Re: (OPE-L) Re: On the 'Unanswered Questions About Rent'

From: Cyrus Bina (binac@MRS.UMN.EDU)
Date: Thu Jan 29 2004 - 16:10:27 EST

Dear Jerry,

I am grateful for your further clarification as to the origin of this question.  Having no idea about the context (which I unfortunately missed due to my frequent travels), I failed to respond to it in my earlier posting of the Twin Notes.  

1. Given the globalization of the oil industry and formation of unified 'market value,' 'differential rents,' and prices, oil sector should be treated as a single sector.  Therefore, all the characteristics of Marxian value formation in a single industry will relevant to this globalized industry as well.  

2. Given the existence of differential oil rents, profits in this industry is  produced through intra-industry competitive forces (i.e. among the various oil regions) uniformly.  

3. The appropriation of differential oil rents (i.e., surplus profits) is either made by either the private land owners or states, depending upon the type of ownership of sub-surface (oil reserves). Therefore, oil workers with more differential productivity produce more surplus value. And, since most of these differential productivities are located in the countries, such as Saudi Arabia, Kuwait, Iran, Libya, Venezuela, etc., the states in these countries are able to appropriate substantially more surplus value (in terms of rent) from their oil workers than that of their counterpart.  That is why I call these oil state as rentier states.  

4. The rate of surplus value, as I indicated in my previous posting, pertains to the totality of labor and capital in a macroeconomic category.  

Thanks Jerry.  I have to run.


----- Original Message ----- 
  From: gerald_a_levy 
  Sent: Wednesday, January 28, 2004 6:20 PM
  Subject: (OPE-L) Re: On the 'Unanswered Questions About Rent'

  Hi again Cyrus.  Thanks for taking the time and energy
  required to reply to my questions and comments.

  > 1. There is no 'rate of surplus value' in US oil and another in 
  > Persian-Gulf oil.  The globalization of oil, since mid-1970s, 
  > means that the oil industry is a 'unified' industry, without 
  > separate conceptual parts.  

  I asked about the rate of surplus value for a couple of reasons:

  1) because the original "unresolved questions" post by 
  Mike L sent on New Year's Day was largely about the rate of 
  surplus value (more specifically, he asked whether the 
  conclusions about the oil industry are "in anyway based 
  on the implicit assumption that the rate of surplus value
  in the oil industry is equal to that in industries elsewhere?")
  Although I wasn't sure where Mike L was going with his 
  question, I didn't recall reading an answer to that question in 
  your 1/26 reply.  I gather, though, that your _other_  post
  constitutes a reply to Mike's question since his question 
  presumes that there are different rates of surplus value in
  different branches of production.

  2)  because you had distinguished in your post the highest
  cost/least productive region in the oil industry (in the US) 
  from the lowest cost/most productive region (in the Persian 
  Gulf region).  What I wanted to determine is whether you 
  believed that the differences in productivity were in any way
  related to differences in the rate of surplus value.  

  > Indeed, I have already demonstrated that oil's regulating capital 
  > is also leading to the formation of value of all fossil fuels as well 
  > as all non-fossil-based energy (see Bina, "Competition, Control 
  > and Price Formation the International Energy Industry," ENERGY 
  > ECONOMICS, Vol. 11, No. 3, July 1989).  As I remember, you 
  > have already have this among the articles I have already sent you.     

  I'll check it out.  I'm afraid that I haven't had the time yet to work my
  way through all of the materials you sent me last June. Thanks for that.  
  Btw, I very much enjoyed meeting you for lunch last Spring. I hope you 
  are getting more sleep!

  Note "PS" on the "tiny point" concerning "barrier to entry".

  In solidarity, Jerry


  > 3. On the contrary, reference to 'barrier to entry' is suspect at two levels: 
  > a) methodologically, for if it is an outcome a process, it does not explain 
  > the overcoming of such entries (i.e., concentration and centralization of 
  > capital through the commotions of competition, which, among others, 
  > result in the larger and larger size of 'regulating capital');
  > b) 'barrier to entry' is embedded in the ideological 'language' of bourgeois 
  > monopoly, thus reinforces the neoclassical misconception of market structure

  As Marxists presumably we should have no problem discussing "barriers".
  Nor should we have a problem discussing the conditions in which entry 
  (or exit) from a branch of production take place.  So, I don't think that we
  should have a problem discussing "barriers to entry."

  Re a):
  Methodologically,  _if_ something is an outcome of a process,  then that
  doesn't mean that we should abandon the concept.  Rather, the 
  methodological imperative is to deepen the concept and connect it to the
  logic of capital accumulation.  I don't really consider that to be an enormous
  task given what we already comprehend about the process of competition
  and the centralization and concentration of capital.  Indeed, it seems an 
  "easy fit" to me.

  Re b): 
  While neo-neoclassical economists refer to "barriers to entry", I don't
  think that it is as such a marginalist concept.   There are major divisions
  within the field of industrial organization that date back to the birth of IO:
  one strand of thought is and was neo-neoclassical -- in either the
  Marshallian or [worse still!] Walrasian traditions; another strand of 
  thought in IO might be better described as "institutionalist."   Both of
  these traditions utilize this concept -- the institutionalists bring
  the concept in from a historical perspective related more to business
  history than mainstream theory. But, I don't recall offhand who introduced
  the expression (perhaps Michael P, or someone else on the list, knows).

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