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

[Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>]

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