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p Monopoly capital, having established its complete domination over the raw material resources of colonial and dependent countries at the turn of the century, dictated the prices of primary products for several decades. The postwar collapse of the colonial system did not lead immediately to the elimination or even to a marked weakening of this domination. The emancipated countries were not in a position in the early postwar years, because of their economic dependence on the industrial centres, to exert any real influence on the international price system. It remained, as before, under the unrestricted control of the leading monopoly groupings.

p A change in the role of developing countries in the capitalist price system was, however, inevitable. Quantitative changes built up gradually that were to pass into qualitative ones, especially where the newly free countries had succeeded in substantially limiting the operations of expatriate primary commodity monopolies and getting fairer prices for the primary products they exported. Convincing evidence of that is the success of the oil-producing countries in their fight to establish real control over their natural resources. The publisher of the West German Aussenpolitik, Heinrich Bechtoldt, had good grounds for stating that

p Both the nationalisation and the oil price explosion could be foreseen by experts a long time in advance... The Arabs had already once tried to use oil as a weapon in 1967 following the Six-Day War. There was then still no talk of a price explosion.  [306•1 

p The oil-producing countries’ subsequent fight against the dominant position of expatriate monopoly capital in 307 their economies had a marked and varied effect on price formation in international trade.

p Their gains led, much more than those of other groups of developing countries, to the monopoly price machinery for primary commodities backfiring badly at the beginning of the 70s. The industrial centres’ dependence on supplies of oil and other energy sources from developing countries, which had been growing in recent decades, in turn made for a disturbance of the operation of this machinery on just one sector affecting the whole set of world capitalism’s primary product connections with special force.

p A situation was created that has been characterised everywhere as the ’energy crisis’. This crisis, developing on a general background of a sharp aggravation of all modern capitalism’s main raw material problems, was associated in the first place with the structural changes in international trade arising from the weakening of the imperialist powers’ colonial-raw material monopoly in the world economy. During its evolution the bankruptcy of monopoly capital’s old, traditional methods of economic diktat, and also of some of its neocolonial methods, began to be more and more clearly demonstrated.

p What happened on the oil market in the 70s? During the preceding decades of this century the Western monopolies, as we know, completely dominated the oil industry of the capitalist world. In the colonies and dependent countries their domination was founded in its time on dictated concessions distinguished by the length of their terms (60 or 70 years or more) and the huge areas possessed by the oil companies. The exploited countries, as a rule, received comparatively small fixed sums, or ‘royalties’ for the concessions. Right up to the beginning of the second half of the century almost all the concessions in colonial and dependent countries were in the hands of eight major oil monopolies, linked together in an international cartel. They in fact decided the fate of the world oil market and were able arbitrarily to fix both the volume of oil extracted and its prices.

p In the 50s and 60s the members of the cartel were forced more and more to abandon the old concession conditions to some extent, under the pressure of the new sovereign states (relying on the all-round support of the countries of world socialism) and of the consequences of the intensification of inter-imperialist rivalry. Initially the principle of a 50:50 308 sharing of the profits began to be introduced (profits, true, from the monopoly-low, ‘posted’ price set by the oil companies themselves). But individual countries had then already succeeded in wringing agreement to a certain participation in the sale of their oil from foreign capital.

p We must also note here the role played in undermining the oil cartel’s monopoly positions in the Near East of the competition of big Western ‘outsiders’, which grew rapidly with the break-up of the colonial system. The contracts signed by the national oil companies of Egypt and Iran in 1957 with the Italian public company ENI became of considerable importance. Under them the profit was shared 75:25 in favour of the oil-producing country.  [308•1 

p Similar principles underlay several subsequent agreements with Western oil companies. Their role, however, and that of royalties still remained comparatively small as a price-fixing factor for several years. Only at the beginning of the 70s was there a marked turning point in this respect. The oil-producing countries began to be transformed into
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OPEC Members’ Income from Oil Table 40 Country Ayerage price of oil per barrel (dollars) 1974 1979 1980 1970 Saudi Arabia 0.83 6.54 17.52 28.77 Iran 0.86 8.40 22.89 35.08 Venezuela 1.09 10.62 16.76 24.96 Libya 1.09 13.89 21.61 38.83 Kuweit 0.83 7.73 23.77 37.46 Nigeria 1.09 8.92 21.03 35.44 Iraq 0.96 10.15 19.71 31.62 United Arab Emirates 0.92 6.68 19.52 31.74 Algeria 0.91 10.57 21.76 35.90 Indonesia 0.67 6.52 19.03 32.40 Qatar 0.92 8.46 22.32 35.18 Sources: Petroleum Economist for the appropriate years. 309
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the real owners of their oil wealth, as the growth of their income from oil produced on their territory in the first half of the 70s in particular shows (see Table 40).

p As will be seen from the figures the oil-producing countries were not, by any means, able to wring equal concessions from the oil monopolies. Saudi Arabia, the United Arab Emirates, and Indonesia had the lowest income per barrel of oil produced, and Libya, Venezuela, Iran, and Algeria the highest. On the whole, however, the income of the 11 OPEC members per barrel rose roughly tenfold in this period, and their total receipts from oil by a factor of 11.5 (from $ 7.7 billion in 1970 to nearly $ 90 billion in 1974), most of them coming not from royalties and income tax but from direct sale of the oil received by their governments as their share of the production of oil. In these years, consequently, there was a breach on many sectors of the system of monopoly-low oil prices built up by imperialism over many decades. The whole course of subsequent events demonstrated that, in spite of monopoly circles’ immense efforts to maintain this system in today’s conditions, the outlook for a return to the old diktat is becoming as Utopian for the monopolies as to expect the oil-producing countries to refrain in future from active participation in the fixing of prices on the world market.

p This reality has begun to be more and more clearly recognised in the West. The influential American journal Foreign Affairs, noting the substantial changes in the system of fixing world oil prices, and in the trading terms, wrote in 1974:

The first key fact that must now be recognized is that the position of the international oil companies has changed completely over the past few years. Up to about 1969 the major concessionholding companies still could determine levels of production, investments, exports and prices. Moreover, they still possessed substantial bargaining leverage in their negotiations with producing countries, largely by virtue of the surplus producing capacity that obtained in the Middle East and even in the United States... All this is now gone.  [309•1 

Moreover, as the journal said, the producing countries have now deprived the international companies of all these rights, and the latter have lost their leverage in them. The British economic press had repeatedly said that since 310 the number of producing countries in which production has been or was intended to be nationalised was growing, the traditional concessions would be liquidated, and with them the posted prices that had been fixed for the companies’ accounts with the governments of the producing countries.

p Many statements appeared in the Western economic literature from which it was obvious that the old mechanism for operating monopoly-low prices not just for oil but also for primary commodities in general had already lost its former effectiveness, and that the era of cheap colonial commodities was over, never to return, while the newly emancipated countries’ national sovereignty over their resources was acquiring a more real economic meaning in price formation on the world capitalist market.  [310•1 

p The changes in the price level of other types of primary commodity in the 70s were less significant than those of oil. But as nationalisation of expatriate raw material monopolies proceeded in many primary-producing countries the tendency to organise processing of their own primary commodities gathered strength.

p Several groupings of countries exporting primary products and foodstuffs have been organised in the past ten or fifteen yeajs, in addition to OPEC. They have the same aim, viz., to get juster prices for their exports, a rise in income tax from enterprises belonging to expatriate monopoly capital, the establishment of effective control over the latter’s operations, and so on. The groups include, for example, the International Bauxite Association, the Intergovernmental Council of Copper Exporting Countries, and the Union of Banana Exporting Countries, etc.

p The tendency to form such organisations was specially stimulated by the clear success of OPEC’s struggle. The New York Times Magazine had to make the following very characteristic recognition of this:

p But while the O.P.E.C. action has left the industrial countries (the developed capitalist countries—Auth.) frustrated, angry and suspicious of one another, the rest of the world has greeted the oil-price increase as an act of justice. Even the poorest countries, for whom the new prices are an impossible burden, have 311 pointedly refused to make common cause in public with the industrial world against the producers’ cartel.... Indeed, encouraged by the success of the O.P.E.C. nations, they are now dreaming of creating their own cartels and forcing the industrial world to pay more for all the other raw materials it needs, from bauxite and copper to the humble banana. For them, the real lesson of the oil-price increase is that the poor and dispossessed have finally turned the tables on the rich and are forcing a redistribution of the world’s wealth.  [311•1 

p All this means that the features of the 70s movement of world commodity prices came about not only through the operation of exclusively economic factors but also reflected the changes at present taking place in the balance of political power between the main groups of countries in the capitalist economy.

p It by no means follows, however, that the developing countries’ anti-imperialist struggle for genuine independence has already decisively altered the balance of power between them and imperialism in the field of price-fixing or in other areas of the world economy. The tendency considered is simply evidence of the beginning of this struggle’s transition in the 70s to a qualitatively new phase. It is developing in conditions in which Western monopoly capital still has an immense economic potential and considerable means of socio-political and economic pressure on the developing countries, and still holds the key positions in the capitalist world economy. This struggle, too, will undoubtedly be protracted and stubborn.

p It is significant that the price increases on the capitalist oil and other commodity markets did not lead to a reduction in the incomes of the commodity monopolies in these years, but rather to a precipitous rise in them. According to the Chase Manhattan Bank, for instance, the profits of the biggest U.S. oil companies rose on an average by 70 per cent a year at the height of the energy crisis and so doubled in 1973-74, reaching $ 22 billion. In the following years the monopolies’ incomes reached record new heights. Those of U.S. corporations concerned with processing energy sources (oil and coal) alone increased by 560 per cent between 1970 and 1981 and were above the annual level of nearly $ 100 billion at the end of this period.  [311•2  There were considerable increases as well 312 in the incomes of other groupings of Western primary product monopolies, which, in dominating the world market, first skimmed off the cream from the rise of prices, and in fact gambled on raising prices. The increase was laid mainly on the ordinary consumer and the working masses of both capitalist and developing countries.

p A faster growth of prices of products exported by the industrial countries remained the determining trend as a rule in the movement of world prices for most types of primary commodity at the end of the 60s and in the early 70s. Only in the mid-70s did the general index of price rises for commodities exported by developing countries slightly surpass the corresponding index for developed capitalist countries. That happened, however, mainly because of the increase in oil prices.  [312•1 

p As exporters of primary commodities the developed countries remained in a more favourable position on the world market than the developing countries both during a decline and an increase in their prices. It is also quite wrong to suppose that all the proceeds from exports remained at the disposal of the primary-producing countries themselves. The fact is that the foreign trade of most of them is still largely under the control of expatriate monopoly capital. And it is impossible to equate the nominal sums of their export receipts, calculated from the customs returns, and their real income from exports of primary commodities. There still remains a great gap between them, even since the break-up of the colonial system.

p We must remember, above all, that many developing countries by no means yet get the full export proceeds in practice, when their exports are made by enterprises controlled by expatriate monopolies, but as a rule only part of it, often, moreover, only in the form of royalties. It needs to be noted in this connection that while a greater or less unity of the prices for commodities dealt in on the world market used to be characteristic under free competition, a plurality of prices arises under the domination of monopoly capital. There are simultaneously several different price levels for the same commodities on today’s world market. This considerable and ever growing difference, which is the result of the operation of various spontaneous factors, 313 depends primarily on the balance of strength of the trading partners, and so favourable conditions are naturally created for the powerful monopolies to dictate prices.

p In addition, the developing countries are forced to pay considerable tribute to expatriate monopoly capital under such items of ’invisible exports’ as insurance, freight, etc. There are also oilier levers that expatriate capital employs in the price field, including monopolies’ buying up of the commodities of petty producers at extremely low prices, all sorts of brokering, forward contracting, cartel agreements to maintain low purchasing prices, false entry of stock changes, and so forth, which enable the price of internal purchases to be differentiated from export prices. The prices of commodities often snowball on the way from the exporter to the consumer, and a great gap arises between the prices declared to the customs and the real prices that the consumer pays.

Commodity-producing countries suffer immense losses from the constant fluctuations of the prices of goods exported and imported by them, fluctuations that are not only linked with spontaneous changes of supply and demand on the world market but also reflect the speculative policies of international monopolies endeavouring in every way to employ the price machinery in international trade to put the maximum possible pressure on weaker business partners. This machinery remains a kind of gigantic pump within the international capitalist division of labour even since the break-up of the colonial system, that helps monopoly capital suck up the wealth created by the labour of the people of economically backward primary-producing countries.