Capital and Conflict in the Middle East

Differential Accumulation of Power: Breadth and Depth
Nitzan and Bichler propose that there are two main methods by which dominant capital can differentially increase its power: depth and breadth. Each of these methods can be further split into internal and external means. They point to internal breadth through mergers and acquisitions (M&A) as the primary method of differential accumulation, supplemented by external depth through stagflation (no, stagflation is not an anomaly of the Great Depression – the authors prove its recurrence throughout history!).

Nitzan and Bichler state that internal breadth – especially M&A – is the most important driver of long-term differential accumulation, with stagflation being useful to bolster M&A at certain points and in specific circumstances along the way. The term internal breadth itself simply denotes a differential growth in earnings achieved through labour movement between firms. The most important form of internal breadth is M&A.

[pullquote]This Weapondollar-Petrodollar Coalition accumulated power, expressed as profits, through an ongoing cycle of oil crisis and violent conflicts in the Middle East.[/pullquote]

The amalgamation of corporate assets in this manner increases the size and earnings of a firm relative to the average of all firms, without affecting that average or increasing capacity, and thus depressing prices. The real effect of M&A is to redistribute control over existing capacity and employment, and thus differentially accumulate profits, and power: “[mergers and acquisitions] directly increases differential breadth; it indirectly helps to protect and possibly boost differential depth (relative pricing power); and it reduces differential risk”.

While M&A covertly increases differential profit and power, it explicitly concentrates ownership of firms, as the acts of merger and acquisition are themselves nothing more than a change in ownership. This has led to an increase in concentration of corporate ownership and tendencies toward oligopoly in some sectors, notably including the oil sector and OPEC.

No Coincidence
According to Nitzan, the twin politicization of oil business and commercialization of arms transfers helped shape an uneasy Weapondollar-Petrodollar Coalition. The differential profits of these companies became more and more dependent on precarious interaction between rising oil prices and growing arms exports stemming from successive Middle East energy conflicts.

The 1950s and 1960s saw the major oil companies moving toward greater cooperation with the OPEC countries, under pressures of increased nationalism and more competition. “The success of this alliance was contingent on the new atmosphere of ‘scarcity’ and oil crisis, which was in turn dependent on the progressive militarization of the Middle East”.

Bringing arms dealers into the picture, the large US and European-based military contractors were faced with ever-more reliance on exports to oil-rich countries. This Weapondollar-Petrodollar Coalition accumulated power, expressed as profits, through an ongoing cycle of oil crisis and violent conflicts in the Middle East. OPEC governments and oil companies alike realized massive profits from soaring oil prices.

As seen before, prices are an indication of power, and with oil prices rising amid periods of conflict Playpokiesonline.org, it comes as no surprise that these same OPEC governments spent the profits of oil on “expensive weaponry in preparation for the next war” Furthermore, the power of OPEC and large oil companies was cemented by the concentration of a small number of giant global players in a controlled sector.

Both the large arms dealers and oil companies gained through Middle East conflict: one through a higher price of oil amidst conflict, a risk premium of sorts, and the other through larger military orders. The interests of these firms all converged on higher oil prices, and the mechanism for achieving this common goal was the militarization of the Middle East.

And the result? The Middle East remained a hotbed of international conflict, and “became the world’s largest market for imported arms, absorbing over one-third of the global trade”. This Weapondollar-Petrodollar Coalition began to lose power and profitability during the late 1980’s and was eclipsed in relative power by other business interests. However, it retained sufficient power to delay a global financial crisis in the early 2000’s, “[managing] to put the Bush clan back in the White House, inflame the Middle East, raise the price of oil”.

This is no conspiracy theory; it is merely the rich and powerful manipulating society to maintain their financial and business interests around the globe, and thus securing their dominance. It is no different than a corporate giant such as Microsoft acquiring or crushing nascent competitors – it is conducting business by any means necessary.

With profits comes the power to shape society, and if the maintenance of said power requires conflict in order to secure profitability, then those in power will seek war – and if history is any judge, they will likely get it.

ARB Team
Arbitrage Magazine
Business News with BITE.

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