Winners and losers: the economic gap widens

By Kimball Cariou

As an economic and social system, capitalism is characterized by certain defining features and laws.

Karl Marx revealed the intrinsic causes of the busts and booms which are an inevitable consequence of the system itself. He also explained phenomena such as the concentration of capital into fewer hands, the paradoxical-sounding law of the declining rate of profit (which capitalists attempt to counter by strategies to increase the rate of exploitation), and the growing impoverishment of the population. 

Using a wide range of statistics, Marx described capitalism as a system which also includes the ups and downs of particular countries and periods of time. The growing power of labour organizations or other factors may achieve temporary gains for the working class. But over the long run, capital will prevail, and the gap between rich and poor will tend to widen.

The post-WW2 decades did see a growth of working class incomes, despite several recessions. This was an era of rapid growth in union density, both in the private and public sectors, in large part due to the efforts of Communists and other left-wing labour militants. 

Across Canada, strikes and organizing won higher wages, the 40-hour week, pension plans, and even radical demands like pay equity for women. The advances for the working class in the USSR and the other socialist countries also compelled capitalist governments to concede improved social services and health benefits such as Medicare.

But in the late 1970s, the tide turned towards neoliberal policies. The overthrow of socialism in the USSR and other countries weakened the ability of the working class to mount a consistent defence of its interests.

A recent commentary by Canadian Centre for Policy Alternatives economist David Macdonald (see provides a fascinating insight into such trends. His analysis compares the six recessions Canada has experienced over the past fifty years, concluding that the 2020-2022 “covid” crisis has seen severe economic setbacks for working class – and a massive rise in profits. 

This was not the case in every recession. In some cases, corporations can find it difficult to immediately shed workforces or impose speed-up. But the fight over how GDP is divided between workers and corporations is a critical part of the wider class struggle. Using the measuring stick of corporate profit-to-GDP ratios, “in the 1974, 1990 and 2008 recessions, workers ended up better off than corporations, while in the 1981 and 2020 recessions, corporations had the upper hand.”

As the commentary reports, “the corporate profit-to-GDP ratio in the most recent recovery is higher than any recovery in the past half century in Canada: In the final months of 2019, corporate profits captured 12.4% of GDP. By the first quarter of 2022, corporate profits had risen to 15.2% of GDP. This unprecedented 2.8-point increase during the pandemic recovery is more than three times larger than the next highest recovery of corporate profits, in 1981.”

Meanwhile, the share of GDP going to workers has dropped 0.8 points since 2020 – close to the record 0.9 points in the steep 1981 recession. 

And now, while average hourly wages rose 3.3% over the last year, inflation is at 8.1% and rising, adding to the “historic realignment of who benefits from economic growth in Canada, shifting away from workers and toward the corporate sector.” 

Profits are booming as workers’ incomes fall behind, but the ruling class blames “wage increases” for inflation. The latest Bank of Canada analysis twice calls wage growth an inflation factor, but profiteering is not even mentioned!

As Macdonald points out, the causes of inflation include corporate profits, skyrocketing input prices for fuel, or supply chain issues, but “workers’ wages trail inflation by a wide margin in most industries.” 

This is a “truth bomb” that needs to be shared widely.


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