Re: (OPE-L) Re: s/v & c/v: macroeconomic categories only?

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
>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.


>   Moreover, he wanted to produce
>and sell more quantities of oil than the capacity of Iraqi oilfields could

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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