Petro-Dollars & Post Fordism global variables
By: Hussein Al-Rumaithi
One of the questions that has a unilateral answer by majority of Muslims and Arabs is, ‘what are the western powers doing in the Middle East?” The answer that will be presented for this question is: “they are after our oil”. However, this answer might be somehow true if we were living in post WWII, when Fordism and Keynesianism was the prominent way of life that drove politics, economics and social evolvements. Nonetheless, since the mid-70s or specifically after the global oil crisis in 1973, the rationales and tendencies of western powers regarding their foreign policy in the Middle East shifted drastically in an entirely new and different direction. The priorities of the western world in that part of the world had changed, as the entire western political and economic system was evolving and shifting itself toward new means, as the old system was viewed as limitation on benefiting from global economy.
Fordism & Keynesianism
The notion of Fordism and Keynesianism is applied to the time after WWII (1945) until mid-1970s, where the global economy was entirely dependent on oil, as almost all commodities and prices were linked to oil. The characteristics of western societies during that period, which was named after Henry Ford can be summarized in the following points:
- Giant manufacturing firms, where assembly lines and division of labour was sought to be the best way for mass production of standardized goods.
- High wages, job protection (unions) and growth of Middle class.
- Suburbanization or manufacturing regions.
- Heavy participation in politics.
- Heavy government intervention.
Therefore, once the oil crisis hit the global economy the western powers were facing what was known as the ‘legitimacy crisis’, as majority of people lost the hope and trust in their governments, since they were unable to address the rising prices and stagnant growth. This crisis was mandating a drastic and total evolvement and change, as diversifying the global economy was becoming a necessity since alternative sources of fuel and means of revenues were becoming necessitated.
Post-Fordism & Neo-Liberalism
As mentioned earlier, the old system was viewed as a limitation on benefiting from the global economy, which was rapidly growing in different parts of the world. Therefore, the states shifted their intervention toward facilitating globalization and free-trade. Due to this shift, majority of large corporations and manufacturing firms moved their operations to the (third world countries) or what is known today as the developing world or global south. This action, which was as a result of multi-national corporations forming in various part of the world, enabled those companies to maximize their revenues, as high wages and job protection means were not sought in their new locations.
In addition, to diversify the local economies of western societies and address the employment plunging rates, emphasis on new industries was introduced. Finance, Insurance and Real State were the new industries that were leading the global powers, and all the previous upper giant manufacturing firms had to adopt to the new system. Therefore, to facilitate the growth of those new industries, empowering new means of evolvement and sufficiency was conducted by emphasis on high-tech and innovational firms. Silicon Valley, Seattle, Wall Street and other destinations were rapidly becoming the new economic giants leading the global economy, as they were creating and developing various means revenue generation and alternatives for diversification.
As the technological superiority of the west grew the tendency to reduce dependency on oil was increasing, as corporations started researches to develop new sources of fuel. Wind Turbines, electric generators, nuclear reactors, Hybrid technology, Flex Fuel capability and most recently the technology to extract oil and fuel from sand was the last path to achieve energy and fuel alternatives.
In addition, the new world had introduced certain cities that were controlling the entire global economic system, and even the oil market was being driven by these market and their supply and demand ratios. Places, like New York, London, Tokyo, Beijing and ultimately the new emerging economic powers (India, Brazil, China, Indonesia and Russia) developed a system were the entire world market is dependent on their market and its fluctuation. Therefore, oil was not the driving force of world economy any more, as even oil producing countries have realized that high prices of oil are not in their benefit, since such a notion would only encourage the tendency to develop alternative sources of energy.
However, to conclude that oil is no factor in Middle Eastern politics is a vague and inaccurate statement, as the impact of petro-dollars in Middle Eastern politics is very evident and affectual. The revenues generated by oil has enabled Middle Eastern states to adopt a distributive system, where wealth is allocated according to political agendas, legitimacy and containment means. Presently, it is obvious that oil producing countries (Gulf States, Iraq and Iran) are the centre of various regional conflicts and tensions, were petro-dollars fuel proxies and direct military intervention. Therefore, other priorities and necessities such as global security, economic security and collective stabilization of the Middle Eastern region have mandated western powers to re-shape their involvement in this part of the world.