US "hegemony"

Another marxian message on Iraq 
 
(From Doug Henwood's list, a different reading of the importance of oil to
imperialist warmongers... Seems to me the key lines are: "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.'")

[Henwood: Rakesh Bhandari forwarded this analysis of the Iraq crisis to me
for forwarding here. I added some paragraph breaks to 3, since it was one
forbidding block in the original.]

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)

(C) Copyright 2003 Cyrus Bina. All rights reserved.

----------

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@mrs.umn.edu
 
**********

This is a very useful addition to the much needesd discussion on what 
the impending war is about and means-no blood for oil is an excellent 
slogan-but poor political analysis. This war is not about oil as such 
it is about good old imperialist hegemony, rivalry and re-asserting 
who is the biggest and toughest 'bully' to any would be up and coming 
bullies, regional bullies and rivals sucha s the EU. Also, I do tend 
to think that the US ruling classs as political and economic 
'policeman' does see itself as having the best interests of 
international capitalism as a social and economic system , at heart 
and is acting, in part, with that motivation also a sort of defender 
of the capitalist realm-imperialist of the last resort.

Peter

Peter Dwyer
Post-Doctoral Researcher,
Centre for Civil Society,
University of Natal, Durban 4041, South Africa.
Tel (031) 260 2116 or 0847694133
www.nu.ac.za/ccs

**********

I disagree with one aspect of this, agree with another. Dominance of the
region's resources is a stated aim of US policy on Iraq. These include, but
are not limited to oil (also rivers; territory for bases; proximity to
Israel; positioning for further regional encroachments; control over
Turkish/Iranian/Central Asian pipelines etc). However, this is not
incompatible with the other aspect of Bina's argument: that current US
behaviour represents a reaction to the loss, rather than an expansion of
hegemony.

I have never been a student of Gramsci, so I'm not too sure what hegemony in
a Gramscian sense means. However, in the way I read this, it seems to refer
less to brute control/dominance itself as to the legitimisation of that
dominance. There may therefore be a broad consensus that: a) states have
always attempted to dominate others, that this tendency is inherent within
state political formation and subject to change, and b) that some such
historical change in relation to US dominance occured in the early 70s. If
that shift was indeed about a collapse of US hegemony (the collapse of Pax
Americana as Bello puts it) it was thus about a collapse in the legitimacy
of the regime. In broad terms, the legitimising (hegemonic) factor that has
sustained modern western states has been a belief that the nation state
stands for something/protects/represents its citizens. What may have
collapsed, then is less the power of the state per se as the sense that it
represented the interests of those in its territory.

The fact that this occured with the roll out of neo-liberalism cannot be an
accident. Neo-liberalism, surely, was the response of the right to the
collapse in the legitimacy of the nation state - and it advocated instead
the creation of the market state - a state stripped of any ideological
resonance- which is now what we have. Neo-liberalism hasn't therefore
reduced the power of the state - what it has reduced and undermined is the
legitimising or hegemonic principle whereby states actions are legitimised
by carrying the people with them. Neo-liberalism and market states push the
relations between people and state into short term commercialised contracts
or into nebulous de-territorialised global networks, to which people feel no
ideological loyalty. Thus, while 100 years ago westerners could be conned
into thinking wars to save empires were also about saving the imagined
community of the nation state, and 50 years ago that the modern state would
rid itself of empire and reinvent itself as truly democratic and welfarist,
now there is far less ideological rhetoric about what it means to belong to
a state, and far more cyncism about what it really means.

This cuts both ways. The good sides are the globalisation of identity and
resistance politics; the bad side is that, as Bina says, the US feels able
to expound a policy of preemptive attack, and is likely to occupy the vaccum
created by the lack of a legitimising ideology to attempt some form of
military global dominance. But I don't think that necessarily means that we
should give up on the possibility that states can be forces for the good. If
this crisis is about legitimacy, then the question is in what ways can
legitimate political activity be restored. This is a question that needs to
be asked at the national - as well as at the local and global level. The
power of the state - backed by nationalist ideology - has after all
sustained radical civil society movements across the world, and it is not a
struggle we should give up on in the west either. In fact, the legitimacy of
the state may be the most pressing issue we are facing - and the most vital
ground to capture given the level of popular disillusion. Why, after all, is
popular, democratic regime change in Zimbabwe resisted amongst the African
brotherhood? Because they don't like the implications. The same holds true
for popular regime change - and thus what or whom the state represents - in
the US, the UK and across the world: its very powerful, but how is it to be
done?

-----

Not a bad thesis. But what's the counterfactual? What if it is about oil,
mainly, what might convince you of that (aside from the petro-military
complex occupation of the White House)?

**********

This brief response to Bina comes from a comrade academic in the US - Keith 
Griffler
__________________________

It seems to me to be one of the typical price-driven theories that one sees 
so much these days. Obviously, this analysis relies on the notion that 
prices are absolute, rather than relative (which is all they can be). In 
other words, it makes money essential (which is very odd in a world in 
which none circulates) and forgets that prices can only fluctuate as 
against the "values" of other commodities. Their fluctuations thereby 
cancel in total. Can that affect the actions or perceptions of particular 
agents of production? Yes, certainly. But is that in any way essential? No.

As for the political analysis, it seems to mirror modern political economy 
in that it conceives categories (structures) and then analyzes them rather 
than the world that they purport to reflect. So that, for example, because 
we are in the era of "globalization," the US could not possibly go to war 
over oil, since that would be irrational (or rather because it wouldn't 
accord with the theory). It also finds no textual validation in Gramsci, 
and we all know that American administrations are avid readers of Gramsci, 
especially since Condaleeza Rice is a former Stanford provost. Case closed. 
This war can have nothing to do with oil.

The only problem is, I don't think this administration does read Gramsci. 
And there are numerous credible reports that companies with close ties to 
the Bush administration (and it is an oil administration from top to 
bottom) want to "develop" Iraqi oil. I agree somewhat with the notion that 
Bina expresses that the world is not as dominated by the US as it once 
was. The problem is that I don't think anyone quite knows that. Certainly 
the Bush administration continues to believe that it can do whatever it 
wants in the world. Current events show nothing more clearly. Is this 
simple nostalgia? No, I think it's something more fundamental. Why do these 
theorists all assume that "hegemons" have perfect understanding of the 
world they live in? I think it will be a long time before the consciousness 
of Americans (especially those at the top) comes into accordance with the 
reality. The bigger issue is that no one else seems to question US 
"hegemony," except in part France and Germany, which is an interesting and 
potentially important development.