Jim, My complete name is Aldo Fabian Balardini. I go by Fabian, I never use Aldo unless I fill out paperwork where they request my first name like the name you see in my e-mail address. Sorry for the confusion. _______________________________________________________ >>> [EMAIL PROTECTED] 03/09/04 09:59 AM >>> >>> [EMAIL PROTECTED] 03/08/04 23:56 PM >>> There is an oil cartel, but like any cartel, it is limited by supply & demand -- and their ability to unify to restrain output levels. Oil pricing is thus partly dependent on OPEC. It can take advantage of abundant demand -- but might fail to do so.
_______________________________________________________ Fabian: so you're theory of oil price is basically the dominant cartel theory used by neoclassicals unless it is different in some other way? Which way? _______________________________________________________ JD: me again: as I see Marx's theory, the _identity_ of the high-cost producer changes with the amount of demand. With high demand, the highest-cost producer has higher costs than the one when demand is low. _______________________________________________________ Fabian: The high cost producer in the oil industry since the 1970's has remained the US no matter what happens to demand. So according to Marxian theory, the US should determine the price of oil throughout this period. Agree? _______________________________________________________ JD: BTW, on the level of price determination, I don't see a big difference between Marx's rent theory and that of Ricardo or modern neoclassical economics. The big difference is that for Marx, rent was a form of surplus-value (produced by labor), so that increasing rent reduced other kinds of surplus-value (assuming that the value of labor power is constant). _______________________________________________________ Fabian: When it comes to price determination of agricultural goods (Marx uses coal in his tables in TSV) the dominant interpretation says that there is no difference between Ricardo, Marx and even Smith. However, a closer reading of Marx in TSV points to a different theory of price determination as Marx criticizes Ricardo for insisting INCORRECTLY that price of coal is ALWAYS determined by the least productive mine. The other difference is on the definition of absolute rent. The standard reading of Marx, including Bina's, says that absolute rent is a function of value transfers among different sectors according to their organic composition of capital. The outcome of this interpretation is the inability to explain rent in oil since it is a sector with high organic composition. The implication of this is that some of the least productive wells in the US can be rented for free. There is a major difference between Ricardo and Marx (as interpreted by the traditional theory) on the price of oil being determined by the marginal producer. In neoclassical theory, OPEC is the marginal producer, in Ricardian/Marxian theories the marginal producer should always be the highest cost producer (US) since the oil produced by US wells are necessary to satisfy demand. Neoclassicals argue that somehow OPEC can calculate the difference between world demand and the competitive fringe supply and provide the letover supply needed to meet current demand, all this has to do with the assumptions of market power underlying their cartel models. BTW, the cartel theory of OPEC has no empirical support as shown in Alhajji and Huetner.
