Dont Blame the Virus for Capitalisms Latest Crisis!

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A Socialist Project e-bulletin ... No. 2101 ... May 22, 2020

Don’t Blame the Virus for Capitalism’s Latest Crisis!

Kim Pollock

Is corona-virus driving Canada into recession? Some people want us to think so. As early as March 27, CBC News referred to "the recession caused by COVID-19." The Toronto Star picked up the refrain April 9, referring matter-of-factly to "the recession brought on by COVID-19." The Globe and Mail repeated it on April 13. And as of May 1, says the C.D. Howe Institute, Canada is in a recession "due to the COVID-19 pandemic."

Short months ago, however, business economists were far more sanguine. They saw no signs of an oncoming recession at all. Quite the opposite: they predicted substantial growth for this year. In January, the Conference Board was just one of the mainstream outlets predicting solid GDP growth in Canada: 1.8 per cent for 2020 and 1.9 per cent for 2021.

Mainstream economists will therefore have good reason to claim ‘the virus did it!’ Yes, they will say, everything was fine until COVID-19 came along and knocked an otherwise buoyant Canadian... economy off the tracks. But look again. There’s no question Canadian capital is headed back into the tank -- but not just because of the virus. I will demonstrate how it was, in fact, already in crisis well before the virus, Wuhan alarms or pandemic. Let’s consider some key economic indicators based on Statistics Canada data. They support the view that the economy was in recession by last fall.

Overall, Canada’s GDP grew by 1.7 per cent in 2019, but it was already faltering by summer’s end. Over the whole in fact, the volume of corporate profit stagnated, rising precisely 0.1 per cent over the entire year and falling steadily after the first quarter. Employment measured as "persons employed" stagnated through 2019; measured as "hours worked" it rose slightly, 0.8 per cent. But by either measure it too fell from September onward. Industrial capacity utilization, already suffering the prolonged slump caused by low petroleum prices, declined farther in the fourth quarter. Conversely, one key indicator did not reverse direction, however: the value of capital formation continued to rise, it was up 0.9 per cent year-on-year and still rising slightly as late as January.

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