Coffee Valorisation as Government Failure: The Common-Pool Problem and Brazil’s Loss of Global Hegemony (1889–1930)

Abstract

This article analyses coffee valorisation in Brazil between 1889 and 1930. It contrasts approaches that view the state as aligned with class interests with a public choice perspective centred on organised groups. It argues that valorisation persisted because it generated benefits for exporters while distributing costs across less organised groups, consistent with a fiscal common-pool problem. Evidence from the Taubaté Agreement indicates that price support was financed through external borrowing and implemented through exchange-rate depreciation and monetary expansion. Over time, incentives encouraged supply expansion and reduced Brazil’s market position as competitors entered. Fiscal pressure constrained other public spending. The case illustrates government failure.