Rob Schaap wrote:
>
> Some thoughts I've just tried out on the Progressive
> Economists' List, to
> no response. Are they just being polite?
Rob, the premise of the CrashList is that four interactive and adverse
processes combine to make world capitalism highly unsustainable, and
they are: energy deficits, climate destabilisation, biosphere
degradation, and human population growth.
We still know very little about any of these processes, and there is
no general agreement about the extent of the dangers any of them
presents. We know even less about the interactions between them, or
the extent to which their effects compound in positive feedback loops
or cancel each other out thru the chaotic and possibly intrinsically
unknowable and unpredictable effects of counter-tendencies. In the
circumstances, given that we still know relatively little about the
factors involved in the Crash, there is plenty of scope for
complacency in any of the relevant disciplines and scope for
ridiculing as 'Cassandra-ism', 'catastrophism' etc, attempts to
understand these processes holistically, or even as a form of
misanthropy, as Doug Henwood accused me of recently.
Nevertheless, it is possible to not only seek common cause with people
from many different backgrounds and disciplines, it is also possible
to start drawing some lines in the sand -- and necessary and timely to
do so. It is possible to say that we DO know enough by now about all
of these processes, to suggest that too much complacency is a form of
denial. Many people are in denial because it is psychologically
difficult to accept what the consequences will be, for our own lives
and the wider society, if the doomsayers turn out to be right. And
there have always been doomsayers, but here we all still are, and life
goes on.
This kind of attitude looks increasingly a vocation in itself. People
spend more time defending themselves against accusations of
complacency in the face of what to many of us seem obvious and
manifest threats to our well-being. The greater the proximity to the
telescope, the greater the perceived disinclination to peek thru it in
case that the moons do indeed move. So do not get disheartened. The
more denialism you run into, the more you should keep banging away
asking you're questions: that's my gratuitous advice.
> >Worries about energy prices.
>
> Me: Well, this seems to cut both ways, I reckon. Are people
> underestimating
> the role of crisis-minimised import costs on US growth?
Dollar hegemony has resulted in savage deflationary pressures in the
world economy outside the US. The result has been to drain off capital
from the rest of the world, now at the rate of $1.5bn dollars per day,
as you point out. The story of the 1980s was the huge rise in dollar
debt and the collapse of development hopes in much of Latin America,
Africa and elsewhere. This was a direct result of the first Oil Shock
and the measures the US took to safeguard its position thereafter.
The story of the 1990s has been the pauperisation of the former
Eastern Bloc, the further impoverishing of South America, Asia and
Africa and a new tidal wave of wealth sucked in from those places, by
US capitalism, fuelling its most sustained boom. The two things are
yin and yang: the present 'bountiful' US economy has been bought at
the price of stagnation in Europe and Japan, and a holocaust of lives
and hopes in many other parts of the world. The huge increase in
income and wealth inequality this has produced *is the immediate
result of fundamental constraints on the capitalist growth model', in
particular, energy-shortage. If oil had been truly cheap and plentiful
(as it was briefly after 1945) economc growth would have been far more
general and its effects more widespread: there might have been real
development in the Third World. But energy has not been plentiful
since at least 1973, and therefore growth has been a mirage for most
of the world. Growth in social production has been unable to keep up
with inertial demographic growth. Most people have got worse off. 3
billion people live on less than $1000 p.a. They are not properly
housed, have no education or health services, no or inadequate running
water, no public transport, no life and no hope. Even in the US,
surface prosperity barely conceals all kinds of social evils. At the
same time, the preservation of US capitalism's hegemony and its
material, social and political bases, has made this phenomenal
inequality, gargantuan wastefulness and ecosphere-threatening
over-production, another inevitable by-product of these fundamental
limitations (primarily, the shortage of energy) on world capitalism.
There are powerful positive feedback loops here. Perhaps 70 percent of
US energy consumption is waste, as is argued for eg by Amory Lovins et
al in "Natural Capitalism" [available on the web at:
http://www.naturalcapitalism.org/sitepages/pid5.asp ]
But that is only if you calculate waste in terms of social utility or
objective human need. It is not waste in terms of the overarching
imperatives of the reproduction of capital. This is a primary reason
why US capitalism is such a roadblock on the way to a safer future. It
cannot be transformed, it can only be demolished and removed.
There is no doubt that the US is trying to buy up other people's oil
reserves on the cheap, using dollars it will subsequently devalue,
thus dishonouring the debt. That is what happened in the 1970s. See
Alexandre Faire's contemporary article, archived at:
http://website.lineone.net/~resource_base/vigier.doc
> But the other side is that the US have large (short term)
> reserves of oil,
> and it's bought and sold in greenbacks. Perhaps high OPEC
> prices suits the
> US economy just fine! As it did back when the likes of
> State Department
> policy wonk James Akins first recommended increased prices
> back in '73. His
> point then was that the rapidly threatening Japanese and
> European economies
> didn't have any oil, meaning higher prices would hit them
> harder than it'd
> hit the States. And, as US Treasury under-secretary
> William Simon said at
> the time, making OPEC a bit richer would be fine, as the
> proceeds would
> eventually be 'recycled' through US finance institutions,
> anyway.
When oil prices rise, some US reserves will become profitable to
extract. However, this is not a boon to the US economy, since higher
energy prices reduce overall profitability and increase the tendency
to stagflation (stagnation+inflation), as well as impoverishing the
masses. What will happen is a new race to the bottom, as also happened
in the 1970s. The US will aggressively use the Oil Shock to push its
nearest rivals still further down the food chain, but the price of
preserving US hegemony will be paid by everyone including the people
of the USA themselves. The big difference is that this time there will
be no second-coming for oil. In 1973 World Oil was still not at its
peak, but now it is. Oil production is set to decline. This means that
absent some miraculous and so far totally unknown source of cheap
energy, the world economy is now set for irreversible decline. What
will be the implications of this decline? How will it work out
politically? That's what we have to think about. Decline in oil
production can take different forms in different oil-provinces. It can
slope off gradually (umbrella-curve) or collapse almost overnight
(umbrella-handle or J-curve). In the USSR decline took the form of a
J-curve and the results were socially and economically catatsrophic.
There are many signs that the same thing will now happen on a world
scale: production is being pushed to maximum capacity in every major
oil province. At the first sign of a setback, it si likely to fall off
a cliff, as overstained infrastructures collapse or turn out to be
impossible to restart once shut off. I think it is possible for world
oil production to fall by a quarter or more in the space of two or
three years. If this happens, it will be economic doomsday for world
capitalism.
I mean,
> ya got all these SE Asian countries, brand new technology
> (courtesy of the
> pre-'97 investment boom) driving their manufacturing
> sectors' costs down,
> and their low currencies threatening US market share and
> and US national
> accounts. Whack oil up a few notches, and the threat goes away.
Of course it is possible that SE Asia will go into another slump and
there is now much evidence of renewed fiscal weakness in Asian states
which suggests this will happen. Since this time there will be no
obvious path out of the economic morass, crisis-resolution is sure to
take an immediate and unassailable political form (revolutions,
state-collapse, fascism, authoritarianism, militarised state-renewal,
forms of autarky etc). Is it conceivable that such ruptures can occur
on the surface of the world system without having knock on effects on
Wall Street, for example? The Dow has moved sideways along a precipice
for more than a year now. A combination of factors are at work to drag
it off, including the effects on the dollar of high oil prices and a
higher payments deficit. Where are the net benefits to the US in all
this? What is the future going to be except a slump of the US domestic
economy more deeper, lasting and dangerous than the 1930s?
And what will happen in the Middle East? If dollar hegemony is
compromised, why should China and Japan (not to speak of Europe)
continue to support the dollar-denominated world energy market? I can
think of no reason why they would continue to accept dollar hegemony
OTHER THAN US control of the sealanes, the US 7th Fleet. And how long
does anyone suppose that US control of the Persian Gulf can be
maintained by military power alone? 5 years? 10?
No, it will not work, it is not a solution.
Mark
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