paul phillips wrote:
I think the parallel with the 1970s is both instructive but yet obfuscates what is happening now. In the 1970s the rapid rise in energy prices (1973-4 by 4 times, 1978 by 2+times) set off an inflationary cycle that had already begun to emerge in agricultural and raw material prices after the late 1960s. The rise in *real* prices/costs led to a rise in prices and, in the case of middle east energy producers (and for that matter those in Alberta), to an increase in (monopoly) rents since this was an 'artificial' restriction in oil supplies, orchestrated by OPEC in support of the Arab/Islamic cause. In other words, there was a substantial shift in real income from wages and profits to rents, with obvious distributional implications. (In Canada it was obvious in a shift in incomes to Alberta). The responce of capital was to raise prices to restore profits and for unions to fight for wage increases to maintain real wages. This was the so-called wage-price spiral that raged until monetarism raised unemployment to a level that unions were unable to maintain real wages. Note that any series of real wage indexes show real wages declining after the mid-1970s, in particular those of unorganized labour and of minimum wages.
(1) currently, monopoly power plays a smaller role. Such things as demand growth (based in China, etc.) and suppy disturbances (Iraq, Nigeria, etc.) are crucial. Nonetheless, there's a redistribution to rents, just as before. (2) I think Robert Reich is right (at least for the US) that this surge is now much less likely to set off a wage/price spiral than it did during the 1970s. Unions are on the ropes, while corporate pricing power is weaker than in the 1970s.
The slow and jobless recovery after the monetarist recession/depression of the ealy 1980s served to keep wages depressed and allowed for a recovery of profits but rents to natural resources declined because the supply exceeded the demand, exacerbated ty the recession of the early 1990s until energy (oil) prices fell to rediculously low levels which not only fueled global warming, but also the industrialization of China and India.
(3) In the US at least, the late-1980s recovery wasn't jobless the way the early 1990s and early 2000s recoveries were. However, there has been a shift to lower-quality (lower-paying, less secure) jobs since the 1970s. (4) the low oil prices after 1986 etc. also helped create the demand for these damned Urban Assault Vehicles that litter the roads of our cities. Or perhaps they should be called "Sports Pollution Vehicles."
The rise in demand for energy occassioned by the expansion of China and India, but equally by the profligate use in the US for non-essential consumption (though the US is not the only culprit, just the biggest) has, however, raised demand just as supply seems to be peaking, or at least slowing to a growth rate lower than the demand growth rate with the consequent rise in prices. But this is fundamentally different from the 1970s in that it will not be possible to increase pumping oil to not only maintain prices at their current level, but to reduce them to the $35-$50 barrel level that would restore the expansion of the 1980s or 1990s. As a result, the 'owners' of oil will not only continue to get huge economic rents, but these rents will get bigger and bigger as prices rise, or at least remain the same as cost of production rise for synthetic crude from Canada or Venezuela.
(5) putting the issue of "peak oil" aside, one alternative here is to develop ways to utilize gasoline and other petroleum products with increasing efficiency, getting more "bank" for the "buck" (or Looney). For example, now appearing are hybrid autos that you can plug into the power grid at night, allowing 150 miles per (US) gallon or so. (6) with luck, high oil prices will encourage a slowing down of global warming (and the more efficient technologies of point 5).
The futher increase in the transfer of surplus to owners of natural resources, will put pressures on both profits and wages. That is the nature of the 'class war' that is playing out now on the world stage. Bush can invade Iraq to try to secure a secure supply of oil under American multinationals, but this even if it were effective, would fail to solve the distributional question in the US or anywhere else in the world. ...
(7) there is also the largely one-sided "class war" that's been going on for several decades (which was sparked partly by the "energy crisis" of the 1970s). In the rich world, we see this as the "race" (or creep) to the bottom, the downward harmonization of wages and social services in the rich world with those prevailing in the poorer world. It's due to the neo-liberal policy revolution, a response to the failure of the 1950s-1960s "social structure of accumulation" (which was expressed in falling profit rates at the end of the 1960s, i.e., after 1965 and before the 1970s energy crisis). -- Jim Devine / "Force cannot, like opinion, endure for long unless the tyrant extends his empire far enough afield to hide from the people, whom he divides and rules, the secret that real power lies not with the oppressors but with the oppressed." -- the Marquis de Condorcet.
