Free Trade Not the Main Villain

By Shadrack, Andy; Bauman, Gail | Canadian Dimension, July-August 1992 | Go to article overview

Free Trade Not the Main Villain


Shadrack, Andy, Bauman, Gail, Canadian Dimension


Like many Canadians we oppose free trade. We strongly object, however, to Bruce Campbell (CD Vol. 26 No. 1) and many other Action Canada Network (ACN) activists blaming free trade for all of Canada's socio-economic ills. Tony Clarke's article (Alternative Proposals for Development and Trade) in ACN's Dossier #34 begins to address some of my concerns. However we remain troubled by the overall lack of historical economic and class analysis.

The same problem exists with Mel Hurtig's presentation to the Senate Standing Committee on Banking, Trade And Commerce and his book Betrayal of Canada. Again, we noted some very interesting and useful facts but no overall economic analysis.

Global contraction

When this recession began Maude Barlow and others called it a "made in Canada recession". Other economists suggested it was North American in scope. In fact conversations with people from Europe and Asia, and our own observations, have led us to believe that we have been and are in a global economic contraction. How close this is to a 1929 Depression I am not sure. It if were not for social programs such as unemployment benefits, social assistance and pensions, many advanced industrialized countries would be in a Depression.

John Warnock, for example, in Free Trade and the New Right Agenda, through use of data from the Organization for Economic Cooperation and Development (OECD) indicates that there was a continuous decline in the rate of accumulation of capital among EEC countries between 1960 and the early 1980s. This occurred in accordance with Marx's description of the cyclical nature of capitalism and was most sharp after 1970 when markets in the advanced capitalist countries began to saturate. We have found an average 3.2 per cent decline in real consumer spending between 1980 and 1988 in BC (British Columbia Comparative Economic Statistics, 1989). Further, real capital expenditure declined by an average 20.3 per cent and repair of machinery and plant equipment by 3.3 per cent over the same period. While year to year figures show incremental growth in sales and investment after the recession of the early 1980s, gross sales and investment since 1980 show an overall stagnation.

Many of us should also be aware of international capital's attempts throughout the 1960s and 1970s to expand markets through stimulation of the Third World economy. This was done via extension of lines of credit in exchange for extraction of resources which were to be sold back as finished goods. Most Third World countries have been unable to pay the interest on the debt, let alone the principal. Nor have they come close to developing internal capitalist consumer economies like our own.

Surplus value usage

John Warnock, again using OECD figures, also shows structural economic differences between Switzerland, Sweden, Austria, Japan and the then West Germany on the one hand, and the United States, Britain and France on the other. Using the figures John quotes we would argue that the difference between full employment strategies and fiscal restraint is the manner in which surplus value has been used since World War II.

Sweden and Switzerland for example have not been involved in military ventures in this century and Japan, Germany and Austria have been precluded constitutionally since the Second World War. Thus unlike the US, Britain and France, the overwhelming majority of their capital has been geared to perfecting production and distribution of goods and services. This includes a variety of attempts to ameliorate class conflict through social engineering and/or spending.

BC manufacturing

What do these factors have to do with the Canada free trade debate? Well it is one thing to oppose free trade but quite another to blame all our economic woes on that agreement. For example, BC's manufacturing employment experience does not parallel Ontario's. Although a much smaller sector, BC manufacturing (outside Food and Beverage, Wood, Paper and Allied), while declining from 78,000 in 1981 to 61,000 in 1984, has constantly expanded from 72,000 in 1986 to 90,000 in 1991 (BC Business Indicators, Table 3 & 4, November 1987 January 1992). …

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