_ CANADA

Market dive highlights free trade peril

By MARK SYDNEY

The upheavals that have shaken
the stock market over the past
week show just how dangerous it
will be to tie Canada permanently
and exclusively to a desperately
Struggling and fragile American
economy via a free trade agree-
ment.

The market fluctuations also
highlight the perils of privatization
Schemes that the federal and pro-
Vincial Tory and Social Credit
governments are trying to foist
upon the Canadian people.

Most knowledgeable observers
agree that the Wall Street quake
was the first real preliminary indi-
Cation of an impending serious

gloomy picture for American and
Canadian TV audiences. ‘““Every
objective indication’’, he said,
‘‘points to the most serious eco-
nomic recession in the past 50
years hitting the United States
somewhere in the next six to 18
months’’.

While the danger signals are
such that even bourgeois econ-
omists are alarmed, progressive
and labour experts are equally
worried. Contacted in Van-
couver, Emil Bjarnason of the
Trade Union Research Bureau
told the Tribune that while he is
‘not about to predict a 1930's
style depression, the possibility is
still there’. He worried that in-

‘Options to deal with the crisis, like beating
up the working class, or imposing |
right-wing economic solutions, are fast
exhausting themselves.

Tecession in the United States, and
Possibly in Canada. As one
Investment counsellor told the U.S.
Financial News Network on Oct.
20: “If an ordinary family starting
Out initially with a house and cat
had administered its budget like
the Reagan administration — re-
duced its income, increased its
non-productive (ie, military) spend-
ing, and doubled its deficit over the
Past six years — it would have by
now lost everything and be out on
the street.”

The former U.S. Secretary of
the Treasury William Simons —
who is said to have personally
Made over $200-million dabbling
On Wall Street since leaving
government — painted an equally

ae

dustry might probably be frig-
thened into cutting back on
investment, while scared con-
sumers could cut back on spend-
ing. “‘This could well trigger off a
serious recession,’’ said Bjarna-
son. |

He said the October 20 crash
represented a necessary and in-
evitable correction of greatly
inflated stock prices, in which the
market boom had risen to ridicul-
ous levels. ‘“What goes up must
come down’’, said Bjarnason.
‘Something was bound to happen
sooner or later’’.

The Vancouver economist
cited the mismanagement of the
American economy by the
Reagan administration as_ the

- Photomontage: “The
Bear Facts’’ — Brian
Davis

=

underlying cause of the crash.
“Because of the depth of the
fall’’, he said, ‘‘it’s a harbinger of
at least a recession, and perhaps
even a depression. It’s anyone’s
guess at the moment whether the
American economy can stabilize,
because a lot of damage has al-
ready been done.

“*Many have already lost all or
a good part of their savings. Some
financial institutions are in trou-
ble, and may fall by the wayside.
Some pension funds and plans
have been severely depleted be-
cause people and institutions put
their reserves into equities and
not safer securities. It’s not a
pretty picture’, said Bjarnason.

CAW reasearch director Sam
Gindin said that he was not sur-
prised by the market tremours.
“The so-called boom was sus-
tained out of all proportion’’, he
told the Tribune. ‘‘However,
there are restraints on the ability
of the market — or of capitalism
itself — to respond to the crisis.

‘Capitalism, and especially
American capitalism, has always
had a certain amount of flexibility

- so that it could do what it really

wanted. However, many of those
options to deal with crisis, like
beating up on the working class,
or imposing right-wing economic
solutions, are fast exhausting
themselves. Capitalism can no
longer restructure at will, because
of increasing global concentration
and monopolization’’, said Gin-
din.

Provided the market doesn’t,

collapse altogether, and a genuine
depression like that of the 1930s is
avoided, CAW members won't
have to worry about their pen-
sions. ‘‘We’ ve negotiated benefits
with the employers, not how it
gets them,”’ he said.

**The auto companies are in an
excellent position; with the stock
boom over the past years they’ ve
reaped a real windfall from their
contribution to pension funds; we
know what the surplus has been,
and have negotiated further.and
better pension benefits according-
ly. This stock market problem
will simply bring the companies
back down to earth — the windfall
has gone.

“The main danger is not seeing
pension benefits wiped out,”’ said
Gindin. ‘‘It’s the threat of a major
depression which could cause the
economy — and our industry —
to grind to a standstill. And that’s
well within the range of possibil-
ity.”’

Although opinion is divided be-
tween those experts crying
gloom, doom and depression and
those poch-poohing the whole
volatile week of October 20 as
“technical correction of an un-
duly high market,’’ a common
feature runs through both analy-
ses: the lack of any real solution
that bourgeois theory on
management can find to ward off
an economic crisis that virtually
everyone agrees is coming.

One possible answer, certain to
delight Canada’s Tory politicians
and business leaders, was.
suggested on the Oct. 20 Joxr-
nal by a prominent Montreal in-
past five years, he said with a
straight face, Canadian working
people have been living, relative
to the rest of the world, ‘“‘beyond
their means.”’ The weakening of
the stock market, he advised,

‘*should tell Canadians that they
finally have to lower their living
standards and expectations so
Canada can compete on the same
terms with the rest of the world.”

No doubt he sees South Ko-
rean wages and working condi-
tions as furnishing the model
Canada would do well to emulate
in order to compete ‘‘on even
terms’’.

What happened on London’s
-stock exchange October 21
should convince Canadians that
privatization is a ticket to eco-
nomic. disaster. Margaret
Thatcher and her Tories had con-
vinced millions of ordinary
British working people over the
past five years to invest heavily in
companies like British Telecom,
British Airways, British Gas,
British Petroleum, National Sav-
ings Bank, etc., that her govern-
ment had ‘‘denationalized’’. They
would then own “‘a little piece of
England’’, she told them, that
would pay handsome and infinite
dividends.

On October 21, that ‘“‘little
piece of England”’ lost 22 per cent
of its value when the London ex-
change tumbled. In the event of a
serious economic collapse — not
improbable. given the current
woeful state of the British and
world capitalist economy — mil-
lions of working people in Eng-
land could see their accumulated
savings worth little more than the
paper their share certificates in
the denationalized industries
were printed on. Canadians
should take careful note.

Crash emphasizes need
for people’s movement

TORONTO — “‘The question now being asked by most people
about the stock market crash is: Is this another 1929?°’, said
Communist Party leader William Kashtan when contacted by the
Tribune, Oct. 20, following the Oct. 19 stock market crash.

‘*The so-called experts say no, expressing the view that built-in

safeguards prevent another 1929. But apart from whether this
indeed is another 1929, it is illusory to think that capitalism is
crisis-proof,’’ Kashtan said. ‘‘As long as there is capitalism, it
will be faced with the prospects of crises.

‘‘Another view being spread around is that the stock market
crash will not affect the economy. This may sometimes be so but
in this instance the depth of the crisis and its world-wide capitalist
scale are bound to affect the economy.”’ Kashtan said that Fi-
nance Minister Wilson is ‘‘trying to fool the public when he says
otherwise. :

‘Most of the ‘experts’, in dealing with the stock market crash,
divert public opinion from its immediate and principal causes,”
Kashtan continued. ‘“‘The super armament drive of the Reagan
Administration brought about a budget deficit and a trade deficit,
and helped trigger the stock market crash which may lead to
recession or worse. Until the U.S. policy of escalating the arms
race is changed, the capitalist world will be dangling over an
economic precipice.

**An arms drive brings no prosperity to the people. Instead of
economic boycotts and military adventures, U.S. imperialism
should open up a new chapter of relationship with the Soviet
Union, the socialist countries and the newly independent coun-
tries.

‘‘The trillion dollars that were wiped out in the USA, the
billions lost in Canada, Great Britain, Australia, Japan, indeed in
all capitalist countries, could have been put to good use to build
homes, raise living standards, create jobs, assist the third world
countries.

‘*Finally, the stock market crash shows how dangerous it is for
Canada to tie itself to a falling star via free trade, in this case U.S.
imperialism. Apart from any other measures Canada should take
to protect itself against another 1929, one necessary measure is to
tear up the free trade agreement with the USA.

‘‘The economic effects of the stock market crash emphasize
the need for the working class and people’s democratic move-
ments to advance an alternative to free trade with the USA — an
independent Canadian economic policy.”

PACIFIC TRIBUNE, OCTOBER 28, 1987 e 5