From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Fri Mar 26 2004 - 02:54:10 EST
Cyrus wrote: >Dear Rakesh, > >Please forgive me for my delayed response. Racing against time is worse >than the fate of Sisyphus. > >ISSUE # 1: "In a previous exchange on treatment of gold in neo Ricardian >theory, we discussed Michele Naples' emphasis on that class of commodities >in which a kind of inherently scarce land is a means of >production." > >ANSWER: Starting with scarcity is the characteristic of 'vulgar economics >(including neoclassical economics). The notion of Rent in Marx is has >nothing to do with 'inherent scarcity.' Rather, it is due to the existence >of landed property that rent obtains its significance. >Moreover, any theory that starts with 'inherent scarcity' is >doomed to become a tautology. In a concrete situation an actual scarcity >may develop in which case it has to do with the >condition and location of 'regulating capital,' particularly >in the rent-related production processes. Oil is not an 'special' commodity >for this and many other reasons. Oil is ONLY different from an industry >like Auto or Steel industry because of the impediment of landed property and >thus the formation of oil differential rents. I am not sure what is meant by the impediment of landed property. > >ISSUE # 2: "With the production of high quality, 'reasonably priced' oil, >isn't an inherently scarce kind of land a means of production? And isn't oil >a special commodity for this reason? (In saying that inherently scarce land >is a means of production for oil, I am not saying that oil is sold at a >monopoly price.)" > >ANSWER: Given the answer to ISSUE I, the notion of scarcity is like putting >the cart before the horse. And, more important, oil is not a 'special' >commodity for that matter (P.S.: trained also in neoclassical school, I >realize that the axiom of 'scarcity' is not >equivalent to 'monopoly'). > >ISSUE # 3: 'In order to produce this high quality and cheap oil and capture >the profits (if not some of the rent) therefrom, mustn't the >capitalist--say, an oil services >company--have access to that land? Why would a capitalist rely on his >ability to gain that access through competitive bidding if >his government can secure it for him by providing 'security' to the landlord >state (or in the case of KSA creating the state) that >controls access to the inherently scarce means of production?" > >ANSWER: Competition of oil regions around the globe leads to a uniform rate >of profit in the industry in conjunction with the various magnitude of >differential oil rents for each oil-producing region around the globe. One >has to do away with the myth of 'cheap oil.' there are differential costs of production, no? > The quality of oil, on the >other hand, is subject to market conditions. Therefore, in an extreme case, >the prolong and forceful capturing of oilfields in Iraq results in capturing >of (competitively determined) differential Iraqi oil rents only. why does not said capturing ensure that US companies will have a major role in developing them? > Here, >pronouncements such 'access' and 'security of supply' (as, for instance >Michael Klare does) are nonsense for, at least, two reasons: (1) Unlike its >cartelized stage, oil has already been globalized and thus can be obtained >through the transnational markets at global spot prices yes consumers can so obtain oil, but not everyone will be able to develop Iraq's oil production potential. > and (2) The oil >exporting states (of the Middle East and elsewhere) are almost singularly >dependent on the revenue from this source and there is no reason to refrain >from selling it. Yes, yes, I agree that US foreign policy cannot be understood as motivated to prevent the use of oil as a weapon. > For instance, even Saddam Hussein never wanted to cut of >the sale of oil to the international market. Agreed. > Moreover, he wanted to produce >and sell more quantities of oil than the capacity of Iraqi oilfields could >endure. right, so how was that capacity to be increased. > Providing 'security' for 'landlord states' [your term, not mine!] >is also a hoax due to the reasons provided above. (P.S.: a few days ago, I >had a chance to have debate with Michael Klare on the UCLA campus. Some of >these points were also raised by him, which were immediately become the >object of my vigorous deconstruction.) > As for the oil services companies, >such as Halliburton, they are outfits to gain from the wholesale destruction >of Iraq and thus 'construction.' These entities are connected to a tiny >interest group that is now conducting the US foreign policy from the >Pentagon. These outfits are not the GLOBAL OIL INDUSTRY. Indeed, in my >judgment, the oil industry hates this predators and their backers in the US >government for creating a domino of instability (with no end in sight) in >the Persian Gulf. But not only Halliburton stood to lose if Total and Lukoil were to develop Iraq's oil fields. I would have thought that if the US' major oil companies (along with Bechtel) stood to lose from a US occupation of Iraq, congressional opposition to Bush's war mongering would have been stronger. > >ISSUE # 4: "Doesn't the US fear that other big consumers of Middle East and >Central Asian oil and gas may demand ever more participation in extraction, >refining and transportation and thus push US companies >out of their presently favored position with state oil >companies in the Gulf? While (as you have shown) a >struggle to control the differential rent yielded by low cost oil cannot >explain the costly US military thrust in the Middle East, >perhaps the attempt to secure rent and the profits from oil >production/refining/transportation can?" > >ANSWER: US may fear that sky is falling! However, one has to look at the >material conditions of the oil production in conjunction with the changed >social relations of the globe. We are in era of post-Pax >Americana and loss of American hegemony. Exactly. Saddam Hussein had been cutting deals with French and Russian concerns and cutting the US out. >Correspondingly, we are living in the era of post-cartelization and >globalization of oil. There is no such thing as US companies anymore. >These are transnational corporations. The role of state in this >era has fundamentally transformed. I am not following this. > We are >living in the era of globalization and global >hypercompetition. As far as crude oil production is concerned you can take >a hike! Cyrus, I am not following this. >The refining and transportation, however, are >separate entities that must be dealt with separately. Finally, >'securing rent' needs the existence of rent, and >existence of rent (i.e., through production) is through global competition >in the oil industry today. Yes, I agree. Yours, Rakesh
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