Editorial

From Cold War to Price War

From International Socialism (1st series), No.2, Autumn 1960, p.3.
Thanks to Ted Crawford & the late Will Fancy.
Transcribed & marked up by Einde O’Callaghan for ETOL.

It cannot be denied that Russian oil in Havana or in New Delhi is politically committed; in the one case to underpinning Castro’s intransigence toward American imperialism, in the other to lending some substance to Nehru’s famous neutrality. But there is more to it. Western official comment on news of the oil shipments was too startled, its anxiety too marked, to be considered merely a conditioned response to a routine shift in Cold War fortunes. There seems to be a growing realization that Russia is beginning to present an economic challenge to western capitalism potentially far more pervasive and threatening than the politico-military challenge of recent years.

Russian oil exports are not, as yet, very large. The 20 million or so tons that will find their way to markets this side of the iron curtain (of which some 16 million to western Europe) will form no more than 2-3 percent of expected consumption. But they are dangerous for western oil combines. Russian oil is being offered to Cuba and India one-third cheaper than any other oil; the oil agreements are part of wider commercial agreements and payment is made, therefore, in goods not in dollars, thus avoiding balance-of-payments difficulties; the parties to the transaction are Governments which can bypass the expensive marketing organizations essential for the functioning of private oil monopolists. In short, for the first time in their history the Big Seven are up against a monopolist that is bigger and more powerful than they, for it includes the entire Russian economy.

So far, it is the oil combines that have most to worry about. But there is nothing to prevent the Russian bureaucracy serving the others with the same sauce by exporting, ultimately, a range of goods – from machine-tools to watches, aluminium to excavators – at prices tailored to the market, at terms more favourable than can be obtained elsewhere.

True, progress has been modest to date. Eastern Bloc exports to the rest of the world have risen from 2 percent of the world total in 1953 to only 2.5 percent in 1958 (and might now have touched 3 percent). But they have been rising at one of the fastest rates in the world (an increase of 75 percent between 1953 and 1958 compared with a world increase of 45 percent) and they are based on one of the fastest-growing industrial economies. Western monopolists have reason indeed to fear the greatest monopoly of them all.

As of now, these developments can be seen only in vaguest outline. The denouement is not yet with us. The Russian economy still cannot challenge western capitalism all along the line; the latter is still capable of adjustment to meet the challenge.

It is this adjustment we have to fear. ‘If Russia cuts prices, so must we’ is the likely refrain (the oil companies have already knocked 11 percent off their list prices to India); ‘therefore no wage increases’ is the likely conclusion. More generally, greater competition easily translates into pressure on prices, pressure on profits and thence pressure on wages as the monopolists try to shift the burden of anarchy on world markets on to the working class (and on to the weaker ‘client’ economies). And as this working class pushes against an ever-narrowing horizon of reforms, as each gain becomes more difficult to achieve or to defend, the span between sectional demands and total demands, between reform and revolution, will narrow.

This then is the threat and this the promise. Russian oil exports look to be the harbinger of mighty economic conflicts between the giants of capital on either side of the Iron Curtain. The working class cannot remain unaffected. It must either be crushed in the struggle between them or rise to power by destroying the contenders. There is no doubt that the conditions for such a choke will mature slowly. There is also no doubt which alternative is in the interests of mankind at large.

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Last updated on 14 February 2010