Book Review: Adam Hanieh’s Crude Capitalism: Oil, Corporate Power, and the Making of the World Market

Alec Fiorini reviews Adam Hanieh’s latest book on the entanglements between oil and capitalism from the late 1800s to today’s environmental and climate crisis.

One of the largest refineries in Europe, located in Romania. Photo from flickr.

There is no shortage of academic literature on the history of oil and capitalism. Many a geographer, historian, and political economist has invested their career analysing the intersection between fossil fuels and the global extension of the capitalist world market – to varying degrees of success. But far too often, historical accounts are solely focused on the upstream segment of the oil business, giving the false perception of oil as a scarce commodity (a ‘prize’) to be captured by competing geo-political actors. Alternatively, a slew of political scientists has invested the oil commodity with mystical capabilities (a resource ‘curse’) to undermine democratization and stifle national economic development. In Crude Capitalism, Hanieh challenges these popular accounts by focusing our attention on the circuits through which the oil commodity has been inserted into our daily lives and everyday material existence.

In the opening chapters, Hanieh provides a comprehensive historical overview of the emergence of fossil capitalism and the petroleum-fuelled world market of the twentieth century. In the process, he documents the progressive fossilization of capitalist development, which extends from the British Empire’s coal-fired industrialization through to the United States’ petro-powered postwar liberal international order. Hanieh also identifies an underappreciated catalyst in the interwar shift from British to US control over global oil reserves – the Bolshevik Revolution. In a fascinating interlude, Hanieh highlights the underappreciated importance of the Baku oil fields, which supplied more than half of the world’s crude oil at the start of the twentieth century. Baku’s grimy quarters were also a crucial site of worker militancy that produced several leading figures of the Russian Social-Democratic Labour Party, including Josef Stalin.

“In Crude Capitalism, Hanieh challenges ... popular accounts by focusing our attention on the circuits through which the oil commodity has been inserted into our daily lives and everyday material existence.”

After the Bolshevik Revolution, Ottoman Turkish, British, and Bolshevik-aligned forces waged successive battles to control these oil fields. As Hanieh explains, the UK’s imperial administrators conceived of “Baku as the key link in a future chain of British-controlled oil fields, military bases, and shipping routes, which could block the global ambitions of an upstart US state,” whereas “for Vladimir Lenin and the other Bolshevik leaders, the future of Baku was inseparable from the survival of the revolution itself.” (79) In the end, Soviet forces were victorious, but it was Lenin’s controversial usage of concessionary agreements with the cartel of privately-owned international oil companies, the so-called Seven Sisters, that was ultimately responsible for “shifting the control of world oil away from Britain towards the US during these critical interwar years.” (87)

And yet, in stark contrast to conventional histories of the global oil industry, which emphasise the contest between vertically integrated multinational firms (the Seven Sisters) and the producer countries’ cartel (OPEC) over access, control, and profit, Hanieh draws our attention to the ways in which petroleum reorganised global production and consumption networks in the postwar period. For Hanieh, in other words, geopolitical tensions to control global crude reserves were epiphenomenal to the more foundational process of oil becoming the central fulcrum of global capitalist accumulation, which resulted in the “very substance of life [being] transformed, alchemy-like, into various derivatives of petroleum.” (95)

In Chapter Seven – the book’s unmistakable fulcrum – Hanieh adapts a previously published New Left Review article (‘Petrochemical Empire’) to expound upon the qualitative transformations in the material bases of capitalist commodity production ushered forth by petrochemicals. Although the oldest public equity index (Dow Jones Industrial Average) and the standards of multinational accounting measures and financial analysis (the DuPont Method) both take their names from American chemical producers, social scientists have underestimated petrochemicals’ role in weaving oil into the material realities of our everyday existence and, by extension, inserting capitalism into the web of life. In the primary sector, Hanieh outlines a range of petrochemical products – synthetic fertilizers, pesticides, defoliants, and herbicides – as well as petroleum-powered agricultural machinery, all of which “turn[ed] oil and natural gas into food.” (95) But the most significant outcome of the petrochemical revolution was that “the materiality of commodity production had become a derivate – or a by-product – of the production of energy.” (144) Heretofore, capitalism’s generalized system of commodity production has been tethered to hydrocarbons, with devastating consequences for both the climate and the environment.

In the following chapters, Hanieh brilliantly outlines the interconnection between the advent of this petroleum-based system of synthetic commodity production and the profound reorganization of global financial networks to stymie the radicalism of anticolonial movements within a US-centred world market. At the production level, the fact that crude oil supplies came from Middle Eastern oil fields controlled by Western oil companies served to reanimate existing systems of colonial domination. Meanwhile, at the financial level, new geographies of accumulation were emerging to sidestep the more radical demands of the OPEC producer’s cartel.

“Capitalism’s generalized system of commodity production has been tethered to hydrocarbons, with devastating consequences for both the climate and the environment.”

As an expert on the political economy of the Gulf Cooperation Council (GCC), Hanieh provides a masterful historical examination of oil’s foundational importance to the restructuring of international financial and monetary systems at a time of acute crisis at the commanding heights of the globalizing capitalist market economy. Cold War historians and international relations experts collapse the complex financial intermediation that was designed to secure the primacy of the American state and the US dollar into an quid pro quo arrangement: oil-for-security. Instead, Hanieh masterfully foregrounds the importance of rerouting surplus oil wealth (petrodollars) into the ballooning Euromarkets. As he stresses, this restructuring was not an anodyne crisis-fighting mechanism, but a supremely political undertaking that exposes the imperial contours of modern finance.

Subsequently, Hanieh examines the evolving corporate strategies of oil producers across three discrete geographic sites of contemporary capitalist accumulation – the post-Soviet, Western, and the new East-East hydrocarbon axis. In the first, he argues that the collapse of the Soviet-style command economy was partially precipitated by the 1986 oil price shock; he also provides a concrete mapping of the Russian oil companies whose operations continues to mediate post-Soviet capitalism’s relationship to the world market. In the second, Hanieh traces the neoliberalisation of advanced industrial economies with the resurgence of Western supermajors whose upstream operations are increasingly centred in West and Central Africa. And finally, he examines the linkages between Asian national oil companies (NOCs) that have formed a powerful new “axis of fossil capitalism running between oil fields, refineries, and factories of the Middle East and Asia.” (274).

In the book’s final chapter, Hanieh scrutinizes the self-serving strategies of fossil fuel companies to co-opt global movements to combat climate change. BP’s new corporate slogan – Beyond Petroleum – is emblematic of multinational oil companies’ farcical effort to rebrand into sustainability partners. In reality, fossil fuel companies’ investment into climate technologies (carbon capture) and low-carbon fuels and feedstocks (‘green’ hydrogen) is motivated by their commercial imperative to maximize profit in a competitive marketplace. Hanieh spares no punches in condemning the professed climate-neutrality of green capitalism as a fanciful delusion; his sober outlook is informed by “the eschatology of leading oil firms, [which predict that] catastrophic change will almost certainly occur.” (300) Hanieh is similarly dismissive of the imprudent liberal conviction that oil companies will be shocked into action by the unmistakable scientific evidence of the ecological and environmental consequences of our carbon-intensive energy systems. As he rightly concludes, “this is not an ethical failing on the part of oil firm executives, but a condition imposed by the nature of capitalism itself.” (310)

All of this motivates his urgent defence of an eco-socialist alternative in the book’s final pages. It is noteworthy, and slightly disappointing, that Hanieh chooses not to engage with the many interesting and contentious climate strategy debates within the nebulous eco-socialist camp. Nevertheless, he does provide a vague outline of his own programmatic affinities: democratic control over energy and technology; decommodification of our social existence; and the cancellation of sovereign debt owed by the Global South. And while these demands might appear utopian, Hanieh also reminds us of a simple truth: the barriers to action are purely social.

Alec Fiorini is researching climate and food politics in the so-called green energy transition.