OPEC, Keynes, unions and the reserve army

[Abbas Alnasrawi <aalnasra@xxxxxxxxxxxxx>]

In Paul Davidson's April 14 message (as reported in Henwood's of April 15)
he asserts that the prosperity of the 1950s and the 1960s encouraged
labor unions and oil bearing property owners to seekk not only higher
wages (and rent) but also to change the distribution of income in their
favor and away from the capitalists.

While the analogy may appear attractive the implication that OPEC and the
unions were driven by similar logic and/or motive is untenable for at
least one simple reason. Up to the early 1970s OPEC oil from Venezuela to
Indonesia was controlled by less than ten multinational oil firms which
succeeded in keeping the price of oil constant in nominal terms. Put
differently the price of Middle East oil was kept around $1.80 per barrel
with the producing countries receiving 80-85 cents per barrel- about 2
cents per gallon.

These fiscal relationships were kept intact for 20 years-up to 1971.
During those twenty years OPEC governments per barrel revenue in real
terms declined sharply due to among other things  the depreciation of
the US dollar and the constant rise in industrial country export prices to
OPEC.

During the same twenty years  wages in real terms did increase, however.

Last but not least: whether this increase in wages is responsible for the
high unemployment rates in industrial countries is still an open question.