Learn More About Guest Contributor Robert Antoshak
Learn More About Guest Contributor Robert Antoshak
“Today, cotton is so ubiquitous that it is hard to see it for what it is: one of mankind’s great achievements,” so declares Sven Beckert, a historian at Harvard University and winner of the prestigious Bancroft Prize, in his newly published Empire of Cotton: A Global History. Even so, as Beckert elaborates, “cotton is as familiar as it is unknown,” a prescient observation when we consider the current state of the cotton industry. If you’ve ever wondered why the cotton business behaves as it does, I recommend reading this insightful history. Deeply researched, highly analytical and well written, Beckert successfully relates the importance of cotton to the evolution of global capitalism. Indeed, the author’s case rests on his observation that although a mundane commodity, cotton was essential to the development of the global textile industry. In so doing, the cotton industry helped to create the global networks necessary for expansion of global trade. Moreover, cotton proved to be a far more versatile raw material than other natural alternatives – such as flax, wool or silk – which not only suffered from small supplies but limited application in various textile products.
As Beckert points out, the mercantilist economies of the 18th or 19th centuries would not have been possible were it not for the availability of cotton to the burgeoning textile industries of Europe – particularly in England, by far the most important producer of textiles into the 20th century. Far-flung supply chains, along with eager supplies of capital, made the merchant community the vanguard of an increasingly globalized world. By the time of the industrial revolution in 19th Century Europe, cotton supply chains were already well established in the United States, Brazil, India, Africa and Asia. Indeed, with the advent of high-speed spinning and weaving in the 19th century, those supply chains were only deepened to meet the needs of European industry. Cotton, as a result, became the essential raw material for what became the single most important manufacturing sector in the 19th century, textiles.
Pulling no punches, Beckert describes capitalism as an exploitive force in the development of the global economy, but cotton was an essential thread intertwined with the growth of global capitalism. Without a ready supply of fibers, the industrialization in England and elsewhere in Europe would not have been possible. From the standpoint of economic development, this was a good thing. Yet such development came with the horrifically negative cost of slavery (to grow cotton) and labor exploitation (to produce textiles), negatives that, although disdainful, contributed mightily to the success of capitalism and, by way of that success, the introduction of much of the world to modernization.
However, due to its importance as a raw material, producers and manufacturers of cotton yarn and fabrics enjoyed a level of political influence seldom enjoyed by any industry throughout history. This influence, though, resulted in abuses in the political, economic and social development of the world, ultimately resulting in the manipulation of political influence, economies of scale and, inexcusably, the exploitation and enslavement of large numbers of people in the American South and elsewhere. Slave labor, in turn, helped to support the wheels of industry, which provided the markets and capital necessary to support the overall system of supply and demand. With the advent of the industrial revolution, exploitation of factory workers took on sinister levels second only to the slaves picking cotton in the fields. Nevertheless, these evils enabled a rapidly developing Europe to meet its potential as the industrial powerhouse of the world by advent of the 20th century.Dr. Beckert explains that the American Civil War was a turning point in the global development of the cotton industry. With the defeat of the Confederacy and the abolishment of slavery, the major source of cotton to Europe was in effect taken off-line as the battered South struggled to reestablish itself after the war. Cotton was an essential product for the South. Sugar and other agricultural products were important, for sure, but cotton held a place in the Southern economy unassailed by any other product.
Further, belief in the permanence of cotton in the global markets led Southern politicians to overplay their hand. When they threatened to withhold cotton from England at the outbreak of the Civil War, England failed to support the South. When confronted by perceived blackmail, English textile mills, benefiting from a large supply of cotton already in warehouses, simply shifted sourcing of cotton to other countries (in particular, India and Brazil) to meet its needs. By doing so, the procurement of cotton spread to a degree that provided English and other European mills with an even greater supply and variety of cotton from which to choose – and at lower prices – than was the case before the Civil War, a historical irony that has benefited mills around the world ever since.
I have a minor quibble with Beckert’s concluding chapter, the Epilogue, as he gives relatively short shrift to the state of the current industry. Nevertheless, Beckert explains the current globalized state of the cotton and textile industries is not new, an expansion of what ultimately came together in the late-19th and early-20th centuries. To this point, I agree. More than anything, though, Empire of Cotton is a work of history and needs to be evaluated from that perspective. Frankly, to consider the current business to the degree in which Beckert treated the history of the industry would require another book in order to do justice to the topic!
Although there have been literally dozens of histories written about the cotton business over the years, Empire of Cotton rises above the rest in terms of analysis and explanation of the importance of cotton as an essential catalyst to industrial development. For casual readers, be warned that this is not a light read, but it is a superior read chock full of historical anecdotes and eloquently described stories of the ascension of cotton to the world stage. If there’s one book about the cotton industry to read this year, it’s Empire of Cotton.After reading Empire of Cotton, I thought about cotton in today’s market and its prospects in the future. Dr. Beckert did an admirable job of depicting the history of the cotton industry and its importance to economic development around the world. But what about the future? Well, for me, any effort to anticipate the future begins with a firm understanding of the past, along with an honest appraisal of the current situation. In particular, we need to assess what works and what doesn’t, while attempting to anticipate what the future holds in store.
So that I am clear, I’m not angling to write a book expanding upon Beckert’s Epilogue. Far from it. Instead, I only wish to float some ideas for today’s cotton industry to compete better against synthetics. To be sure, the success of synthetic fibers in recent years has rattled the cotton industry. Whereas cotton has successfully met the competitive challenge of other natural fibers, such as wool, it has struggled to match the market acceptance of synthetics. The success of synthetics may be due to a simple change of fashion preferences or better prices. Regardless, it is hard to deny that cotton has lost market share and continues to lose share even when prices are down sharply (down more than 20 cents per pound since last year).
So what can be done? I’d like to suggest some ideas:
- Encourage direct sourcing by apparel brands and retailers. The merchant community plays an outsized role in the procurement and delivery of cotton to the global mills. As Dr. Beckert explained in Empire of Cotton, the rise of the merchant class developed in Europe beginning in the 16th century and has developed into the prevalent form of cotton distribution today. Hence, the 21st century cotton business is supported by a 16th-century infrastructure. Some may say that means that the merchants function using a tried and true model. However, with today’s rapid communication, technologically innovative economy, I wonder if the techniques have made the previous model obsolete. Does it make more sense for clothing companies to arrange direct sourcing of cotton via their mill suppliers? Properly devised, such a system would eliminate middlemen, improve efficiency and lower procurement costs – perhaps necessitating more risk, but the tradeoff would be lower costs. For a cost-sensitive supply chain, isn’t that worth it?
- Educate consumers about the realities of synthetic fibers. Cotton has lost its way in highlighting its qualities while educating consumers to what synthetic fibers are – petrochemical materials. More so, the very definition of what constitutes “natural” has become confused as terms such as “organic” and “sustainable” have gained primacy in the industry. For the consumer, the question remains. Where can I buy environmentally friendly products at a reasonable price? For retailers, then, the question remains. How do I best meet the needs of my customers? And for cotton the question remaining is a pointed one. How does cotton remain relevant in today’s marketplace?
- Support a global cotton contract. Cotton is a global business, so support of a global trading exchange is essential to the future development of cotton as a viable, relevant raw material for the textile industry. There is one primary exchange (the New York-based ICE exchange) today supporting price discovery globally, although limited to just one type of cotton – traditional Memphis Eastern cotton. Better quality cotton has taken on a more important position in the global market as these varieties grow in a wide range of places from Texas to Brazil to Australia to Asia to Africa. Furthermore, such globalized production demands a more sophisticated trading exchange to reflect the realities of today’s business. ICE is launching a global contract in Malaysia this year. This is positive, and it’s long overdue.
- Eliminate the duplicity of cotton organizations around the world. There are more cotton organizations globally than there are varieties of cotton grown. Taken together, this duplicity of organizations only makes the cotton appear impenetrable to an outsider. As a consequence, many of these organizations spend an inordinate amount of time trying to promote their agenda opposite other cotton interests. For example, organic versus conventional cotton. All of this infighting only detracts from the broader message of cotton. Why is this? Certainly, it’s a manifestation of the global growth and expansion of cotton around the world. Each local producing industry demands organizations that support its particular interests. However, this results in a fracturing of the cotton message with competing interests. For many synthetic fiber companies, on the other hand, they enjoy the economies of scale only possible for global chemical companies. Cotton is truly a global product, and it faces a global challenge from synthetics. Why not create a global response to the challenge of synthetics?
- Reevaluate subsidy programs around the world. It is an understatement to say that cotton subsidies remain a highly contentious subject for the industry. Of course, supporters of government subsidies maintain they are necessary because of the realities of supply and demand. As a product grown in nature, cotton production cannot be turned on or off by the flip of a switch. It takes months to grow, the weather is often unpredictable and demand from mills may be erratic at times. It’s tough for any farmer to predict demand for his/her products, let alone prices. That’s why futures and options remain central for any farmer to protect his/her long-term viability. But subsidies only distort the market, while masquerading as a way of protecting farmers. There are lots of examples in history where subsidies have only prolonged the agony of the market.
Enough of my pontificating. As described by Dr. Beckert, there are historical reasons why the cotton industry looks and behaves like it does today. Even so, as Beckert explains, the industry has been in perpetual motion along with the evolutionary forces of capitalism. In short, the business has changed many times, adapted to new challenges. If history has taught us anything, today’s situation demands that cotton find a way to succeed.
Contact Robert Antoshak at email@example.com.