COVID-19, the Canadian State, and Global Capitalism

With the current economic downturn, the capitalist media and its pundits would make it seem as though COVID-19, or what is known broadly as the “coronavirus”, is in itself the cause of mass shortages and the general collapse of the global economy. Although this explanation of the current recession being caused by the coronavirus pandemic would appear simple enough, and is partially true, when we take a deeper look into the issue, what we’re dealing with is a direct result of capitalism’s inability to consistently safeguard the literal existence of the proletarian class and humanity at large. This fact was already evident with the abysmal responses to global warming we’ve seen from capitalist states in recent decades. With this in mind, understanding why the economy is currently in shambles during the current pandemic is extremely vital.

During a pandemic, the best way to reduce exposure to the illness is social isolation; in other words, avoiding interaction with others as much as possible. This affects profit significantly as consumerism and the transfer of money for goods is essential to capitalism. It also affects the availability and efficiency of labour for capitalists, and policy containment measures clash with profitability goals for businesses.

As sales drop, the rate of profit expected for that business’ period dramatically shifts; they may just make their costs, may make only some profit, or may lose some money at this time. Most industries have been suffering. As a small exception, drug stores and the pharmaceutical industry have seen a surge in over the counter drugs, first aid supplies, prescription medications, and basic necessities through panic stockpiling. However, past an initial upsurge of sales, these businesses are still affected in other ways, namely, labour.

The availability of labour is affected by the illness itself and the containment of the illness. With containment measures in Canada shutting down schools and daycares, parents have had to take time off work to self-isolate and care for children at home. This affects the amount of available labour. Furthermore, as workers contract illness, whether it is coronavirus or not, the Canadian state is advising anyone with symptoms to self-isolate for at least two weeks until they can be tested, if they will be tested at all. This means workers cannot be replaced fast enough to meet the needs of multiple job sites.

Particularly as we are living under capitalism in a period where labour movements crushed under past anti-worker policies have never recovered, most workers have little support in the workplace. Schedules have become slimmer over time, allowing for higher profit margins, less full-time work, and increased (often impossible) expectations on individual workers. This model backfires during a crisis like coronavirus where illness can result in reduced staff and businesses have to shut down.

Canadian Capitalist Healthcare 

Capitalism is the global economic standard and it is not only retailers that structure their businesses like this – everything in our society is now commodified and falls under capitalist structures, including health and pharmaceuticals. As health care clinics and doctors’ offices in Canada function as capitalist businesses, their goal is to lower costs and generate the most amount of surplus profit. These clinics bill the state for each visit and to generate a profit must ensure all labour and business costs are below what they bill for these health services. At the same time, all industries including healthcare under capitalism are structured to include a division of labour, where workers with the most advanced level of skill in their field are paid at a higher rate than those with less advanced education. However, education under capitalism comes at a fee and seats available for the most advanced education are limited and expensive – making it so that “professionally designated” labourers in Canada like doctors, pharmacists, etc. are purposely limited in number for profit’s sake. Having more workers with an increased level of skill in the workplace wouldn’t harm society and would actually improve the level of service and knowledge available. But under capitalism, where the focus is owners making a profit by underpaying most workers the true value they create, this does not happen – and the division of labour facilitates this.

When technical knowledge is made available to the minimum number of persons possible in order to maintain profit margins, society is placed in a precarious position. Any situation out of the ordinary – like coronavirus – will result in an immediate lack of resources when emergencies call for increased services. As pharmacists, nurses, and doctors contract illness and self-isolate or stay home to watch their children during coronavirus, health care services are reduced during a pandemic where the demand for services is increased.

Now that we understand how Canadian healthcare’s capitalist structure and the division of labour under capitalism weakens the ability of a health care system to prioritize human needs over profit, we can next analyze how the globally privatized pharmaceutical industry lacks the ability to develop long-term solutions.

The Role of Profit in the Spread of COVID-19

Interestingly enough, when taking a look at the past few years, or even looking at the year of 2019 exclusively, many capitalist economists and financial advisors have been expecting a recession or a depression. Capitalist mouthpieces from Forbes to Fortune magazine have been bracing themselves for what some capitalist economists predicted would be worse than the recession of 2008. To be clear, a virus of this sort would have a negative impact on any socio-economic system, but it’s necessary to analyze the particularities of global capitalism in order to understand why the coronavirus pandemic has been inadequately addressed by many governments. The general volatility of the capitalist system, with recessions occurring roughly every decade, is realistically in itself a large part of the panic and unpreparedness in dealing with the societal contradictions COVID-19 has exposed.

As a result of monopoly capitalism, “only a few massive companies retain the ability to develop and produce a vaccine from start to finish, partly because of the expense and the timescales involved and partly because they’ve consolidated the patents on manufacturing processes – a situation analysts openly call an oligopoly.” The process of producing and sustaining effective vaccines is currently a question of profit and competition, rather than a question of simply saving human lives from biological catastrophes.

The question we need to ask is: why should the process of developing vaccines, things created to treat and cure illnesses that negatively impact human beings, proletarians especially, ever be a thing that can be patented and effectively “kept a secret” by capitalist firms for them to privately earn profits?

It is only now that there’s a “demand” to treat or cure COVID-19 that the capitalists are scrambling to develop a vaccine that is projected to be administered roughly in the year of 2021 according to the U.S. National Institutes of Health (NIH) as well as pharmaceutical giants such as Sanofi. Dean Baker, senior economist at the Center for Economic and Policy Research states that “the situation we see today is that many top-notch researchers, in Germany, China, the U.S., and elsewhere, are racing to develop a vaccine that can enter the testing process. The problem with this picture is that they are working in competition, not collaboration. This means that they are not widely sharing information with each other, since they don’t want to give their competitors an edge.”[1]

Another key point to consider is the fact that in 2005, shortly after the SARS epidemic had slowed down, many countries had approved of the World Health Organization’s International Health Standards (IHR).[2] The IHR, in essence, would have given the WHO relative authority in determining global strategies towards solving the various pandemics and epidemics that periodically arise. Although most states have appeared to at the very least adhere to the WHO’s decree that COVID-19 is indeed a pandemic, the methods being used to contain the virus varies drastically. Testing for COVID-19 on a mass scale for example, has been one of the main demands that the WHO has been urging countries to deploy, but this has been done unevenly across the globe. Countries such as South Korea and China have more or less successfully administered mass testing for COVID-19, meanwhile the Canadian state in contrast has so far sluggishly tested those returning from travel, those having contact with other confirmed COVID-19 carriers, health care front line staff, and those with the most severe symptoms, ignoring the reality that merely 14% of COVID-19 cases show signs of severe symptoms. Although the state is seemingly planning to ramp up testing within the coming weeks, the fact that an effective testing strategy wasn’t present from the beginning is beyond worrisome. This is especially the case when the majority of cases where people have tested positively for COVID-19 consist of mild flu-like symptoms or no symptoms at all. In effect, the WHO has no authority to ensure that these methods are adhered to, nor is there any structure set up for penalizing or forcing states that refuse to adequately cooperate with one another in order to contain the disease. This makes it apparent that the world is viscerally fragmented and struggles with major barriers for the coordination between individual capitalist states and their particular political and economic interests.

Canadian Capitalists’ Response to the 2020 COVID-19 Crisis 

Many people view Canada as a progressive country where corporations have more social responsibility and workers have more rights. This may be partially true relative to countries that are exploited by imperialist countries like Canada, the United States, England, etc. However, even within these imperialist countries, the working class is an oppressed class that receives little support from the corporations that exploit it.

As the coronavirus leads to the continued spread of illness globally, as we discussed previously, labour is less available to capitalist corporations to extract surplus.

But to flip the perspective, how does this affect workers? If workers are made to sell their labour as a commodity under capitalism and trade these wages for access to basic necessities (wage slavery), what happens when a pandemic results in workers not being able to work?

With coronavirus spreading fast, in Canada health care resources are scarce for the population on an average day, let alone during a pandemic. Most coronavirus cases in Canada are currently undiagnosed as healthcare hotlines, the state-recommended go-to in situations like these, are recommending self-isolation for 14 days to anyone showing symptoms of illness that could suggest coronavirus infection.

The majority of workplaces are not providing pay to workers who must self-isolate due to this official global pandemic. In fact, the workplaces themselves are mandating that anyone showing symptoms of coronavirus or any illness must self-isolate for 14 days and call their local healthcare hotline. This makes sense – scientifically, we want to “flatten the curve” and prevent as many infections as possible by having those that are infected isolate to keep others safe. However, these Canadian workplaces aren’t willing to take on providing protected pay to workers self-isolating at this time. Although workers dedicate almost all of their adult lives to the profits of capitalist organizations, corporations most often do not take any social responsibility or involvement when it comes to workers. The goal of a corporation under capitalism is to generate the most profit possible and reduce costs, labour being one of their largest. Corporations compete with each other to become monopolies and gather a greater share of the market, so that they can have a higher chance of being successful for longer and keeping their rate of profit high – the rate at which their profit increases over time. The economic system we live in structurally places profit as the highest priority and this is the root cause of most issues under capitalism. For a corporation to be socially responsible their labour costs would increase and under the capitalist model, other corporations would generate more profit and eventually supersede them in gaining a monopoly and gaining larger shares of profit and financial control. This doesn’t mean that the more successful corporations are doing it the right way, it means that capitalism is inherently based on a model where profit is generated for an owning class based on the labour of a working class and that this relationship is continuously obscured under modern-day capitalism.

The existence of the state itself signifies a massive irreconcilable contradiction in society. This contradiction is the conflicting interests of an oppressed class and the oppressors.

To quote Friedrich Engels in The Origin of the Family, Private Property, and the State:

“The state is a product of society at a certain stage of development; the state is the recognition that this society has become entangled in an irresoluble contradiction with itself, that it is divided into irreconcilable antagonisms which it is powerless to escape. But in order that these antagonisms, classes with conflicting economic interests, might not devour each other and society in sterile struggle, a power seemingly standing above society became necessary for the purpose of moderating the conflict, keeping it within the bounds of ‘order.’ And this power, which has arisen out of society but placed itself above it and increasingly alienated itself from it, is the state.”

This does not suggest the state is a viable avenue to reconcile class differences; rather, the state exists to facilitate class rule and to create “order” so that this relationship may continue. Many state bureaucrats and politicians feel as though it is possible to balance capitalism with some reforms to avoid a class war or to avoid building towards a stateless and classless society.

As Lenin wrote in The State and Revolution:

“In the opinion of petty-bourgeois politicians, order means precisely the reconciliation of classes and not the oppression of one class my another’ to moderate the conflict means to reconcile classes and not to deprive the oppressed classes of definite means and methods of struggle for the overthrow of their oppressors.”

Exposing the true relations of workers to owners under capitalism and the state’s role in this explains the global response to coronavirus. Next, we will discuss how the economic effects of COVID-19 have affected the proletarian class in Canada.


The Current Conditions for the Proletariat in Canada

Workers in Canada are facing a lot of uncertainty. As corporations’ profits nosedive while worker illness skyrocket, lay-offs have already begun. For workers who haven’t lost their jobs, many are concerned about the risk of contracting COVID-19 in the workplace and the minimal health & safety provisions in their day-to-day work.

Recent lay-offs in large Canadian companies of workers include 8,900 Fiat Chrysler Automobiles workers, 4,679 Cirque du Soleil workers, 1,373 Halifax Shipyard workers, 470 Sunwing pilots, an unknown number of layoffs at Air Transat, 5,100 Air Canada workers, and unfortunately many more. Service Canada received 500,000 EI unemployment applications in the week of March 20th, around 2.5% of the Canadian population. This is in fact the largest and fastest drop in unemployment in Canadian history; the largest amount of unemployment claims in one month was 499,200 in 1957, and in March 2020, one week’s worth of claims has surpassed that.

Kevin Milligan, an Economics professor at the University of British Columbia, stated to the Globe and Mail “My best guess is that we are very likely to do worse in March, 2020, than the worst month in the 1930s.”[3]

Working class people are experiencing anxiety and worry en masse regarding illness. There are threats of homelessness and joblessness. Housing costs – whether those are rent or a mortgage, car payments, utility bills, phone bills, insurance payments, groceries, and credit/loan payments are looming over the oppressed population’s head even more strongly in a time of economic instability.

Wage slaves are given only part of the value they produce in the workplace, and almost this entire amount is clawed back through payments and bills for basic human necessities afterwards. With a lack of work to receive already meagre wages, many are finding a lack of flexibility among financial institutions even in a pandemic. The “hard core of the proletariat,” the most exploited and oppressed workers at the bottom of the social ladder, will suffer the most during times of economic downturn.

Proletarians who are already struggling with homelessness may struggle with even less shelter space available and encounter food banks with not enough resources for a larger population in need, as the demand for these services increases during recessions. Family shelters are the least common type, while men and women’s shelters tend to dominate. Working class families in times of crises often have to split into different shelters. This is largely a traumatic experience for many and decreases the support families can provide to each other.

The Impact on Indigenous Peoples

The Indigenous populations on Turtle Island are currently incredibly vulnerable to the effects of coronavirus. Many reserves already lack clean, running drinking water, sanitary conditions, and adequate housing. The recommended method to prevent the spread of coronavirus is to frequently wash one’s hands with soap and clean water to eliminate all bacteria. Without clean water readily available, the ability to do this is impeded.

The settler-colonial Canadian government is entirely responsible for the current conditions of reserves and the ongoing genocide of Indigenous peoples. Overcrowded housing spaces function as a catalyst for respiratory spread and the general lack of access to medical care on rural reserves is a large risk factor.

An example of the infrastructure of reserves affecting Indigenous health is during the H1N1 Swine Flu, where Indigenous populations represented 10% of hospitalizations and deaths in Canada – despite only representing 4% of the national population. During this crisis, when Indigenous communities in Manitoba reached out to the Canadian government requesting health care support for medicines, sanitizers, and first aid kits, they were instead delivered body bags.[4]

In response to the current threat of COVID-19 to Indigenous communities, Canadian Indigenous Services Minister Marc Miller stated that the government would assist with bringing additional health workers to Indigenous communities and providing hand sanitizer, PPE, bottled water, and isolation tents for those who have contracted the illness in remote communities with limited clinic space. After facing backlash and criticism, the Department of Indigenous Services clarified later that the tents would be used for screening the coronavirus and not for isolation housing purposes. It is clear that the highest-level bureaucrats in the Canadian state making life-or-death decisions for Indigenous populations are providing solutions that can’t even be considered a Band-Aid. The root causes of instability and poor living conditions on reserves cannot be fixed with water bottles and isolation tents during a pandemic – particularly in the Arctic North where leaving the sick in a tent would equate to leaving them to die.

The minimal solutions provided for Indigenous peoples during the COVID-19 pandemic will come as no shock. Colonization isn’t only a thing of the past as many settlers believe – pipelines threaten to cut through Indigenous territory almost every year like clockwork, Indigenous women are at a much higher risk of trafficking, assault, and violent deaths (with perpetrators including state police services), and Child Services have replaced residential schools by removing Indigenous children from their homes. These institutional forms of violence serve colonialism, which benefits profits for the Canadian settler state.

A colonial state will never support the liberation of an oppressed indigenous population and constant Indigenous oppression in Canada will be the norm as long as they are occupying Indigenous territory. The PCR-RCP supports Indigenous national liberation and the ability of Indigenous nations to self-govern.

The State’s Response

 Many of the welfare-state apparatuses Canada implements during times of crisis come from concessions fought for by proletarian workers in the early to mid 20th century. History has revealed that concessions are not an effective end for the working class as it shifts their focus from liberation to pacification; this has been to the benefit of the national bourgeoisie. Otto von Bismark, the originator of welfare state policy, created it in opposition to communism as developed by Marx and Engels.

Clear examples of this are the options available for workers self-isolating due to coronavirus right now. Canadian workplaces often do not provide pay protection. Employment Insurance (EI) sickness benefits will be what many workers turn to for income support during their mandated self-isolation time. The federal government made a recent change to the regular process of EI sickness benefits, where the first week of sickness wouldn’t be paid and would normally be considered a waiting period. This period has been waived so workers can receive compensation for the two weeks they are in self-isolation. They will not be required to undergo testing and provide documentation as the state’s healthcare systems are overloaded.

 This might sound adequate on a surface level, but upon further investigation, many proletarians won’t be able to benefit from it. For example, let’s start with the fact that EI eligibility requires 420-700 hours worked in the past 52 weeks to ensure eligibility. This means recent graduates and part-time workers may not be eligible. Furthermore, those who are self-employed will not be eligible if they have not opted to pay into the EI program. This includes all “gig economy” workers such as Uber drivers and other app or courier delivery service workers. In fact, any “gig worker” could be affected. The capitalist system has made those employed by these services “independent contractors.” A Stats Canada Study stated that as of 2016, 1.7 million Canadians were employed in the gig economy, representing 8.2% of the workforce.[5] This number is projected to be even larger now in 2020.

Currently EI only compensates 55% of your income, up to a maximum of $573 per week, resulting in a cut of almost half or more of a worker’s income. Also, EI income is taxable which means that though you only receive 55% of your income as a supplement, it will be further taxed provincially and federally before you receive your in-hand amount. Interestingly enough, the EI program originally started as a tripartite agreement that included contributions from three sources: workers, capitalists, and the government. This was reduced to only workers and their employers in 1990. The program once supplemented 75% of a worker’s income but was reduced to 55% in 1994.[6]

On March 18th, 2020, Justin Trudeau announced the government of Canada will be releasing an $82 billion stimulus package in an attempt to revitalize the now dwindling Canadian economy and support the working Canadian people. The $82 billion package is purported to assist both workers and businesses, with a general breakdown of $27 billion towards the working class and $55 billion for the cost of deferring all tax payments until September. The $27 billion announced addresses some of the gaps for workers laid off ineligible for EI: $5 billion will be allocated towards a Workers’ Emergency fund for those ineligible for EI, $10 billion for an Emergency Child Care Benefit for those staying home to take care of someone sick with COVID-19 or children home from school or those under self-quarantine ineligible for EI (up to $450 per week paid out), $1.9 billion for a temporary increase to the Canada Child Benefit (CCB) program, some contributions towards Indigenous communities, women’s shelters, adjustments to retirement fund withdrawals, and $5.5 billion in GST tax credit boosts for low income households.

In reality, the $27 billion serves as a means to maintain the exploitative capitalist system and the funds replacing workers’ incomes, whether it is EI, the Emergency Workers Fund, or the Emergency Child Care Benefit. This pay-out functions as a subsidy for banks and landlords in a time of labour instability.

What will still be starkly resounding for most workers facing layoffs in Canada is that their income will likely go down by about half or more regardless of which support they qualify for. This will send a lot of families into poverty. According to the results of a poll conducted on behalf of the BDO Canada Affordability Index, 53% of workers were living paycheque to paycheque in 2019, while 27% didn’t have enough for their daily needs. These numbers were reported before the mass layoffs and economic turmoil in 2020. If over half of workers in Canada were paycheque to paycheque on what they made previous to having their income cut in half, this majority of the population will no longer be able to meet their needs, in addition to the 27% already not making ends meet.

What Prime Minister Trudeau didn’t address in his speech was the financial bailouts Canada will be providing to banks as a result of loss of profits during the pandemic. Outside of the meagre $27 billion provided to directly support workers during this pandemic, is that $500 billion has been approved to bail out Canadian banks in this time and will be immediate. This will be provided to banks to give them instant finances to continue their operations and to then give that money out as loans to Canadians, and for banks to make a profit off of it. This maintains control for the capitalist class and ensures that they can continue making profit off of the proletariat.

Many people will be enraged to discover that $500 billion went into the hands of corporations during a pandemic rather than into the hands of people who created that value. Realistically, workers create all value, profit, and wealth in society. If the Canadian state mandated workers to be paid their true value at work (the value their employers steal and count as surplus), or distributed a large portion of state funds directly into the hands of the working class, this would be seen pejoratively as “socialist behaviour.” This would go against the interest of the capitalist class. Maintaining working class exploitation is the state’s purpose under capitalism and it works for and with capitalists. The state decides what to do with the wealth we produce, in the same way capitalists do.

The minimal support the state is providing to workers through the Economic Response Plan to COVID-19 (again, at an uneven ratio considering how many capitalists there are to how many workers) ensures that the economy (i.e. a wage labour force for owners to again produce profit) will “bounce back” and their labour supply won’t deplete from death or illness, and that workers won’t rebel against capitalism from extreme conditions. After all, the state understands that small reforms and keeping conditions “just bad enough” is effective to maintain control. It can and will reproduce itself if a revolution does not take place.

In Conclusion

Although what we’re seeing is a complicated and multifaceted catastrophe, it’s important for the working class, especially those in its hard core, to understand that what we’re dealing with is fundamentally capitalism in crisis. The inefficiencies in the health care system, wage slavery, and Indigenous oppression are all rooted in the contradictions of what we believe to be “Canada”: the settler-colonial, imperialist, and capitalist project. These issues had already existed before COVID-19 or coronavirus were words that entered into our vocabulary. Now, these contradictions have become more obvious and clearer for us to see. While the capitalists safeguard themselves and their interests amid coronavirus, the proletarian class has been hung out to dry.

The proletariat is being forced to go to work in fear of not having their basic needs to live and risk exposure to coronavirus in workplaces that do not provide support. Competition between workers for limited resources has sparked panic buying and hoarding as the only means to gain security in an individualistic system. In reality, however, our collective labour and ability to smash the capitalist system is the only true way our class can liberate itself. The PCR-RCP recognizes that we, the proletarian class, are tasked with destroying capitalism, settler-colonialism, and imperialism in order to build a better future. We recognize the necessity of a people’s war and building socialism through revolutionary means.

“The people, and the people alone, are the motive force in the making of world history.”

– Chairman Mao Tse Tsung, 1945

 

Appendix
A full breakdown of Canada’s Economic Response Plan to Covid-19.[7]

Provided here is a detailed breakdown of the $27 billion in direct supports for workers and businesses:
→ $1.9 billion for temporary increases to the Canada Child Benefit (CCB)
→ $5.5 billion for a boost in the GST tax credit for low-income households
→ $50 million towards women’s shelters and sexual assault centres
→ $305 million to address immediate needs within Indigenous communities
→ $10 billion for an Emergency Child Care Benefit for parents staying home and caring for children out of school
→ $5 billion towards an Emergency Support Fund for workers not eligible for EI facing unemployment
→ $3.8 billion towards 10% of salary wage subsidies for 3 months to small businesses for their employees (this seems to be categorized under the worker benefits, though it is still a business grant)
→ Unknown exact amount towards increased flexibility to lenders for deferring mortgages
→ Unknown exact amount towards waiving the mandatory one-week waiting period for EI benefits
→ $190 million towards six month deferral of student loan payments with federal government covering all interest
→ $495 million towards lowered Registered Retirement Income Fund (RRIF) minimum withdrawal amounts
→ $157.5 million for people experiencing homelessness (through Reaching Home)

The breakdown of $55 billion in tax deferrals is simply deferral in any tax payments to the government until September rather than the usual due date in April.

Other supports being provided outside of the $82 billion stimulus package include:

→  $10 billion for the Business Credit Availability Program through banks
$500 billion of credit and liquidity support through financial Crown corporations, Bank of Canada, OSFI, CMHC, and commercial lenders (e.g. Domestic Stability Buffer, Insured Mortgage Purchase Program, Banker’s Acceptance Purchase Facility) 

[1] https://newrepublic.com/article/156979/coronavirus-vaccine-patent-monopoly-reform

[2] https://www.who.int/ihr/publications/9789241580496/en/

[3] https://www.theglobeandmail.com/business/article-canadian-companies-begin-laying-off-thousands-of-employees-in-first/

[4] https://www.cbc.ca/news/canada/manitoba/ottawa-sends-body-bags-to-manitoba-reserves-1.844427

[5] https://www.advisor.ca/news/economic/gig-workers-on-the-rise-statscan/

[6] https://policyoptions.irpp.org/magazines/employment-insurance/a-short-history-of-ei-and-a-look-at-the-road-ahead/

[7] https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html#Economic_Response_Plan