Great Depression in Canada (Plain-Language Summary)

Great Depression in Canada (Plain-Language Summary)

Causes of the Great Depression

The event that started the Great Depression was the stock market crashes that occurred in the fall of 1929. Within weeks many important companies lost much of their value. The stock market crashed because companies produced too many goods and the prices of the goods went down. There was little demand and too much supply. Soon after the crash many businesses went bankrupt, and tens of thousands of Canadians lost their jobs. This made the economy worse. People did not have money to spend. So, more businesses went bankrupt. When more businesses went bankrupt, more people lost their jobs. It was a vicious cycle.

The problem was especially bad in the western provinces. The western economy depended on exports and international trade, which collapsed. The prairies had also suffered from years of drought. This caused huge crop failures.

Government Responses

The federal government was not very involved in the economy at the start of the Depression. Many economists and politicians believed in an idea called laissez-faire (or leave it alone) economics. They thought that the economy would work best if the government left it alone. According to this idea, only capitalists should guide the economy. In the 1930s many people began to question this idea. The unemployment rate was very high. Poor people were getting poorer. And the economy was not improving.

Canada had two prime ministers during the Depression. William Lyon Mackenzie King was prime minister from 1926 to 1930 and from 1935 to 1948. R.B. Bennett was the prime minister from 1930 to 1935. At first, neither of them wanted the federal government to get involved. They thought that churches and local and provincial governments should provide social services. Without federal help, many local governments went bankrupt. So did the Prairie provinces.

Some politicians were very different from Bennett and King. They wanted the government to get involved. One of the most important of these politicians was J.S. Woodsworth. He was the leader of the Co-operative Commonwealth Federation. This was Canada’s first socialist party.

In time, many other Canadians started to believe that the federal government should intervene. They thought that if it didn’t, the economy wouldn’t recover. Prime Minister Bennett then changed his mind. In 1932, the federal government created work camps for single, unemployed men. But conditions at these camps were bad. Some of the men went on strike or rioted.

Bennett’s government also created the Bank of Canada. It was responsible for the money supply. He also created the Canadian Wheat Board. The board made sure the prices of wheat was good for the farmers. Bennett also planned to introduce a minimum wage and unemployment insurance. But he lost the election to Mackenzie King in 1935.

After becoming prime minister, King set up the National Employment Commission. It recommended that King spend money on creating jobs. He was reluctant to do so. The Second World War, however, made him change his mind. The Canadian state became highly involved in the economy because of the war. In 1940, his government created an employment insurance program. Later, it created a family allowance program. By the end of the war, the federal government was much more involved in the economy.

While the world faces ‘Brazilianization,’ China leads with national projects

Illustration: Liu Rui/GT

A striking article, “The Brazilianization of the World,” was recently published in the journal American Affairs. Its starting point was the disastrous failure of Western countries to deal with COVID-19: over 600,000 COVID-19 deaths in the US, more than 525,000 in Brazil, over 400,000 in India, 128,000 in Britain. This compares to less than 5,000 in China.What makes the article striking and innovative is that it attributes this failure not to short term policy mistakes but to deep structural trends in Western society - a rapidly widening gap between rich and poor, breakdown of national institutions which aid the whole population, and their replacement by purely private systems which protect only a small proportion of the people. It also involves the weakening of state institutions capable of dealing with serious crises such as COVID-19, lack of major infrastructure improvements, the decline of long-term planning capabilities, increasing elite corruption, and the monopoly power of technology companies who are able to manipulate the law, etc.The term “Brazilianization” was chosen because this country is seen as a precursor of these trends. It is characterized by what the article terms “Belíndia” (Belgium/India) in which a small minority, the size of a minor country such as Belgium, live a good life while the great majority lives a precarious and non-prosperous life - as in India.“Brazilianization of the World” is the article’s title because this trend is analyzed as being extended into advanced capitalist countries - shown in the great riches of Wall Street circles being combined with US “Rust Belt,” in which well-paying “middle income” jobs are eliminated, and unemployment is high. Consequently, drug abuse is rampant, criminal gangs are strong, etc.There are two key economic reasons underlying this development. Overall, the world economy has not slowed in the last period - on a long-term moving average, to eliminate distortions by short-term business cycles.In historical comparisons, while the short-term economic slump in advanced capitalist countries after 1929 remains the most severe in history, long-term economic growth in these states since the 2008 international financial crisis is now slower than in the Great Depression - characterizing the present period as the “Great Stagnation.“Such slow economic growth makes it impossible to offer social improvement to the whole population - to create a project improving the entire nation. Instead, increasing proportions of the population are left with no significant chance of improving their social conditions. This leads to discontent, which cannot be dealt with by reforms due to the economic trends but is instead met with increasing repression.Within developing countries, “The Brazilianization of the World” analyzes this process as being due to the failure of the bourgeoisie to pursue national interests. A key moment in Brazil is analyzed as being 1964. This is when the Brazilian capitalist class abandoned the path of independent national development to instead support a pro-US military coup.A second key event was in 2016. In 2003 Workers' Party candidate Lula da Silva was elected president - followed in 2011 by Dilma Rousseff. They restarted a “national project” - more rapid economic growth coupled with an independent foreign policy corresponding to Brazil’s national interests and social measures aiding the majority of the population. To pursue Brazil’s national interests, Lula and Rousseff strongly participated in BRICS and sought win-win relations with China. But in 2016 the Brazilian legislature removed Rousseff from office in a “legal coup.““The Brazilianization of the World” admits a decisive exception to such negative global trends - China. The article states: “Nowhere (except perhaps in China) do we find ruling elites pursuing any sort of ‘national project’ - something that thereby implicates, and aims to integrate, the masses.” And, “leaving aside the exception of China’s remarkable ascent, the global story of the past forty years is one of retrogression.“In major parts of the world this analysis is accurate. Step out of an airport in an Indian city and you will immediately see immense slums, sometimes with millions of people, that simply do not exist in China. Similarly, in Brazil, prosperous parts of cities are surrounded by “favelas” (slums) in which poverty is rife and which are frequently dominated by armed criminal gangs. Clashes between criminal elements, and not only with the police but even the army, take place. The non-national bourgeoise, as the “Brazilianization of the World” sees it, does not attempt to develop the country and provide a way forward for most of the population. Instead, it seeks to arm itself to keep the oppressed away from privileged centers of wealth.In short, the trends analyzed in “The Brazilianization of the World” are real.But there are also trends in the opposite direction - attempts to create a true “national project” for the majority of the population. China is by far the most important example of this. It is also shown in socialist countries, such as Cuba and Vietnam.It is not historically unknown for a bourgeoisie to fail in a “national project” leading to forms of national decay - such as “Brazilianization.” In an even more extreme case, the Kuomintang’s failure to adequately defend or develop China led to the CPC achieving leadership of “national rejuvenation” - China’s national project. Organizations such as the Brazilian Workers' Party, or Bolivia’s Movement for Socialism, have emerged as a result of similar, if less extreme, failures.“The Brazilianization of the World” therefore deserves serious attention in accurately noting negative trends in Western society and positive trends in China. But it over generalizes and pays insufficient attention to more positive trends taking place in a number of Global South countries - including their ability to create win-win relations with China.The author is senior fellow at Chongyang Institute for Financial Studies, Renmin University of China, and former director of Economic and Business Policy for the Mayor of London. opinion@globaltimes.com.cn

Community Voices: The Great Depression followed by the Greatest Generation

Bakersfield, CA (93308)

Today

Some clouds this evening will give way to mainly clear skies overnight. A stray shower or thunderstorm is possible. Low 73F. Winds NNW at 5 to 10 mph..

Tonight

Some clouds this evening will give way to mainly clear skies overnight. A stray shower or thunderstorm is possible. Low 73F. Winds NNW at 5 to 10 mph.