Here in the UK the Prime Minister Gordon Brown and his chancellor Alistair Darling (both Scot’s) are meeting oil industry chiefs to discuss the ‘soaring’ oil prices. There is however wide agreement that high oil prices, that is prices over $100 a barrel are here to stay. Indeed there are some who are predicting that $200 a barrel is on the horizon.
There reasons for the rise and rise of oil prices are multifarious, but nevertheless linked. Globalisation has a huge part to play. As one analyst stated on Radio Scotland this morning, “globalisation is a thirsty beast.” Thus demand in other parts of the world are pushing up prices here in the UK. This is in part due to the exponential growth of the Chinese economy, which has also pushed up other raw commodity prices such as steel. India is also a growing factor in this equation.
Actual oil production is perhaps less of an issue in the short to medium term, as the bottle neck which pushes up prices is the capacity at the refineries. Simply pumping more oil out the ground will therefore not solve the problem as there is not the refining capacity to deal with any large increases in supply.
All this worry about oil and how is effects the rest of the economy has got me thinking if we are in the throes of a larger structural economic change?
Since the eighteenth century Capitalism has grown to be the dominant economic model and we have seen it effortlessly transition from local, national, regional to global markets, conquering all and unifying all in its way. We have even seen it shift, at least here in the West from ‘heavy Capitalism’ to ‘light Capitalism’. Indeed we could call the commodity and financial markets ‘virtual capitalism’ and acknowledge that unlike ‘heavy capitalism’ (which has heavy industry as its base) and ‘light capitalism’ (which has service industries as its base) ‘virtual capitalism’ (based not on the exchange of ‘real money’ but of stocks and shares) does not obey the traditional economic rules but is spooked by rumour and confidence.
Yet to say that Capitalism has been a success is a statement given from a particular perspective. It’s the voice from the top, the rich elite to whom Capitalism has brought unparallel success. The trickledown effect of Capitalism whereby even those on the bottom are lifted our or poverty and enriched is one of the many myths of the system. For the majority of the world’s population global Capitalism has not, is not nor will it ever be a success.
The other great myth of Capitalism is that it can continue ad infinitum. If the whole debate about global warming has awoken us to anything it is that we live on a world of limited resources. Oil is a prime example, both in respects of how much is in the ground and how much at any one time we can refine. The world ecologically just cannot survive an economic system that is predicated on the consumption of ever more products faster and faster. Thus humanity cannot survive Capitalism in its present form.
We need to shift to ‘After Capitalism’. What this will look like I’m not sure. While technology may play a part in this shift it cannot provide all the answers, there needs to be more fundamental changes in how we consume. What I am sure about is that if we do not shift to something ‘after Capitalism’ then there is going to be severs economic hardship for many, many people. A shift to something ‘after Capitalism’ will also I think prove very difficult, and may also cause many to suffer. Yet, this seems to be the lesser of two evils if both humanity and the world we live on are to survive.