The business news today was OPEC’s decision to keep producing oil—rather than curbing production to force the price of oil back up. Nor surprisingly investors fled the oil producers and shifted their money to the oil users. Investors belong to one camp, OPEC to another: Investors are the flag-bearers of “capitalist economies,” OPEC is one member of another aggregation, that of the “market share economies.”
I last had occasion to comment on this subject back four years ago (here) when I contrasted “Feudal and Capitalist Economies.” That time I was contrasting Japan and the United States and said: “I characterized the first as ‘feudal’ because it tends on the whole to optimize in favor of large ‘tribal’ aggregates, communities—and the other as ‘detached from the community.’” I also said: “Market share economies aim at control and stability. Capitalist economies aim at maximum profit; they enter and leave markets based on gains to be realized, not to produce values in the long run.”
It’s not as if I favored tribalism. My emphasis is on community. The detached nature of capitalism, meaning its absolute focus on profit, makes it entirely unaware of community, large or small; and in those situations even tribalism is better.
OPEC is focused on maintaining its share of the market—and never mind the profits of its individual producers.
The odd thing about this entire phenomenon (the last fill-up at COSTCO cost me $2.73 per gallon) is that consumption has managed to drop enough across the world for such a thing to happen at all. The world’s public, at least in the aggregate, has been holding back on its consumption—not least driving less after losing a job. But oil so interpenetrates modern life that even a small refusal to consume can cause oil to plummet—and investors to scramble for more profitable stocks.