Coffee Economics and Spirituality

A talk given by John De Val on 11 January 2020

(The views expressed in this talk are my own views, and do not necessarily represent the views of the School of Philosophy, Cambridge – John De Val)

The title of this talk is Coffee Economics and Spirituality. Economics and Spirituality are normally considered to be poles apart. This may well be because our understanding of both is far too narrow. My aim this morning is to bring them closer together. So, it is with these two that I will start. The relevance of coffee to the discussion I will leave till later. I will start with spirituality.

What is spirituality?

This turns out to be a tricky question. Wikipedia states that there is no single, widely agreed upon definition of spirituality. It reports that surveys of the definition of the term, as used in scholarly research, show a broad range of definitions with limited overlap. One such survey unearthed twenty-seven explicit definitions, among which, quote, “there was little agreement.” At one time it was it was closely associated with religion, but nowadays there are many people who claim to be spiritual but not, in any way, religious.

I will start with the definition of spirituality given in the Oxford English Dictionary which is ‘the attachment to or regard for things of the spirit as opposed to material or worldly objects’. And it goes on to define spirit as ‘the animating or vital principle in Man which gives life to the physical organism, in contrast to its purely material elements; it is the breath of life.’ This brings out the distinction between the immaterial world and the material one but is not particular helpful when considering how one becomes more spiritual when engaging in economic activities. It might be more helpful if I address what I consider one of the misconceptions about the spiritual life i.e that spirituality and morality are the same.

Spirituality is often associated with morality in most people’s minds. But there is an important difference between them. Morality is concerned with modes of behaviour, with judgements as to what is right and wrong, good and bad. Spirituality is beyond the duality of good and bad, beyond the duality of moral and immoral. A moral person acts in accordance with the moral code they have assimilated; a truly spiritual person acts naturally and spontaneously. When one is acting spiritually, one does not operate from any fixed position but one lives from moment to moment, where each moment is complete and does not need the second moment for its fulfilment. Intuitively one knows exactly what is to be done in the given moment.

This is not to imply that being moral is wrong or inferior. For societies to exist, a certain morality is needed. It is morality which separates human beings from animals. It is moralities which generally evolve into laws creating a certain order in the society. However, rigidly holding on to morals can be binding too and can lead to unfortunate outcomes, as we shall see later.

An important characteristic of spirituality is the freedom from the concepts of me and mine; to be free of ego. ‘What’s in it for me’ is not the motive for any action. In this respect it seems appropriate to quote a member of the so-called Grantchester Group who often met here in the Orchard – Bertrand Russell. In 1930 Russell, who was widely considered to be an atheist but described himself as agnostic wrote the following”… one’s ego is no very large part of the world. The man who can centre his thoughts and hopes upon something transcending self can find a certain peace in the ordinary troubles of life which is impossible to the pure egoist.” He enlarged on this in an essay on happiness in which he describes how much happier he was in old age than he was in his youth.

‘Now, on the contrary, I enjoy life. I might almost say that with every year that passes, I enjoy it more. This is due partly to having discovered the things that I most desired and having gradually acquired many of these things. Partly, it is due to having successfully dismissed certain objects of desire – such as the possession of indubitable knowledge about something or other – as essentially unobtainable. But, very largely, it is due to a diminishing pre- occupation with myself.’

To act completely free from ego is to come closer to complete communion with the Universe, naturally without any effort. In such complete communion there is no sense of real separation from other people.
So that is a few thoughts on spirituality. It is not the same as morality and is marked by the absence of ego. I don’t wish to dwell too much on the distinction between morality and spirituality. I will argue that our economic arrangements could lead to better, fairer and more just outcomes if they reflected a greater concern for both morality and spirituality.

So, let us now turn to a consideration of economics.

What is Economics?

Although economics and economic affairs are seldom out of the news media, I suspect most people asked to define economics would be lost for words and mumble something about money. I remember when I was a student in Bristol, my landlady found out that I was studying economics and promptly produced a sheaf of papers and asked if I could advise her where to invest her savings; a touching and misguided faith in the financial ability of a 17 year old novice in economics. In fact, as the recent financial crisis showed, an economist is the last person to ask where to put your money. On a visit to the London School of Economics in 2008, the Queen famously asked the question ‘Why did nobody see this coming?’ She did not get any sensible reply.

So, what is economics about?

“Economics is about everyday life. Everyday life is in fact everyday economics. The two are hardly distinguishable. The economy is not a separate thing with its own existence. Economics is going on around us all the time and it shapes our lives. It determines where we live, what we eat, what we wear, how we spend our time, how much money we have to spend, what we have to do to get it, what we can spend it on; whether we have enough, or not. The subject matter of economics is essentially our own lives and those of our fellow human beings”.

Who are these economic agents? Well, they are you and I. In this last description we have both merely become economic agents. As such our interactions with each other are assumed to be governed by rational self-interest because this assumption is at the heart of modern economic thinking, often termed neo-classical economics. According to this approach what has become known as ‘economic man’ or ‘homo economicus’ is a person who acts rationally on complete knowledge out of self-interest and from the desire for wealth.

This economic man deals with businesses that still largely follow the prescription set down by the American economist, Milton Friedman in 1970:

‘In a free society there is one and only one social responsibility of business; to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud’.

This view took a bit of knock when the financial crisis struck, but now appears to have climbed back in the saddle. ‘Staying within the rules of the game’ and ‘without deception or fraud’ appears to be nod in the direction of a minimum standard of morality, but generally speaking modern economists are very disparaging about introducing moral concerns into the subject. Here is Eugene Black, a former President of the World Bank. In a lecture on ‘The Age of Economic Development’, he expresses a wish to ‘render the language of economics …. morally antiseptic…… We try to remove the taint of ideology from the language of economics and thus relate that language solely to the end of promoting higher material living standards’.

Even more explicit is an American economist, Professor Donald Dewey:

‘The concern for efficiency and progress is, and always has been, secular, in that it condemns all religious constraints that are inimical to higher man-hour productivity. This concern is unromantic in that it will not sacrifice national income in order to maintain a happy peasantry or a culture-carrying leisure class. It is materialistic in that happiness is regarded as a more pressing goal – if not a more worthy goal – than salvation. And, above all, it is optimistic in that it supposes that the sum of human happiness is increased by growing wealth.’

Note the phrase ‘sum of total happiness’ – this is not the same as the happiness of everybody. If the rich get richer and therefore happier (according to this view) and the poor get poorer and less happy; the net result could still be an increase in the sum of total happiness.

How did we come to this position where happiness is equated with material wealth and can the introduction of a greater concern for morality and spirituality in our economic arrangements lead to not just the sum of human happiness being greater but greater happiness for everybody?

To answer the first question ‘how did we reach this position’ we probably need to go back to the Reformation. As the Reformation swept across Europe, scholars proposed new doctrines to rationalize the expanding markets and growing prosperity, as well as the needs of the emerging powerful monarchs. Perhaps the most important of these from a commercial perspective was the sixteenth century French theologian and pastor, John Calvin, who fled Catholic France for the Swiss city of Geneva, where he became extremely influential. Indeed, the German social historian, Max Weber, attributed the rise of the archetypal capitalist to the teachings of Calvin.

In Weber’s view, the true capitalist is not the flamboyant gambler who risks all or the unscrupulous speculator who wheedles his way to riches, but the temperate, reliable, hard-working businessman, with quote ‘strictly bourgeois principles and opinions.’ The essence of capitalism is the steady accumulation of wealth, not because of the pleasures it can buy or the material needs it can satisfy, but for its own sake. Indeed, far from unbridled greed and debauchery, rational capitalism combines a single-minded focus on accumulation with a frugal lifestyle. What Calvin did for capitalism, according to Weber, was to provide it a moral legitimacy in a world where avarice was a sin.

Calvin emphasised the notion of calling, or predestination – that God has chosen some to be saved from damnation, and that their moral obligation was to do their duty in the world. Rather than abandoning the world, as was the Catholic monastic ideal, one had to embrace it. The practising Calvinist had to
have faith that he was one of the chosen, and had to demonstrate this faith through worldly activity. Business success was a sign of being one of the elect. Therefore, the accumulation of wealth was no longer to be condemned as avarice, but instead to be celebrated. Indeed, it was condemned only if the
accumulated wealth was spent on luxuries and high living – not only did conspicuous consumption reduce the savings necessary for investment, but it was also a waste of time, detracting from man’s true calling. The Calvinist vision of capitalist society was austere – and Geneva under the Calvinists was
reputedly a harsh, dull place – but it gave the single-minded entrepreneur a moral compass and justification that he did not have before. Various Protestant sects influenced by Calvinism then spread to Scotland, the Netherlands, England, and from there to New England in the United States.

Such a moral compass can however lead to unfortunate outcomes. Fast forward now from sixteenth century Geneva to late nineteenth century America and John D. Rockefeller. Rockefeller was the richest man in the world in his time. He was a superbly efficient businessman in the Calvinist mode; he saw his work as his calling. In many ways, his personal life was exemplary. He lived in what was known as the Gilded Age, a time of materialistic excesses combined with extreme poverty, but he did not partake of such excesses. Rockefeller was a keen church-goer. His mother was deeply religious and disciplined, and had a major influence on him in religious matters. During church service, his mother would urge him to contribute his few pennies to the congregation. He came to associate the church with charity. A Baptist preacher once encouraged him to “make as much money as he could, and then give away as much as he could”. Later in his life, Rockefeller recalled: “It was at this moment, that the financial plan of my life was formed”. Money making was considered by him to be a God-given gift.

Faith was a directing force throughout his life, and Rockefeller believed it to be the source of his success. As he said, “God gave me cash”, and he did not apologize for it. He felt at ease and righteous following John Wesley’s dictum, “gain all you can, save all you can, and give all you can. In the latter part of his
life, he took public responsibility seriously, figuring out how to spend his enormous fortune on the well-being of society. Institutions he founded included two universities, one of which the University of Chicago became very influential in the teaching and preaching of economics in the twentieth century. It is where Milton Friedman taught.

So far, so good. But not quite so good was his way of accumulating wealth. Rockefeller made his money in petroleum when oil’s primary uses were for fuelling lamps and lubricating steam engines. He was not attracted to the risky business of prospecting for oil. However, Rockefeller wanted a more stable business, and he found it in oil refining in Cleveland, close to Oil Creek, Pennsylvania where oil in the US had been discovered first. As Rockefeller worked to make his refinery the lowest-cost producer, he managed to drive out the truly incompetent and gained market share. Yet many producers, having sunk money in their investments, and having debts to pay, refused to quit and kept the price of refined products low. As long as the price was little more than their incremental cost of refining, these producers staggered on. At one point in the 1870s refining capacity was three times greater than demand.

Rockefeller wanted to bring order to oil refining, and his first target was the twenty-six independent Cleveland oil refiners. In 1872, Rockefeller struck a deal with the railroads serving Cleveland that meant his competitors were faced with higher transport charges. With no alternative means of transport, the angry oil drillers along Oil Creek decided to boycott Rockefeller and sell only to these independent refiners. Protesters attacked the railroads, emptied oil cars and spilled their contents on the ground, and ripped up rail tracks. Even as the industry was in turmoil though, Rockefeller bought up twenty-two of his twenty-six Cleveland competitors. As one owner recounted, ‘There was pressure brought… that if we did not sell out, we should be crushed out…It was said they had a contract with the railroads by which they would run us into the ground if they pleased.’ Five years after what was known as the ‘Cleveland
Massacre, Rockefeller’s company, Standard Oil, controlled 90% of oil refined in the US.

Rockefeller was a superbly efficient businessman but he saw unfettered competition as greed, causing unnecessary booms and busts which impoverished the entire industry. He wanted to bring order to the industry by centralising control – his control – and he had no hesitation in bribing entire legislatures or misleading public hearings with fake testimonials to get his way. Manipulating government was just another means to business success. Many successful businessmen of the time thought similarly – Rockefeller was just more successful at executing plans. Many of those at the receiving end saw the
kind of order he brought, which was spreading to a number of industries in the United States such as railroads and steel, as monopoly capitalism. Essentially, these cartels insisted that they, not the free market or the government knew what was best for the public.

So, the moral of the Rockefeller story is that having a moral compass when engaging in economic activities does not always result in a happy outcome for everybody. But at least Rockefeller gave away a considerable proportion of his ill-gotten gains. Many millionaires who have followed in his footsteps and
adopted dubious business practices have not done so. A recent TV documentary described a ‘payday loan’ operation scam in America which led to innumerable poor families losing their life’s savings. The man behind the operation was asked the question ‘Do you consider that you have any morals?’
After a pause, he replied, ‘Look, I’m a businessman’.

So, if morality isn’t a guarantee of fairness in business dealings, can the application of a more spiritual approach do any better and would such an approach be practical? The question which arises from raising this possibility is how do you adopt a more spiritual approach? As we have seen in the case of John D Rockefeller, the application of religious principles is not a guarantee of fairness and equity. However, there is one principle which occurs in all the great religions whose ubiquity seems to point to something fundamental about how people can live in harmony with one another. It has come to be known as
the golden rule. In the Christian religion it occurs in the teachings of Jesus as ‘In everything, do to others as you would have them do to you, for this is the law and the prophets’. In Buddhism, it appears as ‘Treat not others in ways that you yourself would find hurtful’. In the Analects of Confucius, we find, ‘One
word that sums up the basis of all good conduct…loving kindness. Do not do to others what you would not want done to yourself’. The great Hindu classic, the Mahabharata states, ‘This is the sum of duty: do not do to others what would cause pain if done to you’. And, finally, from Islam, we hear from the prophet, Muhammad, ‘Not one of you truly believes until you wish for others what you would wish for yourself’. Similar expressions can be found in Jainism, Judaism, Sikhism, Taoism and Zoroastrianism.

So, following the golden rule in all our transactions with other people can be one way in which we can introduce spirituality into economic affairs.

Even if we agree with the assertions that I have made so far in this talk, we need to ask a further question? Is following the golden rule in economic affairs practicable in this day and age? This brings us to coffee. Why coffee? Well coffee is an important part of the world economy. It is not, as the coffee industry has often claimed ‘the second most valuable exported legal commodity on earth after oil, but it is nevertheless the fourth most valuable agricultural commodity and over 100 million people around the world rely on coffee for a living, all the way up the coffee chain from producer to barista. It is also an industry whose end product is part of daily life for many, many, more people, most of whom are blithely unaware of all the various activities requiring interaction between people that are required to enable them to enjoy their daily fix of a cappuccino or flat white or whatever.

Another reason I have chosen to look at coffee is that while I was discussing the golden rule in relation to economics with a small group of people studying economics, I hazarded a guess that a firm which employed the golden rule principle would be a trusted company. What examples of companies could we
think of that we trusted? One of our group, who hailed from New York, immediately volunteered Starbucks. The rest of us were taken aback. Why Starbucks, a company more renowned in Britain for being a high profile tax-avoider? She replied that whenever she visited her local Starbucks, she was made very welcome, the staff were friendly and the coffee was OK too. She usually went out feeling better than when she went in. So Starbucks seemed to be a promising place from which to start an exploration of how a company might practically apply principles consistent with the golden rule.

Starbucks is certainly a highly successful company. It started off as a small store in Seattle in 1971. Currently it is present on 6 continents and in 78 countries and territories, with around 27,340 outlets. In what follows I must stress that I am not trying to show that Starbucks is a model company and that its activities reflect success in following the golden rule and acting in harmony with the natural environment. But given its size and success, I think it would be instructive to see what principles it asserts are core to its business model and whether there is any consistency with these and the golden rule.

A good place to start is with its Mission Statement. This statement is designed to guide the actions of the organisation, provide ‘a sense of direction, and guide decision making.’ These are Starbucks’ words not mine. Its original mission statement was ‘to establish Starbucks as the premier purveyor of the finest coffees in the world while maintaining our uncompromising principles as we grow’. This has now been changed to: ‘To inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time’.

It is quite possible to be cynical about this and write this off as meaningless output from some PR exercise which is filed away out of sight while the serious business of making a profit is undertaken. But this could be a mistake. It may be better to interpret it as an acknowledgement that following through on
what is implied by this statement is the best way to ensure the company’s success and its profits.

The coffee chain has many links involving people but three important interfaces are between the company and its customers, its employees and the people who produce the coffee. We can examine the company’s policy in these three areas to see whether it is consistent with the golden rule.

The Customer Interface

Cafes are a very old idea, but in the consumerist landscape of the 1980s, they were a radical departure from the norm. They encouraged the customer to hang out, to idle away the afternoon, and to do so without paying very much. In a landscape of public places designed to entice people to buy things and then leave (including such frankly manipulative devices as fast food restaurants with colours designed to make you hungry and chairs to make you feel uncomfortable, a subdued public space with couches and books amounted to a radical revision of the consumer-retailer relationship. When Starbucks began to sell coffee drinks rather than just roasted coffee beans, Chief Executive, Howard Schultz and his team noticed this at once. Here is what he said at the time:

Americans are so hungry for a community that some of our customers began gathering in our stores, making appointments with friends, holding meetings, striking up conversations with other regulars. Once we understood the powerful need for a Third Place, we were able to respond by building larger stores, with more seating.

While my original idea was to provide a quick, stand-up, to-go service in downtown office locations, Starbucks’ fastest growing stores today are in urban or suburban residential neighbourhoods. People don’t just drop by to pick up a half-pound of decaf on their way to the supermarket, as we first anticipated. They come for the atmosphere and the camaraderie.

The generation of people in their twenties (now in their thirties) figured this out before the sociologists. As teenagers they had no place to hang out except shopping malls. Now they are older, some find bars are too noisy and raucous and threatening for companionship. So, they hang out in cafes and coffee bars. The music is quiet enough to allow conversation. The places are well lit. No one is carded (i.e asked for their ID card), and no-one is drunk.

Starbucks recognizes that it’s not just about the product, it’s also about the experience. According to Starbucks’ website, each Starbucks location you walk into has the same look and feel, yet there is apparently an attempt to adapt it to the geographic area. Baristas serve your coffee to you by name. And if it isn’t exactly what you ordered, they make sure to correct it and ask how they can make your experience better. At least that is what they are supposed to do.

The employee interface

When you buy your cup of coffee in the café you are occupying what Starbucks calls the ‘last 10 feet’ of the coffee chain. The other individual in this last ten feet is of course the barista, a Starbucks employee. How does Starbucks look after its employees? What relevant policies does it have in place to ensure that its staff are motivated to provide an efficient and friendly service?

There is not time to cover all the aspects of the company’s human resource policy and in any case, at this stage of the talk, if I did it would probably result in your eyes slowly closing, if they are not already. The policies are based on the belief that happy employees would lead to higher customer satisfaction and the aim is, according to the company, that you have employees who seem genuinely interested in the lives of their customers; and who treat the customer not as a target for sales, but as a human being with a life beyond the store walls of Starbucks. It avoids as far as possible the term ‘employee’ and uses instead the word ‘partner’. These partners are trained in both the technical aspects of creating the drinks as well as how to connect with customers.

It is this latter aspect which is probably the most challenging part of a partner’s job, particularly at busy times. To help them they are trained and encouraged to adopt the so-called ‘latte’ approach in order to deal with unpleasant situations. Latte is the acronym for:

• • Listen to the customer,
  • Acknowledge their complaint,
  • Take action by solving the problem,
  • Thank them, and then
  • Explain why the problem occurred

Another notable feature is that each year around 40 partners from countries across Europe, the Middle East and Africa the company sends a group of to visit coffee farms and farmer support centres. Here, they see first-hand how the coffee is grown and processed, and meet the farmers behind each Starbucks blend.

The farmer interface

This brings us from the ‘last ten feet’ to the ‘first ten feet’ the actual production of the coffee. It is estimated that there are 12.5 million coffee farmers around the world. At present many of them have a relatively precarious existence, particularly as the price of coffee has now hit the lowest level in over a decade. Coffee is a very labour-intensive crop. Labourers plant the seeds, nurse the seedlings under a shade canopy, transplant them to mountainside ranks, prune and fertilize, spray for pests, irrigate, harvest, and lug two hundred-pound bags of coffee cherries. They then perform the complicated process of removing the precious bean from its covering of pulp and mucilage. Then the beans must be spread to dry for several days (or heated in drums), the parchment and silver skin removed, and the resulting
green beans bagged for shipment, roasting and grinding and brewing around the world.

The vast majority of those who perform these repetitive tasks work in beautiful places, yet only earn an average of around £3 per day. Many live in poverty without plumbing, electricity, medical care, or nutritious foods. The coffee they prepare lands on breakfast tables, in offices and in coffeehouses in developed countries where cosmopolitan consumers often pay a day’s wage in the developing world for a cappuccino.

How does Starbucks attempt to alleviate this situation? Back in 1999, when the World Trade Organization met in Seattle, protesters singled out major corporations, including Starbucks. The company was portrayed as a corporate villain for its failure to sell any Fair Trade-certified coffee. The company provided a perfect target – high-profile, seemingly ubiquitous presence, with its high street outlets and readily identifiable mermaid logo.

On national television in late 1999, viewers witnessed protestors throwing rocks through a Starbucks store window in Seattle and then trashing espresso machines. A few months later, the company signed a licensing agreement with the organisation Transfair America to sell some Fair Trade beans, though activists were convinced that the company’s action represented a token effort to stave off criticism. They were probably correct. Starbucks already prided itself on paying well for the best beans it could find, and the farmers from whom it bought generally made a reasonable living and treated their workers well. They didn’t see any compelling reason to undergo Fair Trade certification. Ten years later it had changed its attitude. In 2009 it doubled its purchases of FairTrade beans and became the world’s largest buyer of FairTrade coffee.

In 2004, Starbucks initiated its own internal verification system, called C.A.F.E (Coffee and Farmer Equity) paying high prices to farms that met environmental, social and quality measures for its beans. More recent initiatives are the Farmer Support Centres and a Farmer Loan programme. There are eight support centres across four continents. And they provide local farmers with resources and expertise to help lower the cost of production, reduce fungus infections, improve coffee quality and increase the production of premium coffee. The Loans programme provides an alternative source of finance for farmers that cannot access traditional funding channels, enabling them fulfil their cash flow needs during harvest time, and to make infrastructure investments.

Summing Up

So, is the company following the golden rule? In the areas I have considered, on paper it would seem so. But whether it does in practice depends upon the actual day-to-day experience of customers, baristas and coffee farmers. But the aim of this talk was not to assess Starbucks. The aim was to show that it can be quite possible to put in place practical procedures and policies which reflect the golden rule and thus introduce an element of spirituality into economic activities. So, I will end there and give you the opportunity to experience the last ten feet of the coffee chain.