Nature's Evil

Capital gives better returns than labour. The value of inherited wealth grows quicker than the level of pay. The owners of processing industries get rich quicker than landowners or the best of hired workers. These are all reasons for growing inequality. Sacrificing millions of people, wars and revolutions are the most powerful factors enabling equality, while oil-based capitalism boosts inequality. Let’s look at a trade between two states, one resource-dependent and the other labour-dependent. This is a typical situation in the field of international relations – a game for two players, one of whom sells a precious resource which the other buys, exchanging it for goods produced by the labour of its people. The labour-dependent state encourages internal competition, protects property rights, secures technical progress, and promotes public goods and services. None of this occurs in a resource-dependent state and its monopolies. In such a country, institutions don’t develop, nature is degraded, and the people fail to thrive. All this is a curse for a resource-dependent country but a blessing for its partner. Since the rulers of resource states do not guarantee property rights in their countries, they cannot rely on their own capital or hand it down to their children. Along with their subjects, the rulers also suffer from the absence of public goods such as fair justice or clean air. Their spouses need private goods which only labour-dependent states are capable of offering. Children need the high-quality education which is available only on the other side of the border. Parents need good doctors and hospitals. But while textiles or gadgets come from abroad, safe parks, clean beaches, or good schools and clinics are not available to import. So the next step ensues: the elite from a resource-dependent state keeps bank deposits in a labour-dependent state. This is where the elite settles its disputes, buys houses, establishes its families. Exported capital – a converted form of oil and gas – turns into a bank account in Switzerland, a château in France, a business in Germany, or shares in American corporations. This capital, significant by any standards, is profitable to the recipient. The Swiss bank gets a percentage, London property prices rocket, new businesses pay taxes in the host countries. This wealth trickles down, but those who benefit from it are very far away from the places where it was pumped or mined. Paradoxically, the resource-holding elite invests in the same institutions abroad that it ignores, or even destroys, at home: the judiciary, universities, parks. In a dual economy of the post-Soviet type, Rawls’s first principle is realised at one end of the earth, but his second at another. The wealth is created in one country and trickles down in a different country. The blessings for some do not balance the curses for many others: the sum of happiness declines and inequality grows.

This many-layered dynamic is wittily captured in the music video ‘I love oil’ by the Russian rock group Smash and Vengerov (2013). In the opening scene a Russian oiligarch clumps into a glitzy bedroom carrying a barrel of oil, which he presents to his delighted wife and kids. Cut to a fashionable Italian shoe shop, and we see the same woman buying a new pair of high heels. To pay for her purchase, she tips up her handbag, and viscous black oil gushes out into the grateful hands of the shop assistant. ‘While there’s oil in Russia, I’ll be in Milan,’ sings the young woman. Her glamorous social set parties in oil, swims in oil and drinks oil, while a gang of pantomime villains steals sacks of oil in a bank heist. ‘I love Russia, I love oil,’ sings the girl. ‘I am this oil, I am this gas,’ her partner sings back to her. Addicted to oil, carrying this fetish in their handbags and worshipping it in their bedrooms, these people still need the products of labour – houses, cars, clothes, and also just laws and clean air – which they prefer to obtain in Italy. In the final and prophetic scene, the former oiligarch , now a homeless beggar, pours a hatful of useless oil over his head.

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