Promises of enlightened policies by the likes of Trudeau and Biden fly in the face of the harsh reality of a system in deep crisis, argues John Clarke

Last September, Justin Trudeau’s government used a throne speech to deliver a blueprint for ‘a stronger and more resilient Canada’ that was full of beautiful phrases but rather lacking in details. Now, we have a clearer indication of the limits that will be imposed as this process unfolds. The government has released a set of ‘mandate letters’ that the Prime Minister has sent to his cabinet colleagues.

Of particular interest is the one that was penned for Finance Minister and Deputy PM, Chrystia Freeland. She is told that, while she should unleash ‘whatever fiscal firepower,’ in dealing with the immediate economic damage caused by the pandemic, she is to ‘avoid creating new permanent spending.’

This blunt message is entirely in line with the thoughts Trudeau shared during an online discussion, that was organised by the Financial Times last November. He made it very clear to his audience at that time that the emergency levels of income support his government had provided, in response to the pandemic lockdowns, were not an indication that a permanent major upgrade for Canada’s austerity damaged systems of income support was to be expected.

“That’s not a measure that we can automatically continue in a post-pandemic world,” he said. For good measure, he also stressed that, “What we’re doing now shouldn’t be conflated with things that we might or could do in the future.” 

Trudeau’s uncharacteristically candid remarks on these questions provide a rather telling check on the hopes generated by his government’s aforementioned throne speech. We live at a time when the promotion of such hopes is quite widespread. Last autumn, the annual meetings of both the World Bank and the IMF grappled with the crisis that the pandemic had unleashed. Their deliberations led the Financial Times to dramatically declare that,

“This was the week we witnessed the funeral of austerity. Those who used to worship at its altar now urge countries to throw caution to the wind. Fiscal orthodoxy, practised over decades since the debt crises and inflation of the 1970s and 1980s, has been replaced with fiscal activism.”

The message coming from these key institutions of global capitalism, moreover, is not unique in strongly suggesting that the leopard is changing its spots. Even the hapless Boris Johnson, hardly the most convincing standard bearer for compassionate capitalism, has tried his hand at this game, with promises to consign austerity to the past so as to ‘build our way back to health.’ The incoming Biden administration in the US will play this card and work to keep alive expectations that it will be a progressive breath of fresh air. 

These kinds of assurances of changed ways have, indeed, been taken to the level of an assertion that capitalism itself can be cured of its worst inclinations so that a new age of fairness and prosperity can be ushered in. The World Economic Forum has suggested that “The changes we have already seen in response to Covid-19 prove that a reset of our economic and social foundations is possible.” The Davos set boldly declare that a ’stakeholder capitalism’ is now possible that will “revamp all aspects of our societies and economies, from education to social contracts and working conditions” in a ‘“Great Reset” of capitalism.’

Limits set by crisis

Justin Trudeau normally takes a back seat to no one when it comes to delivering empty promises. However, in letting the cat out of the bag on the distinct limits of his government’s commitment to ‘fiscal activism,’ he paints quite a rather accurate picture of the needs and imperatives of the capitalist state.

The state must preserve the supply of labour power and the unprecedented economic dislocation created by the pandemic has required rather extraordinary measures to preserve public health and social cohesion. With various degrees of reluctance and hesitation, governments have had to act in this way.

It is also true that the pandemic intensified economic crisis may necessitate more than one round of stimulatory fiscal measures. However, this is all very far from the fantasy of a new socially just capitalism that the World Economic Forum would have us believe is about to rise from the ashes. 

The period opening up before us will not be shaped by hopes and dreams or even by the preferences of those in government. The main determining factor will be the interwoven crises facing the capitalist system and the drive to maximise profits under the conditions these impose. The question that will have to be settled is that of who will pay for these crises and no effort will be spared to ensure that working class people are made to shoulder the burden and foot the bill.

The neoliberal period emerged because the postwar years of relative class compromise and Keynesian economic approaches couldn’t be sustained under capitalism. There was an acute need to restore falling rates of profits through the greatly intensified exploitation of workers and by reducing the adequacy of the social infrastructure.

The neoliberal offensive that was set in motion during the 1970s, only partially restored rates of profit and, since the Great Recession struck the global economy in 2007, the picture has been astoundingly dismal. Now, with a stubborn biomedical crisis, interwoven with an economic downturn and an unfolding ecological catastrophe that is having an ever more disruptive and destructive impact, there is simply no basis for any sustained return to anything resembling the Keynesian option.

Even if the exploiters and their enablers who make the yearly trek to Davos genuinely wished to fashion a benign new form of ‘stakeholder capitalism,’ their project would be doomed by these harsh realities.

Intensification of pre-existing crises

It is important to note that the present period of crisis, while it represents a considerable intensification, is only a sharper expression of contradictions that were playing out long before anyone succumbed to Covid-19. Michael Roberts has done enormously important work on charting how the Marxist law of the tendency of the rate of profit to fall has played out, since WW2, on both an international scale and in the UK.

Underlying Trudeau’s acknowledgement of just how limited his zeal for redistributive measures really is, is a very similar reality that faces Canadian capitalism. Todd Gordon and Geoffrey McCormack have shown that ‘the average net profit rate in 2005 was 12.5 per cent. By 2017, it had fallen to 6.6 per cent. Canada has not seen such poor profitability for three decades.’

Writing before the present crisis had developed to the extent it now has, they also draw the conclusion that, ‘the long-term trend presents a difficult situation for Canadian capitalism, one that is unlikely to be rectified without a more aggressive push to increase exploitation.’

Since the pandemic spread around the world, there have been many inspiring and enormously important struggles that have been taken up against the injustices that the crisis has intensified. Chief among these are the social upsurge that followed the racist police murder of George Floyd in Minneapolis and the vast and historic movement that has sprung up among workers and farmers in India. This has challenged and shaken the Modi regime and the neoliberal order it seeks to impose. It is struggles like this that point the way forward.

The incoming Biden regime in the US will exemplify the trap that is set by avowedly progressive lesser evils that work to demobilise the movements on the streets, even as they impose the burden of the crisis on workers and communities. Hopes for enlightened policies from on high fly in the face of harsh reality. It is a time for bold mass action, fighting demands and clear socialist alternatives to that which is offered by an ever more crisis-ridden system of capitalism.