Of Caviar and Capitalism

Are capitalism and caviar incompatible? Is the system that prides itself on the creation and veneration of wealth unable to to maintain a sustainable market for one of the great trappings of wealth?

Well, at the very least, the tragic story of the global caviar industry gives pause. It stands as a parable illustrating the pitfalls of the market fundamentalist ideology that has dominated global economic policy-making for two decades.

The story of the industry is recounted in a new book by Inga Saffron, a Philadelphia Inquirer reporter and former Moscow correspondent for the paper, "Caviar: The Strange History and Uncertain Future of the World's Most Coveted Delicacy" (New York: Broadway Books).

For most of the twentieth century, the world caviar market was supplied primarily by the Soviet Union. Caviar -- the salted eggs of sturgeon or paddlefish -- is a creation of Russian culture. Although sturgeon once populated many of the world's great seas and rivers in large numbers, most of the world's supply after World War I came from the Caspian Sea and the Black Sea.

After coming to power, Saffron says, "the Soviets realized they could make a lot of money if they controlled the caviar market."

They exported the product to Western markets to earn hard currency, but limited supply to increase prices.

"I don't want to say that they had a great environmental record, because they didn't," Saffron says. "But they did act as a brake on fishing because they limited caviar exports."

Even when the Soviets embarked on their disastrous dam-building schemes, which blocked sturgeon from swimming upstream to spawn, they developed an extensive hatchery system that maintained the sturgeon population.

Communism, it turned out, was pretty good for caviar.

When the Soviet Union collapsed, so did the protections and support system for caviar.

In the chaos following the fall of the Soviet Union, factories across the country stopped doing business as government money for operating expenses evaporated. Funding to maintain the hatcheries similarly disappeared, and the hatchery system fell apart. Overall, Saffron says, the hatchery system became much less efficient, and was able to put back many fewer fish than it had before.

Even worse, perhaps, was the rampant poaching that occurred after the fall of the USSR.

"Many of the people who had been thrown out of work began to fish illegally," according to Saffron. "They began to poach for sturgeon and make caviar in their kitchens, because that is the only way they could make money. It was the one resource in Southern Russia."

The old Soviet limits on fishing "were ignored, and people just fished all the time," she says.

Enforcement agencies were weak and ineffectual. Many were bought off or intimidated by the criminal gangs that gained control over much of the industry.

Today, the sturgeon in the Russian and Kazakhstan portions of the Caspian are in steep decline, and Saffron has little hope that they will be saved. International controls on caviar imports are coming too little, too late, and in any case cannot stop the internal traffic in the delicacy.

The collapse of the sturgeon in the Russian and Kazakhstan portions of the Caspian is history repeating itself. Rampant overfishing led to the rapid destruction of sturgeon populations in Germany, France, the Eastern United States and the U.S. Great Lakes, all in a matter of decades in the late nineteenth and early twentieth centuries.

Today, the counterexample to the laissez-faire caviar failure is Iran. Like the Soviet Union once did, Iran maintains strong limits on fish catch in its portion of the Caspian and operates a sophisticated and effective hatchery system.

Countries relying only on price signals to regulate the industry have witnessed a short cycle of boom and bust.