by Steve da Silva - BASICS Issue #20 (July/Aug 2010)

The economic crisis unfolding in Europe today is the crisis of a putrefying world imperialist system.

All across Europe, working people are being confronted with the concerted attack of the European Union (EU) and the International Monetary Fund (IMF) in the form of imposed “austerity measures”, which will result in raided pensions, job losses, slashed wages, and massive cuts to social security and the public sector.

The pretext for the wave of “austerity measures” now being imposed is what is being called Europe’s “sovereign debt crisis”.  Most of the EU countries have total debts ranging from 50% to 115% of their GDP and annual budget deficits up to as high as 14% of GDP.  By these measures, Greece, Spain, Portugal, Italy and Ireland appear to be in the worst positions.

Corrie Sakaluk - BASICS #17 (Jan/Feb 2010)

In December 2009, the estate of legendary jazz musician Chet Baker joined a long list of thousands of other plaintiffs in a class-action copyright infringement lawsuit against Warner Music Canada, Sony BMG Music Canada, EMI Music Canada, and Universal Music Canada, the four principal members of the Canadian Recording Industry Association (CRIA). If the lawsuit is successful, the total amount of money owed to musicians could equal up to $6 billion...

Originally launched in October 2008, the lawsuit has gained momentum as new plaintiffs, like Baker, continually sign on. This is not surprising given that more than 300,000 songs by Canadian and non-Canadian artists are currently on what is called a “pending list”, which forms the basis for the launch of this important lawsuit.

The pending list contains songs that record labels like the ones listed above are supposedly waiting to receive rights for, while already using those same songs on compilation CDs or live recordings.

The list was initially created after a change to Canadian copyright law in the late 1980s. Since this time, members of the CRIA have been engaging in widespread copyright infringement using the list. The record labels create, press, distribute and sell the CDs, but do not obtain the necessary copyright licenses in advance.

This refusal to respect the labour and rights of musicians by obtaining the proper authorization to re-produce their work strikes many as particularly offensive given that these record labels have aggressively pursued Canadian consumers who download and otherwise obtain, share or reproduce music for not respecting copyright laws.

by Mike Grant - BASICS #17 (Jan/Feb 2010)

In the name of reducing the provincial deficit, Premier Dalton McGuinty has been tossing around the idea of privatizing the LCBO, Ontario’s provincially-owned chain of liquor retailers. Privatization of public assets is generally just a way of transferring public wealth into private, corporate hands. But does this proposed privatization make any sense if the goal really is reducing the provincial deficit?

Aside from providing some 6,000 union jobs across Ontario at wages well above the poverty rates found in much of the non-union private retail sector, the LCBO is also a revenue-generating publicly-owned asset. For example, last year (2009) the LCBO made the province $1.4 billion in profits, revenue then available for public purposes – and this is on top of the revenues generated by liquor taxation and licensing. Privatizing the LCBO would be as short sighted as selling a fishing rod for a few extra fish one afternoon.

After crunching a few numbers, both Erin Weir of the Canadian Labour Congress and Jim Davies of the Department of Economics at the University of Western Ontario independently came to the same conclusion: that the province would actually make its revenue situation worse by privatizing the LCBO. This is because even the most optimistic projections of provincial savings off of future interest from an LCBO sale would still only be worth a third, annually, of what the LCBO pulled into the province last year (an amount that has grown each of the past 15 years and figures to keep on rising for the foreseeable future).

Rather than dragging out the tired old privatization scam, it’s time to take note of the LCBO’s success and start asking what other industries can be established or taken over by the province, expanding the pool of stable employment at living wages, generating public revenue and fulfilling public interest goals that private, for-profit industries simply can’t or won’t do.

 

by Enver Harbans
Basics Issue #13 (Apr/May 2009)

The current economic crisis is being repeatedly used to justify capital’s assault on the working-class. Whether it’s in the form of cutbacks on hours in a non-union grocery store, a freeze or cutback of wages and benefits at the bargaining table, or closures at unionized car plants, the recession has been used as an excuse for owners to cut labour costs at every opportunity.

Job losses in Canada for the month of January alone were at 129,000, the largest since the government started recording such data. February wasn’t much better, with 82,600 jobs shed mostly in the construction and manufacturing sectors. Ontario in particular has been hit hard, as 1,500 workers at the Stelco plant in Hamilton were laid off and 900 workers at the Dofasco plant got pink slips in March. With the unemployment numbers growing (officially, 7.7%, but in reality much higher) employed workers can expect an attack on their wages and benefits. Just ask union members who are in the process of bargaining new collective agreements and being expected to make countless concessions before talks even begin. Owners and bosses are telling us that we should be happy that we even have a job and they threaten cutbacks, layoffs and closures when we demand a share of the company’s profits.

However, while the attacks on workers have been hard and swift, workers’ resistance is beginning to develop. Workers at Aradco in Windsor, Ontario occupied their car parts plant after the company withheld over $1.3 million in severance pay, vacation pay and other benefits. On March 18, workers welded the doors of the plant shut, refusing to take the measly $200,000 the company offered to share amongst the 80 workers. Unfortunately, to date, this example of workers uniting to take control over the factories to demand a little bit of justice has not been replicated to meet the gross injustices unfolding around us.

In the 2009 Federal Budget, the Canadian government passed another $200 billion in bailout money for the banks, on top of the $75 billion already passed in the end of 2008. With banks and other major financial corporations in the U.S. and Canada getting bailed out to the tune of hundreds of billions, why are workers being asked to forget about their severance pay, and why is their EI lost in the mix? While the rich can count on the State for bailouts and assistance, workers need to count on each other, and organize in their communities, workplaces and schools to fundamentally change the way this system works.

by Carolina Crewe
Basics Issue #13 (Apr/May 2009)

The failure to allocate money for childcare in the March 26 Ontario provincial budget will have a grave impact on single mothers and working class families in Toronto.

The onset of job losses and a looming depression has created a situation where adults will be returning to school for retraining, signalling a need to increase the amount of subsidized childcare spaces. As a poverty reduction strategy, childcare and early childhood education is an investment that governments cannot afford to ignore. Currently, children who are waitlisted for subsidy spaces number more than 14,000. With numbers this high, the Ontario provincial government is gambling with the well-being of families by foreshadowing cuts rather than growth for the subsidy program. The McGuinty-led government is employing a "pass the buck" strategy by opting to lobby the federal government to top up the subsidy funding, which expired in March 2009. Some 6,000 childcare spaces, currently in use, are slated to be permanently cut in Toronto, as well as 16,000 more spaces across the province.

Most of these spaces were created with federal government-transferred money in 2003, as part of a "Best Start" plan for early learning, childcare and family support programs.

Most affected are families in low-income neighbourhoods whose centres have more subsidized spaces. For example, in Davenport-Perth, 35% of families are living below the poverty line (more than the Toronto average of 32.2%), with 25% of families having lone parents. In the 12 licensed childcare centres in this neighbourhood, 53% of all operating licensed spaces have been subsidized. At least two of the centres in this neighbourhood operate almost exclusively on subsidized spaces at 85% and 92% respectively. Cumulative measures to reduce the numbers of families receiving and eligible for subsidies have already been implemented to achieve the slated cuts, including the introduction of an “Absentee Policy”. This policy penalizes subsidized families, even for keeping their children out when they show symptoms of illness, allowing only 2 sick days per month (even for infants) and a measly one-week vacation over the entire year. Failure to meet the requirements of this Absentee Policy means parents lose subsidized spaces for ALL of their children.

As a mass of families currently accessing subsidized spaces are forced out of childcare centres, low income neighbourhoods will lack parents to pay the full daycare fee to maintain enrolments, resulting in centre closures. In adjacent communities such as Toronto Centre-Rosedale, where the number of families with children living in poverty is at 60%, the fallout from these cuts will be even more devastating. According to the Ontario Coalition for Better Childcare, professional Early Childhood Education staff - already drastically under-paid - will lose their jobs, while centres will significantly reduce their capacity or close down altogether. Given the Harper government's record failure to provide funding for childcare, merely throwing in chump change for children under six, it is unlikely they will step in to reverse the cuts.

At a time when Canadian banks and big businesses are getting bailouts in the hundreds of billions by the Canadian government, these anti-childcare policies of the provincial and federal governments are just another example how working people – especially low-income families and single mothers – are the first to be victimized and the last to be considered in times of crisis.

All children in our communities deserve access to early learning childcare programs and family support. We need to plan together in our communities to fight the coming barrage of policies that will cut families' access to childcare. Refusal to accept these policies will show the province and the federal government that Ontarians cannot work or access education without adequately funded and equitable childcare.









These Cabbagetown kids are wondering why McGuinty’s budget is going to leave them and their friends without subsidized childcare spaces.

by Steve da Silva
Basics #12 (Jan / Feb 2009)

It’s in the time of economic crisis that it becomes most apparent whom capitalism (and the governments that manage it) really works for.

For the last four months politicians and mainstream economists have incessantly uttered two lies to the people regarding the current economic crisis: (1) that it was completely unpredictable; and (2) that we should not worry because economic recovery is on the near horizon, perhaps in a quarter or two. Nothing could be further from the truth, and most of these “experts know it.

The truth is that this crisis was completely expected, and that our society will not emerge from this crisis looking like what it did going into it. Anyone familiar with the economic forecasts of popular and independent economic institutes like MonthlyReview.org or GlobalResearch.ca, would have seen the current economic crisis coming years, if not decades, ago.

The Root of the Crisis: Stagnation

The root of everything wrong with the economy today is inherent to capitalism. Capitalism must constantly expand because capital itself must constantly expand – i.e. it must be invested in the production of new commodities and the exploitation of more workers so as to attain a rate of profit as high as or more than the average.

When capital is unable to find profitable outlets for investment, this is what is called stagnation, and stagnation from the perspective of capital equals crisis! It’s important to recognize that this “crisis” is characterized by an abundance of productive capacity, and an abundance of resources, human and otherwise. This is what distinguishes capitalism from every other mode of production that preceded it: crisis means too much – too much productive capacity and too much capital in the context of too little profitable investment opportunities for the kings of the economy. Another way to understand stagnation is that the capitalists are unable to sell all that they can produce. In an economy where the means of production (factories, banks, communications, transportation, etc.) are collectively owned, the notion that abundance means crisis is an absurdity.

When we begin to recognize that the current crisis is one of stagnation in the real economy, we begin to see whose crisis the current one really belongs to.

To make short a very long story, suffice it to say that stagnation has been endemic to the economies of Western countries since the 1930s. What’s staved off the current crisis from surfacing for over seventy years now has been the opening up of massive areas for new investment, such as the military spending for World War II, and every war after that; the mass consumption of the automobile and how that paved the way for suburbanization of North America; the creation of the welfare state which led to massive expenditures in public infrastructure from the 1940s onward, thus providing another major outlet for capital; and then the period of “neoliberalism” from the 1970s onwards where much of this public infrastructure was placed on the market for privatization; massive consumerism made possible by the rise of household and consumer debt; and of course we cannot forget the violent exploitation and plunder of the “Third World” which worsens daily.

The reason that the real wage (the wage a worker receives once we factor in the eroding effect of inflation) has itself stagnated over the last few decades is because of the need for capitalists to exploit more profits from workers.

From the 1970s onwards, with stagnation beginning to rear its ugly head once again and capitalists finding it increasingly difficult to make a buck (or a billion) in the old way – by exploiting labour – the ruling class began to come up with financial schemes to generate profits.

There’s a reason that the realm of production is referred to as the “real economy”: it’s in the “real economy” where the most profits are generated. When a worker takes out a loan to cover his living expenses, and when the bank seizes part of his income in the form of interest, no new profits have been created. Finance has only found a new way to redistribute income in the economy, not a new way to produce it.

Since the 1970s, in order to hold back stagnation, capital has massively redirected its investments toward financial markets. The problem with financial markets is the speculative nature of the investment. What does this mean? To put things in the simplest of terms (at the expense of somewhat glossing over some important qualifications), the problem with financial investments is how an investment is essentially betting on the future ability of that investment to pay off, be it the rise of a commodity’s price or the ability of a debtor to pay of his debts.

How fragile this system actually was revealed itself to all of us this past Fall of 2008 (pun intended) when America’s largest financial institutions began to collapse, triggered by the “sub-prime mortgage crisis” . Americans began to go bankrupt at record levels when they found themselves unable to service the unrealistically high mortgages and consumer debts pushed down their throats by financiers eager to lend out money with interest rates being so low. Millions of Americans lost everything they owned – or what they thought they owned.

The greatest lie circulated in the wake of the sub-prime mortgage crisis and the current Depression that it triggered was that this crisis was unforeseeable. This lie has become the basis for the kings of capital screaming that the sky was falling and pleading with governments that they were “too big to fail”.

What has followed in every “First World” country has been an orderly and well-managed unfolding of the crisis whereby government after government has come to the rescue of private banks and corporations, while leaving regular people out in the cold.

The Canadian Government’s Response to the Crisis

The U.S. government’s bailouts of private capital over the last few months – which now runs into the trillions and what has been correctly identified as being the largest transfer of wealth in world history – at least generated a certain degree of public debate in the U.S. – even if to no avail. The Canadian government has followed suit with its own guarantees, loans, and bailouts to the big capitalists, and we in Canada haven’t had anywhere near as much public debate. Instead of honest debate about the economy, what Canadians got was a distracting political theatre in November 2008 when two pro-big capitalist parties – the Liberals and the NDP – were trying to take the reigns of government from the third one, the Conservatives – the most shamelessly pro-big capitalist party of the three.

While hundreds of thousands of full-time jobs were disappearing from the Canadian economy in 2008 – 140,000 in November and December alone, with Ontario being hit the hardest – the government was bailing out the rich.

In November 2008, the Canadian government announced that it would “guarantee” $200 billion in loans for the banks, and that it would buy, through the Canada Mortgage and Housing Corporation, $75 billion in mortgage loans from Canadian banks. Then came the U.S. and Canadian governments emergency loans to the “Big Three” automakers, totaling $17 billion in the U.S. and $4 billion in Canada. While some argue that these loans were necessary to prevent further job losses, the loans cannot address the fact that workers are less and less able to purchase cars, especially in a time of recession, and also that what is needed is massive public transportation investment, not propping up private industry which has proved so environmentally destructive and unsustainable.

While the Canadian government says that these measures – the guarantees, the loans, the bailouts – were necessary in order to inject “liquidity” into the economy and get banks lending again, what’s in essence happening is that the public is being made to take over debts from private corporations at a time when those debts are becoming insolvent (i.e. becoming more likely to default).

And so we see that we do not and have not lived in a free market, at least not for the last century. Socializing the losses and privatizing the profits has become the modus operandi of monopoly capitalism in its current stage.

Meanwhile, politicians, mainstream economists, and capitalists deny that they saw it coming. Of course they do. When the big capitalists were wrecklessly lending out money to people who would never be able to pay it back, it’s not they didn’t see the collapse coming, it’s that they knew that they would be able to use the collapse they engineered as a pretext for a new round of attacks on the working class.

Aside from the massive job losses, in what other ways are regular people coming under attack? In late October 2008, the Conservative government announced cuts to the corporate tax rates from the then 22 percent to 15 percent by 2012, which in the current fiscal year alone would amount to $10 billion more in the pockets or corporations. And let’s not forget the $490 billion for new military spending over the next twenty years, which the Conservatives announced in June 2008. Military spending, now more than ever before, is being used as a way to prop up profits for the rich at a time when they are trying to protect their fortunes and control over the economy.

According to a report published on January 8, 2009, the pension plans of Canadians are experiencing historic losses. With Canadian pension plans being invested in financial markets, these plans have experienced massive losses in their investments, ranging from 10% to 20% depending on the particular pension fund.

While the Federal Conservative government assures Canadians that help is on the way with the January 27th budget, and that Canadians should brace themselves for massive deficits not seen in decades, nothing that the Canadian government has done so far suggests that this “help” is for regular Canadians. The $20-$30 billion more in “stimulus” spending being promised by the Canadian government, we can be almost completely certain, is going to line the pockets of the already filthy rich. And all this money has to come from somewhere…

In this moment of the greatest economic crisis since the 1930s, regular Canadians need to start organizing themselves in their communities and in their workplaces to defend themselves against the ruling class’s new round of attacks.

Anything above and beyond merely defending what we currently have under this system is going to take a far broader struggle than the Canadian working class is prepared for. This is the struggle for a socialist society. While Canadians are clearly not ready for this struggle, subjectively or objectively, nothing less than a fully socialist alternative can resolve the contradictions of monopoly capitalism that we’re currently experiencing.

by Thomas Saczkowski & Farshad Azadian
Basics Issue #12 (Jan/Feb 2009)

The Korex soap factory just minutes east of the Esplanade community has been the site of Toronto’s least known labour strike for more than six months.

On June 2, 2008 110 skilled workers of the Korex factory in Toronto began a strike because of labour issues with the Pensler Capital Corporation. Sandford Pensler, the owner of the corporation, purchased the soap manufacturing plant in 2001 from Unilever. ”The management wanted to do away with the collective agreement, they wanted to make us into part time workers with no job security. They cut wages, seniority benefits, and the right to grieve” said Bill McLachlan, the union’s Chief Steward

Since the strike began only 3 workers have crossed the lines to work under the new conditions. With only 3 “scabs”, the remaining 107 workers have held the picket lines at the entrance of the plant 24 hours a day 7 days a week since June 2008. “We still have good morale and we are strong and we are accomplishing something with still having a 107 committed people out here even on New Years Day and Christmas.” said Mclachlan.

Over the past 8 months the strikers have created a unique environment for themselves. A self-constructed building provides most of the basic necessities for the workers on the line. The Pensler Corporation has gone to various extents to close down the picket lines by placing injunctions on the executive council, and cutting the hydro to their building. Even with the Pensler Corporation refusing to negotiate with the union, these strong and courageous workers have proved that they are willing to fight to the very end for their very modest demands.

Meanwhile, there have been safety concerns around the operation of the dangerous chemical plant by untrained scab labourers. Workers at the plant say that at least one year of training is required to be able to run the plant effectively. In response to concerns about the safety of the plant Angus Mortson a striking worker says “ if that place goes, it takes out the whole block with it” This exhibits that the bosses are putting the well-being of near-by communities, such as the Esplanade, at unnecessary risk. The management’s greed and refusal to give their workers the status quo has caused a volatile situation for the surrounding community.

The Insured Mortgage Purchase Program (IMPP) and the Extraordinary Financing Framework (EFF) is to the Canadians what the Troubled Asset Relief Program (TARP) is to Americans: A cover for hundreds of billions of dollars – trillions in the U.S. – of public funds being dumped into the coffers of parasitic monopoly financial interests.

by Steve da Silva
(A version of this article is forthcoming in Relay #25, the quarterly publication of The Socialist Project.)

If you’re still scratching your head with bewilderment trying to understand how the “free-market” Conservatives could make an overnight about-face into Keynesians – from promising budget surpluses during the October 2008 Federal election to giving us unforeseen budget deficits in the 2009 Budget – then you’ve bought into the terms of a “public” debate that is intended to confuse and conceal what’s really going on. The Conservatives have not broke with old ideas as a last-ditch attempt to hold onto power in Parliament, as many are saying. Rest assured that the Conservatives have been and remain the most shameless representatives of monopoly capitalist interests in this country. Over the last three months, the Conservatives – taking the lead from Bush and Obama presidencies in United States and most other imperialist countries – have begun to implement one of the largest transfers of public wealth in Canadian history, channeling untold amounts of public funds into the coffers of the banks and other monopoly financial interests, accounting for at least $275 billion in “bailout” money.

Meanwhile, the pseudo-opposition Liberals and NDPers have de-facto gone along with the ruling party’s proposals by refusing to shift the terms of the debate onto what really matters. While the attention of Canadians were being diverted by the political theatrics of the last three months – with the October 2008 elections, the prospects of an NDP-Liberal coalition, the British Crown’s representative to Canada Michaëlle Jean shutting down Parliament, and the anti-climactic display of Jim Flaherty’s “leaky budget” in mid-January 2009 – a conspiracy of silence has prevailed as the Canadian government swapped hundreds of billions of dollars for questionable assets held by Canada’s banks. This while millions of Canadian working-class were people being walloped by the economic crisis, with hundreds of thousands of lost jobs, pension funds suffering historic losses, (Footnote 1) and EI failing to pay out to workers what they pay in to it. (Footnote 2)

In order to fully take stock of what has occurred in the last three months, let’s return to October 2008 when this untold drama began unfolding.

“Cash for Trash” Under the Cover of “Credit for Consumers”

In October 2008, with the current crisis of monopoly finance capitalism in full swing and the U.S. government preparing to implement its controversial $700 billion “Troubled Asset Relief Program” to buy up junk assets from financial corporations – only one of a series of bailouts that would eventually reach some $8.5 trillion (Footnote 3) – unbeknownst to most Canadians the Government of Canada was in the process of implementing its own “bailout”.

Days before the 2008 Federal Election in Canada, Prime Minister Stephen Harper announced that the Government of Canada, through the Canadian Mortgage and Housing Corporation, would purchase “$25 billion in insured mortgage pools as part of the Government of Canada’s plan, announced today, to maintain the availability of longer-term credit in Canada.” (Footnote 4)

It’s instructive to note that with this announcement falling just four days before the Federal election either the Liberals or the NDP could have generated a groundswell of popular dissent by exposing and opposing this bailout and rode that wave right into power. They did not oppose the bailout then, and their silence on what was to follow has shown the degree to which these parties serve monopoly capitalist interests.

Emboldened by the success of the first phase of the bailout scheme having being carried through with no dissent from the Canadian people, Bay Street began publicly pushing the Canadian government to expand the plan to beyond $200 billion. (Footnote 5)

On November 12, 2008 the Canadian Department of Finance announced that it would buy up another $50 billion in securities through the Canadian Mortgage and Housing Corporation as part of its Insured Mortgage Purchase Program (IMPP):

The Honourable Jim Flaherty, Minister of Finance, today announced the Government will purchase up to an additional $50 billion of insured mortgage pools by the end of the fiscal year as part of its ongoing efforts to maintain the availability of longer-term credit in Canada.

This action will increase to $75 billion the maximum value of securities purchased through Canada Mortgage and Housing Corporation (CMHC) under this program. (Footnote 6)

Simultaneously, the government also announced that they would indeed “guarantee… more than $200 billion to pay back new loans made to Canadian financial institutions.”7

With $75 billion in the bag, and no signs of mass opposition to this massive transfer of public wealth to the banks – not even nominal opposition from any of the main federal political parties – there were no forces standing in the way of the Canadian government buying up another $200 billion of bad assets from Canada’s chartered banks.

The 2009 Federal Budget:

Unbeknownst to most Canadians, this $200 billion program has already been approved by the Canadian government in the form of the 2009 Federal Budget.

The devil is in the details of Table 4.7 of the Budget, reproduced here (click to view):


In the first line, one can find the budgetary numbers that sum up to the much discussed $85 billion deficit. In the line entitled “Insured Mortgage Purchase Program” one can find the $75 billion CMHC buyout. And then, at the very bottom of the table, in the line entitled “Financial source / requirement” one finds the $200 billion + in additional funds. How does the budget explain this massive financial expenditure?

In its own words, the

significant financial requirements are projected from 2008–09 to 2011–12, respectively of $103.7 billion in 2008–09, $101.2 billion in 2009–10, $30.7 billion in 2010–11, $11.4 billion in 2011–12, as well as financial sources of $3.9 billion in 2012–13 and of $47.3 billion in 2013–14. The requirements result largely from government initiatives to support access to financing under the Extraordinary Financing Framework (EFF). (Footnote 8)

And there it is: The “Extraordinary Financing Framework” (EFF) – a mere footnote buried in the 2009 Budget to account for one of the greatest financial raids of public funds in Canadian history, the consequence of which will be a public debt so large that it will have to be serviced through the mass privatization and elimination of the social programs which Canadians take for granted. Google Canada’s “Extraordinary Financing Framework” and you get under 300 hits. By comparison, Google the U.S. $700 billion “Troubled Asset Relief Program”, and you get more than a million hits.

Worry not, the Budget reassures us, since “the large increase in market debt associated with the Insured Mortage Purchase Program (IMPP) does not affect federal debt or the federal government’s net debt levels as the borrowings and associated interest costs are matched by an increase in revenue-earning assets (my emphasis).”

If the bank assets purchased under the IMPP and to be purchased under EFF are indeed stable revenue-earning assets, does this not raise the question of why these institutions are liquidating them? For liquidity, of course, so the banks could get on with their lending – or so we’re told.

If these assets are generating profitable revenue streams, then these banks would have little need to dispose of them. In the current climate of hundreds of thousands of jobs being wiped out in the Canadian economy, the default rate on consumer and household debt is set to soar, and these assets will be hit hard, just as they were in the U.S. with the sub-prime mortgage debacle. And when these assets default, it will be Canadians who will be left to foot the bill.

And what are the banks planning to do with all of this “liquidity”?

In response to the January 27 budget, Ottawa-based economist and editor of globalresearch.ca Professor Michel Chossudovksy wrote “We are not facing a budget deficit of Keynesian style, which encourages investment and demand for consumer goods and leads to increased production and employment.” Rather, as he points out,

Canadian chartered banks will use the money to salvage the time to consolidate their position and fund the acquisition of several U.S. financial institutions' problem… For example, in 2008, TD Canada Trust has acquired Commerce Bancorp of New Jersey, making it the second largest transaction of a Canadian mergers and acquisitions valued at $ 8.6 billion U.S.9

The massive deficit accounted for in the 2009 Federal Budget is not directed at “stimulus spending” to create jobs for unemployed workers in the “real” productive economy, invest in public infrastructure to renew decaying and underfunded public services, or increase accessibility to Employment Insurance and welfare benefits. This is one of the boldest and most overt series of attacks by monopoly capital on the vast majority of Canadians.

The players may have changed, but the game remains the same. As V.I. Lenin demonstrated nearly a hundred years ago in Imperialism, The Highest Stage of Capitalism and other works, capitalist crises are the opportunity for greater concentrations of wealth and monopolization of industry. Canada’s present experiences with the IMPP and EFF are evidence of where that wealth comes from and where that wealth is going.


Economic Crisis as a Prelude to Social and Political Crisis

There is no shortage of resources in our economy or at the disposal of our state to meet the challenges and resolve the social crises that the majority of Canadians are facing in the current economic crisis; only a shortage of political organization among the working-class and other modest-income to have a meaningful say over how these resources are spent; or, for that matter, the operation of the entire economy.

So, if the “open and democratic” liberal society that Canada is couldn’t produce a single dissenting political current in the electoral realm, a single voice of opposition in our “free press” (which is actually one of the most concentrated in the industrialized world), if only a handful of Canadians are writing about Canada’s bailouts, and such a small fraction of Canadians even know about it, while millions will experience the devastating social and economic consequences, what does this tell us about the nature of political power in Canada? And if it simply can’t deliver to goods for us, what comes next?

Left to the devices of Canada’s monopolistic ruling-class, the solution to the current crisis will be the complete gutting of social spending, a new round of attacks on organized labour and the real wage, an increased dependence on imperialism for profits, and all the militaristic campaigns that this necessitates. (In the midst of our economic crisis, we shouldn’t be holding our breath to see cutbacks in the $500 billion military budget pledged by the Conservatives in the summer of 2008).

Canada is long overdue for a serious upsurge in militant grassroots organizing with a socialist orientation. As capitalism proves itself to be nearing economy bankruptcy, we need to come to terms with how morally and politically bankrupt it is as well. What the people’s of the oppressed countries of the world or the indigenous peoples of this land have been telling us for centuries Canadians are beginning to wake up to: That Canadian monopoly capitalism is a parasitic system, and it can’t persist without the constant expansion of war, the intensification of exploitation, further environmental destruction, new territorial conquests, support for state-terrorism and state-sanctioned terrorism, and perhaps even new world wars to redivide the world’s people and resources among the major imperialist powers.

The choice is ours. It’s this bleak future, or we begin to organize ourselves for something else. That historical something else to capitalism and imperialism, as the people’s movements in places like Venezuela, Bolivia, Nepal, or the Philippines are demonstrating to us today, can only be socialism.

(1) See Steve da Silva, “Canada’s Bailouts: A Whole New Round of Attacks on the Working-Class”, BASICS Free Community Newsletter (Issue #12, Jan/Feb 2009) .[ http://basicsnewsletter.blogspot.com/2009/01/canadas-bailouts-whole-new-round-of.html]
(2) See J.D. Benjamin, “The Great Employment Insurance Rip-Off”, BASICS Free Community Newsletter (12 January 2008).
[http://basicsnewsletter.blogspot.com/2008/01/great-employment-insurance-rip-off.html]
(3) See Kathleen Pender, “Government bailout hits $8.5 trillion”, San Francisco Chronicle (26 November 2008).
[http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/26/MNVN14C8QR.DTL&hw=bailout+debt+trillion&sn=001&sc=1000]
(4) CMHC News Release, “Canada Mortgage and Housing Corporation Supports Canadian Credit Markets”, CMHC (10 October 2008).
[http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2008/2008-10-10-1700.cfm]
(5) Paul Vieira, “Ottawa's steps have worked so far: Flaherty”, FinancialPost.com (22 October 2009). [http://www.nationalpost.com/related/links/story.html?id=899369]
(6) “Government of Canada Announces Additional Support for Canadian Credit Markets”, Department of Finance Canada (12 Nov 2008).
[http://www.fin.gc.ca/n08/08-090-eng.asp]
(7) Ann Miller, “Banks get all their wishes fulfilled” National Post (13 November 2008). [http://www.globaltv.com/globaltv/winnipeg/story.html?id=954383]
(8) “Chapter 4: Fiscal Outlook” of Canada’s Economic Action Plan: Budget 2009, Government of Canada (27 January 2009).
[http://www.budget.gc.ca/2009/plan/bpc4-eng.asp]
(9) Chossudovksy, “Canada: Opération «Relance économique», $200 milliards pour les banques”, globalresearcg.ca (28 January 2009).
[http://www.mondialisation.ca/index.php?context=va&aid=12076]

by Herman Rosenfeld of The Socialist Project
Basics Issue #12 (Jan/Feb 2009)

Working people throughout North America have been wondering about the loan guarantees being provided to two of the Detroit-based auto companies, General Motors and Chrysler, by the governments of the US, Canada and Ontario. These corporations are to receive loan guarantees of $17 billion in the US and about $4 billion from the Canadian federal and Ontario provincial governments. Technically, if used, these have to be repaid. Ford, the third company, is to receive a line of credit.

These companies, which used to be the largest and strongest capitalist enterprises in the world, are genuinely in trouble. Without this aid, they will run out of cash and will go into bankruptcy court. This would lead to massive layoffs and closures of workplaces in many communities.
The financial crisis has affected the operation of the real economy – that produces goods and services that all of us use. The breakdown in credit has made it difficult for people to borrow money. With no one buying cars, these companies must use up cash reserves simply to keep themselves solvent.

Why should we be concerned with this at all? After all, these companies have never been great friends of the working class.

The problem is that in a capitalist economic system, workers are dependent upon employers’ survival in the marketplace in order to retain their jobs. This is a real material dependency. It represents a key source of strength for the capitalist system and acts as a kind of brake or limit on the independence of the working class from capital. We have to always keep it in mind while working to lessen and ultimately break that dependency. But we can’t ignore it, if we want to make change.

The loan guarantees allow the auto companies to survive for the time being. Without them, millions of workers will simply lose their jobs and the collective productive capacities these industries represent – even in their alienated form as private capital – would be lost to all of us. Obviously, we can’t trust these companies or the current US and Canadian governments to restructure them in ways that benefit working people.

The US Congress has demanded that UAW members in the US at the Detroit Three cut their wages, benefits and working conditions to match the non-unionized “transplants” (plants owned by overseas-based capitalists) by the end of the year. Canadian governments have also demanded concessions from the CAW.

Concessions from workers in the auto-sector would affect more than autoworkers. Concessions in the one sector will undermine the rights of the rest of the working class: non-unionized autoworkers in the transplants (foreign auto-maker plants) will no longer receive wage and benefit packages that match the unionized sector. Workers in other sectors that currently provide low pay and few protections, would be that much weaker, as the possibility of unionization becomes more remote and unionization promises fewer gains. It would lower government revenues and depress the buying power of all workers. In other words, the strength of the autoworkers and their unions plays a role in supporting and building the power of others. A massive defeat for the autoworkers would be a defeat for the entire working class. Socialists have to call for (and organize for) a different set of outcomes. This might mean:

•Demanding that the companies produce affordable, recyclable, environmentally-friendly vehicles.

•Resisting concessions.

•Regulating investment levels in the auto industry, subjecting the industry to a form of nationally-based planning.

•Surplus plants, tool and die shops, precious skills and workers’ capacities need to be used to produce useful goods and services that people need. Working people should be able to democratically decide on what community needs should be fulfilled by these resources, be it public transit, manufacturing environmentally-friendly technologies, schools, hospitals, recreational facilities or public and co-operative housing. Workers in these surplus plants should be paid wage levels at par with unionized workers.

•The unemployed need to mobilize. Those unable to work need to have social assistance levels that allow a reasonable standard of living and the organizational power to fight for it.

•Finally, financial institutions need to be nationalized and democratically run as a public utility to finance the production of these needed goods and services.

For socialists, the key is that we develop our own capacities as workers to organize, build unity around common goals for different segments of the working class and mobilize behind a set of demands and approaches that will contribute to the kind of society we would like to see in the future.