Archive for January, 2005|Monthly archive page

Class and History, 9

Convergence and Conjunction: Closing Out, Opening Up



1. Re-peaks…



Inherent to capital is an extended moment when the reproduction of capital interrupts itself; when it starts, stumbles, restarts, re-falters, and defaults to the expropriation of surplus value in absolute terms. Then reproduction is more rather than less repetition compulsion. Reproduction, the expansion of capital, appears on a diminished basis, sustained in the present by the props of the past. Continued reproduction becomes both diminished expansion and expanded diminishment. General immiseration is the measure of private wealth. Private property in city and countryside sustains itself by chain, whip, and gun. We call that moment overproduction.

In the 1990s, while the Venezuelan economy contracted, the banking system collapsed, while the population suffered declines in living standards, exploration, development and investment in oil production repeated itself, compulsively, but on a diminished basis.

North of the Orinoco River, the heavy oil belt, “Faja Petrolifera el Orinoco,” contains petroleum deposits estimated at 1.3 trillion b.o.e (barrels of oil equivalent), with an estimated 267 billion b.o.e recoverable. The size of the deposit and the recoverable amounts match and probably exceed those of Saudi Arabia.

The difference between the Saudi and Venezuelan reserves is not location, not exactly geology per se, but costs of production, geology as an economic category. Capital does not exactly produce objects; it expropriates objects as values. The determinants of production are not geological, not scarcity or abundance, but geology rendered as a value, scarcity or abundance as historical, social categories. Everything exists in its moment of value, in its reproduction as a value, and the limitations then are in the determinants of reproduction.

Following the banking collapse of 1994, Venezuela introduced the “Apertura,” allowing foreign oil companies to participate in the investment and development of these fields with the state oil company, PDVSA. This participation continued and continues through the Chavez government.

The heavy oil belt is divided into four distinct zones, Machete, Zuata, Hamaca, and Cerro Negro. By 2002, $12 billion had been invested by the oil majors in four “strategic associations” with PDVSA for production in these zones. Current output is figured to increase to a peak of 660,000 b.o.e. daily by the end of the decade, with the life span of the projects estimated at 35 years. At the end of that period, less than 3 percent of the recoverable reserves will have been extracted.

Costs of production per b.o.e are estimated between $7 and $14, and refining the product is equally expensive. The 1998 oil price collapse to $10 per barrel would have effectively devalued the investment to zero, had OPEC not intervened.

That these reserves exists cannot be denied. That access is a function of cost, price and profit proves that the “peak” in peak oil theories is in the reproduction of capital and nowhere else.

…and Valleys.



In November 2001, Venezuela enacted the Law on Land and Agricultural Development, placing a cap on the size of private land holdings; taxing unproductive lands; and redistributing land to landless rural workers. The response of the bourgeoisie and its supporters was immediate and sustained. In December a national “work stoppage,” really a lockout, was organized by business leaders and trade union bureaucracies.

Unimpressed, in January 2002, the Chavez government organized the Instituto Nacional de Tierras, INTI, to develop and execute plans for the reform of agricultural production, including material and financial aid to the reconfigured production units. The counter-response this time was the attempted coup against the government and the kidnapping of Chavez, events programmed and applauded by priests, police, media owners, latifundistas, and businessmen. The real unity of private property, the linkage between city and countryside under capitalism, is always forged and re-forged in counter-revolution.

After the failed coup, Chavez launched the Plan Zamora which contained provisions for the expropriation, rather than taxation, of unused lands. The great PDVSA lockout followed and it too failed.

To the bourgeoisie, to private property, title to the land is everything. And while title to land may be the secret dream of the rural landless, there is no meaning to title outside the expropriation of value. Analysis of rural production relations, of the condition of the peasantry in Venezuela makes one thing immediately clear: no peasantry exists. Rural laborers exist, tied to individual plots only to make their labor accessible if and when required.

Analysis of the production relations of capitalism internationally makes it clear that the viability of small, individual agricultural producers is not possible. Indeed, viability of any agricultural production separate and apart from industrial support, subsidization, is impossible. All agricultural production is subsidized in some form by urban centers. Nothing defines more clearly the overgrowth of the means of production, its expansion beyond the boundaries of private property, than the self unsustainability of capitalist agriculture.

This much is recognized in the Chavez plans. Individual ownership of the land is not the focus of reform. Collective operation and organization of agricultural production, for use, is. Expropriation, not parcellization, is the critical component for rural transformation.

Nevertheless, the institutional programs of the Chavez government in the countryside are not the vehicles for completing this agricultural reorganization. The landowners are always and ever willing to employ private forces in defense of private property, hiring gunmen to assassinate those challenging the status quo. Since 2001, 150 rural leaders have been killed in Venezuela.

As always and forever, capital finds in its backwardness the key to a secure future. Yearning for the return of the caudillo, the Venezuelan bourgeois turn instinctively to Tachira, where the state cattleraisers’ association, Asociacon de Ganaderos del Estado Tachira, and the Tachira branch of the employer’s association, Fedecamaras, have joined together against the rural workers.

The successful response to the armed violence of the landowners and employers is to be found only in the self-organization of the rural poor both for expropriation of the land and the defense of that expropriation.

1-9

The historical inadequacy of the Venezuelan bourgeois to reproduce in detail and scope the developed capitalism of US and European economies, does not make Venezuela any less capitalist, its bourgeoisie any less bourgeois, its struggle any less than a class struggle of workers against capitalism.

The inadequacy of the Venezuelan bourgeoisie to, on its own, in its own name, revolutionize relations between city and countryside, is the measure of capitalism’s success in protecting private property. It is a success reproduced globally, for what has appeared worldwide as the globalization of capitalism is, more realistically, concession capitalism, enclave industrialization, disrupting to be sure, the prior relations of agriculture production, and just as surely incapable of transforming those relations.

In Venezuela, the struggle is clearly a struggle for the abolition of private property, against the operation of production for the expropriation of value, for the emancipation of labor from wage-labor in both city and countryside, by that class of workers demanding power in its own name; by that class of workers organizing and executing the expropriation of the means of production. Those organizations can be called Bolivarian, but the demands of the struggle are beyond anything Bolivar might have envisioned, or brought to fruition. Those organizations might be called anything. But to succeed, their content must become communist.

To reproduce, in this workers’ struggle, the historical failure of the bourgeoisie to speak in its own name for all of society, will provide that failed class its greatest success.

S. Artesian

013005

address all comments to: sartesian@earthlink.net

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History and Class, 8

Convergence And Conjunction, ReMix



The 1973 OPEC price increases meant that the 60s were really over, that the Beatles weren’t getting back together, that overproduction and a declining rate of profit were one and the same, and that economic growth, the reproduction of capital, and the preservation of private property were not.

The distribution of profits through the cycling of petro-dollars meant that every attempt by Venezuela to diversify its economy made it more dependent on oil, and not just the production of oil, but the price oil; not the profit derived from the relative surplus value appropriated in production, but the general profits dissolved, subordinated through the mechanism of price. Where, in the 1950s and 60s, Venezuela had been able to record continued growth in GDP, based on output regardless of the price of oil, after 1970 GDP danced to the beat of an oil drum.

In 1979, the second round of OPEC price increases forced the relationship between GDP and oil price beyond its breaking point. Despite the dramatic rise in oil prices, there was no sudden or sustained increase in GDP. The ensuing general economic contraction, international increases in interest rates were the opposite but more equal manifestations of the problems in capital reproduction leading to the first round of price increases.

The Venezuelan economy, like that of all of Latin America, was overwhelmed. Venezuela’s GDP ended the decade where it began. Moving in lockstep with oil prices, GDP had recorded declines in 1983, 1985, and 1989. This was indeed the lost decade for Latin America, but some lost more than others. Venezuela, unlike other countries, managed to maintain debt payments, remitting more than $35 billion during the decade. As in other countries, in Venezuela the expansion of poverty became social policy. By the end of the decade, purchasing power dropped by 50 percent. Half the population was earning $2 a day or less. Per capita GDP declined by one-third.

In the reproduction of capital there is a moment, a glorious, even religious, moment for the bourgeoisie, where money reappears larger than before, larger than life. But this is a moment that can exist only to the extent that the money again disappears, submerges itself in the circulation of commodities that covers, and even obscures, the terms of production. This is a moment that can exist only if money continues to extend, deepen its exchange with labor power.

With the oveproduction of capital, that fine art of surfacing and resurfacing, is interrupted. The interruption appears as a decline in trade, the loss of markets, and of course, the demands of creditors for repayment. The essence of these manifestation is the expansion of the means of production. In that alteration of the relations between the components of production, capital finds the expropriation of relatively more labor power through relatively less labor more than inadequate, but an actual threat, to the demands of profit. Debt re-orients that demand, that need, those terms of expropriation from relative to absolute conditions. Living standards are attacked. The terms of the reproduction of capital are transformed into programs of absolute impoverishment. And absolute impoverishment requires degradation of the conditions of subsistence for labor.

Agricultural production in the 1980s increased, but utilization of that production for domestic population absolutely worsened. Net per capital agricultural output declined 3 percent. Cereal grains per capita declined 12 percent. By the end of the decade, daily per capita calorie consumption had fallen 17 percent. Here capital at its most advanced restores the backwardness of the organization of agriculture.

The fundamental convergence of advanced capitalism with obsolete property relations was codified in the hunger of the general population. When, in 1989, the government announced its austerity program, the reply came in the form of street rebellions. It is that rebellion of 1989, reappearing in Chavez’s 1992 attempted coup; that rebellion reanimated in 1993 in the face of another austerity program, that rebellion so critical to the election, restoration, re-election of Chavez, that makes the struggle in Venezuela a specifically advance class struggle, for the emancipation of labor and the end to capital.

S. Artesian 011705

address all comments to: sartesian@earthlink.net

Class and History, 7

Convergence and Conjunction, House Mix



Sowing the oil, Oiling the sow



Windfall profits for the 1973-74 OPEC price increases put President Carlos Andres Perez in an expansive mood. Reconstituting the 1930s, 40s, 50s, 60s, house party theme of sowing the oil, Perez’s administration spent more money in the 1974-1979 period than all the Venezuelan governments in the 1830-1973 years. During the 1970s, and continuing into the 80s, state ownership of manufacturing enterprises increased from 4 to 42 percent of the total. Direct investment, nationalization, subsidized credit, propelled the value added in manufacturing to a 33 percent increase in the 74-79 period. But the unevenness, the deformity, of the Venezuelan economy was not alleviated as the expenditures in capital intensive industries drew masses into the cities and production centers far in excess of employment requirements. The petroleum industry, for example, despite or rather because of massive expenditures, accounting for one-third of GDP, has never employed more than 1 percent of the labor force. In this, Venezuela gave the truth and proof of capitalist reproduction, the expropriation of labor, its transformation into wealth only through its expulsion , the most acute, painful, expression. Income distribution was more inequitable in the 1970s than in the 1960s. Almost half the population was undernourished.

“Sowing the oil” in the 1970s was more than a simple domestic policy. It was Venezuela’s national manifestation of the international recycling of petro-dollars. This recycling financed a global expansion in fixed assets of production in industry and agriculture, a global over-expansion which precipitated economic contractions in the 1980s.

In its conjunction and convergence, Venezuela assumed more than the characteristics of advanced capitalism. It assumed those characteristics with a vengeance. In 1970, Venezuela recorded external debt equivalent to $1.4 billion, approximately 3 percent of GDP. By 1979, that amount had grown to $24 billion, approximately 32 percent of GDP. The debt was secured, of course, by oil revenues. Much of this debt was owed to international commercial, private lenders rather than to official institutions of finance like the World Bank.

Expansion of the manufacturing sector resulted in large enterprises accounting for 2/3 of manufacturing employment and 3/4 of manufacturing output. Traditional, consumer-directed, manufacturing was dominated by thousands of small, family-owned enterprises, surviving through the low wage-rates paid to “over-supply” of workers in the urban ranchos.

The undeveloped relations between city and countryside predetermined the inadequacy of domestic markets. Manufacturing did not produced the capital inputs for increasing agricultural productivity. Agricultural production could not reproduce that capital input in expanded food production for the urban population. During the 1975-79 period, value-added in agricultural production increased 11 percent, below the rate of population growth. Agricultural imports increased from $536 million to $1.3 billion. Concentration of land in large private estates was unaffected by the announced, but unexecuted, programs of land reform. The largest 3% of the farms accounted for 77% of the total land employed in agriculture.

In its assumption of debt, in its over-investment, its overproduction of capital, in the deterioration of agricultural production, in all its distress and deformity, the Venezuelan economy presented itself in the image of modern advanced capitalism, just as the criollos had presented themselves in the image of the peninsulares.



This was a costly non-makeover and the bill would come due with the decline, and the dramatic break in oil prices in the mid 1980s.

S. Artesian 011505

Address all comments to: sartesian@earthlink.net

Class and History, 6

Peaks….



In the post war 1948-1970 period, Venezuela’s economy was driven forward by increasing imports, and the importance, of capital goods. Over those years, imports of capital goods accounted for 46% of total imports. The import of capital goods coincided with high rates of gross domestic fixed investment. This, in turn, was reflected in the increased contribution of manufacturing to GDP. Between 1948 and 1970, the rate of increase in value-added in manufacturing exceeded the rate of increase in toal GDP.

Demographic changes follow this economic transition and by 1970, 73% of the population lived in urban areas.

But to speak of capital goods imports and manufacturing contributions in general terms, as broad economic categories, is to give more credit than is due, for it is the specificity of oil production that so dominates modern Venezuela. Oil production currently accounts for 33 percent of GDP, and 85 percent of exports. It is the specificity of oil production that determined, and determines, capital equipment imports and manufacturing contribution. And in the specific problems of the petroleum industry the general problems of capitalist reproduction are both compressed and expressed.

In 1928, Venezuela was the world leader in petroleum exports. It remained the world leader until 1970, the year its domestic production peaked. The Venezuelan peak coincides with the 1970 peak in domestic US oil production. In neither country was this production peak determined by scarcity of resources, or depletion of reserves. In both countries, the production peak coincides with a peak in the rate of return on investment.

The determinants of capitalist production are the elements of capitalist reproduction in its totality, and those elements are cost, price, and the mass and rate of profit. The decline in US and Venezuelan production after 1970 coincides with a decline in the rate of return on investment. The declines also coincide with increased production from Saudi Arabia. Between 1970 and 1973, Saudi output doubled to 7.6 million barrels daily.

The shift in production to Saudi Arabia was based on reduced costs of production, costs that are less than half the world average. All of OPEC’s increased daily output between 1970 and 2003 is attributable to the net increase in Saudi production as increases in Nigeria, Qatar, Algeria, Indonesia, the United Arab Emirates have been offset by production declines in Iran, Kuwait, Libya, Venezuela, and Iraq.

Behind, or more correctly, preceding the declining rate of return there had been the massive increase in the fixed assets, the technical component for petroleum production. Saudi Arabia, through its lower production costs, and increased output, supported by US petroleum companies, led OPEC into tripling and quadrupling the price for oil, attempting to offset the decline in the return on investment.

The OPEC price increase was preceded and followed by a wave of nationalizations of oil company production facilities and assets, the “concessions ,” including nationalization of the assets of the Arabian-American Oil Company (Aramco). In 1975, Venezuela enacted legislation for the compensated nationalization of its oil producers. At the time of nationalization, 1976, three companies, Exxon, Shell, and Gulf Oil accounted for 85 percent of output and 75 percent of manpower at the newly formed Petroleos de Venezuela S.A. (PDVSA).

Exploration and development of new fields, frozen under Betancourt, were made priorities for PDVSA. Extensive, and expensive, E&D programs were approved. Between 1976 and 1982, capital expenditures increased 160 percent. Daily output continued to fall, and by 1982, production was only half the 1970 production peak. Proven, recoverable reserves from conventional sources increased 34 percent. This bears repeating: while daily output continued to fall, proven recoverable reserves increased. Daily production levels were, and remain, independent of proven reserves.



Further exploration and development has continued to yield increased estimates of proven recoverable reserves. 2003 reserves from conventional sources are now twice those estimated in the peak production year of 1970, despite the continued restriction of daily output.

Good-bye Hubbert, and good riddance. Hello Hugo.

More to follow…..

S. Artesian

address all correspondence to: sartesian@earthlink.net

History Class, Part 5

Convergence and Conjunction: Closing In

Upon Gomez’s natural death in 1935, minister of war Eleazar Lopez Contreras assumed power. In1936, the ghost of Gomez, embodied in the Congress, appointed Lopez to his own five year term.

The unnatural deaths of the Gomez family and collaborators convinced Lopez that his own future natural death depended upon allowing some manifestations of political dissent and democratic rights. The leaders of the 1928 demonstrations ( “Generation of ’28”), who had not succumbed to unnatural deaths were allowed to return from exile and prison. Political parties were established; Bentancourt’s populist Organizacion Venezolano, Jovito Villalba’s Marxist Federacion Estudiantil de Venezuela to name two. Legislation was enacted that recognized the formation of labor unions. The Partido Comunisto Venezolano remained a banned organization.

A little liberty proved to be a dangerous thing as a general strike in June 1936 was followed in July by a strike of oil workers. In true caudillo fashion, the strike was brutally suppressed, labor unions were outlawed, and political opposition was driven underground.

And in true caudillo fashion, “first deliver the sword, then promise the cake,” Lopez announced the program of sembrar el petroleo (sowing the oil); using oil revenues to finance agricultural and industrial development banks, infrastructure expansion, and social programs.

In 1941, Lopez was replaced by the fourth tachirense, another minister of war, Isaias Medina Angarita. World War 2 brought large increases in oil revenues to the government.

World War 2 precipitated profound changes in Venezuelan society. The changes were not in the relations of production, but were in the forces of production. This change in the mass and mechanisms of the means of production severely disturbed the existing relations between city and countryside, sweeping the rural population off the land and into the urban areas. Census figures from 1941 indicate that only 1/3 of the population lived in urban areas. 1950 census figures show urban areas holding 53 percent of the population.

Urbanization, the construction, commercial, and service activities inherent in urbanization meant the end, sooner/later, to rule by caudillo. That end came in 1945. But the Venezuelan bourgeoisie, having proved themselves so inadequate to the historic tasks of the bourgeois order, so obsolete at birth, could bring forth only a military coup, a democratic junta, and not a social revolution.

The means and relations of production were in conflict. The needs of the producers required the emancipation of production from the restrictions of the caudillo, the landed estates, the subsistence agriculture. The property of the owners required the preservation of those estates, that subsistence agriculture.

In 1948 the military overthrew the elected government.

The 1945 democratic junta, and the radical-reformist governments of Accion Democratica, had the distinction of being both ahead of and behind their time; behind the time in that the moment for a popular, radical, bourgeois order had more than passed, it had existed only in the moment of social revolution, in that moment of the Convention, the left Jacobins, the Cordeliers; the moment of the Radical Republicans and the Reconstruction governments; in a moment exterminated by the consolidation of the bourgeois order itself.

The governments of 1946-48 were ahead of their time in that rule by caudillo had not yet so exhausted the economy as to make the prospects of suffrage, labor unions, protective legislation, less terrifying to the bourgeoisie than the looming bankruptcy of the national treasury. It took another six years of rule by neo-caudillo to do that.

S. Artesian 010305

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History and Class, 4

FAST FORWARD



In 1899, “General” Cipriano Castro marched his private army into Caracas from the Andean state of Tachira, becoming the first of the four tachirense caudillos to govern Venezuela.

Castro was overthrown nine years later by his chief aide, Juan Vicente Gomez. Gomez ruled for 27 years, from 1908-1935. Gomez became known as “The Tyrant of the Andes,” and Venezuelan oil reserves were opened to foreign exploitation and development. That development began in earnest in 1918.

Royalties from the foreign concessions were sufficient to retire all of Venezuela’s foreign debt and finance a rudimentary public works program. Income from oil production also generated commercial and service enterprises around the petroleum industry.

Gomez ruled until his death at age 79. While his death was from natural causes, those of his family and collaborators were not as uprisings in Caracas and Maracaibo imposed that combination of rough justice and revenge so appropriate for the heirs of tyrants.

The development of the “capital-intensive” (equipment intensive) petroleum industry within the matrix of Venezuela’s weak relations between city and countryside exacerbated the conditions of both rural and urban poverty. Inflation increased and real wages declined. Unemployment increased as traditional small scale business collapsed in the shift of services and investment to oil production.

Domestic agriculture also deteriorated. The twin dead weights of Venezuelan rural production, latifundios and minifundios, with subsistence production on both the grand and miserable scale, doomed expanded output.

These dislocations, however, were not the result of some unequal exchange between Venezuela and the foreign petroleum companies, but were the contradictions of capital itself. In every expansion of petroleum production in Venezuela, there was the voice of all capitals past and present, whispering “access to free, detached, labor,” which is to say, access to its appropriation through expulsion. At the same time, the technical component of production demanding ever declining shares of labor power to animate itself, reduced the voice to a whisper, a choked whisper. Expanded reproduction, the necessity for capital’s existence, was the threat to the surrounding “undeveloped” property relations, and thus to capital’s own property relation, its command of labor through the private property of production.

Capital always speaks out of both sides of its mouth, and both sides at once. The voice Gomez heard sounded just like his own; the voice that demanded “order,” “property,” and “cash.” That voice wasn’t a whisper