Since the pandemic broke out last March, we were told that we were all in the same boat. Now this is shown to be a great and terrible lie. While the workers have been losing their jobs and dying from COVID-19, Canadian capitalists have been hoarding astronomical sums of money. New analysis of StatsCan data by Fightback has revealed that over the course of 2020, the amount of money unproductively hoarded in corporate bank accounts increased by more than $500 billion. We see that instead of being in the same boat, the rich are on a luxury yacht, while the majority get thrown overboard.
Fabulous profits amidst swelling poverty
The year 2020 was an historic turning point in Canada. Not since the 1930s have we seen such a dramatic economic collapse in such a short period of time. Studies show that Canadian economic activity dropped by 5-6 per cent over the course of the year, hitting the service sector particularly hard. Indeed, this was a collapse like no other in the history of capitalism.
Yet despite the fantastic collapse of the economy, 2020 was an excellent year for Canadian capitalists, a year of fabulous profits and prosperity in the midst of misery. By the end of the year, the amount of dead money—money that lies dormant, uninvested, unproductive and hoarded in the bank—had increased by an astonishing $500 billion. In the third quarter of 2020, the date of the most up-to-date statistics, total currency and deposits by Canadian corporations sat at $1.58 trillion. This thick stack of cash sitting idly and collecting dust grew by an astounding 56 per cent in 12 months! But how is this possible in the midst of the worst economic crisis since the Great Depression?
The man behind this wonderful magic trick is none other than the great magician Justin Trudeau himself. At the beginning of the pandemic, the state immediately violated the most sacred of capitalist holies: the free market. Seeing no other choice, Trudeau pumped hundreds of billions into the economy with the purported aim of keeping it from collapsing via government support. The first to receive money were of course the needy Bay Street speculators and capitalists, who received free money in the form of the wage subsidy and stimulus programmes. Lastly, Trudeau was forced by the severity of the crisis and rising unemployment to essentially expand Employment Insurance with the Canadian Emergency Relief Benefit.
While some praised the government’s measures such as the wage subsidy (Canadian Emergency Wage Subsidy, or CEWS), it quickly became clear that this was nothing but a veiled government handout to the rich. For example, on Dec. 7, an investigation revealed that 68 companies that had received more than$1 billion in total from the CEWS programme were paying $5 billion to their shareholders simultaneously. At the top of the list sits Imperial Oil Ltd, which received $120 million from Trudeau while paying out $324 million to their shareholders. While being only the tip of the iceberg, it became clear where Trudeau’s money is really going: into corporate coffers.
Linamar, an automotives manufacturer in Guelph, Ontario, is perhaps a more typical example of how CEWS money is used. After collecting more than $108 million in CEWS funds, they doubled their dividends to $8 million each quarter. Simultaneously, they saw their revenues fall to $1.64 from $1.74 billion a year earlier, while their earnings jumped from $98.2 million to $125.5 million. Their CEO Linda Hasenfratz jubilantly stated that “It feels great to be profitable again, with earnings actually up from last year, and to see such an outstanding quarter for free cash flow despite the challenges we are facing.” As we can see, government subsidies like the CEWS have been funneled into profits.
Yet while the capitalists and bankers hoarded billions of dollars—presumably to jump into from a diving board like Scrooge McDuck—the working class has seen nothing but poverty wages, unemployment and destitution.
By 11:17 a.m. on Monday, Jan. 4, the average top-paid Canadian CEO earned as much money as the average annual salary of a Canadian worker—that is, $53,482. This is a graphic example of the vast abyss that separates the rich from the poor. In fact, 2020 was a year of great economic polarization, where unemployment rose more than 20 per cent among workers who made less than $13.19, compared to employment rising by nine per cent among those earning over $41.73. In other words, the poorest and most vulnerable workers are the ones who have been facing the brunt of the crisis. On top of this rising unemployment, the working class faces new hardships such as rising eviction, homelessness, and deteriorating working conditions.
We are faced with the following general picture: the rich, although economic activity collapsed, got inexorably richer off the pandemic, and the working class has only sunk deeper into poverty and destitution.
Dead money: Dead end
Dead money was already considerable before the pandemic—about $1.01 trillion and growing at roughly five to six per cent per year. However, it increased by $568.6 billion in 2020 alone to a whopping $1.58 trillion! To put that into perspective, free education costs in theory around $10 billion; to end boil water advisories in First Nations would cost about $3.2 billion; and the cost to end homelessness would be in the ballpark of around $44 billion. Yet instead of ending very real and terrible societal privations such as homelessness and contaminated water, this vast sum of wealth is hoarded in an unproductive heap that even Smaug the dragon on top of his mountain of gold would envy.
This growing sum of unproductive cash is not only a waste of wealth that could be used for much needed social works and projects, but also a grotesque symptom of the overall decay of the capitalist system.
Historically, capitalism played a progressive role in the development of the productive forces; that is, it revolutionized the manner in which we produce and has greatly improved the productivity of labour. However, this period of capitalism’s ascent quickly burned its wick and its inner contradictions have now come to the fore.
Today, capitalism is only a senile and degenerate version of its past self: there is little incentive for capitalists to invest in the means of production nowadays because they already cannot sell the vast ocean of commodities that saturate the market. This means that capitalism has little interest in advancing society or solving important social issues because it would earn the capitalists no profit in doing so. They figure that they may as well sit pretty until a profitable opportunity arises.
However, it is precisely this inability to advance the development of the productive forces which indicates the utter bankruptcy of all past socio-economic systems. When the ruling class cannot develop the economy and raise, even marginally, the living standards of the masses, the system inevitably goes into crisis. For example, in the decline of feudalism, when the feudal ruling class had developed manorial agriculture to its greatest extent under the prevailing conditions, society began to regress, the ruling class split down the middle, and a tumultuous epoch of revolution and counterrevolution began.
We have entered into a similar epoch with the decline of capitalism today. There exist vast sums of wealth alongside terrible poverty and scarcity, yet we cannot make use of this wealth because it belongs to a class that invests for the sole purpose of profit. This has created a great crisis in society that is manifesting itself in political polarization, heightened class struggle, and a further widening of the gap between the rich and poor. In other words, the growing amount of dead money is indicative of the epoch we are currently entering: an era of bitter class struggle and revolution.
A better future is possible
The experience of the past year has shown that the Canadian bourgeoisie are utterly incapable of looking after anything other than their own narrow economic interests. They have grown criminally rich at the expense of the rest of society and the working class. With complete justification, we may call the current capitalist class a parasite on society, because its only contribution to society is its ability to hold it back. Just like tapeworm, ticks, or any other parasitic infestation, it is time that we rid ourselves of these leeching parasites.
If someone were infected with a tapeworm, for example, one would then take a praziquantel pill. However, for dealing with the decrepit capitalist system, we require a bigger pill: socialism.
Under socialism, where the workers would run the economy for human need and not for profit, this immense amount of wealth could be put to good use. Not only could we eliminate hunger, homelessness and contaminated water, but we could also build new schools, better housing and efficient public transportation; rebuild our crumbling hospitals and infrastructure, and institute free education.
However, achieving this goal is neither automatic nor predetermined. The task that confronts us today is to organize and struggle to overthrow the sinking ship of capitalism or else risk a further decay of society. As Friedrick Engels put it, “Bourgeois society stands at the crossroads, either transition to socialism or regression into barbarism.” Let’s get to it.