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'Devil's excrement' has its revenge

The revolutionary upsurge in North Africa and the Middle East is having a direct impact on the global crisis of capitalism.

Oil prices have surged as much as 6% since Monday, rising to their highest since the collapse of demand in the global crash of 2008. If this rise is maintained, it is certain to trigger a renewed slowdown in global production.

Oil companies in Libya are in the process of shutting down the 2% of the world’s production that come from the country. Western oil companies have suspended oil production and BP has started evacuating workers from Libya.

The Libyan mission to the UN is in disarray, the country’s generals are resigning along with many ministers. As in Egypt, the army is going over to the side of the revolution.

Every part of the transnational capitalist class – global corporations, capitalist governments, unaccountable global agencies – is watching events with a mounting horror. They were horrified by the revolution that brought Gadaffi to power in 1969, now they are horrified by the revolution that will end his rule.

Mostly they are desperate to find a way of halting the contagion of revolt against autocratic governments which have provided safe haven for the global oil corporations and built their family fortunes from the proceeds. Nervously they assess the risk of the infection spreading to Saudi Arabia, which is the source of close to 10% of current oil supplies.

Interviewed on Al Jazeera, a former UN official spoke for the capitalists. Now they don’t mind people having rights, they’re even in favour of them having the same “democratic”, “human” rights enjoyed by people in the West. But above all they want stability, they want to see investment, they want people to keep their jobs, they want to see economic growth. They fear a revolution that could end the for-profit system. They are wondering what they can do to stop it.

Any disruption in oil supplies increases the power of the Organisation of Petrol Exporting Countries (OPEC) consisting of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. As of November 2010, OPEC members collectively hold 79% of world crude oil reserves and 44% of the world’s crude oil production, giving them major influence over the global market.

Juan Pablo Pérez Alfonso was a prominent Venezuelan diplomat, politician and lawyer primarily responsible for the inception and creation of OPEC. In 1975 he warned that “oil will bring us ruin… Oil is the Devil's excrement”. He wasn’t far off.

In the 1970s, the inflationary printing of dollars to buy its way out of a historic economic crisis forced the US to abandon the relationship between the paper currency and gold established in 1944. The value of the dollar crashed from $42 for an ounce of gold in 1971 to $800 in 1979. OPEC acted to defend the value of its commodity which was emerging as the essential, cheap and plentiful foundation of the post-war economy. The price of oil quadrupled by 1973.

Four decades later, the situation is very different.

Exponential growth – the global success story of credit-funded huge corporations pouring previously unimaginable torrents of products into the hands of debt-burdened consumers has ensured that the world’s oil is half gone.

Much of it has been used to transform agriculture from a system of food production by millions of small farmers to a global business controlled by small number of corporations whose hunger for profit puts food prices beyond the reach of billions.

Industrialised agribusiness like the rest of capitalist manufacturing is addicted to oil. The burning of oil to fuel the capitalist growth mania has brought the planet to the limits of its ability to sustain life. The revolutionary upheaval now under way brings the possibility of a different future. We have to grasp it.

Gerry Gold
Economics editor
23 February 2011

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