Emil Bjarnason Is an economist at the Trade Union
Research Bureau in Vancouver. In the first and second of
this three:part series he discussed monetarist theories,
the relationship of high interest rates, inflation and spend-
Ing. This is Part Ill.

: Analysis
Arps eA

Because many economists recognize the fallacy of the
Monetarist position, and in particular recognize that if

| tight money did succeed in curing inflation it would be at
_ the cost of high unemployment and low production, they

tend to look for other solutions. Many favor an.
‘incomes policy”, holding that if people are restrained

from seeking higher incomes, prices will cease to rise. -

Unfortunately, experience does not bear out that
theory either. The classic case is Canada’s experience

with the Anti-Inflation Act of 1975 to 1978. Under that

Act, wages were prevented from rising to compensate
for the high cost of living. However, instead of moderat-
ing inflation, the Act merely had the effect of transferring _
income from the working class to their employers, and

Profits rose steeply.

The fiscalist solutionis simply a means of transferring
the burden of inflation from the propertied class to the
working class.

Interest rates will not come down until inflation is
brought under control. And that will not happen until
governments begin to recognize and deal with the real
causes of inflation. x

Production Distorted

The central fact underlying inflation is the cost of the
arms race. The fact that governments are spending
something in the area of half a trillion dollars a year on

U.S. MILITARY EXPENDITURES

130.4

1950 1955 1960 1965 1970 1975 1980

Thecentral fact underlying inflation is the cost of the arms
race. Graph shows the escalation in spending on arms in
the U.S. up to 1980. Under the Reagan administration
another $40-billion will go to the military this year. Canada
as a junior partner in NATO has earmarked $5-billion

annually for arms.

armaments ($500,000,000,000) simply means that
production to that amount is being withdrawn from the
market, and capital and labor are being withheld from
productive uses. Furthermore, all of the capitalist pow-
ers have developed a high degree of monopolization of

Interest rates —something can be done

the economy. By and large the big monopolies are all
engaged partly in civilian production and partly in arms
production, and find it easy to use that fact to obtain
subsidies, real or disguised from government, and also to
pass on wasteful costs and high profits in the prices of
their products.:

The anomaly, if not actually hypocrisy of the mone-
tarists, is clearly exposed by the fact that the very same
governments that are trying to cure inflation by holding
down government expenditures (mainly on welfare
benefits) and by reducing the money supply, are the
same ones that are forcing the pace in increasing the
arms burden.

In short, inflation and high interest rates are the cost of
the military-industrial state-monopoly economy. They
will not be cured without fundamental social changes.

What Can Be Done?

Could the Trudeau government do anything about the
high rates of interest?

Within the present set-up, they cannot cure the situa-
tion, but there are a number of things they can do to
ameliorate it.

‘6 By adopting foreign exchange controls, they could
lessen the balance of payments deficit and lessen our
dependence on the U.S. This would tend to reduce the
extent to which Reagan’s high interest policies are au-
tomatically reflected here.

e Apart from that it would be possible to protect
Canadians against the effects of inflation by further
indexing of incomes.

e By opting out of the arms race, we could put the
Canadian economy on the road of high productivity

again. :

‘e And finally, Canadians could be relieved of some of |
the burden of high interest rates by a comprehensive
program of public housing and of low interest mortgages
for individual private housing.

But all of that implies a government that is dedicated to
the interest of the common people. It does not seem to be
in the cards.

Humanism and the crisis of living

Last week we wrote about the calcu-
lated deceit of the banking fraternity as
expressed in a full-page advertisement
inserted by the Bank of Montreal. The
BM’s ad while shedding crocodile tears
Over the plight of those caught in the
gigantic squeeze play of double-digit in-
flation and scandalously high interest
Tates,.was but a cover-up for the anti-
human policies being pursued by

-Monopoly and government to push down throughout all past ages people have

Alfred Dewhurst

\

Marxism-Leninism Today |

humiliated, an enslaved, an abandoned,

The elementary conditions of material
security are that everyone should have a
roof over his head at an affordable rent or
payment, the certainty of being needed,
and a place in society that he is able to fill.
In the broad sense, the term material
security means much more, namely, the
creation of such conditions that every
individual is able to develop his aptitudes
and abilities in all directions, benefit from
the cultural heritage of mankind and

living standards..
: * * *

_ Today, Canadians are being caught up
in a crisis of living that, unless checked by
the concerted efforts of workers, far-
Mers, small and not-so-small businesses,
will drastically alter the living and social
Standards which have been won over
Past years. This is a calculated policy of

_ the ruling monopoly elite. It is a policy of

putting monopoly profits before peoples’

heeds and aspirations. ;

Without.doubt, what is at stake in to-
day’s struggles against the inhuman
Policies and practices of the giant bank-
ing, industrial and marketing monopolies

» is the winning of humanist standards of

life and social behavior. Humanism in
the work place, in the market place, in
80Vernment and in society as a whole.

We KE

The ideas of humanism are not new.
They have been part of the history of
Mankind ever since man began to think
of himself and the reason for his being.
Great thinkers of the past proved and

struggled to implement humanist ideas.
One of the foremost issues of our time

-is the question of the possibility to give a

truly humanist character to our exis-
tence. This includes man’s capacity for
education and development, the free
exercise and unfolding of: his creative
powers, the dignity of the person, the

_ value of the individual: and his individ-

uality in collective society. Included also
in this concept is the higher development
of society and the free development of
man in a higher society. However old
these ideas of humanism may be, never
before have they moved so many people
as in our time. And never before were the

ideas of humanism for millions of people —

areality. We refer to those millions who

* * *

live in a socialist society.
4

Socialist humanism is connected with
all humanist aspirations and ideas of the
past. Socialist humanism is not content
with the abstract idea of the free man but
strives for social and economic progress
that leads to a real humanism; of putting
an end to those conditions, in which in
the words of Karl Marx, ‘‘man 1s:a

a wretched being’’. The aim of socialist
humanism concists in creating such eco-

nomic and social conditions as will ena- ©

ble the individual to freely develop in his
work and in all other forms of his
activity.

The humanist essense of socialism
demands that every step along the road
to the building of a new society must be
aimed at creating and constantly improv-
ing the necessary conditions for the
material security of all members of socie-
ty. Material security is indivisible. It

_either exists for all members of society or

it does not exist at all.
* * *

In Canada the fear of unemployment
hangs constantly over the heads of work-
ing people. Neither UIC nor welfare can

alter the fact that in a society that is-un-
able to secure the elementary human

right to work, there can be no talk of
material security. Yet this is one of the
basic problems of humanism in our time.
Real humanism demands a society which
guarantees all its members against mate-
rial want and hunger and provides mate-.
rial security in sickness and old age. -

freely develop his personality.
* * *

A living example of fulfilling the basic
right is the right to a job. The Soviet
Union rid itself of unemployment once
and for all SO years ago. Up to that time
unemployment existed on a large scale in
pre-revolutionary Russia and during the
first 15 years of Soviet (socialist)
government. In 1913 old Russia attained
its economic peak ranking fifth in the
world, lagging 50-100 years behind the
USA, Britain, France and Germany.

At the end of the 1920s surplus man-
power in the countryside was estimated
at 8-9 million. Every year one million
persons came to the cities in search of
subsistence. The workers’ state had to
solve a whole complex of economic and
social problems before every person
could have a job. However by 1931 the
last labor employment office closed
down in the USSR and unemployment
was completely eliminated. Today the
Soviet constitution guarantegs the right
to a job as well as the right to choose
one’s trade and profession. This could
only happen in a socialist society.

SSS the ideas of humanism, and

PACIFIC TRIBUNE—JUNE 26, 1981 —Page 5