THE FUEL OF THE WORLD MACHINE

Is a New Oil Crisis Imminent?

By Robert Kurz

[This article originally published June 20, 2004 is translated from the German on the World Wide Web,  http://www.exit-online.org/html/autoren.php.]

In the last months, the dramatically higher oil price has become a political issue more and more. A barrel of raw crude (159 liters) costs more than $41 in New York – a world record. A factor has moved into the foreground that for a long time hardly seemed important: the energetic basis of the capitalist mode of production and its world market.

The price of oil has a key position for the global economy because of the universal dependence of the production- and consumption process on energy. It is not a price like any other and is in no way determined by pure economic laws. Rather economic, political and ecological or “natural” problems cross in the price of this product. All areas of social production are affected.

That the modern goods-producing system has a definite energetic basis is self-evident. This cannot be said in the same way for pre-modern agrarian societies. The fuel in these epochs of the history of the human race was wood. Combustion processes served firstly the preparation of food and secondly the heating of dwellings. There were also machines, in some cases very sophisticated machines, but their functioning was based either on waterpower or on mechanical leverages connected with animal or human muscle power. Combustion processes didn’t have any central social significance.

This is different in the industrial mode of production of the modern goods-producing system. Combustion is technologically central here. A combustion culture exists. The modern machinery of the industrial system consists essentially of combustion machines. This is true for production, consumption, transportation and the cultural sphere. Direct combustion processes (steam engine, auto, aircraft and so forth) are involved or the use of electrical energy gained indirectly through mega-combustion processes in power plants. Combustion machines exist in nearly all modern machines from coffee machines to great turbines, from CD-players to locomotives.

This kind of universal combustion culture can obviously no longer rest on the raw material wood. Otherwise not a single tree would grow any more on the earth. This “young” biological raw material is not technically suited for regular mechanical combustion processes. Therefore the modern combustion culture must fall back to the fossil raw materials coal, natural gas and petroleum as sources of energy in which millions of years of solar energy are stored. An energetic basis of society is manifest. Coal was crucial in the 19th century with the technology of the steam engine. Oil (and secondly natural gas) was vital in the 20th century for the technology of the combustion engine and the electric motor.

The new quality of the global crisis in the third industrial revolution of microelectronics is that this crisis is an economic and energetic crisis. Structural mass unemployment to an unparalleled extent and “oil crises” or energy crises have shaken the modern world system since the 70s of the 20th century. Two different kinds of crises of energy occur with opposite tendencies. The capitalist culture is a combustion culture in a twofold sense. Technologically this culture is based on combustion machines and socio-economically on burning human labor power to utilize money capital.

Value “represented” in the money form as Marx said is nothing but a certain quantity of burnt up human energy in capitalist goods production. What Marx described as “abstract labor” and as the “substance of capital” consists ultimately of combustion processes of the human body measured in units of time. This burnt up energy was an “output” in economic value independent of the concrete substance of production. For the process of exploitation, the question what is produced materially is not central. Whether furniture or cannons doesn’t matter. The main important thing is that human labor power is burnt up or transformed into money or more money than the original costs of investment, that is profit. The substance of this process, “abstract labor” or the combustion of labor power has a material content, namely the physiological “burning up of nerves, muscles and brains” (Marx). However this content is abstract, not concrete and therefore is neither “natural” nor trans-historical. This process didn’t occur either in nature or in other societies than the modern society where the burning up of energy is separated from the concrete material form of this combustion. This happens when the material subject is indifferent and only the abstract substance “labor” occurs in the form of money.

Human labor power cannot be burned in any way. To be “profitable”, this combustion process must take place on the standard level of productivity. The economic crisis consists in that present human labor can no longer be profitably burned up on account of “high” productivity and must go to waste or lie fallow. This economic problem that was merely relative in the past has become an absolute structural problem in the third industrial revolution. Labor is abundantly available at ever cheaper rates while this mass of human energy is “superfluous”. The exact opposite is true for fossil raw materials as sources of energy for the capitalist combustion culture. These raw materials are becoming increasingly scarce and therefore ever more expensive. Thus the twofold energetic crisis of capital accumulation consists in that human energy cannot be adequately consumed any more since it has become vastly unprofitable while fossil energy can no longer be adequately consumed because it has become too expensive. Devaluing people and upgrading oil is the short formula for the increasing dilemma of the dominant way of production and life.

The two moments of the energetic crisis have developed unevenly. In the 1970s, the oil crisis was central. One important reason for the end of the boom after the Second World War was the explosion of energy prices. At the peak of the oil crisis at that time, there were even driving prohibitions for cars. The streets were incredibly empty in Germany on certain days. For the first time, the oil price was a political issue. The anti-Arab or anti-Moslem stereotype of the West was born long before the anti-communist or anti-Soviet stereotype proved obsolete. For more than a decade, the ecological debate was the focus of social criticism. The Club of Rome proclaimed the imminent end of the “oil age”.

Since the middle of the 1980s, the oil crisis was relativized or took a backseat again. Prices declined because the measures of the states, corporations and private households were at least partly successful by saving energy and new suppliers appeared on the global energy markets. Instead the crisis of human energy in the form of structural global mass unemployment attracted attention. The consequence is a continuing weakness of global growth and even the collapse of whole economies. While the devaluation of human energy has intensified relentlessly, the oil crisis seems to be returning as the inexorable rise of the oil price shows. The two moments of the energetic crisis begin to cross and exacerbate each other.

Because of the central significance of oil as the “fuel of the world machine”, the price of oil is always a political price, a price that is not only determined by market laws. Therefore the dramatic rise of this price has a political or quasi-political foundation. Nevertheless there is a decisive difference compared to the 1970s. At that time, the political basis for the price explosion of oil was the founding of the OPEC-cartel. This political act was intent on “equalizing modernization”. The post-colonial states of the 3rd world with rich oil fields wanted to sell their most important raw material at substantially better conditions to western industrial countries to gain their share in the unbroken upward movement of global growth.

This is very different today. The growth of the world economy stagnates or rests only on financial bubbles and deficit cycles. The “equalizing modernization” of the 3rd world has largely collapsed. Governments of the OPEC-states are handed over to the West and seek defensive alliances with the US to keep the explosive situation of their societies under control.

The new political factor in the increased oil price is actually a post-political factor, namely Islamic terrorism as an after-effect of the crisis. Al-Qaida and similar organizations are not seeking a share in the cake of the global growth. Without having their own perspective, they want to strike the West in its economic substance. This irrational reaction to the irrationality of the world market is far more dangerous than the earlier middle-class calculus of the OPEC-cartel. Attacks on oil conveyor systems and pipelines are occurring at ever-shorter intervals in Iraq, Saudi Arabia and elsewhere. It is the bad luck of capitalism that central oil reserves are found in the most explosive crisis- and collapse regions of the world. The more strongly security costs increase, the more intensely the oil price climbs.

However the post-political factor of the terrorist attacks on the “fuel of the world machine” is not the only or more important reason for the inexorable rise of energy prices. The central energetic raw material is becoming ever more scarce. An economic reason is decisive. The present capacities for producing and processing oil and natural gas in the Arab realm, Central Asia, Russia, Africa and Latin America are hopelessly antiquated and degenerate. The respective countries do not have the capital to pay the enormous necessary investments. Western corporations are afraid of the incalculable risk and prefer concentrating on the financial markets. The western states are financially overstrained with the security costs alone. Therefore the global production capacity falls rather than rises.

Secondly, the demands of a global growth economy and natural reserves in energetic fossil raw materials are in a disproportion. Even if terrorism disappears and investment capital flows in a mega-scale, the oil is becoming scarcer and more expensive. The natural reserves are simply not great enough. The world has long scoured for oil with more and more sophisticated methods. The discovery of ever-greater supplies cannot be expected any more. According to disputed and rather high estimates, 2 trillion barrels of oil existed on the earth. Industrialization has already consumed half of that abundance in 150 years. This obviously does not mean that the rest will last another 150 years. The economically immanent pressure for growth devours the reserves at an ever-faster speed. Production cannot keep up with the need.

The growth in China and India, precarious anyway because of the one-sided export orientation in the deficit economy of the US, sucks up masses of energetic raw materials from the world market. China, until recently an exporter of oil, consumes twice as much oil every day than it can produce itself and has become the second largest energy consumer of the world (ahead of Japan). The result is the global intensification of the twofold energetic crisis, not a global thrust of growth, on account of the lowly starting position of the gross national product in China and India. A rapidly growing mass of labor power of more than a billion persons in China and India is devalued while the oil price is catapulted upwards through the same process of export industrialization.

The limits of the modern goods-producing societies are twofold, an inner economic and political limit and an outer ecological and energetic limit. Oil becomes too expensive long before the physical reserves are exhausted. Combined with a complete devaluation of human labor power, a situation develops in which this mode of production (Marx) cannot be maintained any more. A universal combustion culture obviously cannot be of a historically long duration.