Terrance Heath

Crisis of Capitalism

Filed By Terrance Heath | August 14, 2010 2:00 PM | comments

Filed in: Politics
Tags: capitalism, economic policy, peter harvey

I don't have much to add to this (yet), but I agree with Paul that it's too good not to share.


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Thanks. I really enjoyed that video. Many decades ago Einstein pointed out that capitalism does and excellent job of creating production but fails to provide balanced distribution. He stated that he was a physicist and was not claiming to be an economist but simply observing that concentration of wealth distorts the allocation of resources and ultimately causes economic turbulence.

Another deathly long term effect is the dependence on increases in population to feed economic growth. That, of course, leads to the Malthusian scarcity dilemma. Aww but babies are so cute and precious and most people enjoy sex. Why worry about 7 billion mouths to feed. In 1950 we only had 2 billion. Surely we can find a way to provide clean air and water for say 21 billion. We'll just have to stack them vertically so we still have some acreage to til and a few parks to visit.

Okay, not to bleat the horn of my home and native land, but there's a reason Canada has weathered the financial crisis as well as it has. It wasnt just Canadian regulation of the banking industry, which is arguably the best on the planet, considering that no Canadian bank came even close to failing. It has more to do with the Canadian way of looking at its population -- national health, care for the elderly, a whole social construct that does indeed put the power for things back into the hands of the people, and not the industries. Corporations are not "persons" up here: the whole concept would be laughed out of court -- and at the same time, labour doesnt get a completely free ride either: it has a responsibility not only to its membership but to the people who purchase the goods or services, and it respects that.

Top be frighteningly blunt, the world could learn a lot from us Canucks. Capitalism is encouraged, but so is socialism -- the two work *together* to prevent the kind of nonsense you saw elswhere in the world last year.

VĂ©ronique | August 14, 2010 7:24 PM

As a Canadian citizen by choice, I have to give this one a big "thumbs up."

(But Sean, a certain prime minister and his cronies are trying to undercut our advantages!)

Bill Perdue Bill Perdue | August 15, 2010 1:55 PM


The video is enlightening but I think you missed the point entirely. Marxists are right about the contradictions of capitalism. Capitalism is encouraged in Canada by politicians on the corporate dole just as it is in the US. In the end it'll fail in both countries. The only question is how soon.

Canada, Sweden and other nations do have undeniably better reformist regulatory policies. Canada does have a flawed and tightfisted health care system. But neither will stop capitalists, particularly multinational capitalists, from creating the conditions for economic collapse in Canada.

In all other respects Canada is not a socialist country by any stretch of the imagination. Reforms like those in Canada tweak the system, put band aids on suppurating economic sores but don't solve problems. They just prolong the agony of victims of end stage capitalism.

>> "Canada does have a flawed and tightfisted health care system"

Having experience both the Canadian and US models, I seriously beg to differ. I can give you a dozen cases (one from myself, as a matter of fact) that would belie the idea that Canadian healthcare is "tightfisted". Sorry, Bill, you're gonna have to back that one up.

Bill Perdue Bill Perdue | August 16, 2010 10:58 AM

Canada's single payer system is far better than the US system but it's not as comprehensive as socialized medical systems such as the one in Cuba.

There are differences province to province but many of the following costs are poorly covered or not covered: prescription meds, dental, eye-car, physical therapy, long-term care, dental care and ambulance services. That's stingy.

Thats also especially true for native peoples, whose health care reflects their overall situation due to the effects of racism. http://www.cmaj.ca/news/28_08_02.dtl

Canada has a life expectancy of 80.7 years and the government pays just under 70% of all health costs, spending about far less, 60%, than the costs of care in the US. (The difference is made in overcharges by US insurance companies, which are going to escalate enormously with Obama's healthcare giveaway.) US life expectancy is 78.1 years and various government agencies pay only about 45% of health care costs.

(I buy my expensive drugs from Canadian Pharmacies approved by the Board of Pharmacy in my state because they cost approximately 1/7 of the price my insurance charges. The total I pay is less than the deductable I'd pay.)

My main point was a refutation of the idea that Canada is in any way a socialist country. It's a late stage capitalist country ruled by multinationals that happily participate as junior partners in the US wars for resources hegemony like the one in Afghanistan.

Canadians need socialism as badly as Americans and Mexicans.

I read an interesting article today on the expansion of income inequality and the author basically lumped Australia, the UK, the US, and Canada all into the same category together for the fact that they've all let their financial sector get too much power... Here it is:

http://blogs.wsj.com/wealth/2007/01/08/plutonomics/

It's worth a read. Robert Frank generally knows what he's talking about.

In this case, he missed the boat. Canada's banks are the most regulated in the world, which is why it got through the recession/depression/economic downturn relatively unscathed. I cant speak for Australia, but to presume that the financial sectors of the US and Canada share much of anything beyond basic banking economics is laughable.

There are five major banks in Canada, and while they do pull down good profits each year, they also display a solid sense of responsibility towards their customers, shareholders, and the national economy in general, something you dont see in the US. Derivatives are illegal up north. Mortgages are written, by law, in the clearest language possible, and the lendee must also demonstrate sufficient fiscal responsibility if he's thinking about home ownership. Service fees are not raised so that the banks can get around financial reform legislation: the banks have to demonstrate *need* to federal and provincial regulators -- and given their current level of profitability, that need is pretty hard to prove... which is probably why the interest rate on my Royal Bank VISA card hasnt gone up more than a single percentage point since I got the card over a decade ago.

But the biggest difference I can cite between US and Canadian banks? I had a RRSP, a retirement account, that's tied to the stock market. When the market started to crash, I got a phone call that night from a Royal Bank rep, asking me if, given the uncertainty, I would prefer to move it into what's called a GIC account. It's less profit for them to do it that way, but they made the recommendation as something best for their customer. As a result, any losses I may have endured in that initial period have now been balanced out. Tell me *any* bank in the US that would do that.

I'm sorry, but I think this columnist lumped a bunch of English-speaking countries together because of convenience, not out of any solidly defined research into their various economic systems.

Sean, as a fellow Canadian I must, respectfully, disagree with you. There have been many academic/media investigative reports released on the financial crisis in Canada, and nearly all of them have the same conclusion; We Were Lucky.

If the crisis had happened just 2 to 3 years later we would have been affected just as badly, if not worse, than many others have.

One of the goals of the current federal government in Canada is to harmonize our laws and regulations with that of the neo-conservatives in the United States, but as they don't have a majority in parliament this has been slowed considerably. Not stopped, only slowed. This delay is what saved us.

Many of the regulations on our banks had been loosened in the years preceding the crisis. In 2004-5 our bank's exposure to toxic American assets was near zero. In 2006-7 they poured billions into buying toxic ABCP and derivitives in the U.S. resulting in huge losses for out banks, much of which has not put on the books yet. If this had continued we would have been in very deep indeed. All thanks to loosened restrictions on our banks.

Also, in Canada nearly all home mortgages are insured/guaranteed by the Canadian Home Mortgage Corporation (CMHC) run by the federal government at very little cost to the banks or their customers. To qualify, mortgages must follow regulations which had also been loosened in the years leading up to the crisis. Many believe this has yet to play out fully and will hurt us in the future.

The truth is, the only reason we weren't hit as hard was because our program of deregulation was lagging behind most of the others, in large part due to our divided parliament.

We were lucky.

Very interesting--thanks Terrance!

Bill Perdue Bill Perdue | August 15, 2010 1:36 PM

Thanks, Terrance.

I have a question for you. The Democrats and Republicans are a capitalist party that has two guises. They're owned lock stock and barrel by the looter classes and do what they're told to do by the rich.

Do you advocate that people vote for Democrats and their Republican brothercousins?

David Harvey is one of my favorite writers. Thanks for the video.

I can't wait to show this to my class in the Fall. I'm teaching Gender Work & Family, and this will fit right in.

I love these ink drawings that run with the speeches. They really run the gamut of topics, but they're all incredibly fascinating.