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By EMIL BUARNASON

The Canadian economy, at the mo-
Ment, is ina perilous condition. We have
a high rate of inflation, extraordinarily
high rates of interest, and the highest rate
of unemployment since the great de- .
Pression of the thirties.

_ The government, with some justifica-
tion, blames the condition of the Cana-
dian economy on the policies of the Uni-
ted States. In particular, it is alleged that
the rate of interest in Canada has to be
higher than that of the United States in
Order to assure that the flow of capital
between the two countries will be such as
to keep the Canadian balance of pay-
Ments in a state of equilibrium.

A more productive way of gaining con-

_ trolover the interest rate in Canada would

be to institute foreign exchange controls.

This could have the effect of preventing

the immense flow of funds out of the

Country, thereby placing us less at the
Mercy of U.S. interest rates.

Theory not Support

In some quarters it is argued that
Canada should not try to use interest
Tates to maintain the balance of pay-
Ments, and that the way to avoid this is to
let the Canadian dollar depreciate.
According to this theory, a cheap Cana-
dian dollar would promote our exports
and earn enough dollars from the export
Market to keep the international pay-
Ments in. balance. Moreover, according
to the theory, this would increase em-
ployment in the. export industries and
also, by enabling Canada to reduce in-
terest rates, promote investment in
Canadian industry.

St eee o

Backgrounder

Unfortunately, economic history does
not support such a view.

In 1978, the value of the Canadian dol-
lar, in terms of U.S. dollars, was allowed
to drop by approximately 10%. True
enough, that year our exports increased
by 10% in volume and 18% in value. This
meant that for each unit of exports, we
were getting back a much smaller return
in imported goods. The balance of trade
improved by $645-million, but this was
more than cancelled out by a $750-mil-
lion increase in the interest payments we
were compelled to make, since each mil-
lion dollars in interest payments to the
U.S. now cost us $100,000 more. More-
over, all other ‘‘invisible’’ items, such as
tourist expenditures, freight charges,
royalties, etc., cost more, with the result
that the balance of payments was more
than $1-billion worse, in spite of the
favorable balance of trade. This had the
effect of increasing our external debt and
compounding the problem of meeting fu-
ture interest payments.

In both 1978 and 1979, with successive
reductions in the value of the dollar,
‘Canada’s external debt increased by ap-
proximately $5-billion each year. In
1980, with the dollar remaining relatively
stable, the increase in debt dropped to
$2-billions, but in 1981, with the dollar
dropping further to as low as 81 cents, the
external debt increased by about $8+bil-
lions.

At Mercy of USA

Thus while devaluation does have
at least some temporary beneficial effect

on the trade position, it puts Us further in

Dollar devaluation hits workers hardest

NO DEAR.. ITS NOT A POSTAGE STAMP... TS A $10 BILL
YOUR FATHER HID AWAY TWO YEARS AGO!

/

$

debt to the United States and compounds
the difficulty of maintaining a favorable
balance of payments. By the same test it
also makes us still more at the mercy of
U.S. interest rates.

From the point of view of the working
class, the effects of devaluation are even
worse. In addition to other inflationary
factors, the fall in the exchange rate of
the dollar from parity to 81 cents has
added about 25% to the cost of all im-
ported goods, and therefore accelerated
the increase in the cost of living.

It may be that the successive devalua-

tions have created some temporary jobs
in the export industries, but if we look at
the end result, they have only compli-
cated the problems of the economy.

There are no magic solutions to the
economic difficulties with which the
western world is faced. The most critical
cause of these difficulties lies in the out-
rageously high military spending, both of
Canada and of the other western coun-
tries, particularly the United States, and
until a sensible disarmament program is
arrived at, other solutions are not going
to work.

The aim of the Communist Party is the
€stablishment of a socialist society in
Canada. The party’s program ‘‘The
Road to Socialism in Canada”’ envisages
the struggle for socialism in our country
developing in two stages. The first being
the democratic anti-monopoly,  anti-
Imperialist stage, and the second being
the socialist revolution. The party’s pro-
Sram sees these two stages as being inter-

The aims of the first stage cannot be fully
Tealized without taking the next step —
Social public ownership of the means of
Social production and distribution.

The first stage in the socialist trans-
formation of Canadian society will bring
Into being a new political alliance, a
democratic anti-monopoly, anti-
imperialist alliance and a new govern-

Ocratic alliance will, in the first place, be

uilt around the working class as the
Most stable and politically advanced
force, and include the national and dem-
Ocratic forces, the farmers, the middle
Strata, the non-monopolist capitalists, all
those affected by the anti-people policies
of monopoly.

a

This political alliance will include the

Ommunist Party and the New Dem-
Ocratic Party (or sections of that party),
the trade unions, farm organizations,
Women, youth and student organ-
lations, associations of intellectuals and
Professionals, and co-operatives. This
New political alliance will be the basis of
ae power held by the democrat-

Connected. One complements the other. .

Ment based on that alliance. The dem-.

ic anti-monopoly government. A

government which will have the task of ©
' tion of man by man.

carrying through far-reaching social nad
economic reforms. The heart of such re-
forms will be the replacing of monopoly
property by public social property.

The democratic anti-monopoly
government will not be a_ socialist
government, although it will carry
through reforms of a socialist anture. It
will not aim to nationalize the property of
the capitalist class as a whole, only the
property of the monopolies in Canada
whether they be Canadian, U.S. or other
foreign-owned corporations. The new
political alliance will have the task of

elaborating and carrying through a’

comprehensive long-range program of
economic and social development, in-
cluding measures to achieve full
-employment and steadily rising living
and social standards.

* * *

The fulfillment of the foregoing demo-

cratic objectives will open the door to the
second stage of the socialist trans-
formation, namely the transition to build-
ing a complete socialist society. This will
mean the abolition of capitalism, public

Marxism-Leninism Today
Alfred Dewhurst

ownership of the means of production
and distribution, and the end of exploita-

The struggle to build a democratic
‘anti-monopoly, anti-imperialist coali-
tion, and a government based on such a
power base, is an indispensable part of
the struggle for socialism in Canada. It
creates the best conditions for a rela-
‘tively peaceful transition to socialism,
extending democracy, defending and
consolidating Canadian independence, a
united Canada based on the voluntary,
equal partnership of the two nations ina
bi-national, sovereign and democratic
state. It will make possible the utilization
of parliament and its authority in the ad-
vance to socialism and the building of the
new society.
RE NE ok

A peaceful transition to socialism has
great advantages for the working class
and its democratic allies. It will make it
possible to bring about the socialist
transformation with the least possible
‘losses on the part of the working people,
the minimal destruction of the pro-
duction forces of society, ofinterruptions
of the production process. It makes it

Canada’s future — the socialist alternative (8)

possible for the working class to take
over the production machine from the
capitalists almost intact, and after the
necessary reorganization to immediately
put it into operation under its new public
ownership.

Only a relatively short period may be
required to move over from a democrat-
ic, anti-monopoly government to a state
which will undertake the tasks of build-
ing a socialist society. The struggle to
carry through the tasks of the. anti-
monopoly stage is also a struggle for the
extension of democracy, free from
capitalist-imposed restrictions and limit-
ations. This, too, is an indispensable part
of the struggle for socialism.

* * *

The democratic anti-monopoly
government will inevitably face fierce re-
sistance and sabotage from the
monopolies, their political forces and
parties, as well as from their henchmen
deeply entrenched in the present capital-
ist state machine. All these reactionary
forces will do all in their power to bring
about the collapse and overthrow of the
people’s government to maintain
monopoly power and privilege. To main-
tain its rule, the people’s government
must take whatever action necessary to
defend the gains of the working people.

Everything depends on the ability to
forge and consolidate the democratic,
anti-monopoly coalition built around a
united working class, guided by the sci-
ence of Marxism-Leninism and their
Marxist-Leninist party.

Conclusion.

PACIFIC TRIBUNE—JUNE 25, 1982—Page 5