950s and early 1960s a sustained coffee price decline took effect as new plantations in Brazil, Africa and Mexico came into production (Daviron & Ponte, 2005). In Costa Rica these low prices, along with increasing concentration in the agroindustrial sphere, heightened class-based antagonisms between peasant growers and agrarian capitalist processors once again. This led to the creation of the Federation of Cooperatives of Coffee Growers (FEDECOOP) in 1962 to reduce the exploitation by the heavily monopolized exporting business. Policies adopted supporting smallholder processing and export cooperatives included no land tax for 10 years and no tariffs on tools, machinery or agrochemicals. As coffee prices continued to languish throughout the 1960s and the government subsidies remained, producer cooperatives expanded and soon processed the majority of production from peasant farm-households.

Agro-input-substitution-industrialization

As noted above, agricultural productivity grew at an average of 5.2 per cent during the 1960s due to incredible gains in coffee yields, over 300 per cent between 1960 and 1970 (Ludena, 2010). The surplus resources created by this growth became available for investment in other sectors of the national economy, an attractive proposition considering that throughout the 1950s and 1960s the Costa Rican economy was almost exclusively dependent on revenues generated from the export sales of coffee and bananas. Hence, Costa Rica’s developmentally-minded state government reinvested this surplus into industry, following a trajectory not dissimilar form that of the classical agrarian transition. However, perhaps not surprisingly, the particular foci of the initial surplus transfer favoured the historical agroindustry capitalist class interests closely.

The yield gains in coffee were tied to the rapid adoption of agrochemical inputs and especially nitrogen fertilizers. The agricultural surplus extracted by the state was used to invest in domestic agro-industrialization, or what this research calls agro-input-substitution-industrialization (AISI). Through the 1959 passage of The Law of Industrial Production and Development, Costa Rican AISI operated under the assumption that if core developed countries provided finished industrial goods while peripheral developing countries supplied cheap raw materials, and the terms of trade between finished and raw goods tended to decline, then peripheral countries like Costa Rica would be trapped into exporting more raw materials in exchange for declining amounts of finished goods (Prebisch, 1950). The specific course of action followed by Costa Rica’s AISI model was to focus first on the replacement of formerly imported agro-industrial goods such as agrochemical inputs (fertilizers, herbicides, fungicides, etc.) and machinery for coffee and other crops by those produced domestically in Costa Rica (Sick, 2008; The World Bank, 2006). This meant heavy state involvement in the subsidy of domestic agro-industry and the enactment of protective tariffs. AISI was managed by the state through specific entrepreneurial projects such as the state run agrochemical manufacturer FERTICA, targeted subsidies and aggressive protection of domestic agroindustrial goods through tariffs and quotas. In 1963 Costa Rica joined the Central American Common Market (CACM), along with Guatemala, Nicaragua, Honduras and El Salvador. Tariffs between the 22 participating countries were eliminated, boosting Costa Rican manufacturing exports. This strengthened Costa Rica’s nascent agroindustrial sector and between 1961 and 1979, this model of agro-industrialization was very successful in transforming the Costa Rican economy to one increasingly dominated by industrial capital. As Figure 1 demonstrates, after 1961 the total value added by the industrial sector steadily grew from under US$500 million to over US$2 billion by 1979 (a fourfold increase) and the relative value increased from 10 per cent to almost 30 per cent of total exports. Meanwhile, the total value added in the agricultural sector barely doubled from around US$300 million to a little over US$600 million, while the relative value decreased from 90 per cent to around 70 per cent of total exports.

Figure 1.

Source: The World Bank (2011).

Basic Grain Production

The drive for state-led industrialization had important implications for domestic food production as successful industrialization hinged on finding a cheap source of basic grain staples like corn and beans for the urban proletariat. Because of this necessity, which represents the final step in the classical agrarian transition, the Costa Rican government carefully assembled an elaborate peasant-state production partnership and patronage system. This new system was organized around the National Production Board (Consejo Nacional de Produccion [CNP]), an institution regulating basic grain production, consumption and distribution. Throughout the 1970s, the CNP’s mission was to stimulate agricultural and industrial production while stabilizing national prices for food and industrial raw goods (Cervantes 1975). In order to fulfil this broad mission the CNP controlled all aspects of the production and marketing of basic grains from 1970, when the Secure Harvest Program began, until well into the 1980s (Cervantes, 1975). Setting all prices at which grains were bought from producers (mostly peasants), the CNP often set them above international prices. They also fixed retail prices commonly below the going international market price. Finally, they coordinated the national grain purchase, storage and consumer retail, managing a commercial infrastructure that effectively replaced the market as arbiter of ‘private’ profit levels for basic grains. Additional state agencies offered subsidized credit for land, labour, input and machinery expenses, while others provided agriculture extension, agronomic training and technical assistance (Edelman, 1999).

Agrarian Class Transformation: Peasant Persistence and Resurgence

ICAFE data from the 1970s clearly demonstrates that on Costa Rican coffee farms between 0 and 5 hectares familial labour prevails while on farms between 5 and 10 hectares wage labour becomes important but not dominant; on farms over 10 hectares wage labour predominates (Gamboa Marin, 1977). The 1950 and 1973 Costa Rican agricultural censuses utilized farm size classes of 0–4 hectares, 4–20 hectares and 20+ hectares. Peasant, or petty-commodity production units undoubtedly map onto the smallest farm-size class (0–4 hectares), although peasant forms of production probably exist on many of the operations within the medium farm-size class as well (4–20 hectares). Between the years of 1950 and 1973 these petty-commodity producing farms 0–4 hectares in size grew in number from 6,970 to 17,072 total farms, a growth in farm-households of 145 per cent. Their share of total coffee farms in the nation between 1850 and 1973 grew from 32 to 53 per cent. Petty-commodity producer’s proportion of total coffee area in the nation increased from 10 to 17 per cent. Coffee farms in the medium 4–20 hectare range grew in number only very slightly between 1950 and 1973, from 9,117 to 9,741 and their proportion of total area increased only 1 per cent to 32 per cent of total coffee lands. The remaining large 20+ hectare capitalist farms actually decreased in absolute numbers from 5,871 to 5,537 total farms and in total area from 60 to 51 per cent (Winson, 1989).

While the state-initiated formation of producer cooperatives explains this expansion of peasant production, it was also due to the fact that a frontier of premium land, much of it in the right altitudinal belt for high quality Arabica coffee, opened for coffee cultivation in the southern counties of Perez Zeledon and Coto Brus. These more recently colonized zones of coffee production are characterized by smaller average farm sizes and a more egalitarian distribution of land than in the historic centre of production in the Central Valley. This is because the oldest settled coffee zones have been more adversely affected by the fragmentation of family farms as inheritance was often split among each male sibling in the family. But because the accumulation of productive land was not as profitable for agrarian capital as the concentration noted above in financing and industrial processing, small 0–4 hectare farms did not face intense pressure from lower cost producers on large scale heavily capitalized farms.

Coffee and Development in Costa Rica

Coffee production brought important national capital into circulation within Costa Rica and fostered the industrialization of the nation’s agricultural sector, as well as the growth of an import-substituting manufacturing sector. These are advances not usually associated with the terms of trade governing twentieth century developing country agro-export models of development. Indeed, much of the infrastructure, education and healthcare investments that have set Costa Rica apart as a peaceful, social-democratic society have been either the direct or indirect result of the coffee sector. As Table 1 below demonstrates, between 1940 and 1980 illiteracy rates dropped from 27 to 10 per cent in Costa Rica and the proportion of households with piped water rose more than 30 per cent. In addition, while infant mortality rates were reduced by more than sixfold, life expectancy at birth climbed from 47 to 73 years due to the establishment of a nationalized healthcare system on par with any other in the world. In fact, as Table 2 demonstrates, Costa Rica had by 1985 not only attained an average life-expectancy more than a decade longer than any of it’s central American neighbors, but also had surpassed European average life expectancy by more than 2 years.

Table 1.

Costa Rican Basic Indicators of Well-being, 1940–1980

Indicator	1940	1950	1960	1970	1980
Illiteracy (% 15 and over)	27	21	16	13	10
Life expectancy	47	56	63	65	73
Infant mortality (per 1000)	137	95	80	67	21
Population covered by health insurance (%)	0	8	15	39	78
Pop with piped water (%)	–	53	65	75	84

Source: Deneulin (2005).

Table 2.

Life Expectancy in Costa Rica, Europe and Selected Central American Nations, 1950–1985

Country	1950–1955	1955–1960	1960–1965	1965–1970	1970–1975	1975–1980	1980–1985
Costa Rica	57.3	60.2	63	65.6	68.1	71	73.8
El Salvador	45.1	49.3	53	55.6	57.1	57.2	57.2
Guatemala	42	44.2	47	50.1	53.9	56.2	58.3
Honduras	41.8	44.6	48	51	54.1	57.7	61.6
Nicaragua	42.3	45.4	48.6	51.9	55.2	57.6	59.5
Europe	65.6	68	69.7	70.4	70.8	71.2	71.7

Source: CEPAL (2010).

This was the result of a highly successful set of state-interventions to modernize agriculture and redirect the resulting surpluses to social services, infrastructure and industrialization. The coffee modernization program served its purpose in propelling a stagnant, agro-export dependent nation on a path towards industrialization and the creation of an advanced welfare state. Modernization was incentivized by the Costa Rican state, with credit provision for the introduction of new high yielding varieties as well as for the purchase of agrochemicals. Prior to the 1950s modernization, state involvement in economic development was negligible. However, as Figure 2 shows, government expenditures rose from less than 13 per cent of GDP in 1970 to over 18 per cent by 1979. These expenditures were key political tools of the state apparatus in promoting agro-industrialization and mediating tendencies of peasant dispossession by class differentiation in the Costa Rican context.

Figure 2.

Source: The World Bank (2011).

The agricultural surplus used for the investment in productive activities and the formation of an advanced welfare state was mostly generated by coffee, the single most important agricultural crop in terms of export value during the industrialization process. Coffee yield gains due to a state-led agricultural modernization project were impressive, rising 500 per cent from 6 fanegas/hectare in 1960 to 30 fanegas/hectare in 1980 (Romero, 2006). This distinguished the sector as the highest yielding in the world. While this combination of high yielding, surplus generating production is historically and theoretically linked with full capitalist production relations, by the late 1970s smallholder farm-households economically organized around familial labour provision had persisted, and indeed were in the midst of a resurgence.

Discussion: Obstacles to Full Capitalist Relations in Agriculture

The phenomena of peasant persistence in the peripheries of global capitalism has led Byres to reformulate the agrarian question as an inquiry into ‘the continued existence in the countryside, in a substantive sense, of obstacles to an unleashing of accumulation in both the countryside itself and more generally—in particular, the accumulation associated with capitalist industrialization’ (Byres, 1996, p. 26). In order to evaluate the agrarian transition to capitalism in Costa Rica and explain the persistence of the peasantry, the following discussion pays attention to three fundamental ‘problematics’ first identified by Byres (1996), and subsequently developed further by Akram-Lodhi (1998) and Akram-Lodhi and Kay (2010), that may function as obstacles to the development of full capitalist relations in agriculture: ‘production’, ‘accumulation’ and ‘politics’ (Bernstein 1996; Byres 1996).

The Production Problematic: The Formal Subsumption of Labour

The production problematic does not stray far from classic agrarian theory in its focus on capitalism’s barriers or harbingers to rural restructuring and the processes of peasant class differentiation into wage labourers and agrarian capitalists (Kautsky, 1988; Lenin, 1964). The analytical task involved here is to analyze on the ground level the existence and extent of class differentiation, dispossession, repeasantization or other significant production processes in the countryside.

The introduction of commodity relations in Costa Rica led to the formation of peasant, proletariat and industrial agrarian classes. However, a sizeable landed capitalist class never developed in the coffee sector. The specific form that agrarian capital took in Costa Rica, entrenched within processing and factor input sectors, overshadowed the theoretically deduced ‘classical agrarian question’s’ tendencies for producer differentiation (Akram-Lodhi & Kay, 2010; Bernstein, 1996; Byres, 1996). The Costa Rican coffee modernization project introduced expensive, chemical inputs whose manufacture and sale was controlled by the agrarian oligarchy, which also maintained control over processing, credit, input-sales and exportation. Technically speaking the price per pound of coffee paid to small and medium-holder farmers by processors could be considered a ‘concealed wage’ because it signifies a proxy sale of household coffee producing labour power to the agroindustrial and merchant capitalists who profit from the financing, processing and exportation their product (Goodman & Redclift, 1981). In this manner, agrarian capital has found a mechanism for asserting partial control over the production process, but without the guarantee of peasant dispossession and differentiation. Until the peasantry is completely reliant on actual wage–labour relations, the subsumption of peasant labour processes to agrarian capital can only be considered ‘formal’ and not ‘real’ (Marx, 1967). Within a given agricultural sector, if labour relations are actually subsumed to capital this suggests that dispossession of the peasantry is well underway if not completed and that processes of firm concentration, labour rationalization and technological innovation have begun. Meanwhile, an agricultural sector whose labour relations are characterized by only formal subsumption to capital are most often dominated by petty-commodity production, as is the case of coffee in pre-1980 Costa Rica.

The lack of a sizeable landed coffee capitalist class reduced the pressure of market-driven competition between and within capitalist agrarian and landed classes that a classical agrarian transition depends upon to promote innovations in agricultural production. Instead, state-intervention substituted for market competition in developing the technical changes that would boost coffee yields to the highest in the world. And partly because of the state-led regulation of the export market and development of cooperative organizations, the peasantry not only persisted, but thrived through these progressive revolutions in the productive organization of the coffee sector.

The Accumulation Problematic: The Real Subsumption of Nature

The accumulation problematic recognizes the potential role that agricultural production has in creating a sizeable surplus of production that can be appropriated and dedicated to the expensive development of industry and other sectors in the national or international economies. The analytical task involved in this problematic is to evaluate the possibility of agriculture to produce a surplus and if so, identify how and by whom it is appropriated.

In Costa Rica the agricultural sector contributed significantly to the post-war import-substituting industrialization process but without completing the ‘classic’ trajectory of agrarian transition, which would have entailed complete capitalist social relations in agriculture as well as the full dispossession of the peasantry through class differentiation (Goodman & Redclift, 1981). By 1980, the country had successfully completed the first stages of agro-input-substitution-industrialization and was widely considered one of the most stable and developed democratic societies in Latin America. Just as the distinction between the real versus formal subsumption of labour processes is instrumental in understanding the appearance and differentiation of agrarian social classes in Costa Rica, so the real versus formal subsumption of nature by agriculture is instructive in conceptualizing processes of technological innovation and surplus capital accumulation in Costa Rican coffee agriculture. The formal subsumption of nature refers to the process whereby capitalist firms exploit natural processes for commodity production ‘but are unable (or unwilling) to control, intensify, manipulate, or otherwise “improve” upon nature to suit their own purposes’ (Boyd, Prudham, & Schurman, 2001, p. 15). In contrast, the real subsumption of nature finds firms increasing biological productivity as capital circulates through nature (Goodman, Sorj, & Wilkinson, 1987). When shortages of land, such as is the case with the relatively limited altitudinal belt appropriate for coffee cultivation in Costa Rica, prevent the easy spatial expansion of agroecosystems, capital instead devotes itself to completing the real subsumption of nature and agriculture. (Boyd et al., 2001). The tendency of Costa Rican agrarian capital to expand reproduction through the industrial transformation of coffee agroecosystems is a prototypical example of this real subsumption of nature and agriculture (Boyd et al., 2001). These particular processes of commoditization and expansion of agrarian capitalism in Costa Rica are suggestive of:

[w]hat Watts (1998, p. 450) memorably terms recombinant agrarian capital (which) might, in particular circumstances, prefer to sustain a hybrid, noncapitalist rural economy subsumed to capital … as well as the capacity of family-based petty commodity farm production to, as Marx had noted, depress real wages by working harder and longer … agro-industrial capital would restrict itself to food processing, farm inputs, and rural financial systems, using science, technology, and money to subsume petty commodity production to the demands of agroindustrial capital. (Akram-Lodhi & Kay, 2010, p. 188)

The flip-side of this arrangement is that the Costa Rican agrarian transition has left intact peasant social control over the means of production. The historical predominance in Costa Rica of ‘recombinant agrarian capital’ in place of landed agrarian capital has thus ensured peasant autonomy by maintaining their source of subsistence (land), and hence, control over use-value creation.

However, this reliance on the chemical inputs produced and distributed by recombinant agrarian capital has unleashed contradictory forces that have impacted the environmental, economic and social sustainability of coffee production in Costa Rica. By focusing so much political will, financial capital and productive resources in the agricultural modernization process, as well as in agro-input-substituting industrialization, the coffee and basic grain agroecosystems, as well as the national model of industrial development, became increasingly vulnerable ecologically and economically. While outside the temporal scope of this article’s analysis, the increasingly volatile nature of the global coffee commodity market price throughout the 1980s and 1990s, combined with the Costa Rican growers expensive reliance upon agrochemical inputs, made high rates of GDP growth due to increases in agricultural productivity and agroindustrial productivity experienced throughout the 1960s and 1970s unsustainable (Babin, 2012). Similarly, as coffee agroecosystems and their managers became increasingly dependent upon industrial agricultural practices, soil degradation, water contamination, human health decay and overall system vulnerability have increased (Babin, 2015).

The Politics Problematic: The State-led Agrarian Transition of Class Contingency

The final politics problematic examines the interalliances between peasant classes and other societal classes, the state and social–political movements or networks (Akram-Lodhi, 1998; Akram-Lodhi & Kay, 2010; Bernstein, 1996; Byres, 1996). The analytical task here is to identify alliances between peasant classes and other societal classes and evaluate when and why or why not this pact succeeds in procuring social, political and agrarian change through deliberate and strategic struggles, whether violent or not.

Following the 1948 revolution, this problematic resolved itself through the welfare state’s close attention to the class antagonisms that arose between agrarian capital and the peasantry. The state’s political interventions to diffuse these tensions favoured peasant interests more frequently than in other Central American contexts. The Costa Rican state took a unique, and hence contingent role in diffusing agrarian class tensions so that differentiation within the agricultural production sector was minimal, while at the same time accumulation within the agrarian capitalist class was maintained and actually fomented; a key factor leading to the high levels of social development, the capitalist transformation of society and the agro-industrialization of the national economy. All of these state mediated processes up until 1980 are dubbed in this research ‘the state-led agrarian transition of class contingency’. By actively intervening in rural politics the state was able to shape rural accumulation and production processes so that capitalist transformation and peasant persistence went hand in hand. This was apparent from the ad-valorem tax on coffee production enacted prior to the 1948 revolution to the creation of state institutions ICAFE and the CNP immediately following the revolution, both of which actively regulated the farm-gate prices paid to coffee and basic grain producers.

Conclusions

Attention to the individual manner in which these three problematics have been resolved leads to a nuanced understanding of the structural factors that have contributed to Costa Rican coffee sector peasant persistence through the state-led development era. A particular set of historical relations between the coffee producing peasantry, capitalist producers, the oligarchic-elite processors and the Costa Rican state have stymied processes of class differentiation and peasant dispossession. The contingency of the Costa Rican agrarian transition resulted from the particular balance of class powers, including the prominence of state politics both guiding and exploiting the transition. In Costa Rica, this was perhaps best epitomized by the state-led modernization process. The state figured large in the appropriation of the surplus capital accumulation generated by coffee production. The 7 per cent state tax on all coffee production provided fiscal support for the politics of welfare-state capitalism and the process of agro-import-substituting industrialization of the economy. Coffee agriculture provided the majority of the surplus appropriated by the state in order to fund industrialization and so achieve relatively high levels of human health and social development. It was done so in a manner unique to Costa Rica; as agrarian capital increasingly did not concern itself with the actual production of coffee, the internal processes of peasant differentiation in Costa Rica were markedly less impacted by the intense pressures wielded by landed capitalists in other national contexts (especially in Columbia, Brazil and Puerto Rico) to spatially expand and socially concentrate their powers within the productive sector (Winson, 1989). The Costa Rican agrarian transition to capitalist agricultural relations was not one predicted by classic agrarian theory, which would have assumed the trifurcation of the sector into a landless proletariat class, a landed capitalist producer class and an agroindustrial class. Instead, agroindustrial capitalists and petty-commodity producers emerged as the two most prominent agrarian classes and peasant dispossession by differentiation due to the concentration of land in the hands of agrarian capital was not a historically important cause of peasant disappearance in Costa Rica. This is because, as noted above, the tendency for recombinant agrarian capital to concentrate in the agroindustrial sphere does not force agriculture in a ‘path-dependent’ march towards the obliteration of peasant forms of social organization.

This case study provides empirical and historical evidence rejecting the notion of peasants as a residual category or social class destined for enlistment into the ranks of the proletariat (Brass, 2002). That type of path-dependent transition is incorrectly interpreted as a theoretical necessity based on the equally mistaken belief of the inevitability of full structural change towards capitalism in all sectors of society, agricultural included (Marx, 1967). In fact, Marx was very careful to acknowledge the historical and material specificity of each agrarian transition. In this case, capital intensive coffee processing mills were a unique historical and material solution to agrarian capital’s lack of direct ownership over labour and landed production in Costa Rica. Continued access to the means of production, the maintenance of a subsistence economy and the employment of non-remunerated family labour, all are factors that have contributed to a form of Costa Rican coffee producing peasant agriculture not subject to ‘classical’ resolutions of the agrarian question as either landless proletariat or agrarian capitalist (Kautsky, 1988; Lenin, 1964). This combination of commodity and self-sufficient modes of production emerged as the dominant form or class of producer within the peasant sector of Costa Rica in the early twentieth century. In Costa Rica the formal subsumption of peasant labour processes to agrarian capital and the real subsumption of nature by capital is a result of a specific agrarian transition engineered by state politics and is ‘a measure of the extent to which capital itself has adapted to the structural constraints imposed’ (Goodman & Redclift, 1981, p. 213).

Footnotes

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

This research was generously supported by the center for agroecology and sustainable food systems, the center for tropical research in the environment, agriculture and sevelopment, and the Pacific Rim Foundation.

Notes

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