Decline in Investment in Fixed Means of Production
Statistics Canada (StatCan) reported price inflation rose 7.7 per cent from May 2021 to May 2022. In general terms this means more money than necessary was chasing the available goods and services.
Using low interest rates as incentive, the big banks and other financial institutions poured massive amounts of new money into circulation through loans. In addition, the ruling elite in political control handed over enormous amounts of public funds to private interests in pay-the-rich schemes and pushed the economy over a cliff of wasteful production for war and war preparations, including expansion of commitments to NORAD and U.S. global war plans for NATO.
The injection of new money into the economy was not weighted towards expanding or refurbishing means of production. Investment in fixed means of production has been declining since 2015 with the total stock of fixed productive forces per worker falling to the point of not keeping up with depreciation or population growth. In general this affects the available stock of fixed means of production such as non-residential buildings, engineering structures, machinery, equipment and software, the tools workers need to produce.
StatCan detailed the decline of fixed means of production since 2015 as: engineering construction down three per cent; other machinery and equipment down 17 per cent; non-residential building down one per cent; and, surprisingly, software and other intellectual goods down 12 per cent.
Taken together the fall in the stock of fixed productive forces in all categories has registered a general decline of five per cent since 2015. Statistics Canada's June report also noted productivity in the economy fell 0.5 per cent in the first quarter of this year -- its seventh consecutive quarterly decline. All this reflects destruction of Canada's material productive forces not just relatively but in absolute terms, leading commentators in the Financial Post to call it "downright alarming." They made the point that the only historical period where the stock of productive forces per worker declined over several years would be during the economic crisis (depression) of the 1930s.
Downsizing of the productive forces directly affects the production of goods and services and also can negatively impact the rate of development of productivity per worker. Both these phenomena would put pressure on prices to rise or at least not go down. They have now in fact risen. Also, U.S.-led global sanctions and tariffs against designated countries such as the broad ones on Russia and specific ones, for example restricting the operations of Chinese tech company Huawei, reduce the supply of goods for sale thus putting upward pressure on prices in the affected sectors and with certain goods such as energy spreading the price inflation generally.
Productivity lessens the work-time necessary to produce a good or service. In a commodity-based economy where production is destined for sale in a market, the money value of goods and services is broadly determined by the necessary work-time required to produce the commodity. Productivity and increased supply of goods and services without adjusting the money-supply in accordance with these factors causes deflation, which means a dollar could buy a greater amount of goods and services. Price deflation drives the private interests in control of the economy crazy, as deflation both lowers their money return on the goods and services they sell and the money value of the means of production and other property they have bought and own.
To
counter the lowering of the money value of commodities from both
productivity and more supply, the ruling elite flood the economy
with
more money than the money value of the available goods and
services and
take other measures. The excess money supply occurs in several
ways:
financial
institutions creating money through loans; government
pay-the-rich
handouts to global companies, which are now de rigueur whenever
large
private investments are made; the guaranteeing of high prices
for
government contracts for infrastructure; the destruction of
productive
forces through lower
investment in new means of production and less refurbishing of
used-up
productive forces; and, pouring available social wealth into war
and
war production. This is done especially through integration into the U.S. war economy,
supplying it with Canada's natural resources rather than
directing
investments towards building
a self-reliant Canadian economy including social programs to
meet the
needs and well-being of the people.
A combination of all these factors including the neo-liberal assault on the benefits and purchasing power of working people over the last three decades, and now with the U.S./NATO proxy war and sanctions against Russia, the dam has burst so to speak in prices. The economy cannot produce enough goods and services to keep up with the amount of currency (money) in circulation. The inflation-inducing activity is compounded with the massive slice of the economy directed towards war materiel and the stationing of troops and equipment abroad and the financing of actual wars in Afghanistan, Iraq, Libya, Syria etc. and now the U.S./NATO proxy war against Russia and the pouring of war materiel into Ukraine and Europe, all the while antagonizing and preparing for war against China.
The Financial Post writes without specifying what the spending is on or who is doing it: "Prices are rising fast because spending is rising fast while production is not. The capacity of our economy to produce is flatlining because business investment has been so weak that the stock of productive capital [sic] (should read material productive forces – TML ed. Note) per worker is falling. If we do not turn that around, the outlook for real growth in living standards in the coming months, years and decades is bleak."
For
the people, knowing the problems and even the solutions does not
result
in action because of their absence of political power. The
anachronistic
colonial political forms do not allow the people to put their
understanding and desires for solutions into practice. So how do
we
lift the bleakness
of this economic and political fraud when the same self-centred
private
interests of the ruling elite who are responsible for the crisis
still
hold economic, political and social control?
The people can only apply solutions to these problems in conjunction with their striving for political power. As they build new political organizations, new economic and social forms and relations among people and with nature on the basis of new thinking, institutions and ways of doing things, they serve the collective good and well-being. It gives the people the political power to solve real problems on the basis of real solutions. The ruling elite will not suddenly stop waging endless wars, destroying and bleeding the economy dry for maximum profit, and manipulating politics to serve their narrow private interests. They are caught within an imperialist system where they grow richer and more destructive while the people become poorer. The ruling elite have no motivation to change their ways or even contemplate changing. The time is now for the people to strike out boldly to build the new on their own terms!
This article was published in
Volume 52 Number 18 - September 26, 2022
Article Link:
https://cpcml.ca/Tmld2022/Articles/D520184.HTM
Website: www.cpcml.ca Email: editor@cpcml.ca