Energy crisis and social crisis – Miquel Amorós

The article above was circulated on an E-list to which I subscribe. I wrote the reply below, re-formatted for Libcom. Bold words in the formatted text are the ones to which I am replying.
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Readers will notice that the following critique of and commentary on Miquel Amorós' article relies heavily on Marxist categories. I make no apology for this. While Marx's economics are not without errors, his failings as a political activist are far more significant. The Anarchist critique of Marxism is a political, rather than economic, one. On economics, Marx is the essential point of departure for anyone wanting to understand capitalism. It should also be noted that some of the comments are not criticisms of Comrade Amorós, but rather points where I agree with and occasionally expand upon his analysis.

Energy Crisis and Social Crisis – Miquel Amorós

Every sector of the economy depends on it: energy of one kind or another. Energy makes the world go round and the power that rules the world is linked to the way energy is produced and consumed. The capitalist regime did not really gain momentum until the steam engine and the energy produced by the combustion of coal could be harnessed to industry. The initial dependence on coal was the cause of the vast size and appalling filth of the first industrial factories and cities; as the basis of the productive process, this dependence was responsible for the centralization of the entire system and the intensive exploitation of labor power. The internal combustion engine and the turbine put an end to the rule of coal, but not to the basic characteristics of society that had been created by it. Although the generalized use of electricity and gasoline made production more flexible and extended the range of consumption, facilitating the decentralization of factory production and the unlimited geographical expansion of the cities, social development continued to proceed within the framework that had been established by “carboniferous” capitalism: not only was the model of concentrated and hierarchical power maintained, but it was further reinforced by the new technologies. The refinement of machine production only reduced the role of the workers¹ in the productive process, intensified exploitation and stabilized the class order. The new technologies consolidated class society and reinforced the foundations of domination.

1. The role of workers was not “reduced”. Rather, it changed. Labour is still the essential element of the press, but the changing & developing division of labour is changing the way in which labour creates goods & services. It must be remembered at all times that, though machinery is an essential element of all production now, the machinery itself is the product of labour.

Petroleum and electricity allowed productive activities to be relocated far from primary energy sources, that is, they capitalized the world². The extreme separation between the production and consumption of energy made transport the main strategic factor and at the same time the weak link of the system. Any serious disruption in the energy supply would cause all of society to collapse very quickly³. Capitalism cannot exist without an extremely robust privatized⁴ distribution network to connect energy sources, which are under the control of financial enterprises or state-based mafias, with their consumer hostages. The expropriation of energy resources is a most instructive characteristic of social inequality: the proletarian from this perspective is the person who does not have unrestricted access to free energy⁵. This explains why the ruling class strives to maintain the private ownership of energy resources⁶ and thus to keep the population in the most complete dependence. By fighting against the socialization of energy resources, locally controlled power generation and distribution networks and consumption, the ruling class is simply defending its social status.

2. A correct and important point.

3. This follows directly from the fact that petroleum & electricity facilitated the separation.

4. The private ownership of distribution networks does not follow. Capitalism can very well exist with State-owned electricity networks and, in fact, has done so in most countries for around a century. Recent transitions to private ownership have often been accompanied by less robust networks, rather than more, because of skimping on maintenance.

5. This junks the meaning of the term “proletariat”. An essential aspect of the term is that the proletariat produces and, without its participation, production cannot occur. What Comrade Amorós is calling the “proletariat” is a mixture of the proletariat itself, the peasantry and the urban poor (a category much larger in the Third World than in industrialised countries and which appears in industrialised countries largely as the unemployed). His error here has major implications for his political strategy.

6. State ownership of energy resources is common in many Third World countries (OPEC members, for example) and still occurs in parts of industrialised countries like Australia. The State is the executive committee of the ruling class (though this does not make it a mere instrument which the working class can wield) and State ownership of any given enterprise or industry should not be seen as qualitatively better than corporate ownership.

Without cheap, inexhaustible and easily accessible energy⁷, industrial society cannot continue to grow. The ruling class became aware of this “energy reality” when oil prices spiked after the creation of OPEC in 1973⁸. The response was two-pronged: on the one hand, massive investments in nuclear power; on the other, the arms race of the great powers that was required by geopolitics, that is, the art of controlling of the world’s main oil and gas fields. The militarization of the world became indispensable for the system’s survival⁹. This was a deliberate choice: it was the only way that power and servitude could be maintained.

7. This is an overstatement. If the price of energy (measured either in money or labour) exceeds a certain high limit, industrial society cannot grow. If the price is safely below this limit, however, it is only a rapid increase in prices that will seriously harm growth. Otherwise, price variations mostly affect comparative investment returns between industries.

8. OPEC was created in 1960. OPEC moved in 1973 because the Yom Kippur War occurred slightly after oil production in the US had peaked and the US had first become vulnerable to a foreign boycott. The error is not fatal to Comrade Amorós' argument, but it does little good for the credibility of his other statements.

9. There were other paths that capitalism could have taken. The Third World movement, acting through UNCTAD, was agitating strongly for a very different one. Numerous reformist movements were agitating for a modified version of the existing set-up. What militarisation was essential for was the continued dominance of the US in a world where it had become a major energy importer.

During the 1970s and 1980s the market economy was subjected to an intensive restructuring process. The new type of capitalism, based on major technological breakthroughs and the deregulation of the labor and financial markets, displayed the special characteristic, unlike previous types, of not being susceptible to self-management¹⁰. Although the spectacular development of the forces of order and the methods of population control render the prospect of victorious popular revolts quite improbable, even if such a thing were to occur, these new developments make it likely that the new society would inherit the worst kind of situation. The expropriation of the means of production would not accomplish anything, since the system cannot be socialized, because those who would have to implement such a program would be compelled to reproduce all its features and all its defects. They would be forced to reproduce the social relations that such a system necessarily entails. Authoritarianism, bureaucracy, waste, techno-party-ocracy, division of labor, and the dependence and artificiality of a lifestyle based on the private automobile would remain intact if only the developmentalist tendencies and the form of property are changed, without changing the very nature of the system. The latter must be completely dismantled and reconstructed on new foundations. This will be the main goal of future revolutions¹¹.

10. This is perhaps the key claim of Comrade Amorós and is unsupported by argument. It is also one with which I disagree. In reality, the developments in the division of labour have improved the leverage of workers in some occupations as much as they have harmed it in others. For example, the auto industry now operates on just-in-time inventories and, in many places, uses semi-autonomous work teams, where workers collaborate in a non-directed manner to produce cars and solve production issues as they arise. Thus, the political subordination of the labour movement becomes more important to secure, since the subordination of labour through the production process is less secure. Further, to the extent that Comrade Amorós' argument is correct (it is at least partially correct in some industries), it does not date from the 1970s but from the beginning of the 20th Century, with the introduction of Taylorism.

11. Comrade Amorós is quite correct to say that the nature of the system the problem and that it must be reconstructed on new foundations. What he is missing, however, is the fact that the system cannot be reconstructed until it has been seized from the capitalists and brought under the control of the working class. He is definitely correct to warn that the working class cannot merely put the existing machinery of production under new management – but the correct conclusion to draw is that workers' control is a necessary but not sufficient condition for the social transformation which we need. The other necessary condition is the abolition of market relations between enterprises under workers' control. It is by abolishing market relations (i.e. instituting libertarian communism) that workers can come into full control of (rather than being controlled by) the instruments of production with which they work. With the abolition of market relations, workers can make rational decisions, based on human values, about the extent to which the products on which they work should be continued and, if so, the extent to which the process needs to be transformed. Further, it is the abolition of market relations which will abolish the distinction between paid and unpaid work and, in time, the distinction between work and play.

In a context like the current one, so favorable for control and militarization, the state has become more necessary than ever, since absolute obedience to the ruling interests is no longer an option—it has become compulsory¹². The limited supplies of energy resources, entering into conflict with the unlimited demand unleashed by an expanding economy, resulted in an “energy crisis”, understood by those in power in terms of “security”. From that point on, any protest on this terrain would be interpreted as a serious threat and therefore it would be quickly suppressed. Energy security became the condition sine qua non of the globalized economy, and as a result, planning with regard to this question would not be subjected to any kind of debate. During the 1990s the world energy market became the¹³ pillar of globalization. Guaranteeing a sufficient energy supply, regardless of the social cost this might entail, defined the “sustainability” of the capitalist economy.

12. This is a correct observation but, as can be deduced from my previous comments, it has a different cause than that posited by Comrade Amorós. Obedience has become compulsory because the control of the capitalists in production has become more tenuous. The “just-in-time” approach to inventories is financially irresistible, but it renders the company acutely vulnerable to short stoppages of production. A strike in one parts factory can bring a major manufacturer's entire production of cars in a country to a halt in a single day. They are more vulnerable, so therefore our obedience is more important. Further, semi-autonomous work teams render the management hierarchy less obviously necessary and can lead to dangerous thoughts along the lines of “they need us, we don't need them”. In these circumstances, the repressive forces of the State are strengthened, firstly to intimidate workers directly and secondly to discipline labour movement leaders who may be tempted to take advantage of the bosses' vulnerability in the workplace.

13. It is an overstatement to say that the world energy market became the pillar of globalisation. It is a pillar of globalisation. In this context, it is important to note that Liebig's Law of the Minumum (originally developed in agriculture) applies. The stability of the system depends on a range of factors and its vulnerability to disruption is determined by the least stable of them. In the common parlance, the chain breaks at its weakest link. The practical implication of this is that we cannot afford to have a one-dimensional analysis, waiting for the crisis in the world energy market. A fatal crisis for capitalism can come from several directions and we must be alert to them all.

The developmentalist solution of the energy crisis was, first: the creation of international energy markets, which led to the expansion of supply and transport infrastructures; second, an across-the-board increase in the prices of fuel and electricity¹⁴; and third, a whole package of policies: continuation of the nuclear power program, subsidies for industrial renewables, bio-fuel plantations, and the exploitation of shale gas. The destructive impact on the territory and the concomitant repercussions on people’s lives are the most important results of this crisis. A free life in a balanced geographical space will require not just a libertarian communist model of production, but an energy model based on the same principles¹⁵.

14. The increase of fuel and electricity prices is not a strategy for solving the energy crisis, but an expression of it. On the one hand, the approach of Peak Oil has led to a rising price of oil in order to bring successively more expensive deposits to market, while on the other hand, the vast economic development in China and many other Third World countries has led to a qualitative increase in the demand for coal and thus the price which suppliers can demand. Certainly there has been a political decision in most industrialised countries not to shield consumers from the price increases extracted by suppliers, but the fundamental impact of the price rise is felt in production, not in consumption.

15. This is an important point and one with which it is necessary that I indicate I agree. My disagreements with Comrade Amorós revolve around the role of the working class in making the revolution which abolishes capitalism, not what must be done once the capitalists are out of the way.

The new sociological concept of “energy poverty”, coined during the 1990s, reflects the situation of a growing part of the population that cannot pay its utility bills despite the overproduction of electricity. This is due primarily to the constantly increasing price of electricity, an outcome of the peculiarities of the “liberalization” of the markets inaugurated in 1995, the subsidies for renewables¹⁶ and the costs of the “transition to competitiveness”, all of which encouraged speculation and indebtedness, leading to prices per kilowatt-hour far in excess of any reasonable level. We must not, however, overlook the fact that the peak of oil and gas production is a constantly looming threat that pushes prices ever higher, even without taking into account the price gouging of the utility corporations. What is taking place is not merely a simple problem of oligopolies that are illegally fixing outrageous prices by making the consumers pay for their reconversion costs; it is also a problem of the increasing scarcity of fossil fuels, a circumstance that these same oligopolies are exploiting to their advantage. However, in order to exorcise the horrifying specter of an economy without enough electricity, or, which amounts to the same thing, an economy with electricity that is too expensive, because there is not enough oil or gas, the world’s leaders have conceived of a new strategy, that is, the “energy transition”.

16. The effect of subsidies for renewable energy is not a significant factor in increasing the price of electricity. In Australia, the Renewable Energy Target is under attack by energy companies for precisely the opposite reason. The flow of new wind and solar power onto the power grid is depressing the wholesale price of electricity and harming the profitability of companies with large amounts of coal fired electricity generation capacity. Of course, they don't say that in their public statements, because it would interfere with their chances of success.

This energy transition does not consist in a return to the nationalization of the energy sector, but rather, on the one hand, in financial incentives for investments in nuclear power plants¹⁷ utilizing a pseudo-renewable pretext, and, on the other hand, in the resort to the extractive technology of hydrofracking¹⁸. The only kind of nationalization that is being contemplated is that of the costs incurred by the construction of nuclear power plants and new energy infrastructure. This is a kind of partial eco-capitalism, vigorously supported by the green parties, who put their faith in industrial renewables, and even more so by international institutions, whose goal is to reduce the share of fossil fuels in world energy consumption, or at least to control their prices, while maintaining high rates of economic growth. The key to this conception appears to be the free market in energy, energy savings, efficiency plans¹⁹, energy deposits that have yet to be discovered, and expected technological innovations, all of which are very speculative and uncertain²⁰. The alleged effectiveness of fracking has helped to hold down prices during a favorable economic conjuncture characterized by declining demand. The profitability of energy resources, however, is undergoing an even more precipitous decline. Just to get an idea of how much it is falling, we can refer to the Rate of Return for Energy, the RRE—the relation between the quantity of energy obtained on average and the energy used in the extraction process—for conventional oil the RRE is currently 20 to 1 (in 1930 it was 100 to 1), and for non-conventional oil or gas it is only 1.5 to 1. In comparison, the RRE of traditional agriculture, without machinery, was 10 to 1. Since the RRE will continue to decline as the exploitation of new deposits proceeds, the energy crisis will continue to get worse and prices will continue to rise even in a stagnant economy, resulting in “energy” poverty and exclusion for increasing percentages of the population, until the time arrives when this crisis converges with other crises and becomes a social crisis.

17. It is important to realise that uranium nuclear power is a very short term proposition. Global reserves are not especially high and a significant increase in nuclear power production would exhaust them in a couple of decades. The only basis on which this could become a long term source of energy is with large scale deployment of breeder reactors, which would render depleted uranium a viable fuel. This, however, would vastly increase both the dangers of this appalling industry and its militarisation, due to the great amount of plutonium manufactured.

18. Fracking is much less useful as a source of oil and gas than many suppose, due to high decline rates in fracked wells. Current US production has only been able to be kept on a rising trend by increasingly greater amounts of drilling each year. This is, of course, unsustainable and is likely to cease in the near future. Even if fracking overcomes political opposition in other countries, it cannot long delay Peak Oil and Gas.

19. Energy savings and efficiency is an essential response to Peak Oil and Gas. Under conditions of abundance, energy efficiency leads to Jevons' Paradox – greater, rather than lesser, energy use. Under conditions of constrained supply, efficiency allows greater social and economic activity and will be an essential part of a libertarian communist society.

20. Undiscovered deposits and technological innovation are definitely speculative. They form the deus ex machina of the cornucopian critics of Peak Oil. The IEA's World Energy Outlook can be quite revealing, especially if one compares its projections over a period of successive reports.