Workers World, Vol. 21, No. 27
July 2 – On the way back from the summit meeting of all the leading imperialist powers, Carter sounded the alarm that the OPEC oil price increase will bring on a recession. A capitalist economic recession is certainly on the way, if it is not already here, as many bourgeois economics already believe. It is, however, a brazen, fraudulent assertion by Carter that the projected OPEC oil price rise has anything whatever to do with it.
The cause of the oncoming capitalist crisis, which the bourgeois economists have been predicting for months, is not at all due to any projected oil price increase. The purpose of Carter’s blatant deception was to divert attention away from the chaos, dislocation, and suffering of the masses of the people resulting from phony shortages and the conspiracy of the oil companies.
It is also calculated to let the Carter administration off the hook for the consequent unemployment and the simultaneous skyrocketing inflationary price rises at home, which are eating away the very vitals of the living standards of the working people, especially the poor and the millions from the oppressed communities.
Price increases alone, of any type, no matter how steep, do not in and of themselves cause a capitalist economic crisis. This is attested to by the real experience of the capitalist economic system ever since the first general capitalist crisis of 1825. It is not price increases as such that have created capitalist depressions. It is capitalist overproduction, which in turn is caused by the fact that the capitalist class produces only for profit and not for the needs of the people.
Even at this very moment, when the entire world imperialist press is shouting into the ears of the masses that OPEC is bringing on a capitalist recession because of the oil price increase, it is noteworthy that the Washington Post, certainly no friend of OPEC, flatly asserted in its lead article on Sunday, July 1, that there is a likelihood of a glut of oil, not a shortage. And this statement is entirely in harmony with the past history of capitalist production on a world scale.
How is it possible to forget that just a bare few months ago there was a glut of oil all throughout the West Coast and especially in California? And can it be forgotten that the Alaskan pipeline, which can bring enough oil to supply practically the entire East Coast, is not running anywhere near its capacity? And this is not due to leaks in the pipeline or other mechanical and maintenance problems.
Indeed, there is enough oil in this country to satisfy the needs of the people. If need be, new wells can be opened and refining operations begun or expanded. There is plenty of crude oil that could be refined for industrial, auto, and home heating use.
But let us get back to the phony oil shortage scare which is calculated to make OPEC and the other oil-producing countries in the underdeveloped world the scapegoat for the woes of the capitalist system, the skyrocketing inflation, and the capitalist recession. Let us assume for the moment that OPEC puts into effect not merely the current price increase, but a very steep one.
The false theory behind the propaganda of the oil monopolies in the imperialist countries is that the OPECC increase will cause hundreds of thousands of layoffs and affect the lives of millions of people because of an industrial slowdown. But this false assumption is based on an even more hidden assumption just as false to the core. And that is that the oil companies who get oil from the OPEC countries must pass on the price increase, and that this price increase must zoom down all the way, through all the layers of the capitalist industrial system.
But this is the infamous pass-along theory of the capitalist class, the idea that every rise in price of commodities the capitalists purchase must be passed along all the way down the line until it reaches the broad masses of the consumers and the working class, thereby throwing the burden on them. The workers, of course, have no way of passing along any of the increases of which they become the victims. They can only fight high prices by the power of united action in struggle, which ast the moment is not only hindered but virtually prohibited by the Carter administration with its anti-labor policy of 7 percent guidelines, designed to keep the standard of living consistently behind the ravages of the inflationary spiral started by the huge monopolies.
The fact of the matter is that the government has allowed the oil companies to pass along the OPEC price increases to the masses.
The oil monopolies are the most powerful, the richest in the world. They virtually control many foreign governments, not a few of them in OPEC itself, and they not only pass along any increase to the American people, but double it and triple it. This is inflation with a vengeance.
And the Carter administration and the U.S. Congress have done nothing about that. While workers are restricted in their income the oil companies make extraordinary profits merely by passing along higher prices at double and triple the rate they are charged.
In addition, the oil companies are intimately intertwined with the huge multinational banks where OPEC has its money. So that in large measure the price increases of OPEC work out to the benefit of the oil companies through the banks as well as through the industrial facilities from the oil well to the pump, which the oil octopus controls and dominates.
If the Carter administration were serious about not imposing huge oil price increases on the masses, it would regulate the imports of foreign oil and would have compelled the oil companies to open domestic wells and operate their refineries to capacity. On both these counts the Carter administration has failed. So has Congress.
Finally it must be borne in mind that it is inherent in the nature of the oil monopolies in the era of imperialism that they favor restricting production rather than expanding it. Monopolies, by their very nature, are restrictive. If they can make a huge profit without increasing production, they prefer it that way. This history of monopolies in the United States can be seen if one examines, for instance, the aluminum monopoly, the steel monopolies, AT&T, the huge chemical combines of DuPont, and the others. All in one way or another would favor restricting production, making behind-the-scenes deals such as production quotes, sharing out the markets among themselves, rigging the prices, and even deciding which products to keep off the market.
Notwithstanding this restrictive character of monopoly capitalism, it does not abolish the boom-and-bust cycle of capitalist production, that is, recurring capitalist crisis.
The truth of the matter is that it is not OPEC which is the real monopoly, or cartel as it is called, but the U.S. multinational oil companies. Even if OPEC decided upon a complete shutdown, this in itself would not cause a recession. It simply would have the same effect as a strike of workers in a particular industry, such as coal or auto. These strikes, as everyone knows, indirectly cause temporary layoffs in related industries, but as soon as the strike is over production picks up. On occasion it even goes above the level it was at before the strike started.
Thus the 1973-74 boycott by the Middle Eastern oil-producing countries was not the cause of the 1974 capitalist economic crisis. The capitalist economic crisis was long in the making as a result of capitalist overproduction on a world scale. The oil boycott was merely coincidental.
The most authoritative oil and banking executives themselves do not say it was the oil boycott which cause the economic crisis. They do, however, want world public opinion, especially at the present time, to believe that the price increases which they pass along to the public should be placed upon the heads of the OPEC countries, allowing the oil monopolies to go scot free.
Making a scapegoat of OPEC is very handy at a time when the capitalist economic situation is continually deteriorating precisely because of the monopoly-caused worldwide inflation. This inflation didn’t start with OPEC. It started decades ago immediately upon the heels of the Second World War.
The inflation is caused, first of all, by the non-productive character of the military establishments in the imperialist countries, which have continually swelled government budgets with absolutely fantastic military expenditures. There is no real economic return for these outlays precisely because it is a wasteful, although extremely profitable, industry.
A deeper cause lies in the nature of the monopolies, which have long ago ruined the free capitalist market and created artificially rigged prices with no basis in real values. These prices are inflated precisely because the monopolies have the power to artificially rig the prices, share out the markets, cut production, and in some cases ruin competitive, budding new industries. It is the price-rigging by the monopolies, begun as long ago as the start of the last century, and the growth of imperialist armaments, especially the development of the military-industrial complex, which are the causes of worldwide inflation.
Therein lie the true causes for the present plight of not only the working people of the United States but of all in the capitalist world.
Another basic element in the oil crisis lies in the relationship between what the imperialist press describes as the “oil-producing countries” and the “industrial, oil-consuming countries.” The very terminology used by the imperialist press to describe the relationship hides its exploitative, predatory imperialist character. If the relationship were merely between producers and consumers, there would be no problem. It would mean that production was carried on for human need. But that is not so.
The so-called industrial consuming countries do not want the oil in order to satisfy human needs in the U.S. or in the oil-producing countries. That’s not the driving force behind it. The driving force of capitalist production in its monopoly phase is super-profits. The relationship is based upon predatory exploitation, not simple commodity exchange between the industrialized Western capitalist countries and the underdeveloped oil-producing countries. Even historically, that was never the case.
When the oil companies which now go under the name Aramco first set foot in Saudi Arabi 40 years ago, they made the same kind of bargain with the ruling sheikdom that Peter Stuyvesant made with the Native people of New York in the purchase of Manhattan. They took over a world empire, wealthier than any in all of human history. And it has been maintained ever since then by force, duress, corruption, and bribery.
According to Business Week (June 18, 1979), “the oil under the Saudi Arabian desert [is] worth trillions of dollars at current prices [and] continues to gain in value. The conservative Saudi figure for proven and provable reserves is 177 billion bbl., but knowledgeable oilmen think a more realistic figure is more than 200 billion bbl., and possibly closer to 300 billion.” All this the oil monopolies were able to grab.
The cause for the near panic in the imperialist world lies principally in what they call the “unstable political situation” in the Middle East. By this they mean that this vast empire of oil, which the oil companies in fact control, is in danger of being lost because, sooner or later, there will be a revolutionary overturn, not only in Saudi Arabia but in the entire Mideast. And precisely because of their indecent haste to grab everything all at once.
Therefore, they have declared a Roman holiday to grab what they can at the present time and raise the prices sky high in the United States and all over the capitalist world. They are also making sure that, in the event of an attempted revolutionary overturn, the U.S. will militarily intervene. The consequences from such an eventuality are incalculable.
The conclusion to be drawn from all this is first of all that the oil companies are criminally responsible. They along with the other industrial and financial dynasties in the United States were aware from the beginning that this “easy money,” this easy “black gold,” that they have been garnering in could not continue forever.
Certainly a government which was responsible to the people would have years and years ago seen to it that alternative sources of energy were developed, of which there are many in this country. But again the reason why this was never done lies precisely in the inherent character of the capitalist monopolies themselves.
They are restrictive by their nature. Why should they spend huge sums of money or even permit the U.S. government to spend huge sums of money to develop alternate forms of energy or develop oil resources in this country at the present time when they can get billions and billions of dollars worth of oil for what up until now was virtually a song?
Therein lies the true nature of the relationship between the oil companies, representing the imperialist countries, and the oil-producing countries which are oppressed nations of imperialism. When the imperialist monopolies speak of an oil shortage, when they speak of oil resources growing scarce, what they mean is that they are in danger or losing their stranglehold on the Arabian people And of course that is true.
What has to be recognized is that the oil-producing countries are basically oppressed nations, for the most part under the heel of U.S. imperialism, and that the imperialist monopolies are the real oppressor. It is sheer fraud and deceit to make the oil-producing countries the scapegoat, to make them the target of venomous and slanderous attacks in the kept press and media and to inflame the public to the point of hysteria against them. There is method to this madness. It is an attempt to prepare the American people for imperialist intervention and the dreadful consequences which will fall upon the heads of the American people as a result of this.
What must be done? There can be no truthful answer to this question which does not include a takeover of the oil companies by the people of the United States. It is absolutely necessary to not merely excoriate and expose the oil companies for extortionate profits and price rigging, but to point up the solution: a takeover of the oil companies by the U.S. government on behalf of the people of the United States.
The oil companies have been so arrogant they won’t even tell the government where or how much oil they have. Those in the Carter administration who know and act as so-called regulators of the oil industry, such as Schlesinger, O’Leary and others, are nothing but stooges for the oil companies and the military-industrial complex. Nothing progressive can be expected of them. As we stated earlier (Workers World of June 29), it is necessary to divest the oil companies of their properties, which belong to the people in the first place.
This can be done most quickly and expeditiously by a simple declaration or a joint congressional resolution stating that the U.S. government has declared all the oil facilities of this country to be the public property of the United States. Furthermore, the mass organizations from the people, from workers, from oppressed communities, from all over the country, must prepare to take over and become the custodians of the oil industry and all its facilities.
There is still another way to reach the heart of the matter by arousing public sentiment and crystalizing it into action: A national referendum by the people on whether to take over the oil industry. It will meet the approval of the people if it is timely. The bourgeoisie was quick to seize upon Proposition 13 as an “initiative of the people.” That’s because it served their interests to push that type of referendum. It enriched big business and struck at the living standards of the poor.
Now let us fight for a truly popular referendum, one that will divest the super-rich of the property which rightfully belongs to the people and will let the people decide on whether they want to take it into their own hands to be used for the general welfare.
Last updated: 11 May 2026