Hurricanes+bare+capitalisms+whimsical+nature,+Crotty



=**Hurricanes lay bare whimsical nature of capitalism**=


 * Business Report, Johannesburg, September 28, 2005**


 * By Ann Crotty**

It would be difficult to imagine a more appalling display of the whimsical nature of the global shareholder capitalist economic system than what we have witnessed over the past month.

Unlike the hapless residents of Louisiana, we, of course, were all fortunate enough to be able to watch on television the horrors that unfolded in the wake of Katrina and then Rita as though these hurricanes were just another Hollywood horror movie.

On one channel we could watch the people who were struggling to get access to food and water after three days of extreme deprivation and the tens of thousands of Louisiana citizens who were trying to cope with the realisation that their generally sad lives had suddenly taken a huge turn for the worse as they became poverty-stricken refugees in their own home state.

Then, switching over to the business channel, we could see the share prices of oil companies reach record levels, the sort of levels that would ensure that anyone rich enough to have a reasonably sized portfolio of oil shares could now afford to retire for life.

In the wake of Katrina and Rita, it is estimated that more than 1 million people have been displaced and hundreds of thousands have lost most of their possessions.

In the wake of Katrina and Rita, oil companies are sure to continue to dominate the list of the world's most profitable corporations. Four of the world's seven most profitable companies are oil corporations, namely ExxonMobil, Shell, BP and Chevron.

The executives of these companies will no doubt benefit from the huge good fortune that has fallen on their companies. Their remuneration packages will reflect an assumption that the huge profits that follow from the record oil prices have much to do with their remarkable handling of the oil industry and little to do with factors that are, by and large, beyond their control.

While the industry has to be commended for its foresight in undertaking the huge investment necessary to develop the resources, the current high prices are entirely due to an increase in demand for reasons totally beyond the control of the oil companies and their executives.

As a prominent player in the global economic system that is dominated by shareholder capitalism, the oil industry has highlighted not only the generally whimsical nature of this system but its chilling ability to redistribute wealth in a whimsical manner.

Hundreds of thousands of Louisiana citizens face a grim future for no other reason than that they happened to be in the wrong place at the wrong time.

Hundreds of oil executives and thousands of oil shareholders face undreamt-of riches in large part because they were in the right place at the right time.

This situation should not be regarded as one of the exciting spin-offs of a system that in its absolutely raw form is deemed to ensure the most efficient allocation of resources.

No, this situation highlights the mindless inequity of a system that is surely fundamentally inefficient. It is inefficient because, in terms of its own rules, it demotivates all the players.

The more perceptive among the winners will realise that their good fortune had little to do with their own efforts. And tens of thousands of the losers will wonder why, after working so hard all their lives, they are now facing a dismal future of uncertainty.

Over the years, indeed over the centuries, those who have benefited from the capitalist system have done much to flog the notion that the benefits are just desserts for their commitment to hard work, a willingness to take risks, an entrepreneurial spirit, even at times greater intelligence.

A belief in this notion by the millions who see few, if any, benefits from the system is crucial to its continued smooth working.

While the losers in Louisiana will not blame oil companies for their bad fortune, climate change notwithstanding, they as well as oil consumers are likely to be a little peeved by the whimsical redistribution of wealth that has followed an act of nature.

Back home, Sasol, which must be seen as something of a spaza shop in comparison with the huge global oil groups, is of course benefiting enormously from the high oil prices.

At these levels the Sasol management could afford to stuff up really badly in a lot of areas and they would still be able to show impressive profit growth.

Indeed, one major challenge for the new executive leader, Pat Davies, must surely be to try to persuade his management that their efforts do count and that it is not all in the lap of the gods.

It will, of course, be interesting to see if the group's remuneration policy reflects whether or not management is taking credit for the external factors behind the high oil price.

This would be particularly galling for oil consumers and taxpayers, who are aware that the only reason Sasol exists today is because a desperate government was prepared to back a scheme that seemed a little too risky for the private sector.

But such is the whimsical nature of shareholder capitalism.

From: http://www.busrep.co.za/index.php?fArticleId=2893242&fSectionId=560&fSetId=662