This valuable book by leading economists makes an uncompromising case for doing something, immediately, about the devastating effects of international resource extraction on nations and their economies. The book focuses almost exclusively on oil. Certainly, the national and international oil corporations have much to answer for, including massive corruption, local wars, unbelievable levels of environmental rapine and wreckage, and above all massive political distortion in the direction of totalitarianism and non-transparency. The picture that gradually emerges is not pretty. Big Oil is the de facto ruler of several countries, and they are typically totalitarian and characterized by considerable inequity; many are violence-torn. In a few countries, however, national governments have been able to control their oil and their oil industries. Norway and Scotland may have had an easy time because of age-old social institutions that gave them leverage, but the surprising success of places like Oman at dealing with oil deserves more attention.
The book is best at detailing economic and political-economic solutions, starting with transparency, which many of the authors argue is the most basic need. Authors discuss economic problems and benefits with oil funds (as in Alaska), various kinds of contracts, various ownership systems, and various types of rule systems.
This book is basic, and sobering, reading for anyone who worries about the global economy. It is also basic and sobering for anyone who believes that "the free market" or anything resembling it operates in today's world. The oil corporations are either outright governmental ones (as in Mexico, Indonesia, China, and much of the Middle East) or parastatal, former parastatal, or de facto parastatal firms like British Petroleum, Shell (nee Royal Dutch Shell), and ExxonMobil (a de facto parastatal under the Bush regime). The U.S. subsidizes big oil, directly and indirectly, to the tune of hundreds of millions of dollars a year. One indirect subsidy is allowing energy companies to pollute and warm the globe. Big oil has considerable power over whole governments in most oil-producing states. "Corruption" is too mild a word. Yet, much modern political analysis turns on concepts like "neoliberalism," implying that the free market is advancing and governments are losing power. The exact opposite is happening: governments and corporations are fusing and taking over more and more power.
The book has some problems. First and worst, it shows the limits of economics. It identifies the economic problems, correctly labels them as part of a wider political problem, and then leaves it to the politicians. There is some rather ad hoc concession to the obvious problem of how to get the politicians on board. Revolutions haven't worked; militant governments like the Chavez administration in Venezuela don't seem to be solving it. What to do?
Second, oil is unique in some ways, though typical in others, and doesn't always make for policies that apply across the board. One wishes there had been at least one chapter on forests, international logging firms, and deforestation--a worse problem than oil in Brazil, Indonesia, Malaysia, and many other countries.
Third, the book pussy-foots around the case of the United States. The US government under oilmen G. W. Bush and Richard Cheney has been essentially an arm of big oil, and has had all the problems noted herein for the Third World. Consider the infamous secret meeting--the minutes still held secret--in which Cheney and energy company leaders determined energy policy for the Bush tenure. As of this writing, Bush and Cheney are desperately trying to jam through yet more executive decrees giving away vast tracts and privileges to big oil--in defiance of economic sense, let alone environmental concerns. If, as appears, the United States is more or less in the same boat as Equatorial Guinea and Angola, the world is really over an oil barrel, and the need for a serious look at political solutions is all the greater. One hopes that Obama will fix the situation, but he has his work cut out for him.
The dominance of giant primary-production interests--big oil, logging, mining, agribusiness, and all--over whole nations and nation-blocs is the great phenomenon of our time. I have been worried for 40 years about its steady increase, and am glad to see that the economists have finally caught up with me. People listen to economists; in the last 200 years they have taken over from philosophers as the people whose words shape nations and empires. For too long they have been braying about free enterprise (as if it existed), and saying that any and all "development" is an unmixed blessing, no matter what happens to ordinary people and their environments and livelihoods. This book is part of a major, and long-awaited, countercurrent that is correcting those views. Let's hope the turnaround is not too late.