Doug, thanks for letting me know.
Let me clarify the idea from the ground up once again.
First of all, the notion of 'competition' that is carbon copied from one economics textbook to another is wrong. Perfect (or pure) competition is an idealized construct that has no place in capitalism, back in the 18th and 19th century or in 20th and 21st century. By the same token, the notion of pure monopoly, advertised in such texts, is also fallacious. In other words, the entire spectrum of PC/PM has no bearing with reality of capitalist markets from the beginning till the present time (please see Ch. 6 of my Economics of the Oil crisis, among others). If you do not believe me or Marx, please read Joseph Schumpeter's Capitalism, Socialism, Democracy, Ch.7). Therefore, speaking of perfect competition and, by contrast, less than perfect competition would confuse the issues.
Secondly, while it is very difficult to get away from the stereotypical pronouncement of the popular press (which, by the way, has roots in orthodox treating of post-1970s OPEC as monopoly), it is instructive to recognize the institution of the ownership of oil reserves and limitation of rent vis-a-vis capital in the Marxian sense. In other words, one has to depart from framework of 'game theory' and instead concentrate upon the totality of OPEC, as an institution, along with its evolutionary path (one can look at my 'Limits of OPEC Pricing: OPEC Profits and the Nature of Global Oil Accumulation,' OPEC REVIEW, Vol. 14 (1), Spring 1990).
Best wishes,
Cyrus
----- Original Message ----- From: "Doug Henwood" <dhenwood at panix.com> To: "Cyrus Bina" <binac at mrs.umn.edu> Sent: Wednesday, November 07, 2001 2:02 PM Subject: Fwd: Re: yet more Bina
> Cyrus - they keep coming... - Doug
>
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> >From: "Christian A. Gregory" <christian11 at mindspring.com>
> >To: <lbo-talk at lists.panix.com>
> >Subject: Re: yet more Bina
> >Date: Wed, 7 Nov 2001 13:51:36 -0600
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> >
> > >
> >> First, Saudi Arabia belongs to OPEC, which is a rent-collecting
agency.
> >The
> >> price of oil is determined globally via the spot and futures markets.
So,
> >> OIL PRICE DETERMINATION, not attempt to determine prices, belongs to
> >larger
> >> forces that are beyond a rent-colleting entity. The US engagement of
the
> >> early 1990s with Iraq stems from the US reaction against its loss of
> >global
> >> hegemony via the Pax Americana's implosion. If even the entire Saudi
> >Arabia
> >> were taken over by Saddam Hossein, the long-run price of oil would not
> >have
> >> changed significantly. So, both the popular left and the conservative
> >right
> >> are wrong on that note.
> >
> >
> >So, OPEC can't ever act on the production side to influence price again
> >because it's too internally divided? Is this because its huge producers
> >(like Saudi Arabia) gain more relatively from higher production than its
> >smaller producers (like Kuwait), who would gain relatively from keeping
it
> >in the ground in anticipation of higher future prices? Was not Iraq's
> >interest in Kuwait an interest in pushing prices down?
> >
> >You suggest that the price is determined on the spot and futures markets,
> >but the price has got to be above the price for a good offered in a
> >perfectly competitive market with homogenous goods--simply because there
are
> >no substitutes and there is still huge excess capacity. If OPEC still
> >controls around 30% of world output, in those conditions, how could it
not
> >exert some pricing power?
> >
> >I'm not suggesting the US-over-a-barrel scenario. But I also wonder what
> >globalization has meant in terms of oil production and pricing. At one
> >point--1973 and 1979--OPEC pretty much did what it would. That was an
> >anomaly--but what in particular has changed since then?
> >
> >Christian
>
>