SocialismToday           Socialist Party magazine

Socialism Today 140 - July/August 2010

Oil, destruction and profits

The chaos of capitalism

WORDS FAIL to fully describe the devastation in the Gulf of Mexico. Eleven lives lost, ecosystems destroyed, thousands of livelihoods ruined, and the calamity continues. This will become the greatest environmental disaster in US history. A year ago, BP, the oil company leasing the rig, did an environmental study of the operation. This claimed that there was almost no possibility of a severe failure which would produce a large oil spill. This incredible statement was accepted by the US government. At first, BP denied the leak even existed. Next, they denied the horrific scale of the spill. Then, they denied that the oil plumes were beneath the ocean’s surface. This arrogance has fuelled public outrage.

Tens of thousands of gallons of oil leak into the gulf every day. It is difficult to get a full picture of the problem because of BP’s lies and the fact that many reporters have been blocked access. "Journalists struggling to document the impact of the oil rig explosion have repeatedly found themselves turned away from public areas affected by the spill, and not only by BP and its contractors, but by local law enforcement, the coast guard and government officials". (New York Times, 10 June)

The cleanup will take decades. The lawsuits will as well when the families of those killed and injured, and the fishermen affected, try to pry money out of BP’s hands. "There is sure to be a comprehensive settlement with BP. But if the litigation following the 1989 Exxon Valdez spill is any indication, a slow-moving legal battle lies ahead; parts of those lawsuits are still being fought in court" (New York Times, 9 June)

The damage is done and, unfortunately, a BP spill was predictable. BP accounts for 97% of the energy industry’s "wilful, egregious safety violations", reported ABC news on 28 May. This drive for profits and corner cutting helped BP rack up $5.65 billion in profits through the first quarter of this year alone. BP’s cute green sunflower logo and ‘Beyond Petroleum’ ad campaign show the lies and cynicism of corporate ‘green marketing’.

Decades of deregulation

THE OIL companies are not alone of course in showing a relentless, unflinching drive towards colossal profits and handouts at the expense of everything else. Taxpayers were robbed by the big banks and politicians to the tune of hundreds of billions of dollars to bail out the corporate thieves who made billions foreclosing homes and cynically betting against our futures while providing no meaningful public service. William Greider described the 2008 bank bailouts as "an historic swindle of the American public – all sugar for the villains, lasting pain and damage for the victims". With the continued job-loss ‘recovery’ and budget cuts, that pain and damage is still throbbing with misery.

In a report published just before the financial collapse of 1998, Timothy A Canova, a professor of international economic law, wrote: "By 1995, the sub-prime loan market had reached $90 billion in loan volume, and it then doubled over the next three years… Meanwhile, by March 1998, the number of subprime lenders grew from a small handful to more than 50. Ten of the 25 largest subprime lenders were affiliated with federally chartered bank holding companies, but federal bank regulators remained unconcerned".

Remember that this all occurred with Bill Clinton as president. The financial and housing bubbles that grew to encompass the globe were expanding rapidly under the Clinton administration. For decades, the ruling elites in the US have put forward the need for the government to ‘stay out of the economy’. Of course, that was until their financial system collapsed, and they got handouts of hundreds of billions. Unfettered corporate domination, an open ideology of the Bush administration, has actually been the policy of both Republican and Democratic parties for decades.

Before BP and the big banks there were corporate rip-offs by big energy companies (most notably Enron). They shifted away from providing services towards price gouging, deliberate downsizing and dishonest bookkeeping. Rolling blackouts, increased consumer costs, and corporate corruption became the norm not only for the infamous executives involved in the Enron scandal of 2002, but also for the energy industry as a whole. All for profits – at the expense of workers and the environment.

Corrupt corporate watchdogs

WHO MAKES these corporate decisions? The CEOs. Yet, who elects CEOs? When did you vote for a stockholder? Ever have an election for increased wages or better benefits in the workplace? If capitalism is so efficient, then why do the terrible economic or environmental disasters keep taking place?

Our society creates products designed to fail (light bulbs, cell phones), and human potential is wasted in poverty, under-funded schools and meaningless jobs. The best scientists work on bombs instead of cancer cures or environmental cleanup. Clearly, the corporations cannot be trusted, and they will not police themselves. Unfortunately, that is exactly what has been happening. The Minerals Management Service, the main watchdog in the oil industry, has been caught in a scandal including corruption, gifts, sex and drugs during their incestuous relationship with big oil corporations. (New York Times, 10 September 2008)

Sensationalism aside, this reveals the complete inadequacy of the US government to be an effective watchdog. Acting inspector general, Mary Kendall, reported that she was particularly concerned with "the ease" with which federal inspectors "move between industry and government". This story is only a snapshot of a bigger picture.

Tens of billions of dollars are handed from the oil barons to politicians every year, distributed between both major parties. The figures are even more startling when considering the billions being handed from the big banks to politicians. When both political parties are funded overwhelmingly by big business, we cannot expect them to effectively regulate the people pulling their strings. Take for example the ‘financial regulation bill’ currently being touted by Democrats. The Wall Street ‘reform’, like the health reform bill, has big business writing the rules for their own game. Derivatives, complicated schemes for big banks to bet billions, were the initial target of the financial reform being discussed in Congress.

Matt Taibbi, in an excellent article in the May edition of Rolling Stone magazine, pointed out: "Five of America’s biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan’s trading revenue between 2006 and 2008 came from such derivatives".

He chronicled how these massive financial vultures then unleashed an army of lobbyists on Washington in a series of manoeuvres designed to take the teeth out of the bill and keep politicians from both parties beholden to Wall Street. It worked. Derivatives remain unregulated in current legislation. Joe Nocera, business journalist for the New York Times, wrote: "There is something oh-so-reasonable about this bill, as if Congress was worried that they might do something that would – heaven forbid! – upset the banking industry".

Systemic failure

THIS IS not just a failure of BP, TransOcean, Halliburton and the government. It is a bubbling, raw, staggering indictment of corporate negligence and the failure of regulation under capitalism. The Pentagon recently produced a report which points to growing oil scarcity. It states that, by 2015, worldwide "the shortfall in output could reach nearly ten million barrels per day". As the world uses 90 million barrels a day now, and consumption is rising, a shortfall of 10% is bad news. So, oil companies and governments around the world are seeking oil in ever more dangerous circumstances and from more polluting sources.

Instead of a race to address climate change, under this system where two corporate parties share power, our government is directed by the interests of big business. The business plans of BP and other corporations do not take into account the need to provide necessary services or environmental sustainability, let alone precautions against death and destruction. Instead, business plans have only one motive: profits. The question is, how to challenge this corporate control of society?

Immediately, BP should be taken into public ownership. Its books should be opened to reveal all safety expenses, executive salaries and potential scientific personnel. The company should be run by the public with all profitable assets seized and put towards the cleanup. The publicly-owned BP should train and put to work, at union wages and benefits, the engineers, environmentalists and scientists capable of minimising this horror. Many influential commentators, like former US labour secretary in the Clinton administration, Robert Reich, are calling for some form of "seizing BP". The mistake that Reich makes is that he then wants to hand the corporation back into private hands and does not see the overall conflict of interest between people and profits.

In the cleanup, rather than putting the world’s best minds to work on this problem, one company has cornered the ‘market’ for this tragedy. This shows the irrational chaos of the system we live under. Not just resources but also human potential is wasted by capitalism. Short-term profits cannot address either the cleanup or the need for a sustainable planet. The long-term view of corporations and the governments they control are rarely discussed. The periodic glimpses into the future by our world’s leading lights revolve around ‘market share’, ‘capturing revenue’ and raising enough money to get elected.

The socialist alternative

THE SOLUTIONS to the urgent problems of the environment, world poverty and increased despair will not be provided by the rich and powerful. Indeed, it would be utopian to think so. Instead, workers and young people need to get organised to fight for a better future. We need coalitions to demand jobs, social services and workers’ rights. While there is colossal anger against Wall Street and BP, to change these policies we need to build mass demonstrations and a working-class political alternative to counteract these continuous attacks, sell-outs and watchdogs without bark or bite.

By exposing the details of corporate greed and mobilising the public, unions and community groups, an effective check on corporate corruption could be introduced through democratically elected committees from the grassroots subject to recall by working people. A democratically-run movement, resisting corporate domination, running candidates without corporate funding, and with an elected and accountable leadership, could stop the onslaught of environmental destruction, budget cuts and job losses. This movement could also provide a vision for a better society through both actions and programme.

We need energy to be a right and a service, not an industry. The energy industry is potentially destroying our future without a plan to save the planet. Energy companies like BP should be democratically controlled, run by the workers themselves, and linked to a plan of sustainable production. We need an economic plan to meet the needs of all. Enough food could be sustainably produced to feed the planet multiple times over, yet millions starve.

There is the basis and technology for renewable energy and public transportation, yet oil spills and climate change continue. Human means of communication have reached astonishing levels, and we could harness that towards democratic involvement in the economy and decision-making through a voluntary socialist federation of North America and eventually the world. Economic and environmental devastation knows no borders, and our struggle against corporate control must be international as well.

Capitalism is about maximising profits at all costs, creating new markets, searching for the cheapest labour force and cutting corners for stockholders. We are told constantly in the media and by politicians that capitalism is efficient and democratic. Instead, we have unelected CEOs and overlapping stockholders for corporations making the key decisions that affect our lives. Business interests do not just ignore our best interests. They actively fight against our need for jobs, services, good wages and a sustainable future. That is why need to build a socialist society, which can end the domination of our society by corporate interests. Then, decisions would be made by ordinary people through democratic discussion and decision-making. An environmentally sound world to meet the needs of all would be possible. But we have to get organised and fight for it.

Bryan Koulouris

Socialist Alternative (CWI USA)


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