X-Sender: pmason@garnet.acns.fsu.edu Date: Tue, 27 Nov 2001 12:59:18 -0500 To: Rakesh Bhandari <rakeshb@Stanford.EDU> From: "Patrick L. Mason" <pmason@garnet.acns.fsu.edu> Subject: Re: economics of oil Rakesh: Price fixing and rent collecting are not incompatible. Marxian rent theory implies that Saudi Arabia (and other low cost producers) would receive substantial rent even if prices were fully set by the market. This is certainly true. This does not imply that the oil producers may not attempt to set prices so as to obtain monopoly profit. It seems that they often try and often fail, and with the advent of increase energy production by the Russians OPEC may have even less control over oil prices. Mexico has always been a problem for OPEC producers because the Mexicans sell an enormous amount of oil to the US and they are not OPEC members. "The correlatives to control of Arab oil rent are the subversion of democracy in client regimes as well as sanctions and aggressive foreign policy against wayward regimes (Iraq, Iran, Libya); in other words, US foreign policy contributes to the instability and the possibility of upheaval. That is, I tend to see US policy not as in fact promoting stability but rather the control over surplus profit. The US exercise of power is better understood as a threat to peace rather than as a force for stability." Here, you've nailed the contradiction on the head. America's singleminded focus on stable prices and stable supply has lead to the support of anti-democratic governments. It's the false promise of facism, "security and stability" at the expense of democracy, but the "security and stability" of facism creates long term instability as hostility builds up among the oppressed. peace, patrick
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