Many Canadians with high debt loads fear the potential impact of interest rate hikes. Given some strange factors in the economy, it’s difficult to predict when the next hike might come.
This is a pretty bizarre story. Pettis reports that Stephen Poloz, the Bank of Canada chief, says his usual models for figuring out what’s going on in the Canadian economy aren’t doing the job anymore. The economy, he argues, is behaving strangely.
Well, I don’t think ‘the economy’ is behaving strangely at all. In fact there is no such thing as the self-contained ‘Canadian Economy’ any more that there is such a thing as exclusive Canadian weather. The problem Poloz is having is that his models have never worked and will not work in the future either. His models are based on the country, Canada, as the basic unit of analysis when in fact, global finance capital should be considered the basic unit of analysis.
Not all of them, but most countries are beholden to global finance capital. Veblen would call politicians and the likes of Stephen Poloz “Guardians of the Vested Interests”. There is very little left of national sovereignty. Harold Innis argued in the late 1940s that Canada only had sovereignty for about 6 months in 1926 when the British and American empires were almost equally influential north of the 49th parallel. Since then it’s been downhill.
More important, the shift to globally based production makes a mockery out of the notion of ‘Canadian’ manufacturing. Corporations based in the West have transformed Chinese society (and many others in the so-called Third World) by moving most of their productive capacity there. The Chinese have gotten jobs, certainly, but also killer pollution. We, in fact, have exported jobs and pollution. We should be proud of ourselves. Of course, it could be no other way and we, as ordinary citizens, are not to blame. It’s almost impossible to figure out what’s really going on out there but we get the odd hint now and again from the mainstream media, although they are focussed on scandal and misbehaviour like tax evasion rather than on the real story.
The course of history is pretty much fixed: globalization has been in the works for centuries and will end with the complete integration of the globe’s economic power. It’s getting to the point where national governments are becoming a major fetter to the process of the expansion of finance capital and will be soon in a position where they won’t even be able to pretend that they have any control over their own economic lives. Their currencies are objects of speculation with traders making billions guessing on which currency will go up relative to others. Their ‘trading’ relations are increasingly governed by international bodies like the World Bank, the World Trade Organization and other multinational agreements. One example of how silly the situation: when General Motors moves a car from Brampton, Ontario to some place in Michigan, the economists call that international trade. Who’s leading who around by the nose here?
Of course Canada has stagnant wages and low inflation. There is a growing divide between labour’s productive capacity, including knowledge and training, and the needs of business and industry. Labour is not ready for the new global economy and, frankly, governments don’t give a shit because if corporations need cheap labour they know where to find it, and it won’t be in Canada. Jobs in Canada are increasingly precarious, often short term, without benefits and job security. There are a few people driving around in Mercedes’ and BMWs, but most people are sucking air driving their Toyotas they bought on credit over 7 years, and just hanging in there hoping things don’t change too radically, too quickly.
People are strung out on personal debt. Yet Poloz says the economy is doing just great. Poloz and his counterparts all over the world need new economic models, ones that are global is scope and focussed on capital accumulation and concentration if they want to understand anything about what’s going on. Statistics Canada, like all national statistical agencies, is seriously behind the times too, collecting national statistics. A long time ago Harold Innis told a gathering of his colleagues that it was about time that they (e.g., social scientists, economists, political economists, and historians as well as the statisticians at Stats Can) ceased allowing national governments to lead them around by the nose. I’m not holding my breath waiting for this to happen. There are some good international agencies collecting statistics, but unfortunately they have to rely on national agencies like Stats Canada. We need a real, global agency that can follow the bouncing buck wherever it leads.
So Poloz should go trick or treating. A big bag of Nestlé’s chocolates might tell him more about what’s going on than his outdated models of how the world works.
Of course, the situation is not as simple as I’ve laid it out here. The complexity of the global economy has got to challenge the best computer modelling software that exists.This is just a teaser. I haven’t even mentioned export processing zones. Fortunately, there are scholars out there trying to figure things out. Bill Carroll at UVic is one of them. He’s working on corporate supply chains. We need more Bill Carrolls. Enough for now.