Open Letter from Labour Scholars on the Economic Crisis

Brothers and sisters,

More than a year ago, an unprecedented housing boom in the US went bust, triggering a financial crisis that has recently led to large-scale bank failures and enormous government bailouts. This crisis affects not just the financial markets and not just the US. Banks are failing in Europe and in Latin America, as well. Stock markets are plummeting around the world. Governments have bailed out banks in many European countries. Central banks are pouring vast amounts of money into financial circuits that have been deserted by private credit. Moreover, growth is slowing dramatically. Economic activity has actually reached recession levels in a number of countries, and unemployment rates are rising.

The first sector of the Canadian economy that was hit by this crisis was manufacturing. A wave of speculation in resource prices, propelled by money fleeing the plummeting housing and financial markets, pushed the Canadian dollar up sharply and, in turn, drove exports and jobs in export industries down. Though this short-lived boom in resources is already over, the manufacturing jobs that have been lost there won't be coming back. Instead, we are seeing job losses spreading to other sectors. As is the case in many other countries, Canada is on the brink of recession. Moreover, falling stock prices and a severe tightening of credit indicate that the financial crisis is spilling over from Wall Street to Bay Street.

Given the firm grip that profits-first and balanced-budget dogmas have over Parliament Hill and the Bank of Canada, our politicians' reaction to Bay Street calamities is easy to imagine: throw tax dollars and credit at financial investors to cover their losses while gutting public services and jobs to avoid budget deficits. Such misguided policies are a sure recipe to push an economy that is already ailing into deep recession or even depression. More lay-offs, wage cuts and the evaporation of private and public sector pension plans will follow.

The large-scale interventions that we have already seen in the US and Europe, and we can expect to see in Canada soon, are fundamentally at odds with free market propaganda, which provided an ideological cover for an unprecedented accumulation of profit and wealth in the hands of the few at the expense of the many. Working people who created this wealth by the sweat of their brows and the effort of their brains, and who are now destined to carry the burden of the crisis, will see the fruits of their labour benefit no one but the people on Bay Street. While the breadth and depth of this crisis should not be minimized, it can also provide an opening for very necessary economic and social change. And organized labour can significantly contribute towards such change.

We, the signatories, urge that:

• Unions make a major effort to inform their members as well as non-union workers about the economic situation. Undermining the legitimacy of free market ideology is a precondition for a struggle for progressive change that can benefit everyone. Discussion and understanding of economic developments are others. Educationals on the current economic situation are an important contribution to develop workers' capacities to successfully engage in union struggles.
• Unions prepare and lead actions against lay-offs, spending cuts and concessions. Such actions are essential if we are to prevent Bay Street from placing the burden of the crisis on the residents of Main Street.
• Unions help to build activist coalitions that can engage in economic issues beyond the workplace and collective bargaining. Such coalitions should plan and mobilize for demonstrations that claim public control over the financial sector and a major remake of fiscal policies from bailing out private banks towards policies for jobs, social justice and ecological sustainability.
• Unions that are involved in the management of pension funds should inform their members about the state of these funds and develop strategies to their members' pensions. Such strategies could play an important role in a fundamental redirection of fiscal policies, away from balanced-budget dogmas – which cause fiscal transfers that place the weight of financial burdens on those at the bottom – towards taxing the rich in order to expand public services and create universal social programs and protections, including publicly-funded pensions, childcare and post-secondary education.

Greg Albo, York University Bryan Evans, Ryerson University
Ingo Schmidt, Athabasca University
David Camfield, University of Manitoba
Étienne Cantin, Université Laval
Sam Gindin, York University
Cy Gonick, University of Manitoba
Adam Hanieh, York University
Jerry Kachur, University of Alberta
Dennis Pilon, University of Victoria
Chris Roberts, Professional Institute of the Public Service of Canada
Richard Roman, University of Toronto (retired)
Stephanie Ross, York University
Edward H. Shaffer, University of Alberta (retired)
Sid Shniad, Research Director, Telecommunications Workers Union