Enron price fixing
Updated: 21 May 2008, 23:03
Originally written: 19 April 2005
Many people who cling to capitalism believe that the “free market,” in and of itself, is the only market regulator needed or desirable.
People get upset when that “free market” results in market manipulation. But market manipulation is just a natural part of capitalism as it must work in reality. Ivory tower proponents of an ephemeral perfect capitalism try to convince us that market manipulation is an aberration of their imaginary version of true capitalism. They conveniently sweep reality under the carpet when it conflicts with their religious devotion to true capitalism.
According to the newspaper article, “More price-fixing allegations surface at Alberta utilities”, John Davies, a factory owner, alleges Enron withheld power from Alberta’s grid in 2001, creating a shortage which increased prices. Davies is apparently not pleased with this aspect of free market operation. His company’s costs go up, so in this case, the free market is supposedly not good. Of course Davies probably considers this manipulation a deviance from the “free market”, but that is not a justifiable belief. The only possible solution to his complaints, if we maintain capitalism, is to regulate the energy market. In other words to force Enron and other energy companies to sell, whether they want to, or not. That is not a free market.
On the other hand, we can be extremely confident that regulation forcing Davies to buy energy, whether he needs it or not, would be wrong in his eyes. This is a classic case of one sector of capitalists opposing another because they have different immediate interests.
Enron is also accused of keeping prices low at other times. This can be done by selling more oil. OPEC (Organization of Petroleum Exporting Countries) does it occasionally. OPEC also has internal disagreements when it tries to increase prices by withholding oil. Some of the OPEC members sell in excess of their “quotas” to increase their sales and profits at the expense of other OPEC members.
It is suggested that Enron’s market actions depressed prices. This is initially “good” for the “consumer”, but in the long run it affects the market, discouraging power generation, exploration, and other investment. When the supply then drops, prices increase.
One sector wants the government — the administrative committee of the capitalist class — to regulate another sector, simply for the economic benefit of the former sector. The buyers want the sellers regulated. The sellers want no regulation. These are completely understandable, and fully expected, perspectives. It also shows that capitalists are keen to ensure that the “free market” functions in their interests, at any cost to any other capitalist or anyone else.
Apparently, preventing the “free market” from functioning freely is sometimes necessary to ensure the “free market” continues to be a “free market.” It is confusing to honest, consistent thinkers, but consistency is not a strong trait of capitalists’ theory. The really consistent feature of the capitalists, is that they seem willing to do anything to maintain and increase profitability. Their theories are for our consumption and slavish devotion.
The “free market” mantra from business is a sham. Capitalists want to keep governments from competing with them, or regulating them. The mantra is so omnipresent that the occasional demands for regulation do not make significant waves. The working class continues to believe the mantra that the “free market” is the be-all and end-all of production.
Countries which blow the “free market” horn, at deafening volumes, are also countries which practice protectionist import policies. Protectionism is another method of distorting the market. The “free market” is a ploy used to convince us to put all our faith in the capitalists. And like any faith, the followers are blinded to reality.
Socialists do not pretend that governments can run capitalism better than private capitalists. The evidence is compelling that our class is being tricked by the capitalists and their propagandists into believing that government control of capitalism is the only alternative to the private control of capitalism. This trick wipes the real alternative — socialism — off the map. If mentioned at all, it is to incorrectly equate socialism with government intervention. That is interesting because the capitalists do not object to government intervention in their favour.
The real alternative is real socialism. Socialism means no markets which can be manipulated. Socialism means no capitalists whose interests ignore our needs. Socialism means no governments to administer capitalism, because there will be no capitalism to administer.