Notes on Canadian Political Economy

by R.J. Rendle

The international expansion of capitalism is not new, but since the 1960s there has been a massive increase in the internationalization of capitalist exchange and production. This has been facilitated by technological revolutions in telecommunications and transportation, but its economic base is the continued concentration and centralization of capital on a world scale under the control of transnational corporations. The growing mass of capital held by the financial oligarchies of the imperialist powers has increased the integration of financial markets and numerous production processes, such as the “world car.”

Imperialist-driven “globalization” is being determined not by technical necessity, but by capitalist accumulation, particularly to increase profit. Globalization is a direct attack on labour at home and abroad. By exporting capital big capitalists extend their exploitation through lower wages, contracting out, fewer democratic inhibitions (deregulation), the privatization of public property, and natural resource plunder.

Globalization is not inevitable. It is possible to have a freer flow internationally of information and technology, etc. without the imperialist ownership and exchange relationships. Indeed, the struggle for democratic sovereignty and the ending of imperialist globalization is a necessary part of the struggle for socialism.

The central conduit of capitalist exploitation under capitalism has become the transnational corporation. The largest transnationals now own and control production greater than that of many national governments. Initially, the monopoly capitalist corporations had a largely national base in terms of production and controlling ownership; from their domestic base they dramatically expanded the export of capital and foreign control of natural resource production and transportation. In recent decades, the controlling ownership remains tied to the capitalist classes of particular nations; however, a much increased proportion of production and profits, often a majority, comes from exploitation beyond the borders of its national base.

Imperialism is moving to ever larger capitalist blocs and centres of power, of which the most powerful are centred in North America, Europe, and Japan. Transnational-driven pressures for capitalist integration, such as NAFTA and the European Community, which are behind schemes for supranational government and supranational, permanent military organizations. Such schemes have invariably weakened democratic controls over the state power, especially its executive branch. Whatever democratic rights the working people have won are most established at the level of national states and depend on the exercise of democratic sovereignty. The struggle for the democratic sovereignty of states clashes directly with the interests of the transnationals.

The growth of free trade zones and the liberalization of capitalist relations does not mean the end of anti-imperialist rivalry or war, of the emergence of a peaceful, regulated, or stable imperialist order (or “ultra-imperialism”). Imperialist powers have been united in their hostility to socialism and national liberation; though there have been liberal versus conservative/carrot versus stick-type differences on tactics. And as long as there is general resistance to imperialism, there will be points on which the imperialist powers find unity. However, uneven development at a world level is becoming more glaring, which is a guarantee of instability and rivalry. In fact, among the imperialist powers, the intensity of rivalry is increasing, as is their inclination to use military force outside their borders. The “new world order” of imperialism has not become more stable or more peaceful.

The problem of foreign ownership in the Canadian economy, which had long undermined Canada’s economic and political independence, increased sharply in the second half of the twentieth century. Trade and debt dependence on Britain before World War I was replaced with an even more debilitating dependence on U.S. capital and technology in later decades. The result has been a massive and growing outflow of profits, interest, fees, and other transfers that stifles new development, jobs, and research in Canada, adds to the burden of exploitation on the working class, and eases the political penetration of U.S. imperialism in Canada. Foreign transnationals augmented previous pressures for the exploitation of Canadian natural resources, especially in northern areas of Canada, and encouraged further attacks on the land claims and sovereign rights of First Nation peoples.

At the same time, Canadian corporations sharply increased their export of capital, especially since the 1970s. Canadian transnationals in mining, manufacturing, and finance also participated in the predatory super-exploitation of poor countries, where dictatorial and racist regimes have weakened and banned unions and opposed decent labour standards. Dramatic changes in transportation and communications accelerated this trend. Canadian monopoly capital, which was becoming increasingly powerful, moved more aggressively into determining the direction of state policy, through such organizations as the Business Council on National Issues. Canadian-based transnationals, which are prominent in such areas as finance, mining, telecommunications, and transport, dominate Canadian state policy.

A watershed in Canadian state policy was reached with the Canada-U.S. Free Trade Agreement, NAFTA, and GATT. These international treaties are not primarily treaties about the free trade of commodities but about the unhindered movement of transnational corporations and, with it, the reduction of the sovereign power of the Canadian government. Canadian transnationals and their neo-conservative political allies were the major force behind the treaties, but virtually all major sections of the Canadian capitalist class fell in line. By contrast, opposition to these treaties was strong among the labour movement and other organizations of working people with the clear recognition that they threatened jobs, social programs, and Canadian democratic sovereignty.

The Canadian capitalist class has shifted overwhelmingly towards extending the continentalist integration of the Canadian and U.S. economies into a common market. A certain rivalry still exists between Canadian and U.S. capitalists, which appears from time to time in trade or other regulatory disputes as well as certain questions of international policy. But the extent of Canadian capitalist trade and investment in the U.S., U.S. foreign control of the Canadian economy, and the transnationalization of the core elements of Canadian capitalism has eliminated most of the economic base for a Canadian capitalist class which would exert serious support for increased Canadian sovereignty and independent economic development. Canadian imperialism’s collaboration in the G7, the IMF, and other imperialist clubs, in the U.S. imperialist Gulf War and intervention in Somalia, and in support of GATT are expressions of its continued commitment to the imperialist rule of transnational corporations at home and abroad not to democratic Canadian sovereignty.

Historically, the range of state activity in Canada has expanded with the development of capitalism, particularly in areas of economic management and statistics, education and science, and social programs. The extent and character of such activities has changed from period to period depending on economic conditions and the pressures workers are able to exert against the capitalist. However, the core, primary function of the capitalist state, which overrides and suffuses all other state activities, remains the defence of the private property and exploitative power of the capitalist class. The neo-conservative attacks on the social welfare activities of the state in favour of openly oppressive and anti-labour activities, reveal increasingly the class nature of the capitalist state.

Since the mid-1970s, the real wages for most workers in Canada have fallen or, at best, stagnated while the intensity and, often, the length of work has increased. Thus, capitalism has created a situation where there is, on the one hand, mass unemployment and desperation for jobs while, on the other, there is overwork and intensified exploitation. The tendency to create a maldistribution of work is an inherent contradiction of capitalism.

Public debt and international debt jumped dramatically, to the point where federal and provincial governments were subject increasingly to the lending decisions of the world’s most powerful centres of finance capital in the US and Japan. Sharply increased government borrowing abroad coupled with the already extreme level of foreign ownership – the highest by far among the developed capitalist countries and many less developed countries – made Canada’s international indebtedness a central element of the economic crisis in Canada. The Canadian dollar and balance of payments are unstable and continuously threatened by collapse. Foreign indebtedness has already seriously compromised Canada’s sovereignty and lowered Canadian living standards; it is now pushing Canada into relative decline, towards the status of a dependent low-income country, with increased capitalist pressure for economic and political absorption into the U.S.

The massive national debt burden has been exacerbated by and is the immediate responsibility of right-wing state policies, high interest rates, corporate tax cuts and giveaways, and higher unemployment, which reduced tax revenues and increased social program costs. But underlying these anti-worker state policies were fundamental trends and crises in capitalism that all relate to the fundamental contradiction in capitalism between private, increasingly concentrated ownership and social production.

First is the general trend of capitalist accumulation and impoverishment, a process that is being exacerbated by the new scientific and technological revolution. On the one hand, there is the increasing concentration and centralization of capital and wealth, especially in the hands of the transnational corporations; on the other hand, there is the increased long-term unemployment and impoverishment of workers.

Second, the unplanned anarchy of capitalism and the increased internationalization of capital and technological revolution, has led to the rise of particular industries and decline of others. Facilitated by free trade treaties, such restructuring has added to dislocation and unemployment in Canada and deepened the conditions of crisis.

Third, the acute, periodic cyclical crises of overproduction that beset capitalism, have become more serious since the 1940s and now threaten to become chronic in most of the capitalist world. The moderate levels of growth current in Canada and most capitalist countries are incapable of creating the jobs necessary to end mass unemployment. Neither are liberal pump-priming policies capable of achieving this goal, though such reforms are more desirable for the working class than neoconservative austerity.

The trend of neoconservatism is seen everywhere the transnationals rule. Neoconservatism is not simply a “policy” of capitalist states, but a fundamental trend that reflects the profound crisis into which capitalism is mired. Reforms to control the free movement of capital and weaken the power of the transnationals can limit some of the worst effects of the present crisis. But the general trend can only be reversed by working class power and solved by socialism.

The working class has become, overwhelmingly, the largest class in advanced capitalist society (in Canada, now over 85 percent of those with money incomes). The working class is comprised of all those who do not own means of production and, consequently, depend for their livelihood on selling their labour-power for a wage or salary. The historical core of the modern working class is among the manual or blue collar workers, skilled and unskilled, men, women, and children in the factories, resource, and transportation enterprises that emerged from the Industrial Revolution.

As capitalist industrialization expanded into new areas of exploitation, the working class encompassed men and women in other industries and occupations, particularly the growing numbers of clerical, technical, and professional workers that emerged with the expansion of big business and the state. The spread of public education, which increased the supply of literate workers, the increased use of lower-paid women in clerical functions, and the mechanization and computerization of clerical work, reduced the once privileged wages and status of “white collar” employees and gave an industrial character to much office work.

Capitalism will never even out occupational inequalities or unfairness among workers – it creates and profits from such division. On the one hand, to cheapen the cost of labour, capitalism has often deskilled and degraded work and increased the separation between manual and mental activities. A large portion of the working class remains tied to drudgery and menial activities. On the other hand, the technical and scientific demands of capitalist growth have also led to new skills and levels of proficiency, and raised average training and educational requirements so as to reduce the manual/mental division in some activities. A polarization of skills and lopsided division of labour is constantly being inflicted on working people. By its nature, capitalism is incapable of planning or organizing a fair or healthy division of economic tasks.

Whether working by hand or by brain, whether skilled or unskilled, whether male or female, whatever the national background, race, age, region, or sexual orientation, the workers are subjected directly or indirectly to capitalist exploitation and the capitalist social hierarchy. Capitalism is based fundamentally upon this class inequality, an inequality which is bound to, reinforces, and reproduces other social inequalities. Neither this class inequality nor any of the social inequalities of gender, race, nation, age, or disability can be ended without ending capitalism itself; hence, the struggle against such inequalities will never find a lasting solution unless they are taken up from the perspective of the working class struggle for socialism. However, the struggle against such inequalities is also a necessary part of the building of working-class unity and the winning of socialism. Indeed, without making such questions an essential element of the working class struggle, the struggle for socialism can be lost and communism will never be achieved.

Overall, when compared to the 1940s the actual power of Canadian working class relative to the capitalist class has declined. While there were such successes as winning improvement in wages and conditions and in public sector organization, there was gradually growing unemployment, insecurity, and intensity of work. There was also the still low level of unionization in many sectors, particularly the rapidly growing service sectors, the aggressive, concentrated power of the capitalist mass media, and persisting divisions on the national question, gender, and race, all of which significantly weakened the working class.

In addition to the damage done directly by the capitalist class were decades of right-wing social democratic and anti-communist politics and class collaborationist practices within the labour movement which weakened the class independence of the working class. The workers’ movement has been seriously hurt by the heavy political legacy of corporate and government cooptation in tripartite and bipartite schemes, by the growth of the material privileges of leadership, by outright corruption and patronage, and by bureaucratic approaches to union action. There has been a distancing of leaders from members, and the authoritarian methods of the boss have too often replaced union democracy and rank and file initiative.

However, while the working class in Canada is actually weaker in historical terms relative to capital, its potential power is greater. Its numbers are greater. It encompasses more sections and layers of society; the participation of women and racial minorities has increased. The level of literacy and access to information and communications is higher. As a whole, the working class has a greater potential power to organize and struggle, domestically and internationally.

The joint source of wealth in capitalist society is nature as well as labour, and labour itself depends on nature.

The destruction of the natural environment, such as the poisoning of soils and the devastation of forests, did not begin with capitalist industry, nor will questions of the environment die with capitalism. But capitalism has inflicted far more destruction on the natural environment than any socio-economic system experienced by humanity. From the polluted factories and slums of the Industrial Revolution to Bhopal, Love Canal, the Brazilian rainforests, and the Atlantic fisheries, there is an exploitation and destruction of nature that is intertwined with capitalism’s exploitation and destruction of labour.

The scale of capitalist accumulation has raised the exploitation of nature to unparalleled levels and altered fundamentally labour’s relationship with nature. The extent of capitalist expansion over the earth’s territory, the magnitude of material output and its resource requirements, and the extinction of species and destruction ecological systems has pressed the earth’s environment to its limits and, in certain areas, beyond. Imperialism is pressing humanity and the environment towards world-level catastrophe.

There are limits to the material consumption of humanity, to the carrying capacity of the environment. The exact limits in certain activities may be known only approximately, but nonetheless there are limits; when these are violated the result is environmental degradation and crisis, both small and large. Limits need to be established to the extent of the occupation of the earth’s surface and the intensity of individual and social extraction and use of the earth’s material resources. This means limiting the earth’s population and the per capita consumption of a variety of material goods, and defining regions that must be protected from human settlement and economic exploitation. In a variety of areas the level of extraction has to be limited absolutely and on a world level, such as in the harvesting of the forests and fisheries, the pollution of water and soil systems, and the land permitted for human settlement. Population growth has to be limited and planned both domestically and internationally, and urban sprawl and waste expansion has to be ended. It means ending capitalist consumerism, including its deceitful and wasteful advertising, and confronting the concept of unending material consumption.

The crisis of the environment introduces new problems not only about material consumption in general but also about the nature of living standards and their material limits. The standard of living in terms of material consumption, such as in the size of habitation, type and quantity of diet, access to transportation, etc., even given improvements in efficiency, is not infinite.

Defining of the limits to material consumption will not be accomplished without class struggle, particularly since it is the consumption of the rich that must first be limited. It is, first and foremost, the rich of the capitalism class who have far surpassed socially and environmentally reasonable levels of consumption and who have resisted most fiercely any encroachment on their ownership and consumption, while contentedly impoverishing others. The premise that the earth’s resources should be shared either equally or even according to need by all humanity is daily violated by capitalism. Further, imperialism profits enormously from its exploitation of the earth’s resources and has created a global structure in which a small group of imperialist states, particularly their wealthiest people, consume a grossly disproportionate share of the earth’s resources.

It is known that in many areas of production, the productive capacity is more than adequate to supply the entire needs of society. To struggle against the exorbitant and destructive consumption of the rich and capitalist consumerism does not diminish the devastation of poverty or the need to protect the living standards of working people. Quite the contrary, such an approach means that unending capitalist growth is not a solution: the focus of struggle must shift to the distribution and priorities of capitalist production and, hence, against capitalist ownership and control.

Capitalism has changed humanity’s relationship with nature. Its exploitative class orientation has established values of domination and short-term advantage rather than respect, understanding, and sharing in the long-term interests of humanity. The commercialism, incentive structure, and social values that capitalism promotes, as reflected in the “dollar culture” and consumerism, are hostile to both social well-being and the environment. Capitalism needs to be eliminated not simply to alter the character and priorities of material growth, but to sweep away capitalist thinking about society and the environment.

Spark! #5, pgs. 6-12