Received: 2 December 2016 Revised: 13 April 2018 Accepted: 29 June 2018

DOI: 10.1111/joac.12291

ORIGINAL ARTICLE

From organized to disorganized capitalism?

Market versus nonmarket coordination in Spain's
dairy chain
Fernando Collantes

Faculty of Economics and Business Studies,

University of Zaragoza, Zaragoza, Spain Abstract
Correspondence Conventional wisdom has it that the food economy has
Fernando Collantes, Faculty of Economics and
transitioned from organized to disorganized capitalism. An
Business Studies, University of Zaragoza,
Zaragoza, Spain. era of extensive state intervention between around 1930
Email: collantf@unizar.es
and 1980 would have been followed by an era of deregula-
tion and increasing coordination through markets after
Funding information
Regional Government of Aragón, Grant/Award around 1980. This article uses the case of Spain's dairy
Number: 269187; Government of Spain, chain to propose an alternative view. In the case under
Grant/Award Number: ECO2015‐65582
study, there certainly were elements of state‐coordinated
capitalism between 1952 and 1986, as well as elements of
deregulation and liberalization from 1986 onwards. How-
ever, the structure of economic coordination involved some
combination of market and nonmarket mechanisms all the
way through. The organized capitalism of the first period
was not really so tightly organized, whereas much of its
later “disorganization” was in fact a transition towards a dif-
ferent mode of “organization”: one in which the control of
nonmarket coordination shifted from political to corporate
hierarchies.

KEYWORDS

dairy chain, economic governance, food regimes, food system, Spain

1 | I N T RO DU CT I O N

Has the food system transitioned from an era of extensive state intervention between around 1930 and 1980 to an
era of increasing coordination through markets in the last 40 years? Has the post‐1945 food regime been followed by
a long, chaotic period of institutional instability and structural incoherence? Have we moved, in short, from state‐
coordinated, “organized” capitalism to market‐oriented, “disorganized” capitalism? These questions are important

J Agrar Change. 2019;19:295–318. wileyonlinelibrary.com/journal/joac © 2018 John Wiley & Sons Ltd 295
296 COLLANTES

for two reasons. First, they are central to the making of a theoretical discourse on the evolution of the modern food
system. Second, they contribute to informing the ongoing political debate on the food economy, especially in relation
to its institutional architecture.
This article uses a case study to explore these questions. The case selected is the dairy chain, which (as we will
see) provides an excellent occasion to examine both the movement towards greater state intervention between
1920/1930 and 1970/1980 and the deregulation that has taken place from 1970/1980 onwards. More specifically,
the case study is about the dairy chain in Spain, where the transition was particularly abrupt due to its coincidence
with major political turning points such as the end of the dictatorship of Francisco Franco in 1975 and the
country's entry to the European Economic Community in 1986. This provides a contrast between an era of exten-
sive state, top‐down intervention in the dairy chain and a later era of democratization, Europeanization, and
deregulation.
The article is organized in six sections. A review of literature comes first. A second section presents the
theoretical framework that will be used throughout the rest of the article. The third section describes the chang-
ing structure of Spain's dairy chain from the 1950s onwards, focusing on the transition from a short chain com-
posed mostly by farmers to a longer chain dominated by processors and, at a later stage, by retailers. The fourth
section presents the evidence that fits the hypothesis that the dairy chain transitioned from organized to disorga-
nized capitalism. A following section brings a set of qualifications and objections to this hypothesis, in relation to
both the first and the second periods. The concluding section summarizes the argument and discusses its
implications.

2 | LITERATURE REVIEW

2.1 | From organized to disorganized capitalism

Conventional wisdom has it that the food system has transitioned from an era of extensive state intervention
between around 1930 and 1980 to an era of increasing coordination through markets after around 1980. The food
regime analysis pioneered by Friedmann and McMichael (1989) has often proposed a historical sequence of this kind,
placing it within a broader constellation of geopolitical dynamics. After a first food regime that was closely linked to
British free trade imperialism and was broken down by interwar turbulence, a second food regime in which state
intervention was far‐reaching would have taken shape in the decades following the Second World War. In turn, after
around 1980, this second food regime would have been dismantled by the rise of neoliberalism and its policy agenda
of deregulation on both the national and the international scale.
Related strands of literature seem comfortable with this narrative as well. The global value relations approach
favoured by Araghi (2009), for instance, contrasts an era of “retreat from classical liberalism” between 1917
and 1975 with a later era of “neoliberal globalization.” Agricultural historians are becoming increasingly interested
in this sort of formulation too. Schuurman (2013), for instance, uses the terms popularized by Lash and Urry
(1987) to propose that the political economy of Dutch agriculture has transitioned from “organized capitalism” to
“disorganized capitalism”—from strong state intervention between 1930 and 1970/1980 to an increasing role for
the free market as a mechanism of coordination.
It is interesting to note that this narrative is largely immune to the increasing internal tensions to be found within
its original core—food regime analysis (see Magnan, 2012, for a review). Here, we find much internal debate about,
for instance, whether or not a third food regime has emerged in the last few decades. Those who remain sceptical,
such as Pritchard (2009) or Friedmann (2016), may perhaps be thought of as those who, with their emphasis on tur-
bulence, path dependence, and transition, are closer to a notion of “disorganized capitalism.” However, those who
believe that a third food regime has already emerged are even more explicit in portraying the present time as some-
thing widely different from “organized capitalism.” McMichael (2009, p. 285), for instance, identifies a current
COLLANTES 297

“corporate food regime” in which the “organizing principle is the market, not the empire or the State” (see also
Pechlaner & Otero, 2008, about a “neoliberal food regime”).

2.2 | The dairy chain in the West as an illustration

Before going any further in the theoretical analysis of this narrative, it may be useful to illustrate the content embod-
ied in expressions such as “organized capitalism” and “disorganized capitalism.” We will do so by taking the case of
the dairy chain in the West as an illustration (the following is based on Moser & Brodbeck, 2007, for Switzerland;
DuPuis, 2002, for the United States; Atkins, 2010, Fenton, 1995, and Vernon, 2000, for Britain; Just, 2009, Kjaernes,
1995, and Martiin, 2010, for Scandinavia; Vatin, 1990, for France and Germany; Orland, 2005, for Central Europe;
den Hartog, 1998, for the Netherlands; Segers & Lefebvre, 2009, for Belgium; Felice, 2004, for Italy; and Freire,
2011, for Portugal). During the interwar period, most countries implemented active measures in order to manage
the dairy chain. They did so basically for two reasons. First, they wanted to secure consumer access to a regular,
cheaply priced, and safe milk supply. Once milk became a part of the “nutritional social contract” (Valenze, 2011),
governments intervened in order to prevent what until then had been pervading problems, such as shortages, price
peaks, and fraudulent behaviour by suppliers. Alongside this consumer‐centred motivation, governments also wanted
to prevent deterioration in the living standard of dairy farmers. Especially in the 1930s, in country after country, over-
production and decreasing farmgate prices threatened the economic reproduction of the dairy family farm, and gov-
ernments tried to do something about it. During the years after the Second World War, state intervention in the dairy
chain continued, and it was even reinforced by the creation of the European Economic Community and its Common
Agricultural Policy (henceforth, CAP).
The specific measures were of course very different from country to country. Still, we can discern five groups of
measures which, combined in different proportions, formed the backbone of organized dairy capitalism. First, govern-
ments implemented price policies in order to guarantee minimum farmgate prices, maximum consumer prices, or both
of them. Such policies could be direct, as in the case of price fixing by the State, or indirect, as in the case of
programmes for the immobilization of surplus production (i.e., processing surplus liquid milk into powdered milk or
butter). Second, governments used different instruments in order to subsidize farmers. Again, these instruments
could be direct, as in the case of payments linked to technological modernization or to public purchases of surplus
production at guaranteed prices, or indirect, as in the definition of higher‐than‐equilibrium farmgate prices in the
above‐mentioned price policies. Third, governments also used an array of protectionist instruments in order to pre-
serve the national market for national producers or, at least, to make it more difficult for foreign producers to enter
the domestic market.
Fourth, organized dairy capitalism also comprised measures set to guarantee quality standards for dairy products
and for milk in particular. Milk has its own history as a commodity, and setting the biological and chemical standards
that define what (exactly) could be considered (and sold as) milk was an important element in dairy policy. Addition-
ally, governments often went further and restricted business competition for alleged quality reasons. Some govern-
ments, for instance, regulated the creation of dairy processors which, in exchange for the concession of a local
monopoly, supplied consumers in a given territory with processed milk. Others implemented a similar licensing sys-
tem for the retailing link of the chain. There were also governments that allocated production quotas to farmers
(in this case not so much on quality grounds but in an attempt to prevent overproduction).
Fifth and final measure, it was common for states to promote advertising campaigns that would stimulate the
demand for dairy products. At a time when nutritional discourse was dominated by the “newer nutrition” paradigm
(see Biltekoff, 2012), with its emphasis on proteins, minerals, and vitamins, these campaigns used to stress the health
benefits that consumers could expect from drinking milk.
Most of these measures were discontinued in the latter part of the 20th century. Because there had been much
national diversity in the details of state regulation, there was also much diversity in the details of later deregulation.
Yet strong internal pressures seem to have played a major part everywhere. Licensing systems and territorial
298 COLLANTES

monopolies, in particular, soon became unpopular among national business elites. In this respect, dairy deregulation
cannot be separated from the progress made from the 1980s onwards by the neoliberal agenda in the broader polit-
ical economy of the West (Atkins, 2010; Moser & Brodbeck, 2007).
In those countries belonging to the European Union, the politics of economic integration became a powerful,
additional force against organized national capitalisms. Distinctive national institutions, such as Britain's Milk Market-
ing Boards and Italy's “milk centrals,” were abolished following explicit legislative and judicial action by the European
Union. The main charge on them was that they were incompatible with the protection of competition within a single
European market—the Milk Marketing Boards were monopsonists in the British market for raw milk, whereas milk
centrals were licensed monopolies for the production of pasteurized milk within a given Italian territory (Atkins,
2010; Felice, 2004; Fenton, 1995; Vernon, 2000). Although the European Union went on subsidizing dairy farmers,
the bulk of organized dairy capitalism was discontinued in the late 20th century.

3 | T HE O R E T I C A L F R A M E W O R K

3.1 | Markets versus states? Bringing business organization in

The conventional wisdom on a transition from organized to disorganized capitalism is implicitly based on Adam
Smith's view of markets and states as alternative mechanisms of economic coordination (Smith, [1776] 1961). The
market would be the realm of decentralized, individual decision‐making, whereas state regulation would represent
centralized, collective decision‐making. Apparently, a seesaw would be an apt metaphor for the tension between
these two opposed mechanisms: the greater the role for the market, the lesser the role for the state, and vice versa.
Smith, for instance, advocated a free‐market economy with little role for the state. Others of course have made
completely different arguments, but it is interesting to note that seesaw‐type reasoning has very often been retained
as a framework of analysis.
A major theoretical weakness of this perspective is that planned coordination is undertaken not only by the state
but also by other organizations such as firms, households, and civil society organizations (Boyer, 2005). Among these
organizations, it is firms that have been given a more prominent role in the literature. Because firms are also the case
that matters most for the empirical analysis developed later in this article, in the remainder of this section, we will
focus on them.
The role of firms as agents of planned coordination is stressed in a particularly forceful manner by three intercon-
nected intellectual traditions: Marxism, institutionalist economics, and Schumpeterian economics. Karl Marx was
probably the first social scientist who contrasted the hierarchical, rational planning that takes place within a firm with
the (formally) free and (potentially) chaotic order of the market (Chang, 2014, p. 132). Contemporary Marxists in
fields other than food studies have placed this contrast at the forefront of their analysis. Arrighi (1994, pp. 239–
300), for instance, argues that the defining feature of the “systemic accumulation cycle” led by the United States dur-
ing the “long 20th century” (from 1870 onwards) was the substitution of the market by large corporations involved in
planned coordination. The aforementioned Lash and Urry (1987, pp. 3–7) actually define “organized capitalism” (a
notion that originally comes from Rudolf Hilferding) in terms that have much to do with business organization, such
as the concentration of industrial, banking and commercial capital, the separation of ownership from control, and the
growth of new sectors of managerial intelligentsia. As many as seven out of the 14 variables selected by Lash and
Urry in order to define organized capitalism are basically about firms, rather than about the state.
The institutionalist school has also explored the way in which business organization emerges as a distinct mode
of coordination. The seminal work by Coase (1937) originated a vast literature in which the existence of transaction
costs in market coordination motivates the creation of firms oriented towards internalizing said costs (see Williamson,
1985, for the most influential development of this idea). Later on, Galbraith (1967), in the tradition of the older insti-
tutionalism associated to Thorstein Veblen, explored the economy‐wide implications of the rise of large, managerial
COLLANTES 299

corporations in the United States. In Galbraith's view, published in the midst of the Cold War, U.S. capitalism resem-
bled Soviet communism in that market coordination was not particularly prominent: Although Soviet‐type economies
featured central state planning, in the United States, a vast amount of resources and decisions were coordinated
through plans designed by the managerial elites of large corporations.
Neo‐Schumpeterian economists, finally, incorporate business organization to the discussion in a particularly sys-
tematic way. Inspired by Schumpeter's observations on the connection between innovation and business organiza-
tion, researchers such as Lazonick (1991) and von Tunzelmann (2003) propose a theory of history in which
business organization plays an ever greater role in successive technological revolutions. According to this literature,
the shift from the first to the second industrial revolution in the late 19th century was based on a parallel shift from
decentralized capitalism, in which most coordination took place through impersonal markets, to managerial capital-
ism, in which corporate hierarchies designed and executed plans that were by their very nature attempts to escape
the market (the work by historian Chandler, 1977, has been particularly influential here). This is not very different
from the Marxist and institutional accounts referred to above, but the neo‐Schumpeterian literature also highlights
an additional dimension of business‐led planned coordination. The latter would be not only about vertical decisions
taken within each firm considered in isolation but also about collaboration between firms. The third technological
revolution brought about by information technologies in the late 20th century would have been underpinned by a
shift to collaborative capitalism, in which networks of formally independent companies share plans (often controlled
by the managerial elite of one of said companies) for collaborating in a relatively stable way through time. This is yet
another way in which business organization becomes a distinct mechanism for economic coordination.

3.2 | From theory to empirical analysis: A proposed route

Figure 1 provides a simple illustration of the route from theory to empirical analysis that we will follow next. We will
investigate the roles played by the market, the State, and business organization as alternative, and often complemen-
tary, devices for the economic coordination of the food chain. Because the chain is composed of several different
nodes, we will do this at both the intranode and the internode levels. At both levels, we will examine first the degree
up to which political regulation supersedes the market as mechanism of coordination. Are there any regulations that
impact upon resource allocation and the decisions taken by individuals and firms? These regulations may exert their
impact within each of the nodes (i.e., licensing of industrial or commercial monopolies in some sector and/or terri-
tory), as well as upon the connection between nodes (i.e., transfer price fixing by the state).
We will move next into the area of business‐led planned coordination. At the intranodal level, we will examine
the degree up to which the node is dominated by a small number of large firms, and therefore, the planning decisions
hierarchically made within said firms are crucial for economic coordination in the node taken as a whole. Conversely,
it might be the case that a decentralized firm structure prevails, so that the node is coordinated mostly by some com-
bination of market and state. We will also explore the internode level: In terms of the neo‐Schumpeterian literature
reviewed above, can we find business networks and “collaborative” capitalism? Are internode relations strongly

FIGURE 1 Structure and economic coordination in a commodity chain

300 COLLANTES

conditioned by nonmarket agreements between firms belonging to contiguous nodes of the chain? For instance, do
processors create stable networks of farm suppliers in which prices and standards are different from those prevailing
in the outside‐the‐network market? We may even explore the possibility that business networks operate at the
intranode level (i.e., collusive agreements between oligopolistic firms).
The proposal here implies an empirical approach that is perhaps a bit more disaggregated than usual. As a matter
of fact, we will pay close attention to the impact of changes in the structure of the food chain upon the character of
economic coordination. Most food chains involve a number of subchains with partly distinct coordination systems,
which implies that changes in the relative importance of each subchain may have an influence on the overall structure
of coordination. This will lead us to questions such as does the role played by those subchains featuring strong
planned coordination increase over time? Or, on the contrary, is structural change led by those subchains in which
market coordination is dominant?
It should be noted that this framework does not stand in sharp opposition to the framework that is commonly
used for the study of the political economy of food. The conventional framework tries to identity distinct historical
epochs on the basis of the changing relevance of alternative mechanisms of economic coordination—and so does
the framework depicted here. Our framework simply extends the list of mechanisms under study (transforming the
Smithian market‐versus‐state dichotomy into a triangle the third vortex of which is business organization) and pre-
pares the way for a systematic, piece‐by‐piece empirical analysis.

4 | F A R M E R S , P RO CE S S O R S , A N D R E T A I L E R S I N S P A I N 'S D A I R Y C H A I N

In order to contextualize the analysis of economic coordination, three distinct moments can be identified in the evo-
lution of Spain's dairy chain since the 1950s. At the start of the period, farming was the key link in the chain, and
processing was relatively undeveloped. Second, a major dairy processing industry rose in the period 1950/
1960–1980/1990. Finally, from 1980/1990 onwards, supermarkets have become the key actor.

4.1 | A relatively undeveloped dairy chain (around 1950)

The dairy chain was not greatly industrialized around 1950 (Figure 2). It is true that there were a few large processing
companies (such as, for instance, the Swiss multinational Nestlé). It is also true that the market power held by these
firms within their sourcing territory was evident and had actually fuelled agrarian unrest since at least the 1920s.
These processors, however, were specialized in the production of powdered and condensed milk and had barely pen-
etrated the sphere of what was by far the most important component of demand: liquid milk. In the outskirts of large
cities, there were a few processors of pasteurized milk who exerted some oligopsonistic power on dairy farmers, but
their share within total sales was fairly modest, and as a matter of fact, most consumer expenditure was absorbed by
raw (rather than processed) milk (Domínguez, 2003; Domínguez & de la Puente, 2009; Hernández Adell, 2012).
We lack detailed studies of the retailing link of the chain, but it seems that its business structure was very
fragmented (Collantes, 2016). Small family shops and alternative networks such as farmgate trade and itinerant urban
trade by middlemen or by farm populations seem to have prevailed. Moreover, an unknown but probably significant
share of demand was satisfied through self‐consumption.
As a result, most farmers were not connected to any processor. More than 80% of raw milk was used by farmers
themselves for purposes of self‐consumption, direct sale, domestic preparation of cheese and other dairy products,
and calf feeding (Table 1). Dairy farming was not a strong part of Spain's agricultural economy anyway. Dairy farmers
were a small fraction of the country's agrarian population and concentrated mostly on a tiny strip of Atlantic regions
in the northern part of the Iberian Peninsula, where environmental conditions were suitable for the production of
cow's milk under organic technologies (especially because high rainfall levels made it easy for farmers to secure feed
for their animals). Very small farms employing almost exclusively family labour prevailed. Technology was
COLLANTES 301

FIGURE 2 The structure of Spain's dairy chain around 1950. The width of each of the two sections reflects the
relevance of each subchain within the dairy chain as a whole (raw milk has a much larger share of the market than
processed dairy products; see Table 4 below). aExcept in cheese production, where small producers were dominant

TABLE 1 Patterns of raw milk use (%)

Use of raw milk 1950 1964 1976 1986

Consumption, sale, or processing by farmers 57 47 30 20

Calf feeding 24 26 10 4
Sale to processing companies 19 27 60 76

Source. Ministerio de Agricultura (1975, 1976) and Ministerio de Agricultura, Pesca y Alimentación (1986). For 1950 and
1964, the sources give information about milk sales to processing companies for the production of second‐degree processed
products (cheese, butter, condensed milk, etc.) but not for processed liquid milk. This has been estimated through the pro-
duction of processed liquid milk, which is directly available for 1964 (Instituto Nacional de Estadística, 1964) and can be
approximated for 1950 by applying the share of processed milk consumption given by Ovejero (1951, p. 959) to the total
amount of raw milk used for liquid (processed or unprocessed) milk consumption (Ministerio de Agricultura, 1975).

rudimentary: Even though since the late 19th century there had been a move towards more intensive rearing
(through the partial substitution of extensive tendering with natural feeding within the barn) and biological innova-
tion, extensive rearing and autochthonous, multifunctional, low‐yield breeds prevailed. In a way, it is even misleading
to speak about dairy farmers as such—the degree of dairy specialization was very low, and most producers were pur-
suing a diversified strategy that combined several different lines of production (Domínguez & Puente, 1997; Gallego,
2001; Hernández Adell & Pujol‐Andreu, 2016; Simpson, 1995).
This situation was undoubtedly affected by the fact that still by 1950 the Spanish economy was involved in a
major crisis. The Civil War of 1936–1939 had a strong short‐term impact on growth and, in addition, eventually
led to the establishment of a dictatorship whose economic record during the 1940s was very poor. The rise to power
of General Francisco Franco implied, for instance, a reorientation of Spain's international policy towards autarky and
self‐sufficiency, which in turn would make it extremely difficult for firms and farms to upgrade their technologies.
Around 1950, gross domestic product per capita and labour productivity were still below their respective pre‐war
peaks. These problems were particularly severe in agriculture and the broader food system. In the particular case
302 COLLANTES

of the dairy chain, the moves towards milk processing, land use intensification, and biological innovation were all
more important in the decades prior to the war than they were during the post‐war. This does not mean, however,
that prior to the war such moves had ever gained enough momentum to provoke a major transformation of the chain.
In structural terms, the situation described for 1950 was not remarkably different to that of the 1930s (Domínguez,
2003; Langreo, 1995).

4.2 | Dairy industrialization (1950/1960–1980/1990)

The industrialization of the dairy chain took place mostly after the mid‐1960s (Figure 3). Investment in liquid milk
processing rocketed, and liquid milk processors, relatively irrelevant until then, became the core of Spain's dairy sys-
tem. There was much technological upgrading, especially through the incorporation of imported processing machin-
ery. The number of workers employed in the industry increased rapidly and so did the average business size (Table 2).
Dairy agribusiness became crucial for Spain's transition to a mass consumption model during this period. The
massification of dairy consumption was made possible by the rapid increase in household incomes (which resulted
from rapid economic growth and a decrease in social inequality) and the spread of prodairy nutritional advice by phy-
sicians and the state and also by the industrialization of the production chain. The greater part of the consumption
boom was met by domestic production (Figure 4), and the availability of processed milks contributed to improving
consumer trust at a time when raw milk was suffering from serious quality problems in many parts of the country
(Collantes, 2015; Collantes, 2018; Domínguez, 2003 and Langreo, 1995).
Dairy agribusiness also became ever more crucial for farmers, whose links with processors became much stron-
ger. By the mid‐1970s, and in striking contrast with the situation only one decade earlier, selling milk to some pro-
cessor had by far become the most common strategy in dairy farming (Table 1 above). Not only farmers'
commercial strategy but also dairy farming itself underwent major changes during this period (Briz, 1977; Calcedo,
1997; Domínguez, 2001; Domínguez & de la Puente, 2009; Langreo, 1995). It was now that the process of substitut-
ing autochthonous, multifunctional breeds with foreign, higher yielding (mostly Friesian) breeds developed fully.

FIGURE 3 The structure of Spain's milk chain around 1980. The width of each of the two sections reflects the
relevance of each subchain within the dairy chain as a whole (see Table 4 below). aMostly medium‐sized
processors in processed milk production and large processors in the rest of productions (except cheese)
COLLANTES 303

TABLE 2 Firm structure and evolution in the dairy chain, 1958–1989

Dairy farming and processing 1958 1970 1980 1989

Number of farms/plants (thousands)

Farms
With dairy cows 304.3b 213.7
Specialized in dairying 88.0c
Processing plants 1.1 1.0 1.2 1.2d
Labour input (thousands)
Annual work unitsa in farms specialized in dairying 144.1c
Workers in processing plants 7.9 16.4 25.5 27.7d
Size of the average farm/plant
Annual work units per farm 1.6c
Workers per processing plant 7.5 16.4 21.5 23.2d

Source. Farming: Instituto Nacional de Estadística (1984–1985, 1991); processing: Instituto Nacional de Estadística (1975–
1976, 1981–1982, 1991–1992). For dairy processing in 1958, I do not give the figures in the source but a corrected estima-
tion. Because the source was actually a preparatory work for an upcoming manufacturing census, it was probably too
exhaustive: as it is acknowledged in its preface, a very large number of farm‐based and artisan‐type food production units
were misleadingly enumerated as food processing plants. My correction retains the data for those units that employed five
workers or more and assumes that the units employing less than five workers had a share in unit numbers and workers num-
bers that was similar to that in 1970 (which is based on a more reliable source). Considering the trends depicted in the main
text of the article, this may entail some downward bias but one that must be clearly smaller than the upward bias in the orig-
inal source.
a
Labour input, measured in units that equal the number of working hours that a full‐time farm worker would do in the course
of 1 year.
b
1982.
c
1987.
d
1990.

FIGURE 4 Consumption and domestic production of dairy products (butter excluded) in Spain, 1961–1990 (primary
equivalent kilogrammes per capita). Source. Faostat (www.fao.org, Food balance)

Other productivity‐enhancing innovations included milk‐substituting industrial products for the feeding of calves
(with a subsequent rise in cows' net milk yield) and milking machines. Although hard data are not available, it seems
likely that technological change was joined by some farm restructuring. Similarly to other areas of Spanish agriculture,
many small‐scale farmers left the sector and the countryside altogether, whereas many others closed their farms after
retiring and finding that they were unable to secure a successor (Abad & Naredo, 1997; Collantes & Pinilla, 2011).
304 COLLANTES

Even so, by the end of the period, dairy farms remained fairly small in comparison with their Western European coun-
terparts, as well as to the Spanish processors that they were increasingly connected with (Table 2).
Changes in retailing, however, were more modest, especially before the 1980s. Supermarkets and hypermarkets
began to appear in the country's largest cities in the 1970s, but their market share was still not large enough for them
to exert a relevant impact on the decisions of processors or farmers. Moreover, consumers seemed to be strongly
identified with producer brands, which limited the spread of retailer brands. Finally, as late as 1980, almost 40% of
the milk consumed in Spain was still raw milk, most of it commercialized by smaller retailers, itinerant urban middle-
men, or farm populations. All these made retailers dependent on processors, both in the sense that their advance
depended on processors' capacity to expel raw milk from the consumer market and in the sense that their supply
of processed milk had to remain strongly linked to producer brands (Collantes, 2016).

4.3 | Retail‐led restructuring (from 1980/1990 onwards)

In the 1980s and 1990s, a retailing revolution turned supermarkets and hypermarkets into the main actors of the
chain (Figure 5 and Table 3). Smaller retailers and alternative networks were nearly expelled from the market,
whereas food service outlets for extradomestic consumption played a minor role as a potential counterweight to
the increasing power of retailers. Today, large retailers, highly concentrated on a small number of business groups
(some of them foreign, especially French; some others based on national capital), channel a share of dairy sales that
is higher than that in any other chain of the Spanish food system. The retailing revolution resulted from the conflu-
ence of at least three factors: First, supermarkets used market power to exert a strong downward pressure on both
sourcing and consumer prices; second, supermarkets implemented active strategies of supply chain management that
increased such pressure through the creation of stable sourcing networks and the launch of own brands; and third,
there was a congruence between the commercial strategies of supermarkets and consumer behaviour, which was
crucial in (for instance) the rise of ultra‐high temperature processed milk (as opposed to pasteurized milk) as the dom-
inant variety of milk (Collantes, 2016).
At the same time, a transition took place between a very expansive model of dairy consumption to a much less
expansive model in which growth in the demand for cheese and refrigerated desserts could hardly compensate for
the fall in the demand for liquid milk (Table 4; see Collantes, 2015, for details). In combination with a new round

FIGURE 5 The structure of Spain's milk chain today. aThe average business size is largest in the refrigerated
desserts subchain and lowest in the cheese subchain, with liquid milk standing in between
COLLANTES 305

TABLE 3 Demand‐side concentration in the dairy chain

Retail formats for consumer products and use of raw milk 1986 2000 2014
a
Market shares by retail formats (%)
Supermarkets and hypermarkets 44d 62 71e
d
Smaller retailers 25 7 4e
b d
Consumption outside the home 19 28 21e
c d
Alternative networks 12 4 4e
Patterns of raw milk use (%)
Sale to processing companies 76 92 96
Consumption, sale, or processing by farmers 20 5 1
Calf feeding 4 3 3

Source. Market shares by retail formats: Collantes (2016); patterns of raw milk use: Ministerio de Agricultura, Pesca y
Alimentación (1986, 2001) and Ministerio de Agricultura, Alimentación y Medio Ambiente (2014).
a
Includes all dairy products, computed at market prices; there were no major differences between different types of dairy
products.
b
Restaurants, bars, cafeterias, canteens, and institutions.
c
Door‐to‐door sales, farmgate transactions, self‐consumption, company shops, and small cooperatives.
d
1988.
e
2010.

TABLE 4 Consumption of dairy products

Dairy consumption 1958 1964 1980 1990 2000 2006 2012

Dairy‐related intake of calories per person and year

181 193 320 337 325 312 297
Breakdown by individual products (percentage share of calorie intake)
Raw milk 75 64 29 15 2 1 1
a
Processed milk 4 11 43 51 51 44 37
Preserved milkb 8 13 10 5 2 3 3
Cheese 8 7 12 18 18 22 26
Butter 5 4 3 2 3 3 4
c
Yoghurt 0 0 3 5 9 9 10
Otherd 0 0 0 4 15 19 20
Total 100 100 100 100 100 100 100

Source. Instituto Nacional de Estadística (1959, 1965–1995), Ministerio de Agricultura, Pesca y Alimentación (1989–1991,
1992–2006), and Mercasa (2008–2013). See Collantes (2015) for details on source exploitation.
a
Pasteurized and sterilized milk.
b
Condensed, powdered, and evaporated milk.
c
Includes all fermented milks.
d
Mostly other refrigerated desserts, ice creams, and milk shakes.

of technological innovation in processing and farming, this created strong pressure for the restructuring of both sec-
tors (Table 5 and Figure 6). Employment in processing stagnated and eventually decreased. There was much business
concentration in dairy processing: Many small‐ and medium‐sized enterprises disappeared or were absorbed by larger
enterprises. This was particularly clear in the processed milk subchain but took place in the traditionally more atom-
ized cheese subchain as well. Similarly, there was a drastic reduction in the number of farms and in farm labour input.
Most farmers who had been involved in milk production retired or reoriented towards other productions, whereas
the remaining dairy farms became larger and more strongly specialized. Supermarket chains, which were also involved
306 COLLANTES

TABLE 5 Firm structure and evolution in the dairy chain

Dairy farming and processing 1989 1999 2009

Number of farms/plants (thousands)

Farms
With dairy cows 213.7 78.8 29.5
Specialized in dairying 88.0a 47.9 23.1
Processing plants 1.2b 1.0 1.0
Labour input (thousands)
Annual work units in farms specialized in dairying 144.1a 80.1 38.3
Workers in processing plants 27.7b 27.7 26.5
Size of the average farm/plant
Annual work units per dairy farm 1.6a 1.7 1.7
b
Workers per processing plant 23.2 28.4 26.2

Source. Farming: Instituto Nacional de Estadística (1989a, 1991, www.ine.es, Censo Agrario, 1999 and 2009); processing:
Instituto Nacional de Estadística (1991–1992–1992; www.ine.es, Encuesta Industrial de Empresas, 1999 and 2009).
a
1987.
b
1990.

FIGURE 6 Number of dairy cows, annual work units in dairy farms, and workers in processing companies,
1987 = 100. Source. Dairy cows: Ministerio de Agricultura (1972), Ministerio de Agricultura, Pesca y Alimentación
(1986, 2001), and Ministerio de Agricultura, Alimentación y Medio Ambiente (2011, 2014); annual work units in dairy
farms: Instituto Nacional de Estadística (1989a, 1991; www.ine.es, Censo Agrario, 1999 and 2009); workers in
processing companies: Instituto Nacional de Estadística (1962, 1975–1976, 1981–1982, 1987, 1989b, 1993, 1995;
www.ine.es, Encuesta Industrial de Empresas, 1993–2014)

in frantic internal restructuring, came to play a major part in the coordination of business and farm restructuring
through their very aggressive price policies.
Processors have then tried to maintain their profitability by means of two different manoeuvres. With an eye on
downstream developments, they have shifted from process‐oriented to product‐oriented innovation. By starting a
new cycle of dairy products (refrigerated desserts, in particular), they have aimed at diversifying sales towards niches
that are less mature than that of liquid milk, as well as less exposed to price pressure from supermarkets. Still, output
diversification has progressed less than in other European Union countries. Furthermore, supermarkets since the turn
of the century have been increasingly active (and rather successful) at creating their own brands (and, therefore, at
capturing a substantial share of processing‐related profitability) even for these novel products (Langreo, 2003, 2005).
In the meantime, processors have consistently adopted a second manoeuvre, upstream this time: They have
increased their price pressure on farmers. The remaining dairy farmers have made substantial investments in order
COLLANTES 307

to upgrade their technology (i.e., installation of refrigerated tanks) but still fall short of the productivity results prevail-
ing in North‐western Europe and lack any capacity to respond (even if defensively) to downstream pressure (Cabo,
2004; Calcedo, 2004; Langreo, 2005).

5 | T HE RI S E A N D T H E F A L L OF O RG A N I Z E D D A I R Y C A P I T A L I S M

The evolution of the market‐versus‐state tension in Spain's dairy chain is in line with developments in other Western
countries. In Spain too, we can discern a rise and fall of organized dairy capitalism.

5.1 | The rise

In the early 1930s, there still were no major state regulations in relation to dairy farming, processing, or retailing. Although
most Western countries had shifted or were by then shifting, to some variety of organized dairy capitalism, Spain featured
a rather simple, decentralized market economy. This did not change substantially even during the 1940s, when the newly
established Franco regime implemented interventionist measures that drastically restructured the political economy of
most sectors in the Spanish economy. It is true that, as a part of that agenda, the state implemented some quantity‐based
controls in the subchains producing powdered milk and cheese. But, contrary to other major products, milk was not
rationed, and there was no systematic milk price policy either nor were there subsidies to farmers or quality‐oriented pol-
icies restricting competition in dairy farming, processing, or retailing. Finally, even though physicians and local officers had
been spreading the message that milk consumption was good for the health since the late 19th century (Nicolau, Pujol, &
Hernández, 2010), the state was not involved in systematic, centralized propaganda efforts.
The crucial move towards state‐coordinated dairy capitalism took place in 1952, when the Franco regime issued
a dairy policy based on so‐called milk centrals as part of a much broader policy agenda of state intervention in the
economy (Clar, 2008; Freire & Lanero, 2013; see also Ríos‐Núñez & Coq‐Huelva, 2015). The regime had a strong
opinion that Spain was facing two related dairy problems: First, consumption (which was actually among the lowest
in Europe) was too low in relation to standard dietary advice, and second, milk quality was very poor as a result of the
shortcomings of the traditional, unindustrialized dairy chain. From 1952 onwards, local monopolies for the production
of pasteurized milk would be put to tender in every large and medium‐sized city. Concessionary firms would be in
charge of centralizing the collection of raw milk from local farmers and processing that milk. A monopolistic position
would allow them to overcome the scale threshold beyond which milk could be supplied efficiently, cheaply, and
safely. This was expected to bring about a major change especially in those regions where, as in the Mediterranean
and Andalusia, dairy farming was weak and dairy consumption was consequently very low. Milk centrals would dis-
place the until then dominant, highly decentralized networks for the commercialization of raw milk for human con-
sumption—networks in which supply was irregular, adulteration frauds were widespread, and sanitary requirements
were not observed (Domínguez, 2003; Langreo, 1995).
Milk centrals were the core element of Spain's variety of organized dairy capitalism but by no means the only
one. During the period 1952–1986, Spain also implemented all other pillars of state‐coordinated dairy capitalism.
First, prices all along the chain came to be fixed by the state (Briz, 1977; Langreo, 1995). The State fixed the price
at which farmers sold their milk to centrals, the price at which centrals sold their processed milk to retailers, and
the price at which retailers sold processed milk to consumers. In the particular case of milk centrals, price fixation cre-
ated a major link between private investment and public interest—or, perhaps more precisely, between private cap-
itals and state coordination.
Second, subsidies were given to farmers and processors in order to support investment in technological modern-
ization (or, in the case of processors only, in order to stimulate their involvement in state plans of market management
through surplus immobilization). Such subsidies were created in the 1960s under Franco and given a stronger and
more consistent role in the early 1980s by the early post‐Franco government (Briz, 1977; Langreo, 1995).
308 COLLANTES

Third, there was commercial protectionism all the way through. Protectionism was initially very extreme and
even included the use of nontariff instruments, such as import quotas and the rationing of foreign currency. During
the late part of the Franco regime and the early post‐Franco years, the State abandoned most nontariff instruments,
and there was even a minor trend towards tariff decrease. However, it became increasingly clear to all stakeholders
that full liberalization (clearly a potential source of tension between state and local agribusiness) would only happen
when Spain became a member of the European Economic Community (henceforth, EEC). The slow pace of Spain‐EEC
membership negotiations implied thus the consolidation of a tariff‐based variety of protectionism until the late 1980s
(Briz, 1977; Langreo, 1995).
And, fourth and last, the State became involved in an active effort to disseminate the message that a complete
and healthy diet required the consumption of large quantities of milk and other dairy products. This effort included
projects developed by sector‐specific agencies such as the National Dairy Committee (Comité Nacional Lechero) and
also by the Ministry of Health. The school milk schemes implemented in the 1950s worked in the same direction
(Collantes, 2017). Although there were differences between Spain's variety of state‐coordinated dairy capitalism
and others in Western Europe (most notably, a much greater role for discretionary, top‐down decision‐making),
the commonalities are remarkable.

5.2 | The fall

In the 1980s, organized dairy capitalism became exposed to deregulation pressure. At the internal level, successive
democratic governments actively pursued a policy agenda of liberalization in response to the many, complex, and less
than effective regulations legated by nearly four decades of dictatorship. (Said policy agenda has in fact been a long‐
standing element in Spain's democratic regime until today, even in the turbulent social context created by the eco-
nomic crisis of the early 1990s and the post‐2007 great recession; see Maluquer de Motes, 2014.) This was the con-
text in which the policy of state‐fixed dairy prices, which had already been made more flexible in the later part of the
Franco regime, was abolished.
At the external level, entry to the EEC in 1986 implied dismantling protectionism in relation to Spain's main for-
eign competitors, which were quickly able to increase their exports to a market where national producers (both in
farming and in processing) were relatively uncompetitive (Briz, Ward, & Felipe, 1999). Moreover, it also implied
dismantling the political economy of milk centrals, which was viewed by the EEC as a competition‐distorting instru-
ment and, therefore, as an obstacle in the way of creating a common market (Langreo, 1995). To this deregulation
pressure, we should add the fact that from the 1980s and 1990s onwards, the state has ceased to be so enthusiastic
and active about the potential health benefits of dairy consumption. By means of their advertising campaigns, food
processors have actually become more important than the state in the definition of the social images of products
(Collantes, 2015).
The only one of the five pillars of organized capitalism that survived was farm subsidies. Entry to the EEC took
place at a time when the latter was about to shift from a system of indirect, price‐based farm support to a system of
direct, payment‐based support. In fact, after 1986, Spanish dairy farmers were able to apply for the same kind of sub-
sidies linked to technological upgrading that had been available on a national scale in the years before 1986; and to
this, they eventually added direct subsidies dependent on farm characteristics—CAP's main policy instrument after
the MacSharry reform of the early 1990s (García Grande, 2005).
Spanish dairy farmers, however, faced entry to the EEC with great unrest because of the way in which they were
integrated into the quota system. The quota system implied the concession to each country, and to each dairy farmer
within that country, of a license to produce a given quantity of raw milk (and not more). Spain was given a quota that
amounted to barely 80% of its mid‐1980s production level: Not only was the EEC unwilling to tolerate an eventual
conversion of fast‐growing Spain into an overproduction country, but it even de facto reserved some 20% of the
Spanish market for surplus producers from other member states. Deeply dissatisfied with this, the Spanish Ministry
of Agriculture refused to apply the quota system and managed to gain a moratorium until 1993. Even after 1993, and
COLLANTES 309

up to the early 2000s, it behaved in an overtly passive way in relation to the (widely known) circulation of “black milk”
(milk produced without a quota licence) along the dairy chain (Langreo, 2005).
All in all, the European Union dismantled the quota system in 2015. Although this is not the place to undertake a
full evaluation of its consequences, the end of the quota system may well have exacerbated the drive towards farm
restructuring. More specifically, it seems to have removed obstacles for large farms to expand faster, whereas small
farms (operating under a less favourable cost structure) suffer the most from the downward pressure on farmgate
prices that has consequently appeared. It might be too early to make a definitive assessment in terms of farmers' wel-
fare, but in terms of economic coordination, the end of the quota system has undoubtedly been the latest success of
the pro‐deregulation agenda that dominates the market‐versus‐state tension since the late 20th century.

6 | T HE M A R K E T S TR I K E S BA C K ?

So, was there a transition from organized to disorganized capitalism? Between 1952 and 1986, there was indeed a
system of political economy that comprised price policies, subsidies to producers, commercial protectionism, licensed
monopolies, and demand‐side state initiatives. And after 1986, there was a process of deregulation that was driven
by both internal and external factors and that dismantled almost all of these policy instruments. Yet a closer look at
the evidence reveals not so sharp a discontinuity. The market as a mechanism for economic coordination was not so
absent during the first of our periods nor has it been so present during the second of them.

6.1 | How organized was “organized capitalism?”

The active policies of the period 1952–1986 may suggest some version of state‐coordinated dairy capitalism, but
even so, a large part of the sector remained almost exclusively market coordinated (Figures 7 and 8). As late as
1980, almost 40% of the milk consumed in Spain was still raw milk (Collantes, 2014). The regulations over milk cen-
trals were applicable only in large‐ and medium‐sized cities, which made the sale of raw milk for human consumption

FIGURE 7 Strong elements of nonmarket coordination (grey area) around 1950

310 COLLANTES

FIGURE 8 Strong elements of nonmarket coordination (grey areas and arrows) around 1980. The grey arrows apply
mostly to processed milk, which was dominant in relation to cheese and other processed dairy products

perfectly legal in smaller cities and rural areas—a decreasing but still substantial proportion of the population in a late
urbanizing country such as Spain. Even in larger cities, networks for the commercialization of raw milk persisted
throughout the period. Their operations were extra‐legal, but many consumers prized raw milk's lower price and
(Collantes, 2015). In this subchain, there were no price regulations or production licenses nor were there processors
with oligopsonistic powers. Raw milk was produced by farmers in conditions close to perfect competition and sold by
those same farmers or by middlemen in conditions that (except for the lack of perfect information) were also close to
perfect competition.
Moreover, even in the area of processed milk, the design details of organized capitalism favoured a reactivation
of market mechanisms through the back door. Policymakers focused on pasteurized milk, for which they designed the
price and licensing policies presented above. For sterilized milk, however, only price policies (and not territorial
monopolies) were implemented—and these price policies were less rigid than those applied to pasteurized milk. This
asymmetry was to play a key role in the evolution of Spain's dairy capitalism. As soon as the technology of steriliza-
tion and packaging mitigated some of the flavour problems that had originally harmed the reputation of sterilized milk
among consumers, emergent processors began to reallocate resources from the production of pasteurized milk to the
production of sterilized milk. In the domain of sterilized milk, a more flexible price policy allowed for higher profit
rates, whereas the absence of territorial licenses allowed for longer range business strategies for both the collection
of raw milk and the commercialization of processed milk (Langreo, 1995). In other words, although regulation fixed
prices along the two subchains producing processed milk, it did not comprise any mechanism to prevent resource
transfers from one subchain to the other.
In consequence, in the real world, the major policy instrument of Franco's apparently organized dairy capitalism,
the network of licensed local monopolies, never became as extraordinarily important as it was in political discourse or
legislation. At the start of the period, the scheme progressed very slowly because in many cities, there were not many
entrepreneurs who were willing to undertake the required investments under the price conditions fixed by the State.
Only after these conditions were revised upwards in the mid‐1960s was there substantial progress. By then, how-
ever, processors had already found an even more effective way of increasing their profits: reallocating resources
towards a less tightly regulated subchain: that of sterilized milk (Collantes, 2014).
COLLANTES 311

6.2 | How disorganized is “disorganized capitalism?”

The market has not been as present either in the post‐1986 real world as it might seem from a reading of political
discourse or legislation. To start with, the farming link in the chain became subject to the complex regulatory struc-
ture of European Union's CAP. Milk quotas were after all a licensing system that aimed at preventing overproduction
in a way that implied a restriction of competition. In other words, they belonged to the same family of policy instru-
ments as the milk centrals that (on the basis of different criteria) the Spanish government had been forced to disman-
tle in 1986: They would not have been out of place in the previous era of state‐coordinated dairy capitalism. On the
other hand, and as it was commented above, for Spanish dairy farmers, incorporation into the CAP meant that from
the early 1990s onwards, they were given the right to receive direct payments, a policy instrument that belonged to
the same family than the indirect subsidies that had been implicit in the pre‐MacSharry price policy. Both milk quotas
and subsidies have been exposed to remarkable pressure for elimination (in the first case) or market‐friendly reform
(in the second case), outcomes that are gradually happening. Still, this market turn seems to be joined by a parallel
move towards new forms of public intervention in the dairy chain. In the current decade, both the “dairy complex”
implemented by the Spanish government (Royal Decree 1363/2012, Boletín Oficial del Estado, October 2, 2012)
and the new CAP for the period 2014–2020 are explicit signs of a new direction in dairy policymaking—one in which
policymakers search for instruments that improve farmers' bargaining position within the chain in ways that might call
for a lax interpretation of the competition protection legislation.
More importantly, the market has not played a coordinating role as important as around 1950 because the larg-
est retailers and processors have deliberately moved away from the market in their upstream relations with providers
(Figure 9). It is not only that the main retailers and processors have become so large that they internalize a substantial
share of economic decisions under one single vector of managerial planning—that is, managerial capitalism as
opposed to an earlier, Smithian world of small, single‐function business units, it is also that retailers and processors
have implemented strategies of supply management in order to shape upstream decisions.
Supermarkets, for instance, have used their considerable market power to fix prices and standards upon their
industrial providers. During the last quarter century, these policies of price and standards have gradually narrowed
the scope for processors' business autonomy. The trend has reached a peak after the turn of the century, when
retailer brands have eventually become able to capture a substantial share of the markets for liquid milk and

FIGURE 9 Strong elements of nonmarket coordination (grey areas and arrows) today. A wide grey arrow means
very strong nonmarket coordination; a thinner arrow means a more moderate presence of nonmarket coordination
312 COLLANTES

refrigerated desserts. As a matter of fact, the case of Spain's leading retailer (the Spanish‐owned chain of medium‐
sized supermarkets Mercadona) shows that the capacity to create relatively stable networks of processors that
become fully subordinated to retailer demands, specifications, and strategies has become one of the major sources
of competitive advantage within the retailing sector (Collantes, 2016). These retail‐led business networks are cer-
tainly controversial, attracting criticism from both those producers who belong to them (who complain about the
downscaling of their profit rate) and those who do not (who complain about having been excluded from mainstream
contact with the consumer). One thing is clear for the present discussion, though: These networks entail less, rather
than more, market coordination.
The semi‐internalization of upstream providers by large retailers has been replicated by processors in relation to
farmers. To begin with, the persistent relevance of cooperative processors (even if lower than in other parts of
Western Europe) has favoured the consolidation of relatively stable sourcing networks in some parts of the country.
More importantly, both cooperative and private processors have consistently renounced to price warfare against one
another (Langreo, 1997). The Spanish Commission for Markets and Competition now considers it proved that in the
early years of the 21st‐century processors operated as a cartel: They reached agreements over the price that they
would pay farmers for their raw milk and over immobilizing their respective milk collection networks, so that a farmer
who had traditionally belonged to one processor's network would not be accepted into another's (Noceda, 2015).
These voluntary agreements for the restriction of competition can be read as a new (even if illegal) version of one
of the traditional pillars of organized dairy capitalism. The very reaction of Spain's Ministry of Agriculture after
competition authorities imposed a heavy fine on most of the country's leading processors—a reaction that
stressed the Ministry's fear of the consequences that said fine could have on the viability of the dairy chain as a
whole (El País, 2015a)—reflects the actual limits of neoliberalism among Spanish policymakers.
In summary, two of the three main links in the dairy chain are operating under imperfect (mostly monopolistic)
competition, whereas interlink relations are commonly coordinated outside (even if complementarily to) the market.
The contrast between the political economy of the dairy chain before and after 1986 is then not so sharp. In both
cases, we find a combination of markets, on the one hand, and supply management strategies, on the other. In both
cases, such strategies are consciously implemented by hierarchies—political hierarchies in the first case and business
hierarchies in the second. In both cases, supply management is an instrument that elites use in the pursuit of their
objectives—political legitimacy in the first case and profitability in the second. In both cases, finally, the design of sup-
ply management needs to fit with the prevailing technological conditions and (there where they are present) market
signals. The revision of state price policy that took place in the mid‐1960s, for instance, was an attempt to make non-
market coordination more attuned to market signals, but the relentless change in products, standards, and prices that
today's supermarkets promote within the subchains producing retailer brands can be interpreted in a similar way.
Rather than an actual “disorganization” of dairy capitalism, there was a transition towards a different mode of
(partial) “organization.” When, in a recent interview, the president of Spain's largest retailer declares that “We are
learning that milk does not come from a brik, but from a cow” (El País, 2015b), he is adopting a perspective that would
have been perfectly understandable for the policymakers that gave birth to organized dairy capitalism in 1952, with
the qualification that the latter (belonging to a nearly preindustrial era in the dairy chain) would have declared to be
learning that milk does not come from a cow but from a pasteurizing plant. For both the policymakers of the past and
the leading company directors of the present, using power to coordinate the chain seemed and seems more promis-
ing than remaining attached to the textbook idea of a self‐regulating market.

7 | C O N CL U S I O N

Spain's dairy capitalism apparently conforms to conventional wisdom. Once upon a time (in this case, between 1952
and 1986), the State performed many and varied tasks for the coordination of the dairy economy, but in the last
decades, it has stepped back. Especially after Spain's entry to the European Economic Community, most of the policy
COLLANTES 313

instruments of organized capitalism, including price controls and the licensing of local monopolies for the production
of pasteurized milk, were dismantled.
That this truly entailed a transition from organized to disorganized capitalism is, however, much less evident, and
perhaps misleading. The dairy economy was not really so tightly organized during the era of organized capitalism: As
this article has shown, in some domains, the role played by the market as a coordination device may have been more
prominent in this earlier period than later on. Disorganized capitalism has also been less disorganized than it may
seem, and in some areas, the reach of nonmarket mechanisms of economic coordination has become greater than
in the past.
It is important to clarify what this might mean for broader debates on the historical political economy of food.
The point of this case study has not been to provide a supposedly more precise description of empirical details. In
plain terms, the argument is not that there is a prevailing black‐and‐white narrative, that this is too imprecise, and
that the whole issue should be recast in terms of dark grey and light grey. The main point is that we may be getting
wrong what the nature of the contrast between the post‐1945 period and present time is. According to the analysis
in this article, the contrast does not result simply from the substitution of the state by the market, but also (and in no
small measure) from the substitution of political elites by corporate elites in the control of (the ever present) nonmar-
ket coordination. Rather than “disorganization” or a return to the times when the dairy economy was coordinated
almost exclusively through the market, there was a transition between two different modes of (partially) “organizing”
the dairy economy. In the terms of the evolutionary economics framework adopted by von Tunzelmann (2003), the
transition did affect not only the structure of economic coordination but also (and perhaps more crucially) the control
of such coordination.
Is the case considered in this article representative of more general trends? It does not seem that the argument in
this article is hugely based on elements that are specific to Spain's dairy chain. Other Western countries were of
course ahead of Spain in the process of dairy industrialization, but even so, their share of raw milk in total consump-
tion remained substantial in the two or three decades after the Second World War (de Wilde, 1979). Therefore, it is
likely that here too the visible side of organized dairy capitalism coexisted with a less visible side of decentralized
market coordination. On the other hand, the unfolding of supply chain management strategies by processors and
supermarkets has been common to other Western countries as well (Vorley, 2007). As a result, in the later period,
a highly visible element of deregulation and liberalization seems to have coexisted with a less visible element of non-
market, corporate‐controlled coordination.
It is, however, more difficult to assess the degree up to which the argument presented in this article holds for
other chains in the modern food system. Although state intervention in the food system was far‐reaching during
the short 20th century (Moser & Varley, 2013), not all food chains were as strongly affected as the dairy chain.
And, although retail‐led supply management strategies have been pervasive in the later period (Koning, 2013), not
all food chains were as strongly restructured by them as the dairy chain, particularly in relation to the rise of
retailer‐brand foods. In consequence, we need careful empirical research on other food chains and other countries
in order to perceive the bigger picture beyond political and legal discourse.
An important methodological implication of this case study is that such empirical analysis may allow for a more
precise identification of historical eras in the political economy of food. As Bernstein (2016, pp. 638–639) points out,
much research in food regime analysis has favoured verification over open‐ended investigation. Friedmann (2016,
p. 675) suggests in a similar vein that a more careful empirical analysis may reorient the dominant discourse from
the (somewhat reified) third food regime towards a more nuanced consideration of the different trends, tensions,
and outcomes taking place in different countries and commodity chains. There is in fact a new wave of work going
precisely in that direction (see, for instance, Pritchard, Dixon, Hull, & Choithani, 2016; Winders, Heslin, Ross,
Weksler, & Berry, 2016). The present article suggests that analogous arguments can probably be made, with equally
relevant consequences for longer run interpretations, about the second food regime. Much of the conventional
wisdom on the second food regime or organized capitalism as highly coherent, post‐1945 configurations is based
on a relatively small number of studies, most of them interpreted with an eye on verifying a discourse focused on
314 COLLANTES

the political and the legal rather than on investigating actual practices from below. This is relevant not just as a his-
torical issue but also because of its influence on our understanding of the present time. As McMichael (2016, pp.
154–156) has argued, much of the debate about whether a third regime has emerged or not depends on the terms
of comparison that we choose. A more nuanced, less idealized consideration of the post‐1945 food regime would
probably lead us to be less exigent about the degree of structural coherence that we demand from the present food
regime in order to identify it as such (for a convergent methodological observation, see Bernstein, 2016, p. 643).
A different matter is defining what such food regime or, in the conceptual framework adopted in this article, such
system of economic coordination is about. This article is much closer to McMichael's view of a fully formed corporate
food regime than to alternative views of structural incoherence or an insufficiently crystallized new regime (see
Magnan, 2012, for a review of this debate; see also McMichael, 2016; Friedmann, 2016), but it reaches this conclu-
sion through a different conceptual route. Rather than geopolitical conditions (as is intrinsic to food regime analysis),
the article has highlighted the strategies of supply chain management that processors and supermarkets have
followed in the neoliberal era. Such strategies have been extensively studied within the framework of food regime
analysis (Konefal, Bain, Mascarenhas, & Busch, 2007; Lawrence & Burch, 2007) but not so much so as part of a
broader transition towards network capitalism. In a way, this is what a scholar as influential to political economists
of food as Harvey (1990, p. 159) has in mind when, in a rarely considered part of his work, he suggests that post‐
Fordist capitalism, with its “flexible responses,” becomes more (rather than less) “tightly organized” than its predeces-
sor. This reframing of the analysis is relevant because it highlights the main commonality between present time cap-
italism and the state‐coordinated variety of capitalism that prevailed between 1929/1945 and 1973: the long
distance that separates both of them from the ideal type of an exclusively market‐coordinated capitalism.
This reframing has political implications too, even if they cannot be addressed properly in the remainder of this
article. Mainstream economists have experienced as a victory the fact that CAP's last reform in 2013 did not lead to
increased public intervention in agricultural markets (see, for instance, Swinnen, 2015). At a time of increasing social
unrest in several food chains (including precisely the dairy chain), increasing public intervention was an option
favoured by some farm groups. Mainstream economists, however, favour farm support measures that do not have
an influence on the free workings of markets, for instance, direct payments to farmers. However, if the argument
in this article is correct, the alternative before us today is not really between free markets and state intervention.
The real question is who controls the nonmarket mechanisms that, under one form or another, have been playing
a major part in the coordination of the food chain since the central part of the 20th century. Seen from this angle,
more state intervention in the food chain does not necessarily represent the kind of ideological, anti‐intellectual mis-
trust of free markets that mainstream economists criticize but rather a pragmatic way of consolidating some
countervailing power in the corporate‐led governance of the chain.

ACKNOWLEDGEMEN TS
I gratefully acknowledge the comments made by three anonymous referees and by participants at the EURHO Rural
History 2015 Conference, the 2016 meeting of the Spanish Federation of Sociology, and the agricultural history sem-
inar at Santiago de Compostela, especially Lourenzo Fernández Prieto, Erwin Karel, Daniel Lanero, José Ramón
Mauleón, and Marijn Molema. I also thank Albert Herreria for his careful work on my English. Funding was provided
by the Government of Spain (ECO2015‐65582) and the Regional Government of Aragón (269187).

ORCID
Fernando Collantes http://orcid.org/0000-0001-5450-6312

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How to cite this article: Collantes F. From organized to disorganized capitalism? Market versus nonmarket
coordination in Spain's dairy chain. J Agrar Change. 2019;19:295–318. https://doi.org/10.1111/joac.12291
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