Date: Wed, 19 Feb 2003 16:42:04 -0800 (PST)
From: Thomas Seay <entheogens-AT-yahoo.com>
Subject: AUT: Political Economy of War on Iraq


Got this off of lbo-talk.  Found it very interesting.
-Thomas
---------------------------------------------------

> Let me take this opportunity and write up a few
> lines on the issue of 
> oil and its real (not alleged) connection with the
> past and present 
> impending war with Iraq. You have indicated, among
> others: "That is, 
> the US propaganda machine is now selling the
> invasion of Iraq as an 
> attempt to break up putative monopoly power and to
> prevent the Sa'udi 
> dissipation of rent in the financing of anti-Western
> terrorism."
> 
> My position (both theoretically and historically) is
> as follows:
> 
> 1. The oil sector is a globalized entity, belonging
> to the 
> post-cartelization era. This sector was the first
> "industry" to be 
> globalized in the mid-1970s, following the oil
> crisis of 1973-74 that 
> led to quadrupling of OPEC "posted prices."
> Transnationalization 
> (globalization) of oil led to elimination of the
> regime of "posted" 
> pricing of oil and relied on the emerging
> institution of "spot" 
> pricing. Spot prices are the result of REAL
> competition among the 
> various producing units and regions of the world. By
> "real" 
> competition, I mean the actual competitive processes
> that are 
> dynamically setting up oil producing regions
> (including the oil 
> producing OPEC members) against one another. This
> competition (as 
> opposed to fiction of "pure" or "perfect"
> competition al neoclassical 
> economics) is Marxian and/or Schumpeterian in its
> meaning and thus 
> does not necessarily negate the process of
> integration (concentration 
> and centralization) of capital. Indeed, competition
> is a permanent 
> feature of CAPITAL and capital accumulation and it
> becomes sharper 
> and more potent with further centralization of
> capital. Finally, 
> without competition (so defined) value formation in
> capitalism is 
> meaningless. And without an adequate theory of
> value, not unlike the 
> current debate on war and oil, nearly everything
> goes!
> 
> 2. The Oil crisis of 1973-74 was not a simple shock.
> Although was 
> triggered by the Arab-Iraeli War of October 1973 and
> motivated by 
> OPEC member's (particularly by Libya and Algeria)
> who desired to 
> increase their share of oil rent, the cause of this
> crisis was deeply 
> embedded in the change in the US oil production cost
> structure (the 
> center of gravity of oil production in the world).
> US oil cost 
> structure was (and still is) the highest in both
> exploration and 
> development of oil worldwide. Being the center of
> gravity (within the 
> developed and largest market!) and being in need of
> restructuring, in 
> conjunction with the newly developed spot markets in
> oil, is the 
> force behind the unprecedented increase in the price
> oil, the 
> reflection of which was the quadrupling of OPEC
> "posted prices" 
> between October 1973 and March 1974. Given further
> developments that 
> led to the establishment of globalized oil (i.e.
> worldwide 
> reorganization of the entire oil industry on the
> basis objective 
> conditions and regulation of market, including
> pricing of oil based 
> upon spot and futures markets, formation of
> differential oil rents, 
> capping of unproductive well, decisions on further
> exploration and 
> development, etc.). Globalization of oil also
> reshaped OPEC in terms 
> of a modern rent-collecting agency in its present
> configuration (see, 
> "Limits of OPEC Pricing: OPEC Profits and the Nature
> of Global Oil 
> Accumulation," OPEC Review, Vol. 14 (1), Spring
> 1990). Hence, the oil 
> crisis of 1973-74 reflectively laid the cornerstone
> of the 
> globalization of oil and nailed the coffin of Seven
> Sisters for good. 
> The era of post-cartelization had begun. At the
> time, I thought that 
> only neoclassical economists and fools would speak
> of oil cartel and 
> cartelization; only neoclassical economists and
> fools would venture 
> to call OPEC a monopoly. But, to no avail, I soon
> realized that many 
> economists in heterodox tradition, including those
> with "radical" 
> and/or "Marxist" orientation repeat the same
> nonsense, although with 
> different intent. Therefore, it is not surprising
> that the 
> "anti-monopoly" posture such as this makes its
> entrance into the 
> collection of other enlightened reasons to go to war
> against Iraq.
> 
> 3. The US war posture cannot be attributed to oil.
> First of all, this 
> argument is motivated by the lack of adequate
> analysis about the 
> historical evolution and eventual implosion of the
> post-war 
> international ("inter-state") system of the Pax
> Americana 
> (1946-1979?). The United States was at the apex of
> this hegemonic 
> system. The US hegemony was entwined with the global
> hegemony of Pax 
> Americana. Pax Americana was much more than the
> United States. On the 
> one hand, it included the "Western alliance" and
> Japan. On the other 
> hand, and more importantly, it had its hands on the
> large number of 
> countries that are known as the "Third World," in
> Asia, Africa, and 
> Latin America.
> 
> It is in this context that one has to look at the
> three simultaneous 
> US containment strategies on behalf of the Pax
> Americana, namely, 
> containment of the Soviet Union and its satellites,
> containment of 
> nationalism and democracy in the "Third World"
> (Coups against, 
> Mossadegh (1953), Arbenz (1954), etc.), and finally
> ideological 
> containment of people at home (i.e., through
> McCarthyism, etc.). This 
> behavior and these activities were exhibited and
> done from sheer 
> strength. This was the time that some scholars call
> it the "Golden 
> Age" of capitalism. Thus, hegemony of Pax Americana
> can be defined in 
> these and other concrete historical tendencies. I am
> holding to the 
> meaning of HEGEMONY ala Gramsci and thus dismissing,
> for example, the 
> interpretations attributed by the scholars within
> the orthodox 
> international relations tradition. Roughly, from
> mid-1960s to 
> mid-1970s, the international system of Pax Americana
> started to 
> decline. At the very beginning of the 1970s, Bretton
> Woods, the Pax 
> Americana's international monetary system collapsed
> (officially, 
> August 15, 1971). There were many other challenges
> throughout this 
> decade, including the collapse of Pax Americana's
> worldwide 
> tentacles, such as the Shah Mohammad Reza in Iran,
> Somoza in 
> Nicaragua, etc. The Pax Americana imploded and
> collapsed under its 
> own weight. This goes also for its global hegemony.
> The United 
> States, which was once residing at its apex also
> lost its hegemony. 
> This also has been compounded by the
> transnationalization of capital 
> and the emerging hegemony of global social capital
> at more 
> theoretical. Thus, we entered the era that can be
> loosely identified 
> as the era of globalization. I am not talking about
> the so-called 
> "corporate" globalization.
> 
> I am looking at a qualitatively new stage in
> development of 
> capitalism (see, e.g., my "Globalization: The
> Epochal Imperatives and 
> Developmental Tendencies," in Gupta (ed.) Political
> Economy of 
> Globalization, Gluwer, 1997). One of the
> characteristics of this era 
> is that it particularly negates the "hegemony" a
> nation-state. 
> Finally, for those who look at the barrel of gun and
> sheer military 
> capability, and quickly conclude that the holders of
> those powers 
> have hegemony, should think twice: once by
> reexamining the meaning of 
> hegemony itself (al Gramsci) and once by comparing
> the doctrine of 
> CONTAINMENT (the most important doctrine during the
> era of Pax 
> America) and doctrine of PREEMPTION (officially
> unveiled by the 
> current Bush administration). By doctrine, I mean a
> systematic 
> policy, not a sporadic practice. Containment then
> was the reflection 
> of coexistence and also the fact that a hegemon, to
> say the least, 
> had a place worth preserving in the global polity
> and economy. In 
> other words, the hegemon had the system at its
> fingertips. The 
> doctrine of preemption and its systematic practice,
> on the other 
> hand, is the reflection of the fact that the bully
> not only lost its 
> old place (that is why there is such a haste in
> destruction) but also 
> does not wish to settle for an ordinary place like
> everybody else, so 
> to speak.
> 
> Would you call this hegemony? On the contrary, I
> would argue that 
> these trigger-happy positions are as the result of
> the US appreciable 
> weakness, not its strength. These postures are none
> other than sorry 
> gestures against the lost hegemony. It is within
> this historical 
> context that the question of OIL can be properly
> studied and 
> analyzed. Oil is globalized and operating under the
> regulation of 
> market, which is a part and parcel of the era of
> globalization. In 
> this sense, speaking of going to war for oil is
> untenable. The 
> question must be properly focused on the wholesale
> reaction of the US 
> government against the lost hegemony. Therefore,
> nostalgic act of 
> conquest and control will remain as major
> motivation. This motivation 
> is, in my opinion, a thousand times more potent and
> dangerous than 
> "blood for oil." Because the slogan of "blood for
> oil" hugely 
> under-estimates the potency of this systematic
> approach and position 
> on the part of the United States. Indeed,
> attributing this to oil 
> amount to a small potato. Once the weight of real US
> motivation is 
> measured, then the question of oil in Iraq is easy.
> How? One has to 
> look at the transformation of oil and formation of
> differential oil 
> rents that falls into the Iraqi economy.
> Appropriation of this rent 
> (differential oil rent) is not the END, it is the by
> product of 
> bloody search for the lost hegemony (see, e.g., "The
> Rhetoric of Oil 
> and the Dilemma of War and American Hegemony," Arab
> Studies 
> Quarterly, Vol. 15 (3), Summer 1993; "Global Oil and
> Inviability of 
> Pax Americana," Economic and Political Weekly, Vol.
> 27 (28), July, 
> 1992;"On Sand-Castles and Sand Castle Conjectures: A
> Rejoinder," Arab 
> Studies Quarterly, Vol. 17 (1 & 2), Winter/Spring
> 1995).
> 
> 4. Finally, allow me to present a few words on the
> worldwide 
> formation of differential oil rents. This goes back
> to my theory of 
> oil rent (The Economics of the Oil Crisis, 1985), in
> which, following 
> Marx, I have proved that in the post-cartelization
> era (since 1974), 
> via global competition, oil rents of the various
> magnitudes have 
> formed in the industry. Despite the popular
> misconceptions (even 
> among the left), these rents are NOT monopoly rents.
> These rents, 
> instead, are the reflections of cost structures (oil
> exploration and 
> development) associated with the different oil
> producing regions of 
> the world. Different oil regions show different
> productivity in the 
> production (extraction) of oil. In competition,
> these differential 
> productivities translate into differential
> profitability. If the 
> least productive oil region remains in the battle of
> competition 
> (i.e., being able to have average [normal] profit),
> then more 
> productive oil regions, in addition to their normal
> profit, receive 
> differential rents. The magnitudes of these
> differential oil rents 
> depend upon the differential productivity of oil
> production as a 
> whole. Thus, more productive oil regions appropriate
> larger rents 
> than the less productive oil regions (for more
> theoretical detail and 
> empirical results: The Economics of the Oil Crisis,
> 1985; "Some 
> Controversies in the Development of Rent Theory,
> Capital & Class, No. 
> 1989; "Price Formation and Competition in the
> International Energy 
> Industry," Energy Economics, Vol. 11 (3), 1989; "The
> Law of Economic 
> Rent and Property: Applied to the Oil industry,"
> American Journal of 
> Economics and Sociology, Vol. 51 (2), April, 1992).
> 
> As I have indicated to Jerry, with apology, the
> other day, I am 
> overwhelmed by deadlines, excessive commitments,
> unending public 
> lectures, etc., in this grim and unfortunate period.
> I hope these few 
> lines would reveal the application of my oil rent
> and my analysis 
> globalization of oil, the post-Pax Americana
> globalization and their 
> implication for the US foreign policy in the Middle
> East and 
> elsewhere in the world today.
> 
> All the best,
> 
> Cyrus
> (Tuesday night, February 18, 2002)
> 
> Cyrus Bina, Ph.D.
> Professor of Economics and Management
> University of Minnesota, Morris
> Morris, MN 56267, USA
> Office: (320) 589-6193
> Fax: (320) 589-6117
> E-mail: binac-AT-mrs.umn.edu


====<<Be like me!  The Primal Mother, eternally creative, eternally impelling into life,
    eternally drawing satisfaction from the ceaseless flux of phenomena.>>
    -Nietzsche, "The Birth of Tragedy"

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