Canada and the Crisis of International Capitalism

It is a cliché of Canadian political economy to say that if the US sneezes, Canada gets a cold. When the US gets a cold, Canada suffers pneumonia. The reason for this is very simple; the Canadian economy is based on the export of manufactured goods to the United States. The Fightback Editorial Board looks at the world situation and how this affects Canada.

“The present epoch is the epoch of the world revolution”
From The Molecular Process of World Revolution, August 2004


The world situation has drastically altered. We are in a period of sharp changes and sudden turns. The world economy teeters on the brink of crisis, and everywhere we see volatility. Every major bourgeois institution – the UN, the IMF, the WTO and NATO – is in crisis. The potential for instability exists in every country around the world.

After years of attacks in the form of cutbacks, wage reductions, the increase in working hours, privatizations and counter-reforms, the working class has awakened to struggle. One year ago we saw the largest general strike in the history of India, followed by the largest ever Communist vote to parliament shortly thereafter. Six million people demonstrated against the war in Iraq in Spain, and after the events of March 11, 2004, 11 million people demonstrated against the PP government, the war, and terrorism. The pressure of the masses forced Zapatero to follow through on his promise and pull Spanish troops out of Iraq. There have been general strikes in Italy, Spain, Greece and France. Just a few years after the electoral collapse of the left and the rise of Le Pen in France, 21 of 22 regions went to the left in last year’s regional elections.

In Canada we recently saw the largest strike in the history of Newfoundland. Québec seems continually on the verge of a general strike, and we saw 100,000 demonstrate last May Day against the war in Iraq and the austerity measures of the Charest government. There was the occupation and running under workers’ control of the Alcan smelter in Jonquière and hundreds of thousands of students participating in the student strike. We have also seen the growing radicalization of the workers of British Columbia, with the UBC Teaching Assistants’ strike, the Ferry workers’ strike and the events around the HEU strike last year, which could have led to a general strike. Everywhere in Canada the mood is changing and workers are learning how to fight back.

It is the workers of Latin America that are leading the way in the struggle against capitalism and imperialism. There have been revolutionary developments in Argentina, Brazil, Peru, Ecuador and Bolivia and of course Venezuela. This struggle has become the most advanced in Venezuela, where the workers have entered the political arena en masse and are attempting to take control of their own destinies. This is the definition of revolution. The Bolivarian revolution has defeated the Venezuelan oligarchy and the imperialists on three occasions – the coup of 2002, the bosses’ lockout of 2002/2003, and in the recall referendum last summer. In this the Venezuelan masses have displayed their class instincts. The Venepal paper mill and CNV valve factory have been nationalized under workers’ control and President Chavez has now come out publicly in favour of socialism. These are truly inspiring events. And the events in Venezuela have the potential to inspire and enthuse generations of workers and youth in a way similar to the Russian revolution some 80 years ago, or the Cuban revolution 50 years ago.

It is in the context of these events that the class struggle in Canada will develop. It is the job of these perspectives to help Marxists successfully orientate the revolutionary forces here in Canada.

The International Situation

The world situation can only be characterized as highly volatile and unstable. The profound economic, political, social, and military instability has intensified in the past year. Without a doubt we are in the most turbulent historical epoch since the end of World War II, if not the most tumultuous in human history. It is only the beginning of an era of wars, revolutions, and counter-revolutions – an era of world crisis and world revolution. Our political perspectives and organizational tasks flow from this.

At the root of the crisis of the world capitalist system is the crisis of the world capitalist economy. On a world scale, capitalism can no longer take humanity forward. It cannot provide even the most basic means of subsistence to the vast majority of humanity. Literally billions of humans are condemned to live in squalor on less than $2 a day. The capitalist system has long outlived its progressive historic role, and in its epoch of decay threatens to sink the whole of humanity with it. But the decline of the capitalist system does not proceed in a straight line. There can be no “final crisis” of capitalism – it will continue to exist on the backs of the suffering of billions until it is overthrown by the world working class. Within the general downward curve, the boom-slump cycle continues to operate. Some countries recover momentarily, while others contract.

Boom or slump, recovery or recession, capitalism remains a system of exploitation and oppression. The relationship between the economic cycle and the mood of the working class is not direct and mechanical, but complex and dialectical. As Trotsky explained, “So long as capitalism exists, cyclical oscillations are inevitable. These will accompany capitalism in its death agony, just as they accompanied it in its youth and maturity.” The particular conditions under which the boom or slump takes place must be accounted for, including the recent history of the class struggle. A cyclical economic recovery by no means implies a dampening of the class struggle, just as an economic crisis does not lead directly to a revolutionary upsurge. The concrete situation in each country must be taken into consideration.

It is important to keep in mind that regardless of this or that temporary stabilization in this or that country, the overall equilibrium of the world capitalist economy remains severely unbalanced, which gives rise to all manner of contradictions. Seemingly insignificant changes or incidents can have an effect far greater than they would under “normal” circumstances. Non-economic factors such as natural disasters can also play a role in influencing world politics and economics. Cause becomes effect and effect becomes cause. Blows that would normally be absorbed by a healthy economy can throw things even more out of equilibrium. The “straw that broke the camel’s back” can seemingly appear from nowhere, like a lightning bolt – or a 747 – from a clear blue sky.

According to the World Trade Organization, world trade recovered in 2004, growing an estimated 8.5 percent, an improvement over 2003. This was largely due to growth in trade and output in China, Latin America, and Africa. The world economy grew at around 3.9 percent in 2004, the fastest in 20 years. This was led largely by the U.S. economic expansion of 4.4 percent, the largest gain in growth since 1999. Canada lagged behind The States with 3.2 percent growth. Some countries such as China and India expanded rapidly in 2004 with growth rates of 7 percent or more. But growth was very uneven, and there are already signs that while the overall expansion will continue in 2005, the pace of growth will slow.

High oil prices and a tremendous public debt load all weigh on the world economy as it enters 2005. Oil prices have nearly tripled from about $20 a barrel at the start of 2002, and currently hover at just above $50 a barrel, and will remain at that range if not higher for the foreseeable future. Geopolitical instability in the oil-producing regions, in particular the Middle East, Venezuela, Nigeria, and to some extent Russia, all point to continued volatility in oil prices. While high oil prices may appear to be good news for Canada, the fact is that oil only accounts for a significant but not decisive 6% of Canadian exports. The days of cheap oil are over. U.S. economic growth is expected to slow to 3.3 percent in 2005 – growth based largely on continued consumer demand, much of it bought on credit to be paid back with interest.

The number two and number three engines of the world economy, Japan and Europe, did quite poorly. Although Japan’s official growth rate of 2.6 percent in 2004 was the best showing since 1996, its GDP actually contracted during the last 3 quarters of 2004, pushing it into its 4th recession in 10 years. Deflationary pressures on the Japanese economy continued for the 4th straight year. Core consumer prices in Japan fell 0.3 percent in January from a year ago as price-cutting competition in the telecom and electronics sectors continued. The Economist Intelligence Unit expects GDP in Japan to grow just 0.8 percent or less in 2005. Europe has done little better. Germany narrowly escaped its third recession in four years when GDP contracted by a surprise 0.2 percent in the last quarter of 2004 after stagnating in the third quarter. Unemployment in France has reached 10 percent. Now more than ever, the fate of the world economy rests on the United States.

Asia in general is also extremely unstable. The tsunami disaster brought to the surface the many contradictions that have been building up in the region for decades. The appalling poverty of millions across Asia is preparing tumultuous events in the coming period. Pakistan, on the border of Afghanistan and Iran is a mess of contradictions that will come to a head in the not-too-distant future. It is a powder keg waiting to explode, and across the border in India, the fall of the BJP has solved nothing for the masses, despite the improving economy.

Adding further complexity to the international economic situation, China’s 1.3 billion people, 3.7 million square miles of territory and a $1.4 trillion economy are a rising force in the region. It has emerged as an economic powerhouse, growing at 9 percent per year and sucking in oil, steel, and concrete, as well as manufacturing increasingly sophisticated electronics and consumer goods. This has significantly changed China’s economic and diplomatic weight on the world stage. Particularly in Asia, where it is encroaching on Japan’s traditional spheres of influence but also in Latin America, where it is working to elbow out U.S. interests.

It is clear that the world is highly unbalanced. Every inch of our planet is affected by the convulsions of an economic and social system in terminal decline. We have often explained that sharp, sudden changes can come at any time, radically and rapidly changing the consciousness of billions of people. War, revolution, counter-revolution, and the brute forces of nature have shaken the world from top to bottom over the last year, and the coming year will be no different. The bitter experience of life under capitalism is forcing millions to seek an alternative to the constant chaos and instability of the profit system.

To use a geologic analogy, there are fissures in the earth’s crust which periodically unleash tremendous amounts of energy after pressure accumulates gradually over a period of time. The capitalist system also rests on an immense fault line: the struggle between the classes. The pressure building up beneath the apparently calm surface of society can explode at any moment, venting all the pent-up frustration of the workers and poor of the world. Around the world, there are already several open expressions of the intensifying conflict between the classes. Among the most volatile issues in the coming months will be the revolutionary process in Venezuela and the occupation of Iraq.


Several years ago, In Defence of Marxism turned its attention to the developing revolutionary events in Latin America. The combination of political, economic, and social factors there has led to a deep and growing crisis with far-reaching consequences. The turning point was the revolutionary uprising in Ecuador in 2000, during which the masses had power for 4 hours, before handing it back – they didn’t even know they had it. Argentina, Peru, Bolivia, Ecuador, and Colombia are already openly convulsed by class contradictions. The rest of Latin America, above all Brazil, Mexico, and Uruguay are not far behind. At the forefront of this growing revolutionary wave is Venezuela, with the fate of the Cuban Revolution intimately linked to its success or failure.

When Trotsky was alive, he urged the comrades of the Fourth International to focus their attention on this or that country, based on the revolutionary processes unfolding at any given time. By studying the process of revolution as it unfolds, we can understand the events much more clearly (for future application in our own countries), and most importantly we can participate directly as well. In Venezuela, the organized Marxists are not just outside observers or commentators, but active participants. A meticulous study of the events in Venezuela is indispensable for understanding and working in the coming period.

The revolutionary process in Venezuela has gathered pace in recent months. In August there was the referendum against Chavez. He won overwhelmingly, but as we explained from the beginning, the illusions of the reformists within his government that this victory would end once and for all the intrigues and manoeuvres of imperialism and the oligarchy were entirely false. The reformist wing wanted “democratic legitimacy” – as if the previous 7 electoral contests that Chavez and his policies had won did anything to change imperialism’s aims. In fact, the U.S. has been more aggressive since the referendum, pushing countries in the region to put pressure on Venezuela – albeit with somewhat limited success.

The mass mobilization around the referendum resulted in greater democratization of the political process and the creation of thousands of “electoral battle units” across the country. This gave a huge impetus to the mass movement, every day more confident of its strength and increasingly aware of its tasks. The mood of the masses was, “first we’ll win the referendum, then we’ll go on the offensive.”

Now that the immediate threat of reaction is over, there is mass pressure to push the revolutionary process forward. This has led to a clash between the radical and reformist wings of the government leadership. The reformists, as always, are cowardly and fearful of the ruling class even when the bourgeoisie’s claws have been cut off. They are working to slow down the movement. Fortunately, the masses have other aims and aspirations, and are finding support in the left wing of the government. Initiatives such as agrarian reform, the diversification of foreign trade, the search for points of support globally in an effort to break the diplomatic blockade, and a general leftward shift have been seen in recent months.

Recently, several key events have accelerated the process – i. increasing conflict and provocation from Colombia; ii. the decrees on land reform; iii. the nationalization under workers’ control of Venepal paper mill; and iv. The nationalization under workers’ control of the CNV valve factory.

At each stage of the revolutionary process, the masses are increasingly radicalized. What is most important is not Chavez, but the role of the masses and the intervention of the Marxists. However, there is a dialectical relationship between Chavez and the workers, peasants, and urban poor. Influenced by the pressure from below, Chavez’ speeches have become increasingly radical, with calls for internationalism, “revolutionary democracy”, “genuine socialism”, “transcending capitalism”, support for Trotsky vs. Stalin, support for the Permanent Revolution, and the rejection of “socialism in one country”. He recently defined the Bolivarian process as socialist in character, and called for the building of the “socialism of the 21st century”. “So, if not capitalism, then what? I have no doubt, it’s socialism.”

In turn, speeches like these encourage the masses themselves to be bolder in their demands for the revolutionary transformation of society. Chavez is convinced that he is carrying out the National Democratic Revolution – and he has been doing this, despite this or that wavering from time to time. Up until recently, he was always at pains to assure the world that he respects private property and is not a communist. But all the problems he wants to tackle, and all the measures he is implementing, however limited in and of themselves, lead inexorably to a head-on collision with capitalism. There are only 2 possible results – a total break with capitalism or the defeat of the revolution.

In the past, from afar, we raised the possibility of a move towards Proletarian Bonapartism. If this variable comes about (and it is not the most likely by any means), it would be a weak form of Proletarian Bonapartism, more open than in Cuba, and nowhere near along the lines of Stalin or Mao. Why? Because of the already decisive role of the masses. Such a regime could quickly lead to genuine workers’ democracy.

The masses are extremely sensitive to questions of democracy and are internationalist and anti-bureaucratic. Chavez is not a normal reformist or a Stalinist. He has come out in favour of Trotsky against Stalin, especially on the point that the revolution cannot remain in a single country. He has called for the arming of the workers, for democratic socialism, etc. All of this is not lost on the masses, and therefore a Stalinist path is not the most likely – the conditions for a healthy workers’ revolution are greater than ever. Our main approach must be along the lines of Lenin’s 4 points (from the State and Revolution):

  1. Free and democratic elections of all officials, with right of recall.
  2. No official must receive a higher wage than a skilled worker.
  3. No standing army but the armed people.
  4. Gradually, all the tasks of running the state should be carried out by the masses on a rotating basis. When everybody is a bureaucrat in turn, nobody is a bureaucrat. Or, as Lenin put it, “Any cook should be able to be prime minister.”

Given the intensity of the class divisions in society and the experience of the last period, these demands are getting a broad echo in Venezuela at the present time. We have entered a new process of radicalization in Venezuela, and the question of the state and private property will increasingly be at the forefront. At present, the balance of forces is extremely favourable for the mass movement. “Appetite comes with eating”, and the nationalization of Venepal will cause millions to draw conclusions about the way to proceed. One step forward in practice is worth a 1,000 programmes. An ounce of practice is worth a ton of theory.

But there is a danger to the revolution if the economy starts to go badly, for example, if the high oil prices do not continue (though these seem set to remain high for the foreseeable future). Much of the mass support for the revolutionary process is a result of the concrete improvements being made in people’s lives after decades of poverty and oppression. But if this slows down, the more backwards layers in society can become tired and discontented. An economy cannot remain part state-owned and part capitalist forever. If there is not a decisive move towards nationalization and the harnessing of the economy under workers’ control, chaos could ensue. The reactionaries and imperialists are currently frozen with impotent rage, but they are just biding their time for another chance to derail the revolution. The present correlation of forces cannot last forever. The success of the revolution depends on its moving forward, pushed from below. The battle is far from over.

The U.S. is of course trying to disrupt the process, working to engineer a confrontation with neighbouring Colombia. U.S. warships and Marines have been sighted off the coast of Venezuela on the island of Curacao – and the Venezuelan government was not formally informed of their presence as is customary. Right-wing Venezuelan paramilitaries are training in Florida for possible invasion in the future, and it is very likely that some of these are already operating within Venezuela. But unlike Chile’s Salvador Allende, Chavez is an ex-military officer and fully understands the importance of arms. It is clear that if faced with an invasion, he would not be afraid to arm the masses in order to defend the revolution. Such an invasion would cause an explosion across Latin America and affect the millions of Latinos living in the United States.

Because of the highly favourable class balance of forces, the current situation in Venezuela can last for a while – with the usual ups and downs – for another 1, 2, 3, maybe 4 years. The masses’ continued involvement in pushing the revolution forward is the key. But there must be a reckoning one way or another at a certain point. There are 2 choices before the Venezuelan working class – the greatest of victories or the most terrible of defeats. If the reaction wins it will be a nightmare of revenge. It is sufficient to remember the terrible vengeance exacted on the Parisian working class after the defeat of the Commune of 1871, or the bloodbath in Chile after the fall of Allende. On the other hand, the victory of the socialist revolution in Venezuela would shake the world from top to bottom. It would show in practice that the working class can in fact take power and democratically run society in its own interests. It would be a beacon of hope for billions around the world and serve as a focal point for the world revolution. Already Venezuela is becoming an inspiration to workers and youth and this will increase with every step forward of the movement. We must do all we can to ensure the victory of the Venezuelan revolution.

The Iraq War and Occupation

In the Middle East, Imperialism is faced with a hornets’ nest. The much-heralded peace between the Israelis and Palestinians fell apart almost immediately as was inevitable under the given conditions. There is simply no solution to the problem within the capitalist system and the narrow confines of Israel / Palestine. The Imperialists have ratcheted up the threats and increased pressure on Syria in recent weeks, using political instability in Lebanon as a lever to force through its agenda. The ongoing confrontation with Iran over possible nuclear weapons will continue to simmer in coming months, though U.S. options are limited due to the mess they’ve gotten into in Iraq. For the time being, they prefer to lean on the Iranian regime with the help of Europe, but as Bush made clear recently while in Brussels, “all options are on the table.”

The Iraq War and occupation represent a destabilizing factor of colossal proportions. The effects of the invasion will be far-reaching and long lasting. The U.S. government has achieved what Osama Bin Laden was unable to do: create a haven for terrorism in the heart of the Middle East.

U.S. forces in Iraq are in a quagmire. Over 1,500 U.S. troops have been killed, with another 10,000 or more wounded (the vast majority of them after “major combat operations” were declared finished). An estimated 100,000 Iraqis have been killed, and many thousands more have been wounded or psychologically traumatized. Entire villages and even cities have been reduced to rubble. In the words made famous by a U.S. Army officer in Vietnam, “we had to destroy it in order to save it.” Aside from the horrific cost in U.S. and Iraqi lives, there are very real and very serious economic consequences to this latest imperialist adventure.

Before the war, the Director of the Office of Management and Budget estimated that the cost would be between $50-$60 billion, and the White House discounted its own economic advisor when he suggested that the war could cost between $100-$200 billion. Bush recently requested an additional $82 billion in total to fund ongoing military operations, $61 billion of which is earmarked for Iraq. This brings the total spent on the Iraq war and occupation, including military, reconstruction funding and other related expenditures to nearly $210 billion ( At this rate the Iraq war will cost approximately a trillion dollars and last at least a decade. This is a staggering amount of money – money that could be used for health care, social security, housing, education, job creation, etc.

Before the invasion, it was estimated that just 30,000-40,000 troops would be required for the occupation, freeing up some 100,000 troops for other operations – Syria, Iran, and even Saudi Arabia were likely targets. But the reality has been far different. 2 years after the relatively quick invasion and GW’s “Mission Accomplished” photo-op, roughly 150,000 U.S troops remain stationed in Iraq with no end in sight. In fact, instead of reducing the number of occupation forces in Iraq, troop levels have been increased twice in the past year to bolster security around the elections and during the siege and subsequent pulverization of Fallujah.

As a result, the U.S. military is stretched to the limit. Every single division of the Army has units either in, returning from, or on their way to Iraq or Afghanistan. The U.S. now has some 446,000 active troops at more than 725 acknowledged (and any number secret) bases in at least 38 countries around the world. Additionally, it has a formal “military presence” in no less than 153 countries, on every continent except Antarctica, and nearly a dozen fully-armed fleets on all the oceans. Far from having the capability to fight two major wars at once, U.S. imperialism has exposed itself as a “colossus with feet of clay”, unable to cope with the occupation of a small, impoverished country weakened by a decade of crippling sanctions. It’s one thing to smash a regular army with the help of the most technologically advanced killing machines in the world. It’s another matter altogether to hold down an entire population that doesn’t want you there. Those who try to scare the Venezuelan masses with the prospect of US intervention cannot answer the question “where will they get the troops?” If the people of Iraq can hold down the Imperialists after being ruled for decades by the most corrupt dictatorship, just imagine the reaction of workers fighting to defend their revolution with a popular leader.

Although the Iraqi insurgents are inflicting daily casualties in an escalating war of attrition, these attacks do not yet pose a strategic danger to U.S. forces. But the constant attacks, poor conditions, and steady stream of casualties are having a definite effect. This gradual chipping away at the morale of the U.S. military and the American people as a whole is the greatest threat to the imperialists’ adventure. Morale is a critical part of war. An army that loses its will to fight can in time be overcome by a numerically and technologically weaker enemy if it is inspired to win. And when the mood changes decisively against the war on the home front, it’s all but over. More and more signs are emerging that support for the war is falling across the board.

The Pentagon has reported as many as 5,500 desertions. A small but growing number of troops have sought refuge in Canada or deliberately injured themselves to avoid returning to duty. An Army platoon refused to deliver fuel because their vehicles were insufficiently armoured. Donald Rumsfeld faced embarrassing questions from troops he was addressing over this same issue. The Air Force is now airlifting supplies across short distances as the military cannot guarantee the safety of entire highways in and around Baghdad.

The reality of the war is clearly having a sobering effect on the troops in the field, the returning veterans, and their families here at home. The popularity of Michael Moore’s film “Fahrenheit 9/11” was an indicator of the broad anti-war sentiment among Americans – not just among activists, but among “ordinary” Americans from all walks of life. The growing anti-war mood is closely connected with the discontent and frustration at the way things are going in general. Millions are making the connection between the billions spent on the war and the cuts and lack of opportunities at home. That Bush was re-elected does not negate this fact. Although the mass demonstrations seen before the war have not yet revived on that scale, more Americans are sceptical or openly against the Iraq War than ever before.

The political processes south of the border in “the belly of the beast” have a profound effect on the confidence of the world capitalist class and their ability to defend their system. The more the Imperialists are bogged down in Iraq, both militarily and financially, the more workers around the world and in Canada will gain confidence to fight back.

It is amazing in this time of global Imperialism that some Stalinists say that Canada is not an Imperialist nation. Despite the lack of verbal support for the Iraq war, Canada had ships in the Persian Gulf, and is playing a leading role in the Imperialist occupation of Afghanistan and Haiti under a UN banner. Those Stalinists and reformists who defend the UN provide ideological cover for the oppression and murder of Haitian workers and poor who are trying to regain control of their country. We should not forget that Canada is the sixth largest economy in the world and Canadian capitalism is seeking to secure markets just like any other Imperialist nation. To back this up they are spending an extra $12.5 billion to bolster the military. The Canadian left needs to drop its illusions in Canadian “Peacekeeping” and firmly denounce Canada’s quiet Imperialism.

The Economy

It is a cliché of Canadian political economy to say that if the US sneezes, Canada gets a cold. When the US gets a cold, Canada suffers pneumonia. The reason for this is very simple; the Canadian economy is based on the export of manufactured goods to the United States. This conclusion is obvious to anybody looking at the Statistics Canada website ( Canada has one of the highest exports to GDP ratio of any OECD nation at consistently over 40 percent (OECD average is approximately 25 percent). Contradicting the idea that Canada is a “resource based” economy; over 60 percent of exports are cars, machinery, or industrial goods. And finally, about 85 percent of all exports go to the USA where Canada has a trade surplus of over $100 billion. Canada and the USA have a higher level of bi-lateral trade than any other two countries in the world and if anything stops this flow then the Canadian economy will suffer.

Most economists predict that the Canadian economy will grow at a rate of approximately 3 percent over the next few years. However, there are two main things that could derail this prediction: 1) The rise in the Canadian dollar making Canadian goods uncompetitive. 2) A collapse in the US economy dragged down by government, corporate and consumer debt.

The ballooning US budget deficit weighs like a ton of bricks on the back of the American economy, due largely to Bush’s tax cuts and increased military spending. The U.S. posted a record US$113.94 billion budget deficit in February 2005, exceeding the US$96.70 billion deficit in February 2004. This fiscal year’s total deficit is estimated at US$427 billion. This means the U.S. borrows $1.2 billion daily to make up the difference. Bush’s pledge to cut the deficit by slashing social programs is a transparent ploy to make the working class pay for the irrationality and excesses of the military-industrial complex.

The total US national debt now stands at US$7.7 trillion – over $26,000 per U.S. citizen. This is money that must be paid back with increasingly high interest. Some analysts estimate America’s long-term budget shortfall is approximately US$43 trillion or more, about four times the size of the nation’s economy, and more than 20 times the federal government’s annual tax revenues. They forecast that within the next 10 years, the U.S. government will simply not be able to borrow money fast enough to keep up with its exploding expenses. We are not talking about some “banana republic” possibly going bankrupt, but about the backbone of the world economy.

Add in the fact that the Canadian dollar has risen from about 65 cents US in the 1990’s to over 80c in the recent period and that places a significant question mark over the Canadian economy. However, we are revolutionaries and not bourgeois economists. We follow the economic cycle firstly in order to explain how capitalism does not work and is incapable of improving the economic position of the masses, and secondly in order to predict the effect of the economy on the class struggle.

The average Canadian family has seen no real improvement of their standard of living for 25 years and the bottom 20 percent have seen decades of decline and polarization. On every important indicator Canadian capitalists have failed, be it homelessness, youth unemployment, decent wages, or child poverty. The crisis of the system hits hardest on women, immigrants, and young workers who are forced into the growing ranks of the working poor. The days of getting a good job are over and millions of young people have no option but to work in near minimum wage employment. On campuses and among the labour aristocracy you will hear that radical change will never happen in Canada because people are so well off – ironically 2 minutes later you will hear complaints of how people with university degrees are forced to work for minimum wage and how there are no good job prospects.

The Vanier Institute of the Family ( each year releases a report on family finances that tends to be grim reading. The overriding message is that there is no future for Canadian youth. Over the last 25 years the poverty rate for families under 25 went from 31 to 43 percent. Net worth for the same age group plummeted 95 percent. Savings are now at zero percent of earnings and debt has ballooned to 121 percent of income. The only “good” news is that average family earnings have increased slightly. But when you look at the data more closely you realize that total intake has increased only due to increased hours worked by women and children – hourly wages have in fact stayed flat or declined. There is literally no financial room to manoeuvre for working class families; people are stressed out and working as hard as they can just to stay still. In the event of a slump the prospects are catastrophic.

Following the collapse of the Tech stocks, many investors turned toward real-estate. Interest rates were low and many people were enticed into buying property. The result internationally is a massive housing bubble which is on the brink of bursting. Gross domestic product in the residential construction industry was $14.5 billion in 2001, and by 2004 it had risen to just under $21.5 billion. This process has been exaggerated on the North American west coast. In British Columbia for example, housing starts have risen from 14,418 in 2001 to 32,925 in 2004. As interest rates rise, mortgage payments will become more expensive for the thousands of workers who have purchased new homes. We can expect the market to suddenly cool and property values to drop dramatically. Many will find that they owe more money on their mortgage than their house is actually worth. This was the case in the 1980’s when interest rates skyrocketed and thousands of people lost everything.

Such is the state of the crisis that even some business groups are calling for action on unemployment insurance. During the 1991 slump 80 percent of the unemployed qualified for benefits; now only 30 percent qualify. These “enlightened” businessmen worry about the social consequences of millions of unemployed on the streets of Toronto, Montreal, and Vancouver in the event of another major slump. They are correct to worry. Unlike the last slump that disorientated the workers, this one is likely to anger them. Trotsky explained that it is not booms that create class peace and slumps that create revolution, but the quick transition between the two that shows workers that the capitalist system cannot solve their problems. If the short-lived growth leads to an increased fightback over economic issues, then any turnaround in the economy will push the fightback onto the political front.

It is the chronic lack of alternatives that has sparked off unionization drives at Wal-Mart and among other marginalized workers. Here we see how the economic cycle becomes important – it is wrong to say Marxists “want” a slump or that this would necessarily aid the class struggle. In fact the present period of modest growth, coming off the back of over a decade of cutbacks, serves to embolden the workers. Concretely, would the Wal-Mart workers dare to form a union if unemployment was so high they were scared to death of losing their jobs? The modest growth leads to workers demanding their fair share while not being enough for the capitalists to afford concessions. In many ways, the current economic situation is a Goldilocks perspective for the class struggle – “not too hot, not too cold, but just right!”

It is also wrong to view these perspectives in a mechanical way that the class struggle will pick up in the next 5, 10, or 15 years. While the media is obsessed with the Michael Jackson trial the class struggle is breaking out right now. After the slump in the early 1990’s, Canadian capitalism took advantage of workers’ fear of losing their jobs and went on the offensive. They extracted massive cuts and managed to put the burden of debt and deficit away from government and onto the backs of workers. This could be accomplished due to the weak opposition of the labour leadership, which was shown by historically low strike statistics. Since then though, workers have started to lift their heads and demand payback. The number of working days lost to strikes is almost back to the high level of the 1980’s. Newfoundland has just witnessed the largest strike in its history. Illegal strikes are the order of the day in British Columbia and there would have been a general strike if not for the betrayal of the union and NDP bureaucrats. Even in Alberta there are the first stirrings of opposition to Ralph Kline.

At the time of writing hundreds of thousands of Québec students are striking against the Liberal government’s education policies. This movement threatens to spread to the labour movement who only recently voted to support a general strike. The advanced elements in Québec are drawing parallels with France in 1968 where a movement of students provoked a general strike that could have led to a completely peaceful workers revolution. As in France, what is missing is a leadership to push the movement to the end. The leader of the Québec Liberals, Jean Charest, has moved from riding the wave of discontent with the PQ government to now being the most unpopular premier in Québec history. If the Labour leaders even lifted their little finger to call for a Labour Party to unite Francophone, Anglophone, and immigrant workers against the common capitalist enemy it would have mass appeal. However what is lacking is leadership and the process will therefore be protracted. What is clear is that the class question is at the forefront right now and there has not been a better atmosphere for revolutionary Marxist ideas for over a generation.

The only quiet note on the Canadian political landscape is Ontario, where after defeating the Conservatives the workers have a “wait-and-see” attitude with the Liberals. Those who care to look will see massive reserves of discontent under the surface, with confrontations being prepared in the healthcare and education sectors. The Ontario Fib-erals have already lost much of their political capital after breaking their campaign promises to restore public funding. The workers will not wait forever and Canada’s largest province will soon be faced with major convulsions.

The Minority Federal Government

The federal Liberals are in full-on survival mode. They are attempting to please everybody and in so doing show the weakness of Canadian Liberalism. This weakness expresses the contradiction between the needs of Canadian capitalism and the opinion of the Canadian population.

When Prime Minister Paul Martin was voted leader of the Liberal Party, corporate Canada could not have been happier. But since then their opinion has soured as seen in this editorial from the Economist magazine:

As finance minister, Mr Martin acquired a reputation as a tough and decisive deficit-cutter who transformed the public finances and oversaw the renaissance of the Canadian economy. But as prime minister, his faltering leadership has earned him the sobriquet of “Mr Dithers”. At an election last June intended to give him a personal mandate, the Liberals scraped back, reduced to a parliamentary minority. Both before and since, Mr Martin’s main concern seems to have been to court popularity by parading a generous social conscience.” (17 Feb. 2005)

They thought they had got “their man” in the top job. Martin was the finance minister responsible for the deep social cuts of the 1990’s and the leader of the right in the Liberal Party. However, their man led them to a minority government; their man lost public support for tax cuts, and their man has placed his own political survival above the wishes of his corporate paymasters.

One would think that the disarray of the Liberals should play into the hands of the opposition Conservatives. Nothing could be further from the truth. They too are in a political crisis as their support falls to 23%. They are in danger of being overtaken by the New Democratic Party with 21% support. Despite the wailing of the right-wing press, both parties of Canadian capitalism are incapable of carrying out the wishes of Capital.

Corporate Canada is well aware that the current economic growth is on a shaky foundation and is demanding a government that can keep the workers down for future battles. The strategists of capital fear that any concessions given now will merely embolden workers for the future struggles. But they are stuck between a rock and a hard place. If they bluntly pushed an agenda that met their needs it would be massively unpopular and would exacerbate the growing strike movement and increase NDP support (just look at the lack of popularity of Gordon Campbell and Jean Charest). Under this scenario they face the never before seen horror of an NDP official opposition while the Liberals and Conservatives split the right vote. Their “dithering” representatives in Parliament have chosen to save their own necks and put off the fight with the workers until it absolutely cannot be averted. In this they risk facing a strengthened labour movement and they do not get to choose the time and place for the fight. The crisis in the system is reflected in the crisis of the two capitalist parties. We expect however that the capitalists will shake the stick at their Liberal and Conservative lap dogs and demand a united line against the workers.


It is impossible to predict just how long the present minority government will last. It may be overturned after a major political blow or collapse at any time, due to accidental parliamentary manoeuvres. However, with their extreme lack of popularity in Québec, it seems unlikely that the outcome of a new election will lead to a new Liberal majority. Elections only represent snapshots of the political processes in society and the evidence we glean from this snapshot is contradictory instability. The Canadian working class and middle class are upset with the status quo – but they are also upset with the choices on offer to them. The last election saw the lowest turnout since confederation (when most of the fur-trapping population didn’t realize that Canada had become a country). This mass abstentionism is strongest amongst the youth – precisely those voters who we have shown are the most economically marginalized and who have the most to gain from Socialism. Contrary to the opinions of the comfortable Labour and NDP bureaucracies, a radical platform would be immensely popular.

Anecdotes have an important role to play in Marxist perspectives, as statistics by their very nature are months if not years out of date. Anecdotes can reveal the underlying processes before they have reached full maturation. Lately, a poll conducted by the right-wing National Post newspaper came up with an interesting result. Just prior to the March 2005 Conservative Convention they conducted a poll with a series of questions skewed to portray the new Tory party in a favourable light. Sneaked in among the rightward-leading questions was, “Canada’s problems are such that we need more socialism and more socialist policies.” You can see that they were aiming for a front page headline along the lines of – “Canadians love Tory polices, reject socialism.” However, just as many respondents agreed with socialism as disagreed with it – an amazing result given that not one of the major political parties defends socialism in words. The right wing, the left wing, and even many self-proclaimed socialists in the NDP have all fallen for the idea that the working class does not support socialism. The opposite is true and there are huge reserves of support for a radical policy if only a solid lead were given. Unfortunately given the current state of the leadership of the movement, the likelihood of such a lead is not great.

The main barrier to increased NDP support is that the workers do not take the party seriously. The leadership aids this conception by tail ending the Liberals and refusing to solidly propose even modest reforms. It was sickening in the early days of the minority government to see the NDP essentially propping up the Liberals in return for absolutely nothing, not even the much sought after ministerial posts that the NDP careerists hunger for. After having the door slammed in their face repeatedly Layton and co. have adopted a more confrontational tone, however the Liberals would not be able to sell their “we are all progressives” message if the NDP MPs did not appear so eager to jump into bed with them. The perspective of the NDP leadership is to hold the balance of power in parliament – such a proposal erodes support before an election and if successful will lead to the NDP being complicit in the Liberals’ attacks on workers. In as much as the working class movement has an expression within the NDP, such an outcome will split the party on class lines. Increasingly the call will come to split from the Liberals and adopt an independent working class policy.

The British Marxist Ted Grant explained that when workers first move into struggle they do so through their traditional mass organizations. Our perspective is for the present struggles to increase and more and more become generalized. This must eventually lead to the formation of a mass left wing inside the NDP, even centrist tendencies such as the Waffle movement in the 1970s. However, after the brief bout of enthusiasm that followed the election of the soft-left Layton, this movement to the left has taken a temporary detour into the jockeying for positions in the minority parliament. With the exception of BC, where the mass movement and the Marxists have played a role, the NDP youth are not yet a mass pole of attraction for young workers. This will change in the coming period.

An appeal to all honest revolutionaries

It is clear from these perspectives that international developments, particularly in Venezuela, can act as a lightening rod to attract the pent up energy of workers looking for revolutionary change. The method of Marxism allows us to see clearly the outlines of future developments which will lead to splits, divisions and the growth of a mass left force inside the workers organisations. From these developments the future mass forces of revolutionary Marxism will emerge, provided we have built a serious Marxist tendency in the meantime. It is precisely because Marxists understand the importance of the mass organisations and their future course of development that we must now devote such attention to international events and use this example to educate revolutionary-minded youth.

When these events inside the mass organizations will occur is not a question we can seriously address. Instead we concentrate our attention on each stage through which we pass in order to prepare ourselves to intervene in the movement of the working class and its organisations, and above all among the youth. Not when or if, but will we be ready, will we build and prepare the forces needed? These are the questions we pose to all Canadian revolutionaries.

This period should have been ideal for the ultra-left sectarian groups, yet they are all despondent. They lack the compass of Marxist ideas and have sunk into “Marxian” eclecticism. The ideas of Marxism are the means by which revolutionaries reach workers and youth, win them, educate and train them. To the degree that revolutionaries are convinced of the inevitability of events, that we understand the crisis of capitalism, we must lift ourselves up to the task of winning new layers of workers and youth to the struggle, to the programme of international socialist revolution.

We have a vision of a new society – a society without war, poverty, hunger or despair, where the remarkable power of science and industry is democratically planned and used in the interests of all. A world of superabundance is possible. That socialist world is no utopia, but a destination we intend to reach. We appeal to all who share our vision to join our fight.

We must feel on our shoulders a piece of history. This weighs not as a heavy burden but as an inspiration. The international struggle of the working class and the correctness of the ideas of Marxism must inspire us to commit ourselves to the effort and sacrifice required to build our movement. It may seem that the road is long, but a single victory, in any major country, will ignite the revolutionary flame across the globe. We don’t know if that first victory will be in Pakistan, Mexico, Venezuela, Europe, or even in North America. What we do know is that when it comes we must be ready.