Which Way for Quebec: Green Capitalism or Ecosocialism?

Climate and Capitalism previously published one section of Marc Bonhomme’s speaking notes for a presentation he made to the Association de défense des droits sociaux du Montréal métropolitain on October 13, on “Which Way Out Of the Crisis?” Thanks to Richard Fidler, we now have a translation of his notes for the entire talk.

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A. BACK TO NEOLIBERALISM

This option means going back to pure competition, company against company, country against country.

At the company level, minimizing costs, essentially wages.

• How to sell all this mass production coming from chain production and automation?
  • Go back to workers’ indebtedness to compensate for low wages?
• This means solving the indebtedness problem that caused the crisis through more indebtedness.
  • It is possible to relieve an addicted person for a while by more drugs but at the cost of a worse situation later.
  • It is however the path consistently followed by Canada and Quebec

Minimizing companies’ and wealthy individuals’ taxation, hence decreasing governments’ social spending.

• How to get all this money to save the banks and boost the economy?
  • Borrow from the banks!
• But banks are obsessed by the need to achieve a balanced budget, frightened as they are by the state’s unique capacity, especially the USA as policeman of the world, to repudiate its debt or reduce its debt through inflation.
  • Hence an already lively debate on cutbacks, rate increases (in the name of ecology!), and PPP.
• The small indebtedness of the Chinese economy (and the Canadian government!) allows them to follow, for a while, the path mapped out by the USA. But this leads directly into the wall.

The Economist, the leading magazine of global neoliberal capitalism, advocates a return to the old regime though correcting the phenomenal current account imbalance between the USA and China:

“But instead of relapsing into the global imbalances that prevailed before the crisis, a new modus vivendi is possible: America could offset the inflow of capital from foreign central banks with an outflow of capital of its own. It can borrow ‘short’ from emerging countries, satisfying their demand for safe, liquid securities, even as it invests ‘long’ in riskier but more rewarding assets overseas. … Given that its households are saving again, it will have more capital to provide. … This suggests an alternative to industrial policies in both the rich and the poor world. … Moreover, greater outflows of capital from America would weaken the dollar, allowing America’s trade balance to improve.” (A special report on the world economy. Economist, 3/10/09)

In other words, to solve the crisis of neoliberal capitalism, still more neoliberal capitalism is needed… seasoned with a still more spicy sauce of American imperialism (But I must be mistaken, since its Commander in chief has just received the Nobel prize for peace!) How cynical can you get?

B. THE SWEDISH SOLUTION, OR THE ILLUSION OF INDUSTRIAL CAPITALISM

The Scandinavian model, especially the Swedish one, is only an apparent exception. Its social spending is oriented towards increasing the productivity of labour. Everything else is simply cut back. The Swedish exception was possible only because of an institutionalization of class collaboration in 1938 preceded by an intense class struggle between the two world wars and accompanied by a major accumulation of industrial capital during these wars, especially the second one thanks to a pro-Nazi neutrality followed, in the Cold War era, by a pro-NATO neutrality.

“Following the war, Sweden took advantage of an intact industrial base, social stability and its natural resources to expand its industry to supply the rebuilding of Europe. … Social democrats imposed corporatist policies: favouring big capitalist corporations and big unions…” (Wikipedia)

The Swedish model began to decline in the 1970s, and went into a deep crisis in the early 1990s following a major financial crisis which started in real estate, with drastic consequences on the economy. This crisis led to many privatizations, including a major part of the public transport system and the post office, and also to competition within the healthcare system between public and private hospitals, as well as individual vouchers allowing families to choose private instead of public schools. As Canada became part of NAFTA, Sweden became part of the European Union, both free trade areas. Public spending fell as sharply as it did in Canada, and for the same reasons: an investment strike and capital flight followed by the foreign takeover of many icons of Swedish capital. Today, the decrease in growth of GDP, the unemployment rate and the growth in the public deficit are more or less the same as they are in Canada.

Sweden and Canada are both subordinated imperialist countries within their respective free trade areas, which they joined once they had their backs to the wall. This increases the sensitivity of both countries to the “free” capital movements of a handful of financial and industrial foreign and national transnationals that are relatively less dependant on their respective national markets. However, the smaller size of their national markets allows them, if need be, a quick adjustment of their exchange and interest rates to absorb an abrupt change of capital flows, without an immediate response by the great powers. Monetary policy thus gives more time for budgetary, fiscal and structural adjustment – but requires that the bourgeoisie confront any mass movement in opposition to cutbacks while giving international financial centres guarantees of greater commercial and financial access.

The dead end of the Swedish model poses an underlying question: Is it possible to save the (capitalist) economy against finance? To answer this question, the role of finance must be properly understood and certain distinctions must be made:

• finance which is socially useful: money circulation between manufacturing, trade and consumption.
• finance which is socially uselessbut necessary to capitalism:
  • money circulation towards the most profitable enterprises, industrial sectors and countries. For example, Bell Ò Rogers, automobile Ò telecom, Canada Ò China.
  • In a non-capitalist economy, money will also circulate that way but in response to social needs not profit maximizing.
• finance which is socially destructive but has become necessary for monopoly capitalism: money ends up in an expanding speculative bubble based on indebtedness which makes it possible:
  • to park profits not directly realizeable in production at the average profit rate
  • to provide a pretext for bosses to lower wages (“The company has too much debt”) and for governments to make cutbacks and privatize (“If we do not lower the taxation level or if we incur a deficit Standard & Poor’s will lower our credit rating”)

The reverse is true. Higher profits from lower wages and reduced taxation of corporations and high incomes cannot be invested at the average profit rate for lack of sufficient purchasing power of the proletariat and governments. Profits are then converted into loans to companies (leveraged buy-outs are especially perverse because they transfer to the purchased company the loan used to buy it); to governments (which become even poorer and more politically dependant on capital because of the service of the debt); or to the workers themselves – who also become poorer and more dependant.

Finance is as necessary to capitalism as the sun and rain are to agriculture.

A choice between a “good” capitalism which invests in production and a “bad” financial capitalism that speculates is no choice at all.

C. GREEN OR VIRTUOUS CAPITALISM (THE SWEDISH MODEL REVISITED)

A foretaste: the “green” pricing announced by the Quebec Liberal government:

• doubling electricity rates, supposedly to stop squandering energy.
• highway tolls, supposedly to encourage us to use more public transportation.
• fast food taxation, supposedly to encourage us to eat better food.

These rates and taxes are in fact regressive indirect taxation because they are all the same irrespective of one’s income, notwithstanding that low-income workers spend a higher proportion of their income on consumption, especially of food.

These new so-called “green” taxes are a foretaste of the larger carbon taxes, already existing in Sweden, British Columbia and elsewhere: that is, taxing products and services in proportion to the hydrocarbon content used either directly or indirectly to produce them. Note that the so-called carbon or “pollution rights” market plays exactly the same role but by bypassing the State budget, although state intervention is sorely needed in order to fix quotas and establish legal mechanisms of surveillance and sanction.

This new fiscal pressure on working consumers, especially the most vulnerable, will be compensated by a tax decrease on individual income, profits and capital in the name of the neoliberal dogma of fiscal neutrality, that is, maintaining the taxation pressure at a constant level proportional to GDP.

Capitalism cannot be social and green: it is accumulation without end.

• The law of competition requires each capitalist to lower wages, diminish working conditions and pay less taxes. A non-competing company not maximizing its profits – the issue is not making profits but maximizing them – will disappear.

A monopoly – because of a unique technology, a network hard to match, a natural resource deposit with a very low extraction cost, protection by the State – may for a time isolate itself from the law of competition. But these monopoly profits, in fact a combination of an average profit and of a rent, are made by lowering the average profit of the non-monopolistic companies.

Some companies might be somewhat attracted by ecology because it could reduce their energy bill while others might turn toward ecology to respond to a profitable demand for green products.

• However, competition between capitalists obliges each of them to reinvest profits in order to acquire more efficient machines and tools.
• The more efficient machines and tools are those which mass produce for mass consumption.
• Example: It is possible to produce a less energy consuming car with a better technology… up to a certain limit. But capitalism must produce more and more cars… without limit. Public transportation? It is fine for capitalism, especially for Bombardier… as long as individual cars are not done away with.

For never-ending capital accumulation, there must be a never-ending annual increase in green energy, which will create more and more pollution; too much of a good thing becomes a bad thing – and eventually reaches some limits.

• As for the tar sands, the new shale-extracted natural gas, which lowered the price in North America, requires a lot of energy and water, plus it produces a lot more pollution. (It will not be good news to discover an important deposit in Quebec, as some companies are trying to do.)
• Clean coal, apart from being an energy glutton, replaces air pollution with water pollution. (New York Times, 13/10/09)
• The promising desert solar power stations, which would be needed to provide green electricity on a grand scale for a world fleet of electric cars, require a huge quantity of cooling water. There is no water in deserts and it is very hot.
• Nuclear power stations, already very costly to build and maintain, entail a very high risk of explosion and produce everlasting radioactive waste.
• Wind energy, on a very large scale, is limited by the quantity of good winds and by extremes of temperature (nacelles must be heated when it is very cold, hence less productivity), is instable (it must be combined with another source) and is not only visually polluting but consumes a lot of agricultural and forest space; each windmill needs an access road.

The ecological crisis imposes the urgent need to begin right now to reduce greenhouse gas emissions in the atmosphere in order to attain the 1990 level by 2015 (the Kyoto accord required the imperialist countries to do a lot better but the USA, Canada, Japan and Australia simply did not care).

Priority must be given overwhelmingly to energy conservation and efficiency:

• Example: improved insulation of all buildings to reduce their energy consumption by 50% while remaining comfortable, which is fully possible using existing technology.
• Example: highway construction must be immediately stopped in favour of a gigantic and immediate construction program of subways, railways, street cars and bus routes.

The reduction in the production of energy and cars which would result from these policies runs counter to the accumulation dynamic of capital.

• The first reaction of governments of countries heavily dependant on automobile production (e.g. USA, Germany, Japan, China) was to generously subsidize the purchase of new cars.
• Hydro-Québec plans to produce more and more electricity for export to the USA. This is even a basic component of the Quebec government’s recovery plan. And it is worse in Canada, with the substantial increase in the production from highly polluting tar sands.

D. ECOSOCIALISM

To avert an ecological crisis, the United Nations says, a country like Canada must, by 2020, reduce its greenhouse gas emissions by 40% from their 1990 level, and by 90% by 2050. Quebec’s emissions in 2007 (the latest statistics) were 5% above the 1990 level, and Canada’s 20%.

A turnabout like this must go far beyond changes in individuals’ behaviour, which in any case are quite limited by the social structures. (How can one do without a car when one lives in a suburban bungalow – the only way a family can be adequately housed at a price that is affordable even if the bank has us by the throat and the public transit system is more than deficient?)

• Fundamental changes in the way we live, eat, commute and work require the active collaboration of the proletariat, which can only be achieved if the necessary ecological revolution is not carried out on the backs of the workers as it is under “green capitalism”. And this involves mobilizing the working class through participative democracy.

The ecological revolution, if it is to succeed, must be combined with a revolution in social justice and democracy which in any event is a goal in itself. This combination is called ecosocialism.

The economic crisis makes a large number of workers, equipment, machinery, and buildings available, albeit involuntarily, for major ecological construction projects.

• It was a similar mobilization in time of war that ultimately ended the Depression of the 1930s. Today, neoliberal capitalism tends to do as much in the so-called war against terrorism (which, in fact, is a fight for control of oil supplies). For capitalism, war is the highest expression of the law of competition.
• But couldn’t neoliberal capitalism carry out an equivalent mobilization in order to save the planet, and in the interests of social justice?
  • To ask the question is to answer it, unless you believe in pyromaniac firefighters.
  • Spending more on social justice and ecology runs counter to the law of competition. If a capitalist country redistributes more wealth, spends more for social and ecological programs, and arms itself with harsh environmental and social laws, it will lose its international competitiveness. So we have to think in terms of world government. But that would no longer be capitalism.

The governments’ response to save finance showed that there were tons of money available for requisition.

• The $200 billion the federal government made available to save the banks corresponds to $45 billion for Quebec.
• If the Canadian government had mobilized as much money as the U.S. government did, we would be talking about $800 billion, including $175 billion for Quebec (the latter’s total budget is $66 billion).

Independence would allow this money to be mobilized through the democratically controlled Bank of Quebec, once the banks and other financial institutions situated in Quebec had been expropriated. It would mean that:

• Collective savings could be oriented to green, social investments – which the Caisse de dépôts et de placement cannot do Subject to the law of competition, the Caisse tries to maximize its returns through investments mainly outside Quebec and through speculation.
• The taxation of high incomes, profits and luxury consumption could be substantially increased, while putting an end to tax evasion and the flight to tax havens.
• The price of energy over-consumption could be increased provided that the basic needs were supplied free of charge. Highway tolls could be imposed and individual automobile travel could even be prohibited so long as there was free, frequent and quality public transit. Fast foods, “Twinkie” food and overeating could be heavily taxed, as long as subsidized basic, ecologically sound foods were available in ample amounts and close proximity.

An ecosocialist Quebec is a Quebec of full-time jobs for all, with decent wages and working conditions, and quality, free universal public services and social programs with no wait lists. Poverty could be reduced to zero.

• Labour productivity has increased three-fold since 1945, but labour time has declined by only a third. It ought to be drastically lowered, initially to 35 hours a week without any loss in purchasing power.
  • Workers will have the means, the time and the motivation to be ecological.
  • Job security and appropriate public investments will end the stress that creates the conditions for mass hyper-consumption, excess speed and stupefying entertainment, an anti-ecological lifestyle.

The minimum wage should be set at 50% above the Statistics Canada low-income threshold, at $18 an hour for a single person in a major city based on a 35-hour week; a guaranteed minimum income should be indexed to the StatsCan low-income threshold level (e.g. $1800 per month for a single person in a major city); and expenditures on public services and social insurance programs should be increased immediately by at least $10 billion per year.

A five-year mandatory program of ecological infrastructures costing $100 billion or more, to be completed by 2020.

• Building a free, electric-powered urban public transit system of sufficient scope to relieve everyone of the need to own an automobile.
• Building a national and public intermodal rail and water freight transportation system that is sufficient to eliminate long- and medium-distance trucking.
• Renovating and raising to new standards of energy efficiency all buildings in Quebec, without penalizing the tenants. Building 10,000 social and ecological housing units per year.
• Developing vast public wind generating complexes operating in combination with hydro-power reservoirs in the North and on the Lower North Shore of the St. Lawrence – provided the Cree, Innu and Inuit nations agree and are involved in terms of jobs and revenues.
• Transforming industrial and polluting agriculture into organic agriculture based on family farms and farms in democratically managed forestry cooperatives supported financially by the government.
• Reducing, re-using and recycling all industrial and household wastes by 2020 at the expense of the manufactures and businesses.

Is this realistic?

In the dead of night a lad is searching for a diamond in the grass under a street light. A passerby offers to help him. He replies, “No need to help me. I lost it 100 metres from here.”

Taken aback, the passerby asks “So why are you looking here?”

“Because there is some light.”

That’s the approach of the supporters of green and social capitalism.

Ernesto “Che” Guevara used to say: “Let’s be realists and demand the impossible.” Realist means sufficient to fulfill our social needs, including democracy. Impossible means impossible under capitalism.

At this point, in Quebec, neither the trade unions, nor the national coalitions of students, women, environmentalists or popular movements, etc., or the political parties – not even the Green Party or Québec solidaire – are realists.

Preston Manning, the founder of the reactionary Reform Party, urged the members of his tiny Alberta party, which everyone was laughing at, to “think big”. Today this party, having swallowed the Conservative Party, is the leading party in Canada and may be in the process of replacing the Liberals as the “normal” party of the bourgeoisie.

Let us dare to “think big” … on the left.

We will get there through Estates General of the popular movement to organize a mass-action response that could lead to a general strike;

the major confrontation shaping up for 2010-2011 between the government and the public sector unions is an opportunity.

Toward an ecosocialist independence.