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The Progressive Economics Forum

Origins of the New Canadian Political Economy

Abridged Text of Remarks to Panel on Canadian Political Economy in Commemoration of Abraham Rotstein and Stephen Clarkson, Department of Political Science, September 16 2016

Let us cast our minds back to the decade of the 1960 – which I recall as the best of times – as the time of the transformation of the old Political Economy centered on Innis into a rejuvenated Canadian political economy.

Innis, who was an economic historian called for an economic history of economic history. I am attempting a political economy of Canadian political economy.

Harold Innis, English Canada’s great intellectual and from 1937 to his death in 1952, Chair of the Department of Political Economy at the University of Toronto, including economics, sociology, and commerce and finance as well as political science, had written back in 1929: “[T]here is evidence to show that the application of the economic theories of old countries to the problems of new countries results in a new form of exploitation with dangerous consequences. The only escape can come from the intensive study of Canadian economic problems and from the development of a philosophy of economic history or an economic theory suited to Canadian needs.” That is surely a deeply nationalist position in defiance of the claim of neo-classical economics to universality.

In 1948, at the beginning of the Cold War, in an essay entitled “Great Britain, the United States and Canada,” he wrote: “In the Anglo-Saxon world we have a new mobilization of force in the United States, with new perils, and all the resources of culture and language of the English-speaking peoples, including those of the United States, will be necessary to resist it. In the crudest terms, military strategy dominated by public opinion would be disastrous.” He concludes: “Whatever hope of continued autonomy Canada may have in the future must depend on her success in withstanding American influence…[T]here is little evidence she is capable of these herculean efforts and much that she shall continue to be regarded as an instrument of the United States.”

My generation of political economists lived in his shadow. The quotes are the book ends between which there emerged, around Innis the old Canadian political economy, from which sprung, in the 1960s and 1970s, the New Canadian Political Economy.

Its context is a surge in Canadian nationalism as a response to a perceived American imperialism which informs the writings of both Rotstein and Clarkson, and of myself, thereby adding to the surge.

Rotstein writes directly about nationalism. He had studied under Karl Polanyi at Columbia. He took Polanyi’s notion of the movement which called forth the countermovement, creating a new balance of forces. American expansionism, led by its invention of the multinational corporation, moved to Canada with the encouragement, by and large, of the Canadian business class and the Canadian state.The countermovement in Canada was, for Rotstein, left nationalism in general and economic nationalism in particular.

There was a striking engagement of intellectuals in politics. Rotstein became the editor of the Canadian Forum, a small but highly influential magazine. He became an informal adviser to Walter Gordon, who was Finance Minister in the first Pearson government and the leader of movement within the government to counter foreign, mainly American ownership. Rotstein was a member of a 1967 federal Task Force of economists to study the matter, which I headed on Rotstein’s recommendation to Mr. Gordon. It led to the creation of the Canada Development Corporation and the Foreign Investment Review Agency by the government.

Clarkson wrote a background paper on Canadian-American relations for the Task Force. In the early 1960s, Canadian-American relations was a deeply boring subject dominated by business and mostly devoted to justifying American ownership; I remember at one point Rotstein and I made a personal commitment to cease attending conferences thereon. Clarkson’s Task Force study gave life to the notion championed by him of an independent foreign policy for Canada.

Clarkson created a popular course on Canadian-American relations involving both Rotstein and myself. He wrote with Christina McCall a marvelous prize-winning biography of Pierre Elliot Trudeau that dealt with his reluctant economic nationalism.

Clarkson opposed the Free Trade Agreement and NAFTA and when they happened he churned out volumes on their workings within a North America that included Mexico. He documents the ways in which the Canadian state has, by its particular management of the American connection, risked the mismanagement of the Canadian nation. He was remarkably productive, publishing more of high quality after he became a senior citizen than many of us do in lifetime. When the Department of Political Economy split asunder in the early 1980, he took a hoard of the now obsolete stationary and when he thought the occasion warranted, used it.

As well as Innis and Polanyi, a central figure intellectually in the 1960 was the Canadian philosopher/theologian George Grant with his books Lament for a Nation and Technology and Empire. (I should add that in the nature of the 1960s, Marxism was in the air we breathed and, in Canada and particularly on this campus, McLuhan, with his ties to Innis, was a genius who could not be ignored.) Grant wrote: “A central aspect of the fate of being a Canadian is that our very existing has at all times been bound up with the interplay of various world empires…What our fate is today becomes most evident in the light of Vietnam. It is clear that in that country the American empire has been demolishing a people rather than letting them live outside the American orbit.” Grant spoke these deeply moving words at a giant teach-in in the war in Vietnam on this campus in 1965; Rotstein and I were among its organizers.

Clarkson’s writings on the Canadian-American relationship are in one sense a continuing riff on the inadequacy of Canada’s responses to the U.S., which is suggestive of the continuing influence of Grant’s apocalyptic Lament. I cannot refrain from citing the 2003 study by Penny Cousineau-Levine with the revelatory title Faking Death: Canadian Art Photography and the Canadian Imagination which, to quote from its dust jacket, “expresses a collective Canadian wish for a symbolic passage to Canadian national maturity.” That “wish” permeates the New Canadian Political Economy at its origins in the 1960s. It has been successfully transformed into a firm sense of national identity and tolerance of the “Other”, albeit accompanied by the advent of neo-liberalism which restrains national economic policy.

A proliferation of identities and issues has overwhelmed economic nationalism and, quite properly, become central to Canadian political economy. The continuing relevance of nationalism was evident in the sustained effort by the Harper government to recast it as militaristic, monarchical, white, and Christian, as well as the decision by the aboriginal peoples who had been labelled “Indians” and consigned to “reservations” to rename themselves “First Nations.”

The possibility that the limits of the present round of globalization have been reached – indeed exceeded with respect to climate change – is putting the issue of Canada’s place in a chaotic global economy on the agenda of Canadian political economy as it was in the 1960s and 1970s before neo-liberalism stood it on its head.

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