Energy Resources in Argentina:
Analysis of Income
Marina Recalde
Marxs Contributions
( ...continuation )

The existence of AR does not depend on the lands relative productivity, but rather upon the property monopoly, and as such, the concept of territorial property is crucial. According to Marx, the surplus value between the price of production and the commercial price is determined in proportion to the relationship of fixed and variable capital, the different organic composition of capital.5 Caballero (1978: 119-123) explains that the existence of AR for Marx is due to the fact that the value of merchandise in the agricultural sector is greater than its own price of production, owing to the lower organic composition of capital relative to the average. All of this results in greater surplus mass, for a constant surplus rate.

Finally, Marx extends his analysis to any sector dependent upon a natural resource and asserts that the existence of private property and the capacity of some sector of society to monopolize the force coming from the same will assure that the owner will appropriate surplus profits in the form of a rent payment.

Application to Non-Renewable Energy Resources: Hydrocarbons

Up to this point, our arguments have highlighted the complexity and density of the concept of rent, and various opinions that have arisen around this topic. To apply this concept to the study of energy resources, opinions on the theoretical treatment are varied (Orchard, 1922: 290-318; Caballero, 1978: 119-143; Debrott Snchez, 2001: 193-232; lvarez, 2006: 820-829). For the purposes of this research, the key point in each of these discussions will be the type of energy resource being analyzed.6 In this sense, to analyze oil and/or gas income, it will be key to note the peculiarities of the hydrocarbon sector, such as its non-renewable nature, the morphology of the market and its relevance to national development.

The analysis is based on acknowledging, as the classic authors do, that the existence of private ownership is relevant to deposits. Just like in the agricultural sector, for the hydrocarbon sector, the existence of private ownership of hydrocarbon resources gives its owners (State and private agents) a monopolistic power. The morphology of the hydrocarbon market is highly concentrated, which makes clear the possibility to monopolize not only ownership of the resource, but also production of the same. A second aspect to keep in mind for oil income is the scarcity of this resource. Incomes from scarce resources are studied very often as equivalents to the AR from Marx and defined as the income that exceeds the DR and arise from a limited supply that allows the owners of the resource to charge prices higher than their marginal costs, or from restrictions in the supply of technology necessary to exploit this resource (Rothman, 2000: 3-6; Banfi et al., 2005: 929). Mansilla (2007: 103-104) argues that income in this sector is a consequence of the scarcity of the natural resource, which, unlike other goods, cannot be replicated by a production process. This last factor is directly related to the importance of energy resources for economic development (Stern and Cleveland, 2004: 27-30; Lee, 2005: 415-427; Sari and Soytas, 2007:890-897). The importance of energy in the development process, in a context in which the majority of energy systems display models highly concentrated on the usage of hydrocarbon resources,7 necessarily implies that this type of resource is important. The global economic system has made economies energy-intensive and dependent upon consuming fossil fuels. The situation is further aggravated by the low possibility to substitute for fossil fuels, at least in the short term (Kaufmann, 1992: 37-54; Cleveland, 2003: 10-12; Stern and Cleveland, 2004: 15-16; Stern, 2004: 2-35; Stern, 2009: 2-26). Both factors can help explain the growing appeal of purchase that Marx (1894) references for hydrocarbon resources, and as a result, the establishment of monopolistic prices and incomes resulting from these. In this way, the level of supply concentration, and the power of the market to fix prices, is reinforced by a demand factor.

Given this framework, this work acknowledges the existence of total oil income (TOI), principally derived from the existence of private ownership and the capacity to monopolize a non-renewable energy source, which faces high demand from individuals due to the fact that the development process is highly dependent upon this resource. Total oil income is composed of the DR, based on productivity differences, added to the Absolute Monopoly Rent (AMR), using the characteristics of the industry mentioned above.

5 Relationship between constant and variable capital; the relationship between capital invested in production means and capital invested in the work force.

6 For example, the choice will be different if we are analyzing hydraulic income like Rothman (2000) or Banfi et al. (2005), or if we study oil income, like Visintini (1990), Santopietro (1998), Mansilla (2006, 2007), Scheimberg (2007).

7 According to the IEA (2010), in 2007, 63% of the total global primary energy supply came from oil and natural gas.