Introduction 1

Notes Introduction 1. F. Fukuyama (1992), The End of History and the Last Man (New York: Avon Books). 2. T. Shanker and E. Schmitt (2004), “Pentagon Weighs Use of Deception in a Broad Arena,” New York Times, December 13: 1, 12. 3. It is instructive to revisit the documents in this period on the issue of nationalization. For instance, being in cahoots with Nixon Doctrine in the Persian Gulf, Saudi Arabia all along did not wish to national- ize its oil and was asking for better “equity participation” with the International Petroleum Cartel (IPC). Saudi officials (including Sheikh Ahmed Zaki Yamani, the petroleum minister) asked for gradual increase in their “share” before they opted for 100 percent equity. This is but a de facto nationalization of oil. The title of following piece, however, speaks rather vociferously on political timidity of Saudi Arabia and the extent of regime’s captive status by the United States. See A. Z. Yamani (1969), “Participation Versus Nationalization—A Better Means to Survive,” Middle East Economic Survey 12 (June 13). 4. C. Bina (2012b), “Who’s Afraid of Kirchner’s Oil Nationalization,” Asia Times, May 8. 5. C. Bina (1985), The Economics of the Oil Crisis (London and New York: Merlin and St. Martin’s); C. Bina (1990), “Limits to OPEC Pricing: OPEC Profits and the Nature of Global Oil Accumulation,” OPEC Review 14 (1): 55–73; C. Bina (2006), “The Globalization of Oil: A Prelude to a Critical Political Economy,” International Journal of Political Economy 35 (2): 4–34; C. Bina and M. Vo (2007), “OPEC in the Epoch of Globalization: An Event Study of Global Oil Prices,” Global Economy Journal 7 (1): 1–49. 6. C. Bina and C. Davis (2008), “Contingent Labor and Omnipotent Capital: The Open Secret of Political Economy,” Political Economy Quarterly 4 (15): 166–211. 7. S. D. Krasner (1978), Defining the National Interest: Raw Materials Investments and U.S. Foreign Policy (Princeton, NJ: Princeton University Press); D. W. Drezner (2011), Theories of International Politics and Zombies (Princeton, NJ: Princeton University Press). 202 Notes 8. See S. Bromley (2005), “The United States and the Control of World Oil,” Government and Opposition 40 (2), Spring; S. Bromley (1991), American Hegemony and World Oil (University Park, PA: Pennsylvania State University Press); C. Bina (1994c), “Review of American Hegemony and World Oil,” Harvard Middle Eastern and Islamic Review 1 (2): 194–98. 9. D. Stokes and S. Raphael (2010), Global Energy Security and American Hegemony (Baltimore, MD: John Hopkins University Press). 1 World Oil and the Crisis of Globalization 1. There is a growing literature that represents the main characteristic of this category. The results of a symposium held after the oil crisis, with contributors such as Raymond Vernon, Romano Prodi, Alberto Clô, Edith Penrose, George Lenczowski, and James McKie were edited by Vernon and published in Daedalus Fall 1975b. See also M. A. Adelman, 1972, and Taki Rifai, 1974. 2. There is an extensive literature on dependency theory, but perhaps the popular arguments can be found in Arghiri Emmanuel, Unequal Exchange, 1972 and in Samir Amin, Accumulation on a World Scale, 1974. See also Andre Gunder Frank, 1969a, 1969b, 1972. 3. Norman Girvan uses the phrase - “OPEC offensive” to show that the oil crisis was the consequence of the nationalism of the Third World. 4. For the analysis of monopoly and competition see Bina, 1985, Ch. 5. 5. It is important to note that here we are concerned with the average oil recovery per well, in association with the entire volume of capital investments that were applied to these oil fields, rather than what is known as the “investment at the margin,” a prevalent concept in the neoclassical economics. The lumpiness of these capital expenditures and their role as regulator of the entire production aside from the quality of the oil deposits. This is significant for the determination of value based upon the least productive oil fields. For more discussion see Ben Fine 1979, Bina 1985, Ch. 5. 6. In the mainstream economic theory there are only ghosts of economic crisis rising from the dead and visiting upon the economy from time to time. There is little articulation and almost no theory as to the restructuring of the circuit of capital in micro (the industry level) or for that matter in macroeconomics (the economy as a whole). In Marxian theory, breakdown in the circuit of capital is anticipated within the structure of value theory to correspond with the reality of the capitalist economy— far from speculation. In the 1973–74 crisis of decartelization (i.e., competitive globalization) of oil, one must appreciate the objective side of this rather universal restructuring and its regulating mechanism within a broader context beyond the Middle East, and beyond the superficial interactions of the actors— irrespective of their political and ideological Notes 203 intention. These ad hoc contingencies are worthy of consideration. But they do not provide us with anything tangible unless we have a theory that is beyond the actions of these and other agents to be able to articu- late them. This is the difference between, say, astrology and astronomy in modern Physics; and it is certainly the difference between mainstream economics and its classical and Marxian counterpart. 2 World of Modern Petroleum and the Oil Rent 1. Harvey (2003) stubbornly clings to the duality of “territory” (i.e., geog- raphy) and “capital” (i.e., social relation), particularly where it comes to the oil sector and oil fields. He then alleges that “OPEC monopoly,” and recent US interventions in Iraq and Afghanistan are connected to oil and that the world has now entered an age of “The New Imperialism.” 2. It is perplexing to me that the work of James Anderson (1739–1808) had been left without an acknowledgment by Adam Smith who was his contemporary and lived in close proximity in Scotland at the time. I have come across a copy of the first edition of Anderson’s Essays Relating to Agriculture and Rural Affairs published in 1797 while searching for material in the University of Maryland library, at College Park, in 1974. I was astonished to know that Anderson had produced a more coherent theory of agricultural rent than Ricardo did. While I do not understand the hesitation of Smith, who might have come across this important source, in acknowledging Anderson’s contribution to classical rent theory, I wish to bring this to the attention of scholars and students who may want to do further work in this field. 3. In neoclassical price theory “scarcity rent” is the measure of opportunity cost of intertemporal allocation. Hence, MC + Scarcity Rent = User Cost. This is the highest stage of initiation in the hall of fame in orthodox theory. Yet certain (post-Keynesian) economist has managed to cling to such a tautological ploy and at the same time hold on to het- erodoxy (see Davidson 1979). 4. One of the valuable contributions of Ricardo is the distinction between profit and rent. Chevalier’s framework negates this contribution and opens the door for amalgamation of capital and landed property. This, in a methodological sense, has divorced Chevalier (1976) from the classical school and wedded him to neoclassical economics, where anything could be rent, thus nothing is rent. 3 OPEC: Beyond Political Battering and Economic Romanticism 1. Today, setting up competition and monopoly in their axiomatic and idealized forms in the opposite ends of the “market-structure” spectrum, 204 Notes and attempting to bridge the gap by negation of real competition through the method of successive approximation, is but the basic tenet of the industrial organization literature. 2. Andrew E. Kramer, New York Times, June 14, 2012: http://www. nytimes.com/2012/06/15/business/global/opec-is-said-to-leave- production-steady.html. 3. For Schumpeterian theorists, competition is not an idealized rendi- tion of perfect atomistic markets to be counterposed to equally idealized “monopoly” or “imperfectly competitive” markets in a tautological manner. Rather, competition itself is internal to the process of “creative destruction,” and dynamics of concentration and centralization of production. Hence, the presence of integration does not necessarily negate competition. This is also generally true for the Classical, Marxian, and Austrian theories of competition (Schumpeter 1928, 1942, Ch. 7; McNulty 1967; Clifton 1977; Shaikh 1980, 1982; Weeks 1981a, Ch. 6; Semmler 1984; Bina 1985, Ch. 6, 1989a, 2006; Kirzner 1987; Bina and Davis 1996). 4. For critical examination of oil (and energy) as a decartelized global sector see Bina (1985, 1988, 1989a, 1992, 1994b, 1997, 2006). 5. Given the eventual physical exhaustibility of oil and thus intertemporal opportunity cost of its present and future exploitation, neoclassical theory contends that some measure of “scarcity rent” must be added to the marginal cost of oil extraction. Hence, MC + Scarcity Rent = User Cost. Adelman (1986, 1990) believes that oil is produced at the time of discovery; thus, reserves must be treated as “inventory.” In addi- tion, Adelman ignores the very distinction between the ownership of oil reserves and holding of such reserves through leases, which in turn separates oil rents from profits. Bina (1985) does not rely on the physical exhaustibility of oil but contends that the economic institution of modern landed property and the ownership of subsurface oil deposits are behind the distinction of categories of rents and profits in the oil industry. Hence, given the formation of competitive (general) rate of profit, differential productivities of the existing oil fields turn into differential oil rents across the globe. Theoretically, given the legendary debates within the classical school, these rents, while price-determined, not price determining, are still dependent upon the property rights of subsurface ownership.

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