Supplement

No. 17May 11, 2019

Canada Post's Fraudulent Accounting Methods

Postal Workers Produce Enormous
Value for the Economy and People

- K.C. Adams -

The government of Canada should salute the 67,466 workers of the Canada Post group of companies for their hard work and contribution of value to Canada during 2018. The year was difficult as Canada Post executive management refused to negotiate a new contract necessitating unionized workers in the Canadian Union of Postal Workers (CUPW) to organize rotating strikes. The Trudeau government used its police powers to force an end to the strikes. The legislated end of the strikes means the serious issues confronting postal workers remain unresolved. This course of action also covers up the immense value postal workers contribute to the Canadian economy.

The fact is that, despite the difficulties, workers delivered 8.1 billion pieces of mail, parcels and messages to 16.4 million addresses across Canada during the year for a realized gross income of $8.675 billion. According to the Canada Post accounts, each full and part-time worker produced on average $128,583 of realized gross income (revenue) for the company. This does not represent the actual value in work-time and money that individual workers produced and transferred into social product during the year. The realized gross income is the value in money of postal workers' social product sold in exchange at specific market prices.

Canada Post's 2018 Annual Report, Financial Section

The 2018 yearly accounts from Canada Post management are mostly meant for propaganda purposes pushing whatever line favours the ruling oligarchs at the moment. The accounts do not give a scientific rendering of the work-time of workers to produce new value or the amount of old value transferred into production from machines and material.

New value arises from the actual work-time of postal workers and can be calculated in standard work-time of the total hours worked to move mail, parcels and messages from point A to point B. Using a modern formula to determine the price of production of the social product, the new value in work-time that workers produce can be calculated in money.

The actual new value workers produce through their work-time and the amount realized through the sale of the social product may not be the same. The amount realized of both the old and new value depends on two main factors: the sale of the social product and its market price.

The realized gross income of Canada Post, which it calls "revenue from operations," may or may not represent the actual value of production. This arises because the accounts do not explain or in any way elaborate a scientific basis to calculate a retail price as payment for transporting mail, parcels and messages and its relation to the actual value workers produce. Nor do they discuss any subjective motive regarding prices that should arise from the necessity to provide in the spirit of nation-building a vibrant mail service equally for all Canadians no matter where they live.

New Value Postal Workers Produce

The reproduced-value workers claim as wages and benefits forms part of the new value they produce. Another part of the new value workers produce is the added-value those in control of Canada Post and others who have investments in the company expropriate as profit. Expropriation of new value as profit takes many forms such as interest profit, enterprise profit, rent profit, a portion of government's claims, and money given to executives and directors, which in the case of Canada Post in 2018 was $12 million. A portion of new value can also be used to renew the productive forces and fulfil Canada Post's mandate to serve equally all addresses in Canada regardless of location, or be distributed for investment in social programs and public services.

The accounts do not provide a scientific rendering of the value workers produce and transfer into social product, the price of production of that value in money, how the various market prices for social product are determined, and the distribution of the realized new value workers produce and the old value from already-produced value workers transfer into the social product.

Instead, without elaboration the accounts begin with a realized amount of the value received from customers stated as $8.675 billion in realized gross income, which they call "revenue from operations." The realized gross income from the total value workers produce is the amount received in payment from customers for services rendered. The retail prices do not necessarily represent the actual value of work-time of workers to produce the social product. Also, the accounts do not explain how Canada Post determined what the retail prices should be.

The next item is called the "cost of operations," which totals $8.784 billion. This amount is deducted from the first amount resulting in what the accounts declare a "loss from operations" of $109 million.

This presentation of the value Canada Post workers produced in 2018, its realization and distribution is a travesty and distortion of the modern reality. By subjective sleight of hand, the accounts turn the value workers produce and transfer moving the mail, parcels and messages into a "cost of operations." What was all that work to move mail, parcels and messages around the country if not work-time to produce new value that can be measured with precision? The accounts turn the hard work of postal workers producing value into a cost without blinking an eye and then cover up their anti-worker self-serving deed by posturing as great economists and captains of industry. Workers should have none of it and denounce the entire accounts as anti-worker subjective rubbish. In this modern era of socialized production, the Canada Post accounts hold no merit and exist for an ulterior motive to attack the claims of postal workers on the value they produce and to prepare public opinion to privatize Canada Post even further and erase from memory Canada Post's nation-building mandate to serve all Canadians equally no matter where they live.

An Examination of Canada Post's Published Accounts

A modern accounting method begins from the present, which is the work-time of workers producing new value and transferring old value from machines and material into production. The human factor and its work-time is the essential feature that sets the productive forces into motion and produces value. Any accounting of production must start from the work-time of the human factor.

Canada Post's accounts are far from such a rendering. The first item in imperialist accounting is the revenue from operations, which is the realized gross income from exchange of the social product the workers have produced, the realized amount of whatever goods or services can be sold and their market price. The second item in the accounts is a so-called cost of operations. Any factor that from the point of view of those in control takes money from the realized gross income is viewed as a cost to them and their bottom line. The financial oligarchy considers its right to expropriate the value workers produce as the aim of the economy. All other claims on the value workers produce are considered a cost to those in control, even other factions of the oligarchy such as moneylenders.

The so-called costs of operations include most importantly the claims of workers, their wages and benefits, which they have reproduced through their work-time. The costs also include the amount of old value from machines and material consumed in the productive process and transferred into the social product, which should be returned when the social product is sold.

The third item in the accounts is the profit or loss from operations, which merely deducts the second item, the "cost of operations" from the first item, the "revenue from operations" (realized gross income) and any expropriation of added-value by those other than those in control of the enterprise such as moneylenders, landlords and government.

This rendering obscures and buries the source of new and old value within the social product, which is the working class itself and its work-time using means of production. The accounts begin from the sale of the social product, which in reality is a realization in money of the value workers have already produced through their work-time.

Imperialist accounting transforms the working class from its role as the essential creator of value into a cost of production for those in control. It puts the financial oligarchy into the centre of the economy from where it can manipulate the economy and the enterprises it controls to serve its narrow interest for maximum profit and to perpetuate its class privilege and exploitation of the working class. The accounts become a propaganda weapon for whatever project those in control have in mind, such as to attack the claims of the working class on the value it produces and in the case of Canada Post, the added dimension of privatization and to destroy its original socially responsible state-organized mandate to serve all Canadians equally regardless of location as an important aspect of nation-building.

The fatal flaw in Canada Post's accounts stems from the anachronistic outlook of those in control. The outlook of the financial oligarchy, executive managers and government views already produced social value and the control of that value as the starting point for the production of new value from which it can expropriate profit. This starting point serves the aim of the financial oligarchy to defend and expand its control of the productive forces of the country and the social product workers produce. This negates the role of the work-time of the actual producers, the postal workers themselves, as the essential human factor setting in motion the productive forces to produce value and the necessity to put the well-being of the people and society as the aim and priority of the socialized economy.

For the financial oligarchy the work-time of the working class and its claim on the value it produces become a cost of production reducing the amount available for those in control to expropriate as profit. In fact, the financial oligarchy, which can be characterized as a non-working class, has become obsolete and a barrier to the development of the productive forces to serve and guarantee the well-being and rights of the people and open a path forward for society to humanize the workplace and natural and social environment, and put an end to class privilege and the exploitation of humans by humans.

To find an objective base for a market price, Canada Post must first determine the actual price of production of the social product workers produce. A modern formula to determine a price of production exists. The formula requires proper accounting of all the factors involved in the production and reproduction of new value and the transfer of old value from machines, buildings and material into the social product.

Contrasting Accounting Methods

The already-produced social value comprises the fixed assets such as buildings, machinery, and accumulated money owned and controlled by Canada Post.[1] Canada Post has a state-organized mandate and right to mobilize workers to use those means of production to deliver mail, parcels and messages equally to all Canadian addresses no matter where they live or work.

Canada Post workers are put to work on those fixed assets and bring them to life to produce a service for Canadians. The working class is the essential ingredient or human factor to set the productive forces in motion to produce value. Instead of beginning the Canada Post accounts from the work-time of workers producing value, the starting point of the imperialist accounting method is the end result or exchange of the social product and the realized value the enterprise receives as gross income, which it calls "revenue from operations." The financial oligarchy then considers all claims on the realized value, the gross income or "revenue from operations" as expenditures or costs reducing the realized value down to either a profit or loss for those who own and control the already-produced fixed assets and other social wealth of the enterprise.

Contrasting accounting methods reflect the social being and conflicting aim and outlook of the two main social classes in Canada, the working class and financial oligarchy. A modern accounting method serving the actual producers, the working class, begins from the work-time of the workers for the period examined. The work-time of workers using the already-produced value produces new value, which is the sum of reproduced-value and added-value and equivalent to the standard work-time required to produce a certain quality and quantity of social product. Added to the new value is the amount of old value from the already-produced value of buildings, vehicles, machines, equipment and material that workers transfer into the social product.

A modern formula to determine a price of production using an average rate of profit reflecting the added-value workers produce at the economy's level of productivity could then find the monetary equivalent of the total value of the social product workers produce. The price of production forms the objective basis for determining retail or market prices, which in the case of Canada Post would be adjusted according to the mandate of the enterprise to serve all Canadians equally and contribute to nation-building.

The imperialist accounting method, rather than recognizing the work-time of workers as the means to produce new value and unleash the productive power of fixed and circulating already-produced value, turns workers' work-time producing value and their claim on the new value they produce into a cost of producing the value they produce! This imperialist-centred method of accounting allows those who own and control the already-produced value to engage in propaganda warfare against the rightful claims of the working class on the new value they produce and obscure how and where new value arises. It seeks to perpetuate the outmoded role and class privilege of the financial oligarchy and block the empowerment of the working class in the political, economic and social affairs of the country.

In the case of Canada Post, the 2018 accounts show a loss and no value as profit for those in control of the enterprise and therefore the entire year of hard work is considered in a negative light. According to this accounting method, the loss arises mainly from the claims of the workers on the value they produce, their class struggle to defend themselves through rotating strikes and the pay equity arbitration decision.

Those in control lament the perceived loss as it reduces the original already-produced value and social wealth of the enterprise. Those in control of the already-produced value seek to expand the social value they control. The workers are blamed for incurring the so-called loss because their claim on the new value they produce directly conflicts with the imperialist aim of maximum profit to serve and strengthen the class privilege of the financial oligarchy. The solution to the loss, according to the imperialists in control, is to attack the working class using police powers when necessary to force a reduction of what belongs to workers by right, and, when it suits the narrow interests of the oligarchs in control, further privatize the public enterprise.

The financial oligarchy has abandoned any notion of nation-building and instead wants to seize direct control of the movement of mail, parcels and messages outside any state-organized mandate to serve Canadians equally. A method in this attack is to privatize and fragment the post office into increasingly competing segments that have no connection or allegiance to the original mandate of Canada Post to serve all Canadians equally no matter where they reside or engage in business.

Those in control refuse to recognize the legitimate claims of workers on the new value they produce. The imperialist aim of private profit even within a public enterprise puts those in control into contradiction not only with postal workers but also with the official mandate of Canada Post to serve the people equally. This means postal workers have to strengthen their organized resistance to attacks on what belongs to them by right, and reach out to the Canadian public and rally them in a broad defence of nation-building and a public post office that upholds its social responsibility to serve the people equally and not a privileged few for private profit.

Information Gleaned or Not from the 2018 Annual
Accounts of Canada Post

Total work-time of postal workers in standard work-hours = not reported

Total new value of social product workers produce = not reported

Total old value of already-produced value workers transfer into the social product = neither the total reported nor itemized

Price of production = not reported as a whole or in its particular forms such as letter mail and parcels

Total gross income from value realized in payment from customers for social product = $8.675 billion (recorded as "revenue from operations")

The refusal of Canada Post to negotiate a new collective agreement with workers and their union CUPW and the subsequent rotating strikes is posited as having contributed to an estimated realized gross income shortfall (loss) of $195 million.

Total claim of workers on the new value they produced (wages and salaries of active workers) = $4.364 billion (Reported as "cost of operations" under the subhead "cost of labour")

Claim of active and retired workers for benefits, including pensions, on the new value workers produced = $1.620 billion (Reported as "cost of operations" under the subhead "cost of employee benefits")

Total claims of active and retired workers on new value workers produced = $5.986 billion

Because of the pay equity ruling, the total recorded claim of workers for the year 2018 misrepresents the facts. For the Canada Post segment, the pay equity arbitration ruling for Rural and Suburban Mail Carriers gave CUPW members an additional $550 million in pay owed to them for the new value they produced of which $420 million was recorded in 2018. Although recorded as paid in 2018, this amount in fact includes $280 million retroactive to January 1, 2016. The accounts for 2016 and 2017 at the very least should have been redone to record the actual realized claims of workers for those years and not have been used to fabricate a "loss" of $195 million in 2018, which management has used in its propaganda war against workers and for privatization. The ongoing annual amount from the pay equity ruling will be an increase in workers' claim on the new value they produce of $140 million.[2] Workers should note that an increase in their claim on the new value they produce results essentially in a reduction of an equivalent portion of added-value within the new value and not in an equivalent increase in the total value and subsequent price of the social product.

Fixed transferred-value from already-produced fixed assets such as vehicles, buildings, machines and equipment = $311 million

Fixed transferred-value is the amount of value workers transfer into production from fixed assets. The accounts report this as a "cost of operations" under the subhead "depreciation and amortization."

Circulating transferred-value from already-produced material assets consumed in the production process, such as electricity and fuel for vehicles = not reported as a separate item.

Circulating transferred-value is the amount of value workers transfer into production from already-produced material consumed during the production process.

Circulating transferred-value from material consumed is contained within "other operating costs" but not separated out and itemized = $2.488 billion

The use of the term "cost" to account for both fixed and circulating transferred-value is suspect for modern accounting. A definition that would make some sense is "outlay" with the expectation of a return of the outlaid money upon realization of the social product. The realized return of the outlay should make the final result, at least the expectation, neutral or "equivalent in value" of the outlay and not in the final analysis a cost to the enterprise.

The value from already-produced value workers transfer into production, which the enterprise buys, should as a rule return to the enterprise through realized value once the social product is sold. The end result is that the value from machines and material transferred into production and then realized and returned in payment should be approximately equivalent and not be a cost to the enterprise other than in the sense of the time between the outlay of the money spent and its return. This could entail borrowing, which means the moneylender expropriates a portion of the added-value workers produce.

In general, if the realized amount does not amount to near the price of production because some of the social product remains unsold or the retail prices are too low then that reveals a deeper problem with the enterprise or sector that needs to be addressed.[3]

Selling, administrative and other = $538 million

This section of the accounts should be categorized so as to determine if the work-time involved is productive or not. This becomes important when determining a price of production and the amount of added-value or total profit.

Interest claim from money lenders on new value postal workers produced = $44 million

This amount is not reported as part of the profit the financial oligarchy expropriates but falsely as a portion of the "cost of operations." Interest profit comes out of the added-value or total profit that workers produce from their work-time, which is part of the new value workers produce. Imperialist accounting from the point of view of those in control of the enterprise falsely puts interest profit as a cost because it comes out of the total profit (added-value) thus reducing the portion going as enterprise profit.

Outstanding loans to money lenders = $1.025 billion

Claim of executive managers and members of the Board of Directors (defined in Canada Post accounts as Key Management Personnel) = $12 million

Note that this executive profit is not reported as profit expropriated by those in control from the new value workers produce but falsely listed as a "cost of operations," which contributes to the reported loss.

Such "largesse" with Canada Post's revenue from new value is a form of corruption. The corruption is broadened through privatization and the bringing of representatives of private interests into executive management and the Board of Directors. Many people have exposed as corruption the participation of the main private owner of Purolator as a member of the Board of Directors of the Purolator segment of Canada Post Corporation and the subsequent lucrative contract for air services given to the private owner's company KF Aerospace. Corruption also deepens as more fixed and circulating already-produced value, such as vehicles, sorting machines and computers, is purchased from favoured global imperialist enterprises and contractors rather than having those assets manufactured within the national economy using Canadian public enterprises.

Social Reproduced-Value

An issue of great importance across Canada is the absence of any specific payment coming from big companies for the social value embedded in workers. The education and health care of workers comes mostly from public institutions that produce this social value. Canada Post should acknowledge and pay for the social value embedded in workers' capacity to work and subsequently reproduced as new value while working. Social reproduced-value is part of the new value workers produce and should be exchanged with direct payment to the public enterprises that produced it and reported as such in the accounts.

The companies should pay for social reproduced-value directly to the education, health and other social institutions and sectors producing the social value within the human factor as capacity to work. Social programs should not have to receive the bulk of their revenue from governments through taxation.

Claims for social reproduced-value form part of the overall claim of the working class on the value it produces in exchange for its capacity to work. Social reproduced-value forms part of the amount that should be used to sustain all members of the working class at a Canadian standard from birth to passing away.

The absence of any accounting of social reproduced-value and its realization by the companies that consume the value is a serious problem confronting the economy. The imperialists are unwilling to resolve the problem. This stems from their aim to serve their private interests at the expense of the well-being and security of working people and the socialized economy as a whole and the other enterprises and parts within the economy, which are considered competitors.

Canada Post Segmented Accounts

Revenue from operations (gross income from realized social product) = $6.620 billion

Number of workers (includes part-time workers and those on unpaid leave) = 53,330

Realized gross income of segment (revenue) = $6.620 billion

Realized gross income per worker = $124,133 (This does not represent the actual value in work-time and money that individual workers produced and transferred into social product during the year. The realized gross income is the value in money of postal workers' social product sold in exchange at specific market prices.)

The amount paid for "non-labour collection, processing and delivery" (Canada Post segment only) = $1.025 billion

The accounts read, "Contracted collection, processing and delivery costs increased by $46 million or 4.3 per cent in 2018 (to $1.025 billion)." No further details on this amount are given leaving readers to wonder how large contracted and privatized work has become. Mention is made elsewhere in the accounts of outstanding payments due and difficulties in receiving payments in time from contracted or privatized services such as retail outlets. Of the 6,100 post offices across the country, private dealers operate 2,400.

Purolator

Purolator gross income from realized value (revenue from operations) = $1.8 billion (Purolator is 9 per cent privately owned. Purolator's gross income makes up 21 per cent of the Canada Post Group.)

Workers' claim for reproduced-value on new value they produced (wages and salaries wrongly labelled as part of "cost of operations") = $830 million

The amount paid for "non-labour collection, processing and delivery" at Purolator segment = $859 million

This must include fixed transferred-value from buildings, machines and vehicles, and circulating transferred-value from fuel etc, although no details are provided. A large portion must be for payments to contractors, such as to the airline company owned by the private interests that own part of Purolator and for other delivery contractors.

Number of workers (includes part-time workers and those on unpaid leave) = 9,857

Realized gross income of segment (revenue) = $1.8 billion

Realized gross income (revenue) per worker = $182,611

SCI Group (Logistics)

SCI Group (logistics) gross income from realized value ("revenue from operations") = $322 million (per cent of total Canada Post business = 3.3 per cent)

Workers' claim for reproduced-value on new value they produced (wages and salaries) = $163 million

"Non-labour costs" (SCI segment) = $139 million

No details are provided for the "non-labour costs."

Notes

1. Already-produced fixed assets of Canada Post:

Fixed assets include land, buildings, vehicles, plant equipment, sales counters, office furniture and other equipment etc, which 67,466 workers set in motion to produce value. The number of workers excludes temporary, casual and term employees. Workers work in every urban, rural and remote community across Canada.

Almost 7,000 retail post offices

Vehicles = 18,000

Canada Post segment alone owns and controls:

21 processing plants containing equipment
480 carrier depots
22,519 street letter boxes
205,500 community mailbox sites
1.7 million post office boxes including general delivery
5,300 parcel lockers

Total assets of Canada Post Group of companies valued at = $9.197 billion

Use of new value workers produced to invest in fixed assets in 2018 = $387 million

Depreciation of fixed assets in 2018 = $311 million (Workers transferred this amount of old value, fixed transferred-value, into the social product.)

Difference between investment in fixed assets and depreciation = $76 million (This investment from the new value workers produced increased the total value of Canada Post fixed assets by $76 million.)

No specific amount is given for circulating transferred-value of material workers transferred into the social product. The amount is lumped in with "cost of operations" and the subgroup "non-labour costs."

2. Canada Post executives and both liberal and conservative cartel party federal governments have been fighting tooth and nail for decades against any arrangement and resolution of the Canada Post pay equity dispute acceptable to workers and their union CUPW. The longstanding opposition of federal governments and executives against pay equity for rural and suburban workers forced postal workers to seek justice through job actions, expensive court filings and arbitration.

Instead of apologizing for having pay inequity an official government and company policy for decades, Canada Post executives moan bitterly of the enterprise suffering a "loss" in 2018 because the decision of the arbitrator forced retroactive back-pay to rural and suburban workers to rectify in a small way the pay inequity they have endured for decades. Not content to throw abuse at workers for "causing a loss for the enterprise" from their just claim on what belongs to them by right from the value they produce, in a statement introducing the 2018 accounts, the Canada Post executives write, presumably with a straight face and no sense of shame because their imperialist outlook would prevent it, "Pay equity is a basic human right and any pay disparity on the basis of gender is unacceptable to Canada Post." Yeah right, you hypocrites!

3. The issue of value from machine use is obscured under imperialist accounting. An underlying suggestion of the imperialists, or rather distortion, is that machines themselves produce new value and do not merely transfer their already-produced value into production. More productivity through machine use increases the total social product in relation to work-time. However, machine use does not create more value than the old already-produced value embedded in the machines and transferred into the social product. The portion of the value of the social product contributed by machines is equivalent to the value of the machines themselves and their depreciation through use.

This differs from human productive power, which has the capacity to create new value through work-time. The new value of human work-time reproduces its own value, called reproduced-value, plus an additional amount called added-value. The total of reproduced-value and added-value is the new value workers produce through their work-time. Human work-time reproduces the value contained in its capacity to work, the value that is embedded in the human factor and its capacity to work and creates the possibility for the human factor to work again. In addition to the reproduced-value, human work-time produces an additional amount called added-value, which under imperialism forms the basis for private profit and the class privilege of the financial oligarchy. To attain its emancipation, the working class must gain control over the added-value so that it controls the entire new value, the entire social product it produces.

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