The posting of "Fossilgate" and the other web sites of information included
in that posting coincided with my reading of "Friendly Fascism" by Bertrand
Gross. This has turned out to be one of the most seminal books I have ever
read, both in its depth and range. That it is not quoted continually begs
explanation. It was written in 1980, a mere 17 years ago and yet it seems
to have been forgotten. I would like to thank whoever mentioned it on
FutureWork which led me to seek it at my library. It may be of interest
that the Ottawa Carleton area library's did not even have a copy and the
one I recieved is from Trenton, Ontario.
If ever the FutureWork List members wanted to do a group read/review of a
book, a project I have been meaning to propose, I cannot think of a book
which touches on so many areas in such depth and with such insider
knowledge and scholarship - I stand in awe and I don't get impressed very
easily. The couple of pages I am going to transcribe as a lengthy quote is
primarily about the coming oil shortages and should be read as an adjunct
to the Fossilgate posting and extended reading of the Internet Sites in
that posting. If this still leaves you with any faith in our leaders, I
suggest you go watch the news for awhile and then compare the two pieces of
information; (1) news - (2) fossil fuel depletion, and ask yourself if we
are living in an age of disinformation.
Quote from Friendly Fascism
By Bertrand Gross
ISBN 0-87131-317-0
Copyright 1980
Page 214
An Abundance Of Shortages
Be not afraid of great shortage. Some benefit from shortages that are born
naturally. Some achieve shortages by cooperative work, and some have
shortages thrust upon them.
An adaptation of Maria's letter to Malvolio in William Shakespeare's Twelth
Night
Back in 1798, in his essay on the principle of population, Thomas Malthus
argued that population tends to grow faster than the food supply.
Devastating shortages of food are inevitable, he argued, unless population
growth is curbed. For Malthus the major curbs, in addition to sexual
continence, were poverty, starvation, pestilence, and war. Today's
neo-Malthusians have modernized his thesis. Conceding that food supply has
been increased by modern technology, they argue that further growth of
production and population will bring back the Malthusian nightmare.
According to Herman Kahn, they claim that "the world is entering so severe
a period of international scarcity of major agricultural goods that mankind
may have to come to grips with the decision of who shall eat and who shall
not (the triage decision)," a decision presumably to be made by the major
grain-exporting nations. The triage decision refers to the practice of
overworked medical staff in wartime who may divide the wounded into three
groups: those who can no longer be helped (and must be allowed to die),
those who can get along without help, and those who can be saved by quick
help. The implication is that with growing shortages of food the same grim
choices will have to be made. With somewhat less grimness, the sons of
Malthus now argue that desperate shortages of all non renewable minerals
(bauxite, cobalt, copper, chromium columbium, iron ore, lead, manganese,
molybdenum, nickel, tin, tungsten, uranium, etc.) are around the corner.
The greatest fury of all surrounds fossil fuels (coal, natural gas, and
petroleum) which, unlike metals, cannot be recycled after they are burned
for fuel or transformed into such new products as fertilizer, plastics,
textiles, dyes, or dynamite. Because these fossil-fuel deposits will
eventually be depleted, the major energy reserves of modern civilization
will disappear with them.
In rebuttal, anti-Malthusians argue convincingly that the limits of growth
lie not only decades ahead but many centuries in the future. Herman Kahn
and his associates at the Hudson Institute estimate that the resources of
the planet, although limited, are enough to support a world population of
15 billion people by the year 2176 at a per capita national product of
$20,000, or two and a half times the U.S. per capita product in 1976. Barry
Commoner estimates that "in round numbers, some 350 billion barrels of
domestic crude oil are available to us. At the present rate of oil
consumption (slightly more than 6 billion barrels per year), this amount
would take care of total national demand for oil without any imports for a
period of 50 - 60 years." Herman Kahn makes a similar estimate for the
entire world supply of oil and gas.
There are also vast proven reserves of coal in the United States. Herman
Kahn cautiously estimates that "potential U.S. resources of oil, gas and
coal are sufficient to supply the energy needs of this country for more
than 150 years." Both Commoner and Kahn point out that within the next 50
years it would be both technologically and economically feasible to replace
non recoverable fossil fuels with alternative energy sources: nuclear
fission (with all its attendant dangers), solar energy in many forms,
geothermal energy and eventually, perhaps, nuclear fusion.
But most debates about resource depletion verses resource sufficiency tend
to obscure one of the most fundamental facts of life: Whenever things that
many people want are in short supply, those who control the supply have
important power over those who want some. For many centuries this principle
was used by feudal landlords, Kings, merchant capitalists, and colonial
exploiters. In India under the British, for example, crop failures that
resulted in widespread famine were occasions for joyous profiteering by
landlords and colonial officials, who were able to sell food at
extortionate prices. Under modern industrial capitalism, this principle
survives in a new form. The new technologies that make abundance possible
have the potentiality of abolishing scarcity. From the viewpoint of many
large corporations this has always been a great disadvantage: it can create
a shortage of shortages. It is only logical, therefore, that corporate
executives do everything possible to get into situations in which shortages
are available. The established methods of doing this are (1) keeping
production down, (2) restricting competition by other producers or
substitute products, (3) using patent monopolies to keep out of production
products or processes that would diminish the scarcity, and (4) throwing a
tight mantle of secrecy over reserves that are kept off the market or out
of production. In the case of many basic raw materials or food
products-particularly uranium, tin, copper, coffee, wheat, sugar, milk,
etc. - this is done through formally organized commodity agreements,
marketing agreements or cartels. In a still larger number of areas
production is kept down and prices up by less formal arrangements. Under
"price leadership," a dominant concern will set a certain pattern and the
others will follow the leader. Over two hundred years ago Adam Smith
described some of the informal ways of doing this: "people of the same
trade seldom meet together, even for merriment or diversion, but the
conversation end in a conspiracy against the public, or in some contrivance
to raise prices." Since then, conventions, conferences and clubs-all
subsidized through tax deductions-provide much greater opportunities of
this type. Trade associations make it possible for this kind of cooperation
to be handled indirectly by experts who are not even on the direct payroll
of the cooperating corporations. Hence it is that modern capitalism is
moving toward a growing abundance of shortages.
These shortages appear in a huge variety of forms. Some come from the
natural or historical disproportionatality of productive forces. Soil,
mineral, fuel, and climatic resources are distributed very unevenly among
the countries of the world and within most countries. Technological and
institutional capabilities of using these resources. Successful growth in
any country invariably pushes it up to the limits of certain resources
within its borders and makes it more dependent on imports. During the
upward swing of the business cycle some sectors within any country hit the
top of their capacity before others, thereby creating "bottleneck"
shortages. Those who hold the neck of the bottle are seldom loath to take
advantage of their opportunity; the result is inflationary price increases.
Some shortages stem from bad weather, drought, earthquakes, or tidal wave
(or El Nino). In 1972 and 1974 "there were extensive droughts in many
countries. One of these countries was the Soviet Union, which faced a
serious shortage of feed stock for its farm animals and cattle. A massive
Soviet purchase of American wheat sent the price of American grain
skyrocketing. In a few weeks ' time a handful of corporate traders (who
were close to the Nixon administration) cashed in on advance information.
"in those few weeks," according to Jim Hightower, "the grain oligopoly
collected $300,000,000 in export payments from the taxpayers." Although
they did not share in this windfall all at once, wheat farmers consequently
benefited from the high prices that they were able to wrest from any other
food-scarce countries. In what sense natural events are always "natural" is
somewhat debatable. The extensive droughts in sub-Sahara North Africa have
resulted in part from the pressure of fast-growing human and livestock
population on food-producing ecosystems. "Denuding the semi-arid landscape
by deforestation and overgrazing," two observers reported to the Club of
Rome, "has enabled the desert to move southward, in some cases up to 30
miles a year, particularly in the years plagued by increasing droughts."
Some shortages stem from conscious business decisions, usually supported by
government action, to get higher prices by keeping the supply levels low.
In periods of agricultural glut, this has often been done by destroying
crops, pouring milk into the ground, and slaughtering livestock. The more
modern tendency is toward keeping a lid on production-as has been done
extensively in the United States-by maximum production quotas and by
subsidies to farmers (usually in the name of conservation) for allowing
fertile land to lie unused.
In energy, the maintenance of low supply levels has been an equally
central-although less widely known-aspect of corporate policy. In the
United States, as James Broadway reports "the Connally hot oil act, passed
in the 1930's, first formally allowed the oil industry to set its own rate
of production through creation of state 'conservation' agencies". Under
this legislation prices were kept at artificial levels by firm ceilings on
domestic production. Later, as large amounts of oil became available in the
Middle East, oil import quotas were set to protect the American market from
the threat of abundance. These were enforced by the cooperative
relationships among the seven major Western companies: Exxon, Gulf, Texaco,
Mobile, Socal, British Petroleum, and Shell. As revealed in the magisterial
historical analysis by Robert Engler and John Blair, these companies have
traditionally kept production down and prices up through price-fixing
agreements, interlocking directories, and banking ties. The success of this
Western cartel has led to its been referred to in the industry as the
"Seven Sisters."
Early in the 1970's the Sisters were confronted by the fact that their
junior partners in the major oil-exporting countries organized what they
called "a cartels to confront the cartel," namely, the Organization of Oil
Exporting Countries, or OPEC. Thus it was that the Western cartel suddenly
had a new shortage thrust upon it. Its response to this opportunity has led
to relations with OPEC that are best described in the remark of the rich
Armenian oil speculator, Calouste Gulbenkian: "Oilmen are like cats; you
can never tell from the sound of them whether they are fighting or making
love." Actually, it is the sound of making money. As OPEC has piled up
petrodollars by continuously raising its prices while keeping output down,
the Western oil cartel has made fabulous sums by operating as OPEC's
distributors, raising the price of its non-OPEC petroleum toward OPEC
levels and investing its huge profits in other energy sources (gas, coal,
uranium, and solar energy). It has also achieved the semantic miracle of
hiding it's cooperative relationship with OPEC-which can be precisely
described as a bilateral monopoly or duopoly-and creating the false
impression that there is only one cartel, OPEC.
As prices rise, the Sisters and the Brothers are still faced by a
short-range oil surplus that threatens prices and profits. They counter
this threat with a combination of well-made shortages and explicitly
contrived warnings of eminent depletion. To support these warnings, they
publicize oil-reserves figures that are limited to the "known recoverable"
or "proven" reserves-in other words the inventories held underground. These
artfully contrived statistics usually leave out or seriously underestimate
the full amount of these inventories and the potentiality of newly
discovered oil fields. Logically, therefore, one would expect that the
companies would slow down the rate of new discovery, thereby reducing the
burden of carrying overly large inventories and sharpening the illusion of
impending doom. This is exactly what has happened: "The declining rate of
oil discovery per year," Barry Commoner revealed in 1974, "is the result of
company decisions to cut back on exploration efforts rather than of the
depletion of accessible oil deposits. We are not so much running out of
domestic oil as running out of the oil companies' interest in looking for
it."
As world oil prices have risen rapidly, there has been some recent
increases in exploration, enough indeed to threaten the maintenance of
well-assigned shortages. Thus, in his first energy address to the nation,
President Carter predicted a serious energy crunch in the 1980's. Since
then, new oil fields in the North Sea, Alaska, Mexico, and many other
countries have resulted in the oil industry itself now stating that no
serious shortages are imminent until the 1990's. Even then, they maintain,
if the price is right-that is, high enough, there will be in the bountiful
supplies. At the same time, however, they take vigorous action to prevent
any tendency toward the expansions of supplies not under their control. In
1978, for example, the World Bank, reversing a long-standing policy,
announced a plan to finance exploration by Third World countries. This plan
was based on a study by the French Petroleum Institute, which reported that
of seventy-one non-OPEC developing countries only ten had been adequately
explored. Of these, as reported in the New York Times, 23 were "judged to
have excellent prospects for finding oil or gas." At this point Exxon went
to work on the U.S. Treasury Department and convinced it to force the World
Bank not only to scale down its program but to put it in the hands of the
Western oil companies rather than Third World: enterprises.
In the case of almost all other minerals, known reserves are large and
potential reserves still larger. But any individual country may face the
prospect of eminent depletion of this or that resource. Hence a world-wide
scramble for materials. The United States is extremely well situated, since
its dependency on imports is limited mainly to cobalt, chromium, manganese,
tin, bauxite, nickel, and zinc. In some of these fields, depletion of
high-quality ores is just around the corner-and future needs could be met
only by expanded imports, use of low-quality ores (which is expensive), or
use of substitute materials. In any of these cases, depletion means
substantial dislocation, as the populations of former mining areas are left
stranded and the changeover costs of shifts to alternative sources are
inflicted on the people in these areas and the general taxpayer.
Depletion of a specific resource-whether by destructive fishing methods,
deforestation, soil depletion, or running down the supply of a given
mineral-is indeed killing a goose that lays golden eggs. But goose killing
is not necessarily bad for business. In the words of Daniel Fife and Barry
Commoner, "the irresponsible entrepreneur finds it profitable to kill the
goose that lays the golden eggs, so long as the goose lives long enough to
provide him with sufficient eggs to pay for the purchase of a new goose.
Ecological irresponsiblity can pay-for the entrepreneur, but not for
society as a whole." The fact must be faced, however, that ecological
irresponsiblity is the other side of the capitalist coin. The major
responsibility of corporate executives, so long as they are not constrained
by enforced law, is to maximize their long-term accumulation of capital and
power no matter what the cost may be too geese, people, or physical
resources.
