Thursday, December 07, 2006

The heretical oil weapon...then Autarky

One of the firmaments of neo-liberalism is the primacy of markets. The First Commandment of that faith might go something like: Markets are the ultimate arbiters of supply and demand truth and they shall not be toyed with. All shall accept the market price, for it is good.

Those who have seen the curious ways in which currency crises unfold or have read books like Perkins' Confessions of an Economic Hit Man are likely apostates to the faith. Markets and prices (and supply and demand) can be and are manipulated by the powerful.

I'm (hopefully) not writing anything new here.

One reason I bring up neo-liberalism is that it stands as the guiding philosophy behind globalization- the vision of an infallible market that will guide producers and consumers around the world in a wonderful global economic harmony.

Or at least it would if the powers that be could manage to stay in the shadows with their interventions and reasons therefore. But such is not the case.

President Bush recently shared his fear of "extremists and radicals" gaining control of oil and using that as a weapon.

Nawaf Obaid (a recently fired) advisor to the Saudi government suggested that one way to control the rise of Iran was to drive the price of oil down and thus drastically reduce Iran's (and Russia's and Venezuela's to boot) supply of currency. Steve Clemons of TheWashingtonNote has also heard similar rumblings so I guess Mr. Obaid isn't alone is his view, firing or no.

Going back a bit further, some have accused Russia of using natural gas as a weapon against the Ukraine.

These are heretical statements against the guiding philosophy of globalization. If nations are going to use markets and prices against other nations, i.e. engage in overt economic warfare, the whole experiment in once again trying to make the world safe for supra-national corporations will end much like the last one.

The thing about globalization as opposed to more self-sufficient (autarkic) models of political economy is that it leaves nations much more vulnerable to economic warfare in much the same way that a family with a garden, some trees to burn and one income is less vulnerable than a family with 2 computer programmers earning money.

Specialization is only great when your specialty is in demand.

As one who thinks a shift towards greater national, and even regional self-sufficiency (note that I wrote, shift towards, not copy North Korea) might be a good thing, I'm watching these heretical to neo-liberalism statements with some interest. The more talk there is about overt economic warfare, the more obvious a shift back towards some degree of self-sufficiency will become.

ps One other point about overt economic warfare, it doesn't begin and end with oil. Who knows, maybe somebody will get the bright idea to start buying up all the loose Gold in the world, and then see what happens to the US$, the IMF and the major US banks.


Ruby said...

Wow. Thanks for tipping me off to the word "autarky".