Economic Measures of the Financial Oligarchy and Its State to Preserve Its Power, Control and Private Wealth

The financial oligarchy has directed governments at various levels to distribute money to businesses and individuals and to borrow money from the private institutions of the rich. Every country within the imperialist system of states has followed this directive from the financial oligarchy. In Canada this dual policy has resulted in upwards of $300 billion in state handouts in various ways to businesses and individuals and a similar amount of government actual or projected borrowing from global institutional holders of private wealth. As of May 7, 2020 the federal and provincial and territorial governments have committed over $820 billion. The Department of Finance breaks this down into the following categories: Measures for Protecting Health and Safety, Direct Support Measures, Liquidity Support to businesses and individuals, and Business Credit Availability Program.

The state handouts to individuals are meant to sustain the circulation and realization of goods and services at a minimum level. The handouts to businesses are said to meet debt, rent or other obligations, and to pay certain workers 75 per cent of their wages in order to make businesses viable given the conditions and to keep a number of other workers available when work resumes. The government handouts to businesses are an extension or generalization of the more normal practice of state pay-the-rich schemes to specific cartels and big business.

State borrowing from the private global institutions of the financial oligarchy is to pay for the handouts to individuals and businesses but also to provide a safe place to park massive amounts of private money during the crisis and even gain some interest profit. Institutional lending of private wealth to various government agencies within the imperialist system of states is a normal practice of the financial oligarchy, which greatly expands during crises.

The financial oligarchy hopes these two broad economic measures will allow the imperialist state to weather the economic crisis and prevent an uprising of the working class demanding a new pro-social direction and aim for the economy and country under its control. The financial oligarchy is using its vast private wealth and the state it controls to defend its narrow interests during the pandemic. The financial oligarchy owns and controls the main financial, industrial and other cartels in the country and their means of production and circulation. The imperialist state, with its economic, political, police, judicial, and social institutions, is the crucial and essential weapon for the financial oligarchy to defend and preserve its private wealth, power and control over the economy and people.

The Canadian state is one within the U.S.-led imperialist system of states. The financial oligarchy in Canada is an international social class and exists as a faction of the global financial oligarchy, with private business and personal interests and connections throughout the imperialist system of states. Members of the financial oligarchy engage in fierce competition to expropriate maximum value from what workers produce.

The imperialist economy operates in a vast socialized way with production, financing and circulation of goods through just-in-time supply chains worldwide. The pandemic has disrupted operations of the imperialist economy and the production, financing, circulation and realization of means of production and consumption.

An immediate necessity for the financial oligarchy during the crisis is the realization of at least a minimum of already-produced goods and payment for financial and other services. With the interruption of circulation and realization of means of production and articles of consumption, the availability of cash for businesses to buy the capacity to work of the working class, to service debt and pay for other obligations has emerged as a serious problem. This has become extremely acute in certain sectors, such as retail, tourism and the airline industry, and in energy with the attendant oversupply of oil and the collapse of prices. Bankruptcy looms as a real threat, especially for small and medium-sized businesses.

When the pandemic began, it caused China to shut down much of its manufacturing of means of production and articles of consumption. This immediately disrupted production and consumption around the world, which require Chinese-made goods and their realization.

As the pandemic spread globally so did the severity of the economic crisis, which falls on the backs of the people. Workers were laid off and the realization of means of production and articles of consumption were curtailed. Businesses began to lose the means to service their outstanding debts and rent and to buy the capacity to work of their workers, resulting in further layoffs. The big private financial institutions started to lose income from the servicing of outstanding loans and, increasingly, lost possibilities to invest their money, as private lending slowed or became too risky.

The circulation and re-division of already-produced value as money within stock and commodity exchanges was disrupted as traders began to sell their holdings. Since February 19, the market value of shares on the U.S. stock exchanges alone has decreased by $11.5 trillion. Throughout the imperialist system of states, value has come out of traded shares to be held as cash or simply evaporated as prices fell.

All of it shows that to forestall the collapse of the imperialist economy and the possible loss of control of the financial oligarchy over the political and economic affairs of the countries within the imperialist system of states, the ruling elite has unleashed the power of the state to manage the crisis in a way that favours their private interests.

This week's TML Weekly supplement looks into the government's borrowing, who it favours and the consequences.


This article was published in

Volume 50 Number 16 - May 9, 2020

Article Link:
Economic Measures of the Financial Oligarchy and Its State to Preserve Its Power, Control and Private Wealth - K.C. Adams


    

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