[OPE-L:8488] Re: George Caffentzis. "Not Just Blood for Oil: The Political Economy of the War on Iraq"

From: rakeshb@stanford.edu
Date: Wed Feb 19 2003 - 15:46:40 EST

OPEC is a price-fixing cartel? Evidence? George's most important 
piece of evidence seems to be the assertion of a Republican 
yahoo congressman probably aiming for the anti Arab popular 
vote.  Argument against counter-evidence? How much of tradeable 
oil is under OPEC control? What is the nature of internal OPEC 
relations? How are OPEC decisions made? How do the spot and 
future markets affect or constrain OPEC choices? Or is the price of 
oil simply determined by the arbitrary will of OPEC? Is OPEC 
always an effective price-fixing cartel? If not, why not? 

OPEC collects differential rent, George says--but differential rent is 
not the product of monopoly power. The magnitude of differential 
rent, whether I or II, is price-determined, that is, it is determined in 
and through competitive price formation, as Cyrus shows.  
Differential rent is not a price-determining phenomenon; it is not 
the product of the pricing power of monopolies. In short, two 
claims are conflated--OPEC is a price-fixing cartel and OPEC 
collects differential rent.  The latter is true; the former not.  It may 
well be true that the US would like to exercise indirect control over 
the disbursement of OPEC and Arab oil rent in particular in order 
to make a (hopeless and thus truly reactionary bid) bid for 
renewed hegemony. 

I also think by absolute rent, George does not mean absolute rent 
in Marx's sense but rather in the sense of monopoly rent. 

I just don't find the underlying economic analysis persuasive; 
moreover, I think the analysis based as it is on the myth  of OPEC 
as a price-fixing cartel comes close to supporting the anti Arab 
demonology (close in structure to the old myths of the Elders of 
Zion) which will be the backbone of popular support for the war, 
such that it is.

Yours, Rakesh

Quoting gerald_a_levy <gerald_a_levy@msn.com>:

> In a separate message, George indicated that his talk "is
> 'anti-copyright,'
> i.e. it can be reproduced by anyone who does not copyright it". 
> This
> is the first time it has been published on the Internet.  Note the
> "Theoretical  Interlude" in Level 2 of the paper.
> Solidarity, Jerry
> ----- Original Message -----
> From: <GCAFFENTZ@aol.com
> Sent: Wednesday, February 19, 2003 10:59 AM
> Subject: Re: paper for OPE-L
> Dear Jerry,
>   I too enjoyed last night. The audience was in general well 
> and
> followed the argument. You are right, I do know many on your 
> fine list.
> I enclose the talk (without footnotes and other scholarly 
> and I
> look forward to comments/criticisms/etc.
>  All the best,
>  george Caffentzis
>  ------------------
> Not Just Blood for Oil:
> The Political Economy of the War on Iraq
>  a talk given by George Caffentzis
> at ABC No Rio (NYC) on February 18, 2003
>  Send comments/criticisms to caffentz@usm.maine.edu
>      After Saturday's gigantic world-wide show of popular will, the
> anti-war
> movement can claim to have put a new player in the field beside 
> miserable  protagonists of the Iraq/US war: Bush and Hussein. 
> figure
> is the refuser  of a war with a banner on which a shibboleth is
> written:
> "No Blood for Oil."   Who is this person? What does the banner 
> What will we do on the basis  of it?
>      In this discussion I want to make some elementary reflections 
> this
> shibboleth and see what future the protester is pointing to. I will
> do this
> by reading the slogan on four different levels, each more general
> than the
> previous one.
>  Level 1. No Blood for Oil, literally
>      We should not be reductive nor jump to conclusions, but there 
> plenty
> of evidence to show that the Bush Administration is planning war 
as a
> way
> to  plunder the oil fields of Iraq.
>      It is widely known that Iraq's presently known oil reserve of
> more than
> a  100 billion barrels is the second largest on the planet and that
> "the
> undiscovered oil in the Middle East [including Iraq] is very likely
> the
> largest untapped supply in the world." As a retired petroleum
> geologist
> unequivocally answered when asked about whether Iraq or Iran 
> more
> untapped oil: "[I]t's Iraq. We plugged and abandoned any well 
> wouldn't
> make 5.000 barrels a day. Threw'em back in the water." Iraq's oil
> reserve
> is  worth potentially more than three trillion dollars at current
> prices.
> Moreover, Iraqi oil is very inexpensive to produce and is one of 
> world's  "sweetest," i.e., it produces fewer pollutants on
> combustion.
>    At the moment however, even though the US government and
> corporations
> import 2.3% of their total oil from Iraq (US News and World 
> February  17, 2003: 36), US based oil companies cannot directly
> profit from
> oil production there. In fact, the Saddam Hussein regime has 
made a
> number
> of important agreements with French, Russian and Chinese oil 
> assuring
> them of very attractive deals in oil production once the sanctions
> are
> ended.  The British and US firms, however, have been given 
> notice that
> they will  not be welcome in a post-sanctions era, if Saddam 
> and/or
> the Ba'ath Party remains in power.
>      Therefore, the only way for the US (and British) oil companies
> to gain
> profitable direct access to Iraqi oil is through a war that would
> violently
> and irrevocably end the Hussein/Ba'ath Party rule and bring in a 
> government that could cancel the deals with the French, Russian 
> Chinese
> companies. That is why the first objective of the US military is to
> secure
> the oil fields in an invasion of Iraq. Further, the US government
> assumes
> that its troops will occupy the country for many years and will 
> a
> general as a military governor, in the style of Douglas MacArthur 
> post-WWII Japan. This governor will be paying for the occupation 
> the
> sales of Iraqi oil.
>     Anyone familiar with the oil industry-connected backgrounds of
> key
> figures in the Bush Administration, starting with George Bush
> himself,
> should not be surprised by this plan of plunder that the "No War 
> Oil"
> slogan reveals and protests. The US oil corporations (including
> Haliburton,
> VP Chaney's former company) would definitely find the 
> of
> "rebuilding" the Iraqi oil industry destroyed by US bombs and/or
> Hussein's
> "scorched oil" tactics a bonanza.
>     Such a blatant plan of theft and plunder can only be 
> by
> military means. The consequences for the Iraqi people will be
> devastating,
> even if the invasion is relatively swift. For the subsequent
> struggles
> among Iraqis and against the US occupiers will be bloody 
>     The slogan "No Blood for Oil" on this level rejects the obvious
> gangster behavior the Bush Administration (and the Blair echo) 
> brevity
> and justice. S/he who affirms it wants to stop this act of 
> pure
> and simple and treats Bush's and Blair's "high-minded" (and 
> crafted)
> rationalizations for invasion as crude, shameful parodies of
> justice.
> Surely,  s/he will brand any oil company that profits from such an
> adventure
> a  criminal and boycott its tainted products.
> Level 2: No Blood for Privatization of Oil Resources
>     Though plunder is definitely part of the Bush Administration's
> plan
> there are other more global issues suggested by the slogan. For 
> US has
> been the leader in imposing neoliberal/globalization policies 
> the
> planet. Thousands of nationalized companies and agencies 
have been
> privatized due to structural adjustment programs imposed by the 
> Bank
> and IMF while many forms of "restraints to trade" (including 
> fixing"
> cartels) have been abolished by the international trade 
> now
> coordinated by the WTO. The US government, not surprisingly, is 
> dominant partner in the World Bank, the IMF and the WTO.
>     One commodity after another has been "neoliberalized," but oil
> has
> escaped this fate. Most of the nationalizations of oil companies 
> place
> between 1969 and 1973, but it has been almost impossible for 
> companies to be privatized, even though the national telecoms 
> airlines
> were put on the auction block in many of these same countries 
> Nigeria).
>     Similarly, though there has been an attempt to destroy
> international
> price fixing cartels in most commodities via treaties like the one
> that
> created the WTO, oil and OPEC has been exempted from the 
rules of
> the
> neoliberal global regime. This is unusual since oil is the 
> that
> is both most basic (i.e., being involved in the production of most
> other
> commodities) and the most traded (i.e., the highest value of
> international
> sales) while OPEC is the most blatant price fixing cartel in the
> world.
>     This exemption of oil and OPEC from neoliberal standards 
has been
> at
> the heart of the Republican Party critique of the Clinton's energy
> policies.
> Thus in the waning days of the Clinton era, there was a
> Congressional
> Hearing on "OPEC's Policies: A Threat to the U.S. Economy" 
> by
> Benjamin Gilman (R-NY) who charged that Clinton remained 
> passive in the face of OPEC's continued assault on our free 
> system
> and our antitrust norms."
>     With the Bush Administration's rise to power, OPEC is
> increasingly seen
> as a hostile entity--especially after 9/11--which must be 
> and
> either replaced or abolished.
>     This hostility is intensified by realizing who are the main
> political
> figures in OPEC now (aside from Iraq's Ba'ath regime): in Iran 
> are
> the desperate Islamic clerics, in Saudi Arabia there is a ruling
> class that
> is divided between globalization and Islamic fundamentalism, in
> Venezuela
> there is the populist government of Chavez, in Ecuador there is a
> government
> that was nearly seized in a rebellion by the indigenous, in Libya
> there is
> Ghaddafi (need more be said?), in Algeria there is a government 
> just
> narrowly repressed (and collaborated with) an Islamist 
> movement, in Nigeria and Indonesia there are "democratic" 
> with
> questionable legitimacy that could collapse at any moment. 
There is
> simply
> too much class struggle in an area of high tech production (oil
> production)
> that these leaders and governments were not able to control.
>     This list of OPEC leaders constitutes a "rouges" gallery from 
> point
> of view of the thousands of capitalists who send a tremendous 
> of
> "their" surplus to OPEC governments via their purchases of oil 
> gas.
> With such a composition, OPEC is hardly an institution to 
energize a
> neoliberal world.
>     Of course, OPEC was not always a political or economic 
> In the
> 1960s and in the early 1970s OPEC was a relatively pliable
> organization
> while nationalization and monopolistic pricing were still 
> elements of  the Keynesian political economy of the day. Iran 
> under the
> Shah, the Ba'athists had just lost their Nasserite zeal, Ghaddafi's
> fate was
> still undeveloped, Venezuela was a tame neo-colony, Indonesia 
> under the
> communist-killer Suharto, Nigeria was under the control of 
> Gowan,
> and the Saudi Arabian monarchy's Islamic fundamentalism was
> considered a
> quaint facade under which the movement of billions of 
> could
> be recycled back into the U.S.-European economies.
>     But that was then and this is now. From the Bush
> Administration's
> viewpoint OPEC needs to be either destroyed or transformed in 
> to lay
> the foundation of a neoliberal world that would be able to truly
> control of
> energy resources of the planet. The Bush administration is 
putting as
> much
> pressure as possible on OPEC's members. In April of 2002 
there was a
> U.S.-supported coup d'etat in Venezuela against the Chavez
> government, the
>  leading price hawk in OPEC. It failed. In August 2002 it was 
> Arabia's
>  turn. The RAND corporation issued a report claiming that the 
> Arabian
>  monarchy was the "real enemy" in the Middle East and should 
> threatened
>  with invasion if it did not stop supporting anti-U.S. and
> anti-Israeli
>  groups. But that verbal threat was nullified by the Bush
> Administration in
>  the controversy that followed.
>      All in all, the Iraqi government is clearly the weak link in
> OPEC. It
> lost two wars it instigated. It is legally in thrall to a harsh
> reparations
> regime, it cannot control its own air space, and it cannot even
> import
> freely  but must have UN accountants approve of every item it 
> to
> buy on the  open market. Ideologically and economically it is
> prostrate.
>       But a US-sponsored Iraqi government committed to 
> policies
> would definitely be in a position to undermine OPEC from within 
> if it
> departs, from without.
>     Such a transformation would make it possible to begin a 
>  investment in the energy industry that might be an alternative to
> the
>  spectacular failure of the high-tech sector that has dissolved
> hundreds of
>  billions of dollars.
>  ----------------------------------
>     Theoretical Interlude: We should realize that oil is not just
> like any
> other commodity for a number of reasons. It is a basic 
commodity. Its
> price
> changes affect the prices of almost all other commodities and 
> average
> wages and profits. Also, its production process has a high 
> composition, i.e., it involves large amount of machines and 
> and
> relatively little direct labor. Finally, it has a rent component in
> its
> cost. All of these elements together make of oil a special 
> from
> the point of view of political economy and for our movement. Let 
> review
> them.
>     Basic commodity. Surely, any group which can make 
decisions to
> change
> the price of oil can influence the rest of the capitalist system in a
> way
> similar to the way that those who decide on interest rates can. 
> ultimately have a power much more general and diffused that it
> immediately
> appears. The many economic models since 1973 that have 
shown how
> whole
> economies have been "put into recession" because of oil price 
> (whatever  one makes of their scientific value) express this
> connection.
> The fact that  NY, Washington and London looks at the 
composition of
> the
> OPEC leaders and sees Islamic terrorists and nationalist
> revolutionaries
> clearly shows how the  economic character of the commodity 
> political consequences.
>     Transferred value. Most commodities do not sell at their 
> otherwise highly demanded commodities like oil would not be 
> since
> their almost labor-less production would not generate enough 
> value
> directly. Consequently, some value from branches of production 
> lower
> organic composition (e.g., textiles) must be transferred through 
> market
> and competition into the higher organically composed branches 
> the oil
> industry. This means that oil is a commodity that is the object of
> the
> collective interest of the capitalists around the planet. Any 
> to
> run such an industry that would be detrimental to the general
> capitalist
> interest will face opposition from a vast assembly of individual
> capitalists
> around the world. (As Kissenger said in the early 1970s: "Oil is 
> important  to leave it to the Arabs.") Thus there is a tendency for
> these
> enterprises to be closely monitored (and regulated) within nation
> states
> and, more irregularly,  internationally. All this to simply say that
> it is
> not only the US oil companies that are vitally interested in the fate
> of the
> oil reserves of Iraq, there are behind them are many other
> corporations
> whose profits will  depend upon that fate as well.
>     Indeed, there is such a collective (almost communal) capitalist
> concern
> for such industries that they can easily be the object of political
> action.
> Sometimes this action can be peaceful. The oil industry in the 
US is
> a good
> example (it was the initial target of the "anti-trust" movement) as
> is the
> software industry (see the Microsoft case). But sometimes this 
> can
> be violent and prompt war (from the British attack on the Ottoman
> Empire in
> WWI  to the Gulf War in 1991.)
>      Rent. Rent is one of the categories of political economy that
> is
> clearly relevant to the oil industry. There is differential rent due
> to the
> fact  that not all underground oil is the same. Some is "sweet" 
> is not,
> some is deep, some is not, some is on land, some is not, some
> requires a lot
> of technology to find, some does not. Clearly, if the price of oil is
> the
> roughly the same, then the owner of the territory where the oil 
> positive characteristics can charge rent (and expect to be paid it).
> Indeed,
> there is probably some "Absolute Rent" that is paid simply as 
> to the
> regime of private property even when a company is producing in 
> worst
> oil areas.  All  this rental value comes from the transferred value
> discussed above. Again,  there is a collective interest in its part
> of the
> cost of oil.
>     Indeed, there has been a capitalist critique of "rent-seeking"
> throughout the history of political economy. Rent is the epitome 
> unproductive  income, presumably. This critique still goes on 
> in the
> text-books and among the ideologues of Keynesianism and
> neoliberalism.
> However, for all the critique of the rentier, rent still is a
> decisive form
> of  income in capitalist society, as any New Yorker will attest to!
> But the
> productivist ideology that  has its roots in Locke's defense of
> English
> colonialism in the late seventeenth century is always waiting on 
> horizon
> to be brought in to justify attacks on the rights of the rentier. If
> the
> rentier, though his/her   right of exclusion, disrupts the
> productive
> development of a  profitable industry, then there is a right of the
> more
> productive to lay claim to the right of exclusion. Therefore war is
> on the
> wings of all rental claims.
> -----------------------------
>      Given the exceptional political economic character of the oil
> commodity,  it is not surprising that this gift of hundreds of
> millions of
> years of the  meeting of organic life and the heat of the earth's
> core
> should  generate so much violence in a capitalist world. The
> protester's
> sign now is  saying: no blood should be spilt to preserve the 
> system envisioned by Bush and Co. It must be scrapped before 
we are
> all bloodied for oil. Some  new way of distributing the earthly
> commons
> must be devised, the present  and future pricing/profit system 
> will
> lead to one war after another cannot be allowed to continue.
> Level 3: No Blood for Neoliberalism
>     One of the main diplomatic failures of the Bush Administration
> has been
> to give the impression that this new "world domination" strategy 
> a
> product  of a spontaneous Nietzschean will to power. Their claim 
> the
> urgency of   the Iraq invasion and take-over is due to some 
> threat
> to national  security posed by Hussein's weapons of mass 
> has
> been rejected even by many of their most loyal defenders. There 
> an
> emergency  the Bush  Administration is responding to, but it is 
> a
> military one...it is political-economic one.
>     The neoliberal system of capitalist accumulation (what we in 
> US
> call  "globalization") that replaced the Keynesian one in the late
> 1970s has
> been in deep crisis since 1997 and the Bush Administration 
> respond to
> this crisis or it too will be thrown out by its masters, (if not by
> its
> subjects!)  I need not inform you of the story that now
> conventionally
> begins in  Thailand  in July 1997 with the collapse of the "bhat."
> This was
> not  the first financial crisis of the neoliberal model (there was
> the
> Mexican crisis of  1995 we should remember), but the Thai crisis
> began
> a series of events that have led to today's situation. Nor need I
> trace this
> series for you through the dramatic collapse of the stock market
> bubbles
> throughout the planet leading to destruction of trillions of dollars
> of
> values (paper though they were), the stagnation in Europe and 
> and even the decline of profitability in US capitalism. This
> constitutes the
> first major crisis of neoliberalism.
>     The Bush Administration's answer to this crisis is war. How 
> this
> be?
> What does war have to do with this political-economic crisis? Of
> course,
> there are many past reasons for such a correlation and they are 
> to be
> slighted. For example, war is a classic devise of ideological and
> juridical
> control of a population dissatisfied with an unrelenting economic
> crisis
> (after all, Chief Justice Rehnquist has recently reminded us that 
> War
> the Laws are Silent"). As another example there is "war
> Keynesianism," i.e.,
> the use of war expenditures to stimulate demand for capital and
> consumer
> goods in order to jolt the system out of a far from full employment
> equilibrium.
> These could be reasons for the Bush Administration's answer to 
> crisis,
> but they do not deal with the fact that the crisis of neoliberalism
> is
> global and that  the US government is now "responsible" for the
> survival of
> neoliberalism/globalization as a whole.
>     The main problem with neoliberal/globalization is that for it to
> "work"
> the system must be global and the participant nations and
> corporations must
> follow the rules of trade even when they are going against their
> immediate
> self-interest. In a time of crisis, however, there is a great
> temptation
> for many participants to drop out of or bend the rules of the 
> especially if  they perceive themselves to be chronic losers. What
> country
> is going to keep the recalcitrants (both old--those who refused to 
> part
> of the  game--and new-those who dropped out) from 
proliferating? Up
> until the post 1997 crisis most of the heavy work of control was 
> by
> the IMF and World Bank through the power of money, but since 
then it
> is
> becoming clear that there are countries that will not be controlled
> by
> structural  adjustment  programs.
>     The most obvious case is Argentina, but there are other, 
> drop
> outs in Africa and South America. The most illustrious 
> are
> the Bush-baptized "axis of evil" nations, Iraq (one of the last of
> the
> national socialist states), Iran (one of the last fundamentalist
> states
> after the demise of the Taliban) and North Korea (one of the last 
> the
> communist states), but there are many other Islamic, national
> socialist and
> communist governments that have not transformed their 
economies into
> neoliberal form. This list will undoubtedly grow unless there is a
> check, in
> the form of a world police officer that will increase the costs of an
> exit.
>     There needs to be for neoliberalism of today the equivalent of
> the role
> Britain played for the liberal capitalist system of the 19th century
> in
> order for it to function properly. Clinton and his colleagues
> believed that
> the UN could eventually be used by the US government as such 
a force.
> The
> Bush  Administration disagrees. According to Bush, the US will 
> to act
> in its own name to enforce the rules of the neoliberal order (even
> though
> many of  its adherents are unwilling to do so) and that action 
> at times
> be military. In the end, it is only with the construction of a
> terrifying
> Leviathan that the crisis of neoliberalism will be overcome and
> regime of
> free trade and total commodification will finally be established for
> its
> Millennium.
>     The invasion of Iraq (the "oil" of the slogan) is a step in this
> construction process which is seen by Bush and Co. as a 
sacrifice of
> US
> human and capital resources for the greater capitalist good. The
> internal
> debate in  the UN is part of a complex negotiation process that
> ultimately
> is meant to determine the conditions of US interventions, not 
> elimination.  That is  why the protester's sign does not say, "No
> Blood for
> Oil...unless the UN says  so!"
>     The Bush project might be possible, if there promised to be 
but a
> few
> recalcitrants to and migrants from the neoliberal order. However, 
> the
> antiglobalization movement is right, this is not likely. For
> neoliberalism
> does not seem to be able to deliver on the "sustained growth" 
> rises
> all ships even in its halcyon days. On the contrary, it does not 
> raise
> the 20% of the "ships" it had claimed to do in its inception. This
> means
> that many ruling classes and even more working classes 
around the
> planet are
> going shopping at Porte Alegre to look for another system.
>     There will be neoliberal wars aplenty in the years to come if 
> US
> wishes to play the British Empire of the 21st century. For what
> started out
> as tragedy ending in WWI, will be repeated, not as farce, but as
> catastrophe.
>   Thus the slogan, "No Blood for Oil," is a rejection of the series
> of wars
> that are being planned by the Bush Administration for the years
> ahead,
> aimed at terrorizing the recalcitrants of the neoliberal order into
> cooperation.
>  Level 4: No Blood for Profit, Period
>     The protester's sign's slogan has been interpreted on three
> different
> levels so far: first, as a refusal to spill blood for the plunder of
> an
> individual nation's oil resources; second, as a refusal to spill
> blood in
> order to impose privatization and "free market" practices on the 
> industry internationally; third, as a refusal to spill blood to
> preserve the
> rules of the neoliberal global regime. On the final level, I want to
> think
> about  "No Blood for Oil" as a revolutionary slogan similar 
> to
> the "Land,  Peace and Bread" of the Russian Revolution, i.e., a
> concrete
> demand that at  first  sight seems quite moderate and practical, 
> due
> to the context it becomes revolutionary. After all, having
> "revolution" on
> one's banners does not make  them revolutionary!
>     The slogan is neither anticapitalist nor against war per se. It
> commits
> one to be against a war for oil, but not necessarily against war 
> other
> things. Nor is it absolutely anticapitalist, for the sign is
> conditional.
> It seems to be saying, I reject the spilling of blood in order to
> continue
> with the commodification of and profit making off "oil" (or indeed
> any other
> vital stuff). Human blood is beyond the worth of any commodity 
and a
> system
> that can only run on this higher exchange is a corrupt and 
> Molloch.  The slogan seems to be offering an alternative, if "oil"
> can be
> commodified and sold at a profit without the expenditure of 
> then
> let it continue. A  tame, non-aggressive capitalism is an 
> one.
> The slogan seems to be challenging the "world leaders" at the 
UN to
> come
> up with such a capitalism.  Some indeed are trying, as some
> non-Bolsheviks
> tried to implement the demands of "Land, Peace and Bread" but
> failed.
>     Capitalism in any of its forms--neoliberal, Keynesian, liberal
> or
> mercantile--cannot meet the challenge of the slogan. It must 
> war
> and blood, since it cannot satisfy the minimal demands of the 
> race as
> a  whole, much less its terrestrial environment. We have five 
> years
> of  experience to support that claim. Consequently, since the
> condition can
> not  be satisfied, the slogan's advocates will not part with their
> own or
> others'  blood, period.
>     Indeed, if we combine the slogans of the antiglobalization
> movement--"Another World is Possible"--with that of the antiwar
> movement--"No  Blood for Oil"--the political arithmetic gives us,
> "Another
> World is Necessary." We must reason with this arithmetic and 
> to in
> the  coming days, weeks, months and years to be sure that the
> invasion of
> Iraq,  if it comes, does not demoralize us, but merely confirms 
> logic of
> our path.

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