May 6, 2011 - No. 76
An Attack Against One Is an Attack
Supreme Court of Canada Criminalizes
Farm Workers' Right to Defend Themselves
An Attack Against One Is an Attack
• Supreme Court
of Canada Criminalizes Ontario Farm Workers' Right to Defend Themselves
The Harper Agenda and Need for a New Direction for the Economy
• Shipbuilding Yes, But Not the Militarization
of Shipbuilding - Tony Seed
• Alarming Rise in Consumer Price Inflation
An Attack Against One Is an Attack
Supreme Court of Canada Criminalizes Ontario
Workers' Right to Defend Themselves
The Supreme Court ruled April 29 that 80,000 Ontario
farm workers have no right to organize into a trade union and defend
their good faith bargaining through strike action. This means that a
collective of farm workers who attempt to bargain in good faith with
their employer cannot legally back up negotiations
with a withdrawal of their work-time. This anti-worker anti-social
ruling follows the Ontario government's recent criminalization of
Toronto Transit Commission workers' right to strike to defend their
wages, benefits, pensions and working conditions, and the quality of
the public service they provide.
The quality and security of Canadian food production and
the quality of public services are directly connected with the quality
and security of the livelihoods, wages, benefits, pensions and working
conditions of the workers who produce our food and provide our public
services. Self-reliant, secure and quality
food production and quality public services are dependent in large
measure upon guaranteeing the rights of workers, which includes their
right to bargain in good faith and go on strike if necessary to defend
their just demands.
The Ontario working class is resisting this
attack on its rights by the judiciary and Ontario government. Workers
are also taking up their responsibility to articulate an alternative to
the negation of rights, an alternative that opens a path towards
secure food production and quality public services for all. The
anti-worker anti-social Supreme Court ruling and Ontario government
legislation directly affect farm and transit workers but also all other
residents of the province. Ontarians live in an interconnected modern
world where issues in one sector of the economy
affect and concern all of us, wherever we live, work or study. We all
need quality public services and secure food production, and should
participate consciously in guaranteeing those needs and the rights of
The United Food and Commercial Workers union, the
Amalgamated Transit Union and their supporters have said repeatedly
that these political attacks on workers' rights cannot and will not be
tolerated. Any government, laws or judiciary that deny the rights of
workers lose all credibility and legitimacy from
their anti-social actions. The working class and its allies will hold
such anti-social governments, laws and judiciary to account. Ontario
workers are developing tactics to reverse and stop this tyranny, denial
of rights and wrecking of quality food production and public services.
Workers are developing a pro-social
agenda to resolve these problems in their favour, an agenda that
strengthens the socialized economy and serves the general interest of
society. Ontario workers are advancing their resistance movement and
assuming their social responsibility by fashioning a pro-social agenda
for the province. Governments are duty
bound to respond to the working class in a socially responsible way to
stop these attacks on workers' rights and ensure that no harm occurs to
food security and the quality of public services.
Problems in the
Agricultural Sector Can Be Solved
Farm workers throughout the over two hundred year
history of capitalism have been one of the most exploited sections of
the working class. Farm workers have almost never achieved standard
wages, benefits, pensions and working conditions in
any capitalist country including Canada. An important factor in this
regrettable situation is that the added-value produced by farm workers
is claimed not by one or two layers of capitalists but consistently in
large measure by three: equity owners of the agricultural business,
owners of the land itself and owners of
debt. Ownership of land, its market price, ground rent, debt and
interest are key problems facing the sector. The smaller the
agricultural enterprise the smaller the revenue left to the owners of
the agricultural business as most of the revenue goes towards ground
rent and interest on debt. This is the case whether the
agricultural enterprise owns the land or not as in most cases of equity
ownership of land, a mortgage is held on the land in question.
Throughout the history of capitalism, statistics show that land prices
exist in inverse relation to wages, benefits and working conditions.
The Supreme Court with its unscientific and detached
outlook lumps together all agricultural enterprises regardless of size.
This is wrong and becomes a block to solving problems in the sector.
Denying the rights of farm workers then becomes a cover for the court's
refusal to say to the Ontario government that
it must show social responsibility and leadership in solving the
problems arising from lack of revenue in the agricultural sector and
stop pretending that denial of farm workers' rights is a solution.
The size of agricultural enterprises with regard to the
number of workers hired to work and the seasonal nature of certain
sectors such as vegetable, fruit and cereal production affect the
approach and solutions to securing farm production and the rights of
workers. Large corporate farms especially in non-seasonal
production such as poultry, dairy, pork and beef and their processing,
which hire scores of workers either at one or many locations, should
not be lumped together with smaller farms that hire less than five
permanent workers or only hire seasonally to harvest crops. These
qualitatively different enterprises require
different solutions to the problems they face. Real problems require
real solutions; denial of workers' rights is certainly not a solution.
Denial of Workers' Rights
Is Not a Solution
The Ontario government and Supreme Court have decided to
deny the rights of farm workers to "solve" the problems of farm
production and specifically a lack of revenue to satisfy all claimants
on the agricultural added-value produced by farm workers.
This is not a solution and should be denounced as socially
irresponsible. A modern society cannot deny rights to solve a problem
of lack of revenue or any other problem. Such a shameless pragmatic
stance to deny principles and rights is not worthy of a modern society.
Ontario workers and their allies must do all
they can to change this criminalization of farm and transit workers.
Criminalization and denial of rights of any section of the working
class is an attack on all workers and must be resisted.
Time for a New Direction
for the Economy
The problems of ground rent, usury and general lack of
revenue within the agricultural sector, especially for small
enterprises are surmountable. A solution can be found that does not
deny the rights of farm workers. Attacking the rights of farm workers
does not make the problems of ground rent, usury and lack of revenue
disappear, it merely papers over the problems using super-exploitation.
This is neither acceptable nor sustainable.
The working class movement has long advocated that
public not-for-profit financial enterprises be established to serve the
country, which includes importantly the agricultural sector. Of note
also is the negative effect arising from the wrecking of Canada's
agricultural machine building sector and the attendant
loss of control, wealth, expertise and innovation. The closure of the
John Deere factory in Welland is an example. A self-reliant
agricultural machine-building sector supplying quality equipment at
reasonable prices is an important factor in guaranteeing food security.
The working class movement has also stood for
some form of public control of the farm produce wholesale sector to
guarantee that market prices correctly reflect prices of production,
which are vastly different according to the size and type of farm
enterprise. A modern formula for prices of production consciously
calculated and reflected in market prices for specific
products and from different enterprises should replace the market
prices dictated by the global monopolies. This would go a long way to
guarantee sufficient revenue to satisfy claimants including farm
workers and their right to Canadian standard wages, benefits, pensions
and proper working conditions. Stability
of prices and revenue is also needed to improve the overall quality and
security of food production.
The issue of land and ground rent has become
increasingly important to tackle because of monopoly control and
speculation of land for big scores. Monopoly right uses the issue of
land ownership as a block to even thinking of solutions to restrict the
claims for ground rent and interest. Land ownership is a natural
monopoly. Restricting this natural monopoly and its monopoly right to
claim added-value in the agricultural sector, either as ground rent or
mortgage interest, will be of great assistance in solving the problem
of insufficient revenue for farm workers and owners of agricultural
businesses. All those involved in the
agricultural sector including owners of smaller farm enterprises should
have an open mind on the question of land ownership and ground rent,
its negative effects on their operations and food security, and the
need for a modern definition.
The anti-social Supreme Court ruling and Ontario
legislation attacking the rights of workers should be denounced across
the country. These neoliberal attacks are meant to negate the
progressive trend of history towards the guarantee of rights and to
fulfil society's need for quality public services and food security.
The working class and its allies will not allow this to pass! A growing
Workers' Opposition is meeting these anti-social attacks with organized
resistance and responsibility.
The Harper Agenda and Need for a New
Direction for the Economy
Shipbuilding Yes, But Not the Militarization
Shipbuilding is one of the
traditional industries in the
Maritimes which is in crisis. Now, instead of resolving the crisis in
favour of the people, the warmongering positions of the Harper
government include the militarization of all shipbuilding. The position
the NDP "for all ship and military vessels to be built in Canada" is no
different. In the 40th Parliament,
the Party appointed a parliamentary critic for shipbuilding, Peter
Stouffer, who is an advocate for continuing the occupation of
Afghanistan. In the 2008 election, the NDP and Green Party both
demanded that the $3 billion budget for naval and coast ships
be "maximized on a buy-Canada basis." The Liberal and Conservative
candidates had nothing to contribute that I can recollect. In the
"great debate" in the Central Nova riding,
Elizabeth May attacked both Harper and MacKay "for outsourcing our
future by contracting to buy navy and coast guard vessels out of this
country." MacKay for his part evasively accused the Greens of
deception, and he made a big-time promise: "We are
absolutely going to build ships -- icebreakers, destroyers -- in
It's fear-mongering to suggest that these ships are being outsourced."
This shows how the issue is made one of whether the
contract is to be "outsourced" or not. The only alternative presented
is "insourcing" -- if such a word even exists.
Why is such a vital industry as ship repair and building
discussed in this way? It is insulting to the dignity and
worth of labour to treat the shipyard workers as a vote bank. Visions
and slogans are one thing, facts are another, and a very stubborn one
that. When it comes to the economy, in the 2011 federal election
even the usual number one issue, discussed in the most narrow way and
self-serving way, of "jobs" and "buy Canadian" as a means
of stimulus, was not taken up. In fact, the election managed to totally
ignore the consequences of the economic crisis. In Nova
Scotia however, the suggestion always hangs in the air that the
militarization of the economy and the
$20 billion war budget are the solution to the economic crisis and
regional disparities and it is a matter of "buy Canadian" or "buy Nova
Scotian" versus outsourcing, either abroad or to another region such as
consequences of the militarization of the economy are kept in the
shade. Only the Marxist-Leninist Party of Canada presents the necessity
a nation-building project that includes shipbuilding, merchant marine,
fisheries and the steel industry.
Ottawa is planning a massive expansion in the
preparations for bloody war and foreign intervention in the service of
the U.S. empire, but a war profitable for the big bankers, and there is
furious bidding for fabulous military orders. Harper's "Canada First
Defence Strategy" involves
a military budget of $490 billion and a "Shipbuilding Procurement
Startegy" of $35 billion for as many as 100 vessels over 30 years.
As part of the latter, the naval shipbuilding contract
involves a more than $3 billion program for the transfer of public
funds to private shipbuilding and armaments monopolies. It was
initiated by the Chrétien Liberals and adopted by Paul Martin in
April 2004 as part of the "modernization" and "transformation"
of the Canadian Forces which Donald Rumsfeld and the Pentagon demanded
of the NATO "allies."
To satisfy this demand Harper and MacKay put into place
new tendering arrangements for domestic and foreign monopolies under
the pretext that the previous design specifications were too high. To
elaborate: this would have included $324 million for the procurement,
operation and maintenance of six new coast
guard vessels -- as well as the previously announced $2.9 billion joint
support ship procurement which is now estimated to cost up to $3.5
The Coast Guard ships are being modernized as part of
the contention of vested interests for Arctic shipping routes and oil
reserves, the "benefit" of climatic change. The Canadian Coast Guard,
whose prosecution of tankers for oil spills has been cut by fully one
third since 1994, has been brought under the command
of U.S. Homeland Security since 9/11 as part of the new U.S.-Canadian
The three naval "joint support ships" to be commissioned
are massive state-of-the-art command-and-control warships, unique in
the world. They are being positioned to become a principal weapon for
offensive operations in the seven seas of the world, wherever the U.S.
Empire has need of them. This came at
a time The U.S. Navy -- Status of the Navy revealed that 92
cent of its surface ships were obsolete or deployed. The "joint support
ships" combine a supply and provisioning role for forward combat
operations and a command centre, capable of directing amphibious
invasions of coastal and sovereign
countries. According to Wikipedia,
Joint Support Ship will enable
a Naval Task Group to remain at sea for up to six times longer than is
currently possible." They were envisaged to be far superior in
high-tech electronics and armour than anything afloat. This explains
the global dreams and megalomaniac ambitions
of the ruling elite. Vast sums in the tens of billions of dollars --
greater than the $3 billion -- were at stake by meeting the U.S. demand
that Canada pay a far greater share of the defence of Fortress America
and the Canadian Forces be fully annexed under the Pentagon. The
military "ship procurement strategy"
is then presented as a "Canadian shipbuilding strategy." The
neoliberal and imperialistic policies have nothing whatsoever to do
the defence of Canada or developing a modern shipbuilding sector, but
the NDP helps promote them in the name of a "Buy Canada," "protecting
Canadian sovereignty" and "ensuring
steady work for all yards" propaganda.
The policies of Ottawa in military procurement ("defence
production") have always involved arrangements through which finance
capital subjugates the assets of the particular sector of the economy
involved, as the AVRO Arrow affair famously illustrated. At present,
the vicious inter-monopoly competition for
the contracts has both a national and international dimension,
involving the cartelization of the armaments and shipbuilding sector of
the economy within the U.S.-NATO bloc, which has not yet been resolved.
The domestic monopolies include the U.S.-owned Kiewit
yard in Marystown, Newfoundland, the Irving-owned Halifax Shipyards,
the idle MIL-Davie Yards Inc. in Levis, Quebec City (also involving
Norwegian and now Italian interests), Port Weller Drydocks in St.
Catharines, Ontario, and the U.S.-owned Vancouver
Shipyards Co. Ltd.
The German shipbuilding corporation, ThyssenKrupp Marine
Systems Canada, though rarely mentioned, also lurks in the background,
as does SNC Lavalin with its well-known links to former Prime Minister
Paul Martin, whose family owns Canada Steamship Lines. In February,
2006, both were selected to receive
a contract for the Project Definition Phase of the Joint Support Ship
project and paid $12.5 million each to develop designs and submit bids
by the summer of 2008. The designs were rejected as being out-of-line
yet it is prominently reported that the design of the Joint Support
Ships will be remakes of either German
or Spanish warships.
So much for the disinformation that the issue is to
oppose "outsourcing." These warships not only involve building hulls,
at which Canadian shipyard workers are second to none, but also foreign
armaments and electronics all to be imported, with huge profits made.
None of the domestic monopolies have revealed
with whom they are linked. In this regard, Lockheed Martin established
an operation right within the bowels of CFB Stadacona in Halifax.
Harper's aim in extending the tenders was to bring new arrangements
into being . For instance, efforts were underway to forge one European
shipbuilding company --
a German/French production under the leadership of the ThyssenKrupp
Steel and Industry Corporation. However, just as in Hitler's time, the
concentration of the European maritime shipyards under German
leadership has so far been thwarted by France's resistance, which also
seeks a predominant position in the
production of warships, as does Spain.
ThyssenKrupp is the largest builder of warships in the
European Union which has plans for its own Rapid Reaction Force,
distinct from NATO. ThyssenKrupp represents the combination of the
biggest German Nazi armaments trusts (Thyssen and Krupp) brought about
under U.S. leadership after WWII and the
rearming of Germany in violation of the Potsdam Agreement. It is
important to remember the important political ties between the
Conservatives and Germany highlighted by the Schreiber Airbus
arrangements with Brian Mulroney and Elmer MacKay, the former cabinet
minister and Schreiber bagman (he put up
his bail), which included plans for an armaments plant in Bear Head,
ThyssenKrupp's legal staff once included the then-lawyer
Peter MacKay in its Kassel, Germany office in 1991 (the missing page in
his resumé). Now MacKay is an Canada's Defence Minister and
the Canadian representative in NATO. As one blogger put it, "you can't
make this stuff up."
The Ship Procurement Strategy also involves scores of
smaller vessels. The Harper government, under the banner of "free
trade," has been removing tariffs to allow interests in the European
Free Trade Area (EFTA) -- Iceland, Norway, Switzerland and
-- to knock off the smaller shipyards and swallow
their shrinking market for medium-sized vessels. Under the EFTA
agreement negotiated in June, 2007, a key shipbuilding tariff of up to
25 per cent on foreign-built vessels coming into Canada was phased out.
Norwegian interests then bought into the MIL-Davie yard in Levis to
build oil rigs for North Sea drilling.
(Although it has $500 million orders on the books, it was last year put
under protection of the Bankruptcy Protection act and shut down,
throwing 1,100 workers onto the streets.)
The Harper government and the monopolies have also been
demanding that shipyard workers make concessions to capital in the name
of "restructuring" so as to line up each individual shipbuilding
monopoly in each region, the Maritimes, Quebec, Ontario and British
Columbia in the cutthroat competition for
the ultimate contract.
Here we have the "Canadian Way" -- the vision and
program of the rich to make the monopolies successful in the global
market and enrich the financial oligarchy, as well as an attempt to
liquidate the independent movement of the working class and people by
imposing on them the neoliberal agenda in the
name of job security, national security and national interests.
There Is an Alternative
The alternative becomes apparent the moment one shakes
off the disinformation that the issue is one of "insourcing" ("Buy
Canadian;" "protecting Canadian economic sovereignty") versus
outsourcing. Self serving propaganda advocates support for
militarization in the service
of empire building so long as the fraudulent "balance" with "jobs for
Atlantic Canadians" is maintained. In other words, there is no
alternative -- except who gets the tender! Animosity between regions
workers is stirred up over competition for the tender. The shipyard
workers are supposed to make every concession
imaginable to make their monopolies competitive.
The first thing about the alternative is to reject the
logic of there being "no alternative" -- except to join the Irving
empire to fight for "Atlantic Canadian jobs" or to side with some other
There is "no alternative" only if the workers adopt the
outlook of the rich that maximum capitalist profit is the motive force
for production, that making businesses competitive in the global
marketplace is the first priority, that the government has no
responsibility to ensure a livelihood for every member of society
and for every region of the country. This is the logic of "no
alternative." In other words, workers, without thinking, should accept
that it is impossible to have a self-reliant economy geared to
providing for the people's social, peaceful needs at home and abroad.
The consequences are brutal and do not even lead to job
creation. For example, in 1977, the Irvings were awarded a contract by
the Trudeau Liberals for nine out of a fleet of 12 warships of the
Halifax-frigate class. Their tender was some $1.2 billion. The
4,750-tonne Halifax-frigate class was built according
to U.S. and NATO "standardized" specifications in the 1980s for
bluewater operations. Only the assembly took place in Canada. All the
armaments and electronic and navigation systems were imported from the
merchants of death -- a Swedish main gun, Dutch fire control, U.S.
air-search radar, gas turbines, point
defence and anti-ship missiles and close-in weapons systems.
Frigates designed for coastal defence average around 3,000-tonnes. But
the Halifax class was designed to shell targets on foreign coastlines
as well as against enemy aircraft and ships. When they leave Canadian
waters they come directly under overall
U.S. and NATO command.
When the contract was finished, by the end of the 1980s,
the Irvings had billed out at over $9 billion from the public treasury,
some 800 per cent over and above the original tender. Tens of millions
of dollars were spent upgrading the Saint John yard to build them. What
happened? The workers were forced
to surrender their rights. Five thousand workers were thrown into the
streets, and the shipyard was mothballed. In 2003 the federal
government gave J.D. Irving Ltd. $55 million to close down the Saint
John Shipbuilding yard, one of the largest and most technologically
advanced shipyards in Canada. The Canadian
Autoworkers Union said, "This yard still contains its equipment, its
services and highly skilled workers are still available to build ships
in this yard. The problem is that as part of its deal with the
government, J.D. Irving agreed not to build ships at the facility for
Nor did this particular transfer of wealth do anything
for research and development in the shipbuilding industry, let alone in
armaments. Furthermore, Irving's shipping line, Kent Lines, is itself
registered offshore, in Bermuda. So much for the false "alternative" in
the name of "jobs." The Irving monopoly later
took over the shipyard in Halifax and Shelburne.
At one time Canadian shipyards, which two decades ago
employed 16,000 workers, about twice of what is employed today,
produced commercial vessels of the highest quality, which of course
required steel of the highest quality. Already in contemporary Nova
Scotia the steel works have been cratered, along
with many small and medium-sized shipyards. This has been a big
disaster. Meanwhile, the federal government facilitated the
cannibalization of Stelco and its annexation by U.S. Steel, ignoring
bold call of the Hamilton steelworkers for Canada to take up a
As is the case across the country, governments and the
political parties of the establishment, together with the
monopoly-owned mass media, present the practice of paying the rich as a
benefit to the people so as to justify the flow of public funds in
their direction. As is the case across the country, the rich of
the Maritimes are identified with the people, and the declared benefits
which are said to trickle down to the people of a region, usually
employment, are said to be reason enough to trample of the rights of
the workers to working conditions, benefits and pensions commensurate
with the jobs they perform. This practice
of blackmailing workers is corrupt and should be declared illegal. Any
scheme where the consideration of a public program or spending is not
the overall public good but the electoral fortunes of a particular
political party and the making of personal fortunes must be condemned.
The workers must take a stand against using regional
disparities to fan regional disputes so as to transfer pooled public
wealth to private hands.
For example, J.D. Irving -- the greatest polluter in New
Brunswick and greatest backer of the Liberal Party's carbon tax
(remember IrvingAir) -- used the threat of transferring paper
from Saint John to a region in Quebec where working class and
government claims on added-value are lower, land
is cheaper and regulations more lax to demand even greater subsidies
from the province of New Brunswick.
To the same end, Irving is a champion of the Atlantic
Gateway scheme which aims to convert the Maritimes into a transit zone
to the USA for goods and resources from strategic South Asia through
the Suez Canal and the Mediterranean, and in which trade union,
environmental standards and social rights are
to be surrendered. Peter MacKay, the Minister of Defence, is not
coincidentally Minister for the Atlantic Gateway.
Take Up the Demand that
Governments Stop Paying the
The central issue is for
governments to stop paying the
rich, and for the workers and people to stand for a nation-building
project utilizing the socialized and integrated character of the modern
economy to extend public control over
its privately-owned, competing parts that are currently blocking the
development of an all-sided self-reliant economy in all the regions of
Militarization of shipbuilding negates the necessity of
Canada having its own merchant, fishing and coastal fleet which is
where the interests of the shipbuilding workers, the Maritimes, and the
nation should lie.
Atlantic Canada, Quebec, Ontario, the Prairies, BC and
other regions of Canada need steelworks and industrial mills and
factories with which an all-sided, self-reliant economy can be built to
meet the needs of the people.
If genuine sovereignty was actually exercised
territorial limits of the Canadian 200-mile limit, possibilities would
be created for the expansion of the fisheries and its development to
provide food for the Canadian people instead of the U.S. commercial
market, creating a need for new or renovated fishing
vessels. As a result of the fishing crisis, many vessels are being
transferred from Canada and the European Union to the African and Asian
fisheries, an unequal transfer financed through "aid" and loans from
the Asian Development Bank, World Bank and CIDA. Internationally,
shipbuilding facilities could be exchanged
with Latin America for oil and other resource preferences on an equal
People are demanding an end to Canada's participation in
war on behalf of the U.S. Empire and also demanding an end to all
military contact with the U.S. Empire-builders, including withdrawal
NATO and NORAD.
The necessity for an anti-war government and to stop
Canadian participation in the wars of aggression and occupation of the
U.S. and European big powers is increasingly urgent to oppose the
danger of a cataclysmic world war and the crimes committed in local and
regional wars. Canadians can play an important
role by taking a stand against the use of public monies, military
forces, finished goods
such as steel and raw materials especially oil and gas to
strengthen the U.S. military and the NATO bloc.
1. As stated by in the 2008
federal election by NDP candidate Megan Leslie in Halifax. Leslie was
reelected as the MP for Halifax in the 2011 election.
2. KarlHeinz Schreiber also at
about that time
reportedly paid Walther Leisler Kiep, the treasurer of the German
Christian Democratic Party with 1 million Deutch Marks after a Thyssen
deal to sell tanks to Saudi Arabia -- an arms sale that was approved by
then Chancellor Helmut Kohl, a
close confidante of both Mulroney and Ronald Reagan.
3. The "standardization" program was
create a unified NATO market for the U.S. arms industry, at the expense
of Europe and to integrate national navies in the name of
"inter-operability" under the USA whose commanders head up the NATO
4. Canadians would be well advised to
heed the South
African multi-billion dollar arms deal scandal involving Thyssen.
Documents uncovered by Der Spiegel
magazine in Germany revealed that,
to secure the deal to build and supply warships to South Africa,
Thyssen paid bribes and inducements amounting
to millions of dollars to South African government officials and
cabinet ministers. Thyssen Krupp then desperately lobbied the SA
government in an attempt to head off a German probe into the arms
scandal. Thyssen succeeded in preventing the seizure of key documents
and the interrogation of witnesses in South
Africa. A German court consequently and unsurprisingly cleared Thyssen
of bribery and corruption charges; but in South Africa the scandal
refuses to go away.
5. Buzz Hargrove, Globe and Mail,
May 3, 2004
Alarming Rise in Consumer Price Inflation
Statscan reports consumer prices rose 3.3 per
the 12 months to March. Ontario's increase was 3.6 per cent. The
alarming aspect is not just the size of the increase but that a
consistent rise in prices for seven months has occurred during a weak
recovery from the economic downturn. A big part of the blame
can be laid at the door of the massive handouts to the rich and their
monopolies and subsequent expansion of the money supply while GDP has
been stagnant, especially in the U.S. The weakness of the U.S. dollar
affects all those countries tied to the U.S. Empire including annexed
The negative consequences for people on fixed incomes
not protected with CPI indexing are severe. Canadian workers and
pensioners have to fight for wage or pension payments greater than 3.3
per cent just to maintain their purchasing power. This is because the
HST, GST and PST sales taxes are all calculated
in the present on the higher commodity prices. The combination of price
inflation and sales taxes compounds the difficulties for Canadians on
Let us use the Ontario HST of 13 per cent as an example.
A $100 general item in March 2010 cost $113 after paying
the combined GST (5%) plus PST (8%).
The same general $100 item in Ontario now costs $103.60
in March 2011. After paying the HST (13%) of $13.47, the real consumer
cost rises to $117.07. This amounts to an increase of $4.07 from a year
earlier on a general $100 item.
Any indexing of income has to take into account the
effect of individual sales taxes.
Canadians without consumer price indexing of their
incomes are badly affected. These include workers in unions who do not
have a CPI indexing clause in their collective agreements for wages and
benefits. Workers not organized into unions will have to fight
individually for an increase in their claim on revenue,
which is not an easy thing to do, or think seriously about organizing a
trade union to defend the rights of all at their workplace. Workers
receiving the minimum wage are at the mercy of governments as they see
their wages decrease due to price inflation. They are particularly
vulnerable as they often work for smaller
companies that have limited revenue. Owners of debt (interest) and land
(ground rent) grab a significant chunk of the available revenue of
small businesses leaving little for workers.
Canadians receiving fixed pensions and monthly annuity
payments without consumer price indexing will all see their incomes
fall. This is a growing problem as the monopolies are destroying
defined-benefit pension plans and their indexing. U.S. Steel, which
seized the Canadian steel company Stelco, is attacking
the workers' defined-benefit plan for new hires and indexing of the
existing DB plan. U.S. Steel has unjustly locked out Local 1005 workers
to reduce steelworkers' pension claims on the wealth they produce.
Price inflation has a direct negative effect on the well-being of
active and retired workers, which must be
In contrast to a defined-benefit plan with CPI indexing
protection, a defined-contribution pension plan has no defined benefit
or indexing. The benefit from a DC plan is mostly based on the
principal amount at the time of retirement. This principal is gradually
reduced as a pensioner draws out the monthly payment
during retirement. Reduction of the principal is only offset through
investment income on the shrinking principal. To sustain the principal
and the level of the benefit payout, investment income has to be
greater than the amount taken out monthly plus any decrease in value
due to consumer price inflation. That is
structurally impossible, especially at this time when individually
invested interest rates in secure instruments, such as guaranteed
investment certificates, are lower or only equal to the CPI. During a
downturn, pensioner savings can decrease substantially as they did in
the 2008-09 period without any hope of regaining
their former level even during an upturn.
Pensioners relying on annuities are particularly hard
hit. Usually, the monthly payment from an annuity for life or a
guaranteed period is fixed at the time of purchase. Annuities with
price indexing protection are very expensive and even if someone does
buy the protection, the amount of indexing is usually capped.
This all begs the question why governments do not defend
the rights of Canadians to security of income while active in the
workforce and in retirement. Certainly, worker politicians as a
priority would guarantee the security of income of all workers both
retired and active. Worker politicians would also take
measures to guard against consumer price inflation and to stabilize the
currency. This could be done through public control over the wholesale
market and prices, building up the Canadian economy as diverse,
self-reliant and vibrant, especially in the realm of manufacturing,
public services and social programs and
taking measures to ensure the money supply is under the conscious
control of the public and its government. This would require the
development of not-for-profit public financial enterprises.
Why is consumer price inflation a preferred policy of
owners of capital and their political representatives?
Reason one: Owners of capital are greatly concerned with
their rate of return on investment commonly referred to as the rate of
profit. A tendency occurs spontaneously under capitalism for the rate
of return on invested capital to fall. To serve their narrow interests,
owners of capital do everything they can to
offset the fall in the rate of profit. Let us examine a simple example
of a commodity manufacturer and the effect a rise in the CPI of 3.3%
has on the rate of profit.
The total invested amount in the example is $200
million. This fixed investment has an annual rate of return on
investment of 5 per cent or $10 million.
Fixed investment = $200 million Gross income from sales
= $50 million Costs of production (mainly inputs such as raw and
semi-finished material) = $10 million Revenue (gross income minus costs
of production) = $40 million
Claims on $40 million revenue
Claim of workers and salaried employees on the wealth
they produce = $10 million
Government claim = $10 million
Interest profit (claim of owners of debt) = $10 million
Profit of enterprise (claim of owners of equity capital)
= $10 million
The country experiences a general rise of 3.3% in
consumer price inflation similar to Canada in March (called consumer
price index by Statscan).
The original fixed investment does not change with a
rise in the CPI. It remains at $200 million.
A change occurs in gross income consistent with the CPI
rise of 3.3%.
Gross income from sales X CPI $50 million X 3.3% = $1.65
million New gross income = $51.65 million
Costs of production increase the 3.3% as well. $10
million X 3.3% = $0.33 million Costs of production adjusted with the
rise in prices = $10.33 million
Revenue is gross income minus costs of production.
$51.65 million — (minus) $10.33 million = $41.32
New revenue = $41.32
If workers do not have CPI indexing protection then
their claims and those of governments remain similar to the previous
Claim of workers and salaried employees on the wealth
they produce = $10 million Government claim = $10 million
If no additional capital was borrowed then the claim of
owners of debt remains the same.
Interest profit (claim of owners of debt) = $10 million
Those three claims reduce revenue by $30 million from
$41.32 million to $11.32
New claim for profit of enterprise (claim of owners of
equity capital) = $11.32 million
The return on the original investment of $200 million
has climbed from $10 million to $11.32 million because of the rise in
CPI of 3.3%.
The rate of return on invested capital (rate of profit)
has risen from 5% to 5.66% caused by price inflation.
Even if workers wages were protected by indexing and
government claims kept pace with the CPI, the rate of return on the
invested capital would still increase. Let us redo the calculation with
workers having wage indexing and government claims keeping pace with
the CPI of 3.3%.
Revenue is gross income minus costs of production.
$51.65 million — (minus) $10.33 million = $41.32
New claim of workers and salaried employees on the
wealth they produce adjusted for inflation: $10 million X 3.3% + $10
million = $10.33 million New government claim adjusted for inflation =
$10 million X 3.3% + $10 million = $10.33 million
No additional capital was borrowed then the claim of
owners of debt remains the same
Interest profit (claim of owners of debt) = $10 million
Workers and governments claim = $20.66 million
Those three claims reduce revenue by $30.66 million from
$41.32 million to $10.66, which becomes the new claim for enterprise
Claim for profit of enterprise (claim of owners of
equity capital) = $10.66 million
In this case, the return on the original investment of
$200 million has climbed from $10 million to $10.66 million because of
the rise in CPI of 3.3%.
The rate of return on invested capital (rate of profit)
has risen from 5% to 5.33% caused by inflation even when workers and
governments' claims on revenue increase along with the rise in the CPI,
which is not often the case.
When new fixed capital is invested, the owners of
capital have a narrow interest in pushing for consumer price inflation
to boost their rate of return on invested capital (rate of profit). A
fall in the CPI or deflation causes the reverse to happen. Deflation
puts downward pressure on the rate of return on invested
capital (rate of profit). As stated, a main preoccupation of owners of
capital is to offset the trend of a falling rate of profit and they
will do anything to accomplish that narrow end even it means
endangering the stability of their own capitalist system through
provoking price inflation and other reckless measures.