Inflation: capital’s war on working people

By Elizabeth Rowley 

The first thing to know about inflation is that it’s caused by corporate greed. Corporations have made off like bandits during the pandemic and the global capitalist economic crisis that accompanied it. Loblaws, Sobey’s, Walmart and other grocery chains seized the moment to hike food prices while 7 million people were unemployed and while cutting pandemic pay for their own employees. And those prices are still rising – along with the huge corporate profits they continue to generate.  

According to data from April, consumer prices rose 6.8 percent in the past year while wages increased just 3.3 percent. This means prices are rising twice as fast as wages and that real wages are falling behind fast – 3.5 percent in the last year alone. This is on top of the losses (cuts) to real wages that have taken place over the last 40 years due to stagnating wages and increased cost of living.

The social wage has also declined as a result of cuts to healthcare, education, social programs and public services.  

This is accompanied by a real decline in the purchasing power of public pensions and the corporate drive to eliminate defined benefit pension plans in the private sector.

Further, wage restraint legislation in Ontario has limited wage increases in the greater public sector to 1 percent per year since 2019. This has affected more than 1 million workers in the province whose wages have been held down by government fiat and further slashed by inflation.

Workers and their unions have responded with major strikes and struggles to win substantial wage increases and cost of living (COLA) clauses to maintain those gains. The building trades unions have set the pattern this spring with wage increases above 15 percent, with UNIFOR not far behind. Public sector workers, constrained by legislation, are voting with their feet, with a huge exodus of nurses and healthcare workers who are retiring or leaving public healthcare to work in the private sector.  

The second thing to know about inflation is that the Bank of Canada is not independent from the government. The Bank’s decision to raise interest rates to 3.25 percent in four hikes to date, with more to come, is in keeping with the neoliberal economic policy of capitalist governments around the world. High interest rates are what the biggest corporations and the richest of the rich around the world want, because high interest rates protect their wealth and increase their mega-profits.

The inflation spiral is caused by soaring prices and profits – if the Bank of Canada really wanted to beat back inflation, it would have implemented price controls and acted to roll back prices, starting with food, fuel and housing. 

Multinationals and their governments and Banks in Canada and globally insist that inflation is the result of workers struggling to maintain their wages and living standards. This is the Big Lie.

The proof is in the fact that labour costs have declined to only 1/3 of direct production costs, mostly the result of new technology and the increased productivity it generates. After inputs and taxes, the remainder is surplus value – the difference between the value of the product and the wages paid for the labour power to produce it. According to Jim Stanford, that unit profit has increased to about 23 percent, which is why corporate profits today are the highest in history. This is what corporations and their governments are protecting and want to expand.

If those profits were socially owned instead of privately appropriated, then living standards in Canada would be rising, not falling. Priorities such as strong social programs and public services, climate action, good jobs, good wages and pensions, and shorter work time with longer holidays and a shorter work week, would be the norm. This is why socialist countries have been able to increase and maintain living standards, despite imperialism’s sanctions and wars. It’s also why socialist countries are rapidly moving to reduce carbon emissions while Canada continues to prop up the oil and gas industry, the mining companies and others with exemptions and tiny carbon taxes that change nothing at all.

The third thing to know is that the high interest rate policy will launch Canada – and all capitalist countries following this neoliberal policy – into another deep and long-lasting global recession. The Canadian Centre for Policy Alternatives estimates this will throw a minimum of 850,000 workers in Canada (and up to 1.3 million) out of work, many of them permanently. Further, this vicious anti-worker policy will permanently cut workers’ real wages and living standards, forcing families out of their homes and into bankruptcy. It will also drive small and medium businesses and farmers into ruin. This is the power of state monopoly capitalism in all its glory.

This situation is fueling right-wing populism across Canada, and fascism in the US, Europe and other parts of the world.  

But it’s also motivating workers and their unions to fight back in a defensive struggle to stop the further erosion of their wages and purchasing power. Corporations and governments have responded with wage restraint legislation, back to work legislation, cuts to funding for social programs and public services. The federal government has also vastly increased funding for the military, for NATO and NORAD, and for the war in Ukraine which are also a major cause of inflation. Sadly, they have had the support of all the parties in Parliament for this dangerous and destructive anti-worker agenda.

The fourth thing to know is that inflation and unemployment can be beaten. But it will require a united struggle by the labour and people’s movements against monopoly power and profits, and for a people’s agenda that prioritizes people’s needs over corporate profits.  

A democratic, anti-monopoly people’s coalition with labour at its core could bring working people into the streets to demand price controls and price rollbacks on food, fuel, housing and rents. It would pursue full employment policies, public ownership of the banks and insurance companies, and the expansion and adequate funding of public services and social programs to create jobs and meet people’s needs. It would build affordable social housing on a massive scale which would also bring down prices and rents in the private market, expand public transit and eliminate fares, adequately fund universities and colleges and eliminate tuition fees. Such a coalition could implement the immediate transition to renewable energy with job and wage guarantees for displaced workers. It would raise wages, pensions and incomes including a $23 minimum wage, a guaranteed annual livable income, a substantial increase in pensions at age 60, universal pay and employment equity, and EI reform that covers all the unemployed for the full duration of unemployment at 90 percent of previous earnings.  

This is a program for working people – quite distinct from the massive transfer of public funds to corporations in the airline industry, oil and gas and many others through LEEFF and CEWS.

Now’s the time for labour to take the lead and to build such a coalition across the country.

The Communist Party of Canada gives full and active support to this kind of coalition building and united action to protect workers’ wages and living standards and to roll back the power of the corporations, their governments and the far-right movements threatening democracy and workers’ interests today.  

[PHOTO: BC government employees are among many workers across the country who are fighting back against inflation and a soaring cost of living ~ credit BCGEU Twitter]

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