Editorial
Who
Should Pay for the Economic Crisis?
The Harper government is preparing to reconvene parliament and present a new budget. Harper has reportedly consulted with the leaders of the opposition parties and has promised a new package of economic stimuli in accordance with their wishes. He has also met with the provincial premiers and has promised to help finance a number of capital works projects, particularly ones involving renewal of highways and bridges. He has also stressed repeatedly in recent days that there are going to be very large federal deficits over the next few years.
Some will greet Harper’s new budget as a “victory” for the “coalition” parties. Others will no doubt criticize it for not going far enough, either in terms of the amount of federal spending or how the funds are allocated. Left in the shade, however, will be the crucial issue of who is going to pay for these expenditures. This is not an accidental omission. All of the parliamentary political parties are in agreement on this issue. They all begin from the basic premise that the working people will have to pay for the crisis. To the extent that there is any disagreement between them it is, first, over which sections of monopoly capital will receive the lion’s share of the loot and, second, how best to convince workers to accept the burden of the crisis with the least amount of resistance.
On the first issue, in general
terms, the Harper Conservatives would like to see most of the money spent in
the western provinces, primarily to subsidize the oil extraction industry,
while the opposition parties want to see more handouts to the manufacturing,
mining and forestry industries in Ontario and Quebec.
On the second issue, the Conservatives made it clear in their November economic statement that they intend to use the crisis to crush the trade unions - as illustrated by their attempt to remove the right to strike of federal employees - hoping to thereby leave workers defenceless in the face of the inevitable attacks on their wages and working conditions. In their coalition agreement the Liberals, NDP and Bloc Quebecois demanded increases in Employment Insurance and welfare benefits. Whether that demand was serious or merely politicking remains to be seen, but it does indicate that those parties are hopeful that the trade unions can still serve a useful function in limiting the resistance of the working class.
In all previous economic crises in Canada the capitalist class has used its monopoly over the means of production and its state machine to force the working class to pay, through reduced wages and deteriorated working conditions, reductions in social expenditures on health, education and welfare and through a constant shifting of the burden of taxation away from corporations and the rich and onto working people. The working class has suffered in other ways, as well, such as the weakening of the trade unions and their increasing incorporation into the state apparatus. The three decades following the Second World War saw a partial reversal of this trend, partially as a result of the super-profits being reaped by the capitalists due to the massive destruction of capital in Europe during the war and partially as a result of the emergence of a socialist camp in the immediate post-war period. However, even during that period the relative gap between rich and poor continued to grow.
The issue of who should pay for the current crisis is not an incidental issue, nor is it a moral issue either. Rather, it is a practical matter which will profoundly affect the length and severity of the crisis, as well as whether it will be followed by further such crises in the future. History shows that working people are willing to make enormous sacrifices and shoulder enormous burdens if there is a prospect that their sacrifices will lead to a better future for themselves and their children. However, both theory and experience demonstrate that this will not be the case with this crisis.
In purely economic terms, making
the working class and people pay for the crisis will significantly delay any
recovery which may or may not take place. The capitalist business cycle is
based on the periodic production of greater quantities of commodities than the
market can absorb. Unsold inventory accumulates, profits plummet and factories
are shut down until the surplus inventory is sold off. Eventually demand begins
to recover and factories begin to reopen, albeit usually with fewer workers
than before due to technological advances.
However, such recoveries merely set the stage for another, and often more severe, crisis because increasing mechanization leads to both a relative decline in the rate of profits and a relative decline in the purchasing power of the working class. In other words, the domestic market shrinks at the same time that the productive capacity increases. This process led to a generalized stagnation of the entire capitalist world in the last two decades of the nineteenth century, a generalized economic crisis that was only reversed through the imperialist rape and plunder of the entire world and the systematic destruction of both capital and people through two world wars and a century of almost continuous regional and/or local warfare.
The world has now arrived at a stage where virtually the entire global economy is industrialized. For at least the past two decades there has been a massive international overproduction crisis. The economic crisis which has swept the globe during the past year was kept at bay for a period of time first through the plunder of the property and savings of the people of Eastern Europe (where life expectancy plunged overnight by over 20 years) and then through the enormous investments of capital in China and India. However, both of those factors have served to exacerbate the underlying overproduction crisis by reducing effective demand, while massively increasing global productive capacities.
If the working class pays for the current economic crisis through lower wages, higher taxes and reduced social expenditures, that will mean that the market for the mountains of surplus commodities will be reduced which, in turn, will prolong and exacerbate the crisis. Furthermore, the huge amounts of cash being doled out to the monopoly capitalists will be used (assuming they manage to survive) to buy out competitors and modernize equipment. The result will be a further contraction in the market and expansion in productive capacity. Ultimately, the main surviving groups of international capital will go to war with one another to settle their trade disputes and to destroy enough of the world’s productive capacity to keep capitalism going for another few decades. The working class gets nothing for its sacrifice except increasing misery, insecurity and death.
On the other hand, if the working
class and people refuse to pay for the crisis and make the rich pay instead,
the benefits will be tangible. Many corporations would go bankrupt, but that is
going to happen in many cases regardless. However, the factories, mines and
other centres of production would remain, as would
the workers. Measures could be taken to ensure that the centres
of production remained in operation and the workers remained employed. Of
course, to accomplish that, the working class and people will also have to take
control of the political institutions and establish their own state, because it
is inconceivable that the rich can be made to pay for the crisis so long as
they control state power.
Taking over ownership and management of the main means of production would also ensure that the working class and people could reorganize production on the rational basis of providing for the material and cultural needs of the people, rather than on the basis of maximizing capitalist profits. Therefore, the underlying basis of the vicious cycle of capitalist crises would be eliminated and long-term economic security would become a possibility. If the working class and people are going to be forced to make sacrifices, then at least those sacrifices should result in a future worth making sacrifices to achieve.