China’s Relocated Poor Struggle to Build New Lives

China-MassRelocation-305Over the past year has been actively organizing and setting up a research network to link Canadian and Chinese applied and academic researchers. The goal of the network will be to enhance the exchange of information and shared understanding of economics and labour markets issues that each country faces. The network will engage in a variety of activities including original research, translation of the latest research documentation,  publication of materials that are mutually agreed upon  and  dissemination of information. The focus however will be to establish better communication, dialogue and exchange of ideas and experiences.

As suggested  in this Radio Free Asia Video the trouble that lay ahead in China as 300 Million plus rural citizens are targeted to move to the urban is quite complicated.  More to come on this endeavor.

Great Recession’s Lack of Investment Takes it Toll as Business Innovation in Canada Drops

The continuing stagnation of investment that set in during the great recession is catching up to Canadian business as innovation by Canadian  companies in 2012 has fallen dramatically.  Statistics Canada recently released the results of the Survey of Innovation and Business Strategy and its ominous headline indicates that Innovation in Canadian businesses has fallen off by a whopping 17 percent in 2012 to a mere 60 percent of surveyed companies indicating a level of measured innovation. This lack of investment is creating an  ecosystem  of reduced innovation within the value adding infrastructure of the Canadian business sector.This inevitably leads to lower productivity as more than 1 in 5 Canadian firms between 2009 and 2012 reduced their level of innovative activity. Ultimately this translates into an increasing downward pressure on  standards of living for Canadians.  The study reads like a dark shadow falling over the whole idea of building  a higher value adding/ high wage/ high innovation  economy that many developed countries are pursuing out of this great recession.decline

Developed countries like the USA, are highly focused on reversing the off shoring trend that was the focal point of corporate strategy for two decades, and “on-shoring”- high waged jobs back inwards is the goal. This of course will mean higher degrees of innovation, new business strategies and the like. However the results of this extensive survey suggest that Canada’s corporate leaders are not only just sitting on their hands, when it comes to investment, but the most critical area of investment into innovation is being cut back. The ongoing lack of focus on innovative investment by Canadian businesses is coming home to roost and it will mean more jobs lost, more decline and lower standards of living.


The question of where has all the investment gone has reached a crisis point for the Canadian economy and it is not for want of funds.  The investment conundrum famously defined by former bank of Canada governor Carney when he coined the term “dead money” was outlined  to Canada’s corporate leaders as he ridiculed them for sitting on mountains of cash. However what he failed to mention to the Canadians is much of this cash is not dead and as he full well knows, the cash sitting on corporate balance sheets is more  likely financialized into off balance sheet derivative trading. It is difficult to allocate just how much of an affect the finacialization of the economy is having on corporate investment decisions, but the  negative impact on the brick and mortar economy is real.  This due to much of the book keeping for these assets is  off balance sheet and  end up in what is known as the shadow banking sector of the economy. Not many statistics are kept on this portion of the economy, and as such not much in the way of regulation exists in the globalized casino however as the Bank of International Settlement (BIS) ,makes clear on the statistical reports the amount dollars involved in derivative vehicles is estimated at over $640 trillion dollars globally. This is up dramatically from the $400 trillion that was reported by the BIS before the finanical crisis of 2008 . So the question remains, how does the economy come out of this recessionary stagnation in terms of growth and declining worker outcomes, when investment seems to be caught up in other profitable and apparently less risky assets within the financial circuits of the economy.

A few key points should be underlined from the survey that add some qualitative and quantitative into the lack of investment question.

1) Innovation as defined and measured by the survey was significantly down from the ’07-’09 in to the ’10-’12 period by over 16% to 60.1% of firms signifying some form of innovation. Broadly speaking, this slow down in terms of innovation translates into further evidence of a slow down in investment- and most likely the most vital type of investment, when considering productivity and competitiveness which in the key areas of higher value adding. This also reflects the decline of the higher innovative  industries found in manufacturing and a continued expansion in lower innovative resource extraction industries.

2) Many progressive economists have praised such concepts as industrial strategy over the past several years for getting a foothold to climb out of this economic recession. One policy option that is critical in the formation of industrial strategy and is highly effective within a high value adding/high wage economy is targeted investment in the form of tax credits. In this study on Innovation,  firms surveyed indicated that the most critical of all government programs to support innovation are tax credits. Despite Canada’s Mr. Flaherty’s constant ideological stance of very low tax credits and as pontificated not wanting to “pick winners and losers” (which is quite a simplistic and destructive stance) it quite obvious that businesses feel this a required policy with over half of all respondents indicating that tax credits are an important determinant of innovation. Notably this is up from 34.9 percent in the previous survey period- which is highly significant as we stagger through this elongated slump.

3) Thirdly it  was quite enlightening as this survey sees through this whole notion that the Harper government has allocated a substantive amount of tax money on priming the pump on  skills shortages. However businesses reported that only a mere 7% felt that government help on training was necessary for innovation and this actually fell during this period from 19%. If indeed we were suffering through a massive skills shortage that the Tories claim, than I would imagine businesses would be ranking Training a lot higher than 7%.

Wow that last point is a zinger! How can the tories stake their entire human resource strategy on the country that there is a skills shortage when only 7% of businesses feel it is an issue. I have to say this empirical evidence surely must make the tories look again at the whole skills shortage argument it is indeed the straw man.

4) Lastly this survey again debunks the claim of small business being agile, innovative and bleeding edge as Large enterprises indicated a much higher innovation rate than small business.

Some very interesting findings.

When will this survey get cancelled??

This business survey is the highly cut back- business enhanced/ worker and labour content subtracted version of the workplace and employee survey (WES- long live WES! It was a survey to trump all surveys and take policy to the eternal fountain of truth of higher productivity and worker outcomes! Now a shadow of itself and look at our economy since WES was cancelled in 2009). We can now call it the productivity survey for sure.

A Canoe Trip With Mel Watkins

Welcome to my first blog post and as such I would like to dedicate this post to one of my favourite economists, Mel Watkins (right up there with Karl Polanyi, Colin Leys, and Pat Armstrong). It is difficult to encapsulate the labour process of learning and how one takes in the social construction and manifestations of the prevailing learned.  Being a student of political economy for many years and attempting to engage the workings of the global economy, it was through such work and teachings of  Mel Watkins that made this journey easier.

Mel’s important contributions to the Staples theory and later his work on foreign ownership and Canada’s growing reliance on foreign direct investment were of  great comfort and guidance for me. It is much easier running the rapids with a skilled canoeist in the boat. Too often in other areas one finds themselves in the cold, dark, shark infested waters. The great asset of the staples theory for me is its ability to examine linkages that are demarcated by the boundary of the firm and follow the value chain of productive processes. It is an approximate extension, and necessary outline of the circuitry of capital. Recently I finished reading Capital Volume II and what I took away was a greater appreciation of the flows of capital as Marx provides a fairly detailed outline to the circuitry of capital – yet it was frozen in terms of technology. So there is plenty of work to be done to understand how this circuitry has changed over time. I found the Staple’s theory to be a start into that process.  The necessity due to an increasingly complicated and diversified process of value adding- in terms of product design, division of labour,  and geographical location. The Staples theory allows a simplified and focused theory to  situate power relations, inputs and outputs within the totality of the production process. It indeed at first glance seems to be focused on resource extraction and inputs, but it’s actual extension into the deeper reaches of the production process allow a more synthesized perspective in the face of an increasingly complicated value chain of the production process.
It is in that fashion that one does indeed have to give Mel a lot of credit for seeing through this and providing the necessary work to bring Innis and the Staple’s theory back into the main discourse for understanding this process as globalization was beginning to make its comeback. Mel is still at it, looking into the linkages and how they actually do potentially inadvertently propagate newer technologies and industries that build up from those original industrial linkages and  technologies. As Mel stated recently in a blog post-

“Following Hirschman’s insight, focus on a dialetical relationship, a shifting symbiosis, between an emerging mode of industrial capitalism and an emerging industry. Add, as it seems to me, that as the mode forms more fully, it then facilitates the emergence of other industries – the most powerful of linkages, the exemplary case of what some writers have come to call “lateral linkage.””

That is quite a deep insight into the functioning of the circuitry, and given the nature of the complexity in  causality, and the lack of data to explore such causality and outcomes, it takes a real economist to interrogate such depth of  analysis. This leads me in many ways, to remind myself that people such as Mel in this field of economics, reminds me of the great artist, Tom Thompwa_a3_k2_thomlismerincanoeson. Yes an artist-  after much debate, reading, research, math, and age, I do find the study of economics and the political space it is embedded within very much an art.  There is very little science in Economics, very little in the theoretical space and much less in the praxis of real life where real people need to eat, work and survive. Indeed there is math and some notions of science, but  given the dimensions of power in the field and the fact that it  is applied with external force for specific ends, how could these means be considered as striving for minimal subjectivity.

Consider the inputs, the process and the  outputs of the current state of the field of economic study. Given the outcomes how could economics in its current form be anything but some-kind of crazy art.  Indeed the  current variety of capitalism is an art form based on the notion of haphazardly designed misery. As we increasingly move into the Risk Society,  billions in the “developing” countries have been left out and more are continually pushed out. How could an field of study be considered a science when it ignores so much of the life world. The new equations of economics need to expand, it’s not just the sharing of the rewards, we also have sharing of the risks. Yet the “sciences”  within  the economics subject matter guided under the quite visible hands of the  orthodoxy of neo-classsical economics and the rest of it, rarely make any space for the risks it creates. From the environmental collapse and the accelerating CO2, the instability of the economy, the lack of adequate food and security for billions, is an equation without enough parameters. But plenty  of mathematical weight for the thin veneer of the shiny flashy objects of the commodity fetishism and the ego stroking keep the profits maximized and the human experience as an externalized- I am imagining that is the basis for Marx’s focus on alienation and they are more relevant than ever.

These thoughts never stray far from me and reading through Travis Fast’s dissertation on the Varieties of Capitalism reminded just how artistic the neo classical- Orthodoxy has been and will always be under the current power relations. (great work Travis)

It is precisely this space of assumed science- that prevented the Staples theory from becoming part of the orthodoxy- and that is indeed problematic- given the truth behind the prime movers of knowledge construction. There are indeed hints that Staples theory makes a splash in the main stream teachings- but typically it is cast out as some historical artifact of a bygone era. It is in fact a theory that could be applied across many developing and developed countries and is ripe for research and informating capacity.

Thinking more about the relationship between art and economics- I realize now that potentially Tom Thompson reminds me more of Mel Watkins than the reversal. One could claim that indeed Tom Thompson was an early proponent of Staples theory in his own way. One of his famous works of art entitled “The Jack Pine” has been interpreted much differently than many believe. Instead of  the majestic massive Jack Pine on the shback copyores of Canoe Lake in Algonquin park, where Thompson painted it, some have stated (and you can actually see what seems like stumps  in the painting itself and the whole lone pine without a friend), it is a portrait of critical analysis, of the very few Jack Pines that remained in Algonquin park. It is well known Thompson was highly critical of the clear cutting and logging operations that were ongoing throughout the park during his stay. It was his love and the park which he treasured was being assaulted. So potentially Thompson helped out early economists like Innis form up the Staple’s theory. I like it and endorse it fully.

In Canada we are fortunate to have that great bastion of Canadian Political Economy to embrace, and guide us through the layers of the  economic terrain laid down. Mel has and always will be a pillar within that space. The recent Tar sands debate within Canada is proof positive that our resources aplenty economy will necessitate its survival. The Staples theory indeed has global appeal in potential and  a  necessary perspective to grasp the foundations in which understand the structure of the Canadian economy. The history and future of our economy will gyrate somewhat into higher value adding but always at the base our economy will unfold like a Staples economy glove, form fitted and never getting free, sometimes feelings its fists of  velvety sting and other times regional prosperity will keep us debating the merits of sharing. From the tar sands to big data and its computational high performance GPU farms cooled in the cold airs of the north- staples theory  touches the lives of millions of gainfully employed workers in its boom and bust resource based flows of output through the productive circuits of capital.

Mel and a cast of several, created and  built what is now defined as Canadian Political Economy- from the founding work of Innis it has grown and evolved. It is difficult to affix  labels to define the makeup of Canadian Political economy but if one had to it would start with a mix of  heterodox economics from the realms of  Keynesian economics,  Marxian economics,  and the post-Keynesians. It also infuses larges amounts of sociology, history, feminist theory in a uniquely interdisciplinary mixture. Indeed Canadian Political Economy is a mongrel- but at its root, it is home grown and started with the seeds of the Innis’s Staples theory to economic development. Mix in its blend of  qualitative and quantitative uniqueness and you have one very robust yet flexible base of knowledge, theory and empiricism. It is what fuels  the progressive movement in Canada that helps power up the debates and greater social awareness that pervades Canadian economics and society.

Over at the Progressive Economic Blog, they have paid tribute to Mel Watkins and his work through a series of guest articles from several academics, labour economists and activists. The series of article shows just how deep the Staples theory runs, as the articles focus on applying and nurturing an understanding in a variety of fields. It has been over seven  years that I have been involved with the Progressive Economics Forum through commentary and guest blogs and this tribute to Mel  made possible by the collective efforts of the fine collective at the blog is another wonderful adventure into defining and breathing in this new terrain for collaboration and debate.

My recent studies in machine learning and natural language processing combined with political economy brought me to an idea to add in my own celebration of Mel’s work. Unfortunately for Mel he will have to be my lab partner in this experiment.  I have combined all texts submitted to the “Staples at 50” project that are in honour of Mel’s work. With this large file I  applied some new standardized machine learning algorithms within the natural language processing field producing a word cloud. It is a bit of a simplistic approach but it tries to extract some nuances with the aim of introducing these thoughts to the social networks, twitter verse and the rest of the online world. Word clouds based upon sentiment extraction are a new tool to analyze text, and I am currently research a method to automate a process to rate and maybe create a typology of economic texts based upon the political aspects of the textual content.

For the word cloud below I added a few stop words to the algorithm as they were so over whelming or redundant. For example I excluded Canada and Canadian, which given the potential of the long run outcome of Staple’s theory- might actually be foreshadowing. I will follow this up soon with another version of a word cloud and this time using Mel’s own original article to feed into the machine learning algorithm  and compare the two.mel