The causes, character and consequences of economic growth in Canada, 1974-2008: a classical political economic analysis
MacBride McCormack, Geoffrey Robert
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"This dissertation explores the dynamics of capital accumulation in Canada over the last four decades, including the long downturn from 197 4 to 1990, the subsequent slump, and the long upturn from 1993 to 2008. To this end, it examines in great detail movements in the rate and mass of profit as well as their reflection in the marginal efficiency of capital (MEC). Building upon the theoretical framework developed by Henryk Grossman and refined by Anwar Shaikh, it demonstrates that a downward sloping MEC accounts for the escalating severity of crises in the period 1974-1989 and that the ""Great Canadian Slump"" of 1990-92 was a result of a shrinking and subsequently stagnating mass of profit. The depth and breadth of the crisis of 1990-92 created an environment conducive to the re-establishment of accumulation beginning around 1993. As real wages and the price of machinery and equipment fell, the re-organisation of production was made possible. Profound industrial restructuring alongside the cheapening of transportation, telecommunication and business-computing equipment helped to consolidate just-in-time (JIT) production systems and the usage of information communication technologies (ICT) in industrial processes. In tum, these historical processes reversed the tendencies of decline: the rate and mass of profit began to grow alongside the MEC, business investment picked up, real wages rose and a long period of sustained accumulation got underway from 1993 to 2008.Furthermore, the consolidation of JIT and ICT profoundly changed the character of inventory control and investment. In particular, businesses were able to hold lower levels of inventory and these new technologies and organisational forms resulted in fewer disruptions along the supply chain. Hence, there was a reduction of fluctuations in inventory investment and thus the overall pattern of economic growth. The last chapter argues that the aforementioned historical processes underlay the stability of Canada's banking sector during the crisis of 2008-09. Conventionally, Canada's sound banking system is viewed as the principal factor underlying economic stability in this period. Contrary to this position, the chapter argues that the stability of the banks was a function of the long phase of stable capital accumulation preceding the crisis."