Political Economy of Canada

Political Economy of Canada

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Introduction

Political economists are mostly concerned with the allocation of the called scarce resources in this world which has the infinite wants and needs as well. Therefore, for allocation of these resources, then politics are used in the state for provision to the people. Political economy therefore is a branch of social science which entails the studies of the relationship between individuals and society in addition with markets and state by the use of a diverse set of tools and ways drawn largely from economics and sociology. Notably, the word political economy comes from derivation of the Greek word polis, which means city or state and oikonomos, which means one who can manage a household or an estate. Political economy however, can be understood as a study of how the country –public household- is governed by the government considering both political and economic factor.Traditionally, political economy was understood as the social change and historical transformation. To the classical theorists for instance Adam smith it all meant comprehending the great capitalist revolution, an upheaval that transformed the societies majorly based on agricultural labour into commercial, manufacturing and finally the industrial societies. Therefore, in the introductory of the 1923 edition of the author John Kells Ingram’s influential ‘history of political economy’ in the explanation of the role of history in the mind of the political economist. “It is now universally acknowledged that societies are subject to a process of development, which itself is not arbitrary, but regular; and that no social fact can be really understood apart from its history. Hence the ‘pocket formulas’ in favour with the older school, which were supposed to suit all cases and solve all problems, have lost theEsteem they once enjoyed and Economics has become historical in its method, several stages of social evolution being recognized as having different features, and requiring in practice a modifying intervention which ought to vary from one stage to another.” (Ingram, 1923:4-5)Over the years Canada has encounter a lot of challenges and crises. As a failure of efforts in the constitution reform that ensure that the outstanding issues like provincial and Aboriginal rights remains the forefront of Canadian political problem, hence this failure calls for the government of Canada to manage a range of other challenges. With the continentals pressure put by the North American Free Trade Agreement (NAFTA), Canada has to adjust. Moreover the international pressure set by the globalization of business and commerce as well will adjust it too. Question such as how will the Canadian cope up with this pressure? And will the political and economic system encounter with this challenge in its present form will be addressed by the political economy.Political economy in relation to the study of domestic is majorly concerned with the relative balance in the economy of the country between the state and the market forces. Most of this debate can be followed from the thoughts of the English political economist John Keynes (1883-1946) who postulated in the theory of employment, interest and money which existed as an inverse relationship between the unemployment and the inflation hence the government should manipulate the fiscal policy to ensure a balance between the two. The Keynesian revolution which happened when the state were attempting to ameliorate the impacts in the world great depression of the 1930s, it contributed to the rise states welfare and increase in the governments size relatively to the private sector.In some countries, specifically Canada, Keynesianism development led to gradual shift of the meaning of the liberalism, from doctrine calling for a relatively passive state as well as an economy that is guided by the ‘invisible hand’ of market to the view that the state needs actively intervention in an economy so as to generate growth and sustain employment levels as well.Keynesianism dominated domestic economic policy as well as development of the post-world II international economic system which consisted of creation of international Monetary Fund and World Bank that was from 1930s. Countries of political complexion practised Keynesianism, with inclusive of those that embraced capitalism, social democracy and fascism. In 1970s majority of western countries experienced stagflation or high unemployment and inflation which was simultaneous, this phenomenon contradicted the Keynes’s view. The effects of it were the revival of classical liberalism also known as the neoliberalism which was now the cornerstone of economic policy in Canada and United States of America.The neoliberals and others state that the state should once again reduce its role in the economy. It could happen by the government selling off the national industries and promoting free trade. The pioneers of this approach, who influenced the policies of the international financial institutions and government worldwide, maintained generation of prosperity, would be through free market. However, opponents of neoliberalism has argued that the classical theory overlooked many of the negative social and political impacts of the free markets, which includes the creation of the large disparities of wealth and damages to the environment. In 1990s, the major point of debate was the North American Free Trade Agreement (NAFTA) that facilitated the creation of a free trade zone which was between the United States, Canada and Mexico. Since its effect in 1994 it has generated theControversy of whether it has created or eliminated work or rather jobs in the United States and Canada. Moreover, the controversy as well is about whether it has helped or harmed the labour condition, local culture in Canada.The contemporary periods is witnessed remarkably with the ability of capitalist institutions to restructure themselves anew. It was attributed by forms of production which were new to new communication networks that linked the world market in a way that is remarkable to the political alliances of the neoliberalism. Canada is witnessed registering all this remarkable shifts. In some assessment, Canada’s position amongst the highly advanced capitalist countries is under threat if it lacks a concerted industrial policy; while others, Canada is once again re-establishing its competitive place within the NAFTA economic bloc; still others, the new egalitarian politics was offset by deepening social inequalities as well as Canadian decline of the economy relatively. The trajectory development of Canada in the world market was attributed by all those factors mentioned above. They need some of conceptual and historical perspective which is of political economy of Canada.Majority of the Canadian scholars agree that the pre-eminent Canadian political was Harold Innis the economist. The economist studied the fur trade relationship between the extractions of staple products with the nature of the Canadian state; moreover, he theorized the interaction between the means of communication as well as system government.

Bourgeois Canadian Political EconomyThe Canadian political economy was cognizant which was of the contradictions leading to peripheral development within the world’s capitalist system expanding. Since its starting point of analysis its distinctive was the international character of the market economy as well as international division of labour. It emphasised on the specificity of historical circumstance that helps in the understanding of development, with the rejection of most part of the abstract normative assumptions of the modern economics. Therefore, in the sense it recognises the specificity of Canadian capitalism and development of Canadian capitalist. “Since the household [in the simplest form of competitive capitalism] always has the alternative of producing directly for itself, it need not enter into any exchange unless it benefits from it. Hence no exchange will take place unless both parties gain from it. Cooperation is thereby achieved without coercion…. In the complex enterprise and money-exchange economy, co-operation is strictly individual and voluntary provided… that individual is effectively free to enter or not into any particular exchange, so that every transaction is strictly voluntary…. Payment according to product is therefore strictly necessary in order that resources be used most effectively, at least under a system depending on voluntary co-operation.” (Milton Friedman, Capitalism and Freedom)The Canadian union leaders highly committed to organizing the organizing s they believed that they could attain the objective without further transformation to labour laws. Increase in the union in Canada increased the organizing the investment which is necessary in the maintenance of the levels of organizations through two decades of neoliberal in the structure as well as major affiliates had made them. Since 1960s, Canadian labour laws have been more conducive to organizing than their United States counterpart with the impact that there has been pressure which is less to a development in innovation organizing tactics. Therefore there was need for the CLC to be a stimulus to the higher level of expenditure on organizing and disseminator that promises innovations in this domain. In the past five years the AFL-CIO conjunction with the unions backed the New Voice leadership has made moves closer to Canadian labour movements that long stood stress continuous, and building of the members commitments to their unions that is organizational forces which includes movements for the greater social justice and economic democracy. The federation in Canada took the lead in development of broad social movements’ alliances in the scramble against the Canada-U.S. Free Trade Agreement (CUSFTA), the North American Free Trade Agreement (NAFTA) The frame work of Marxian analysis is stressed in their discussion of the nature Canadian capitalism which was largely incidental to their principal themes that were the question of the logic of a unified Canadian nation-wide.

Canada’s transformation under neoliberalismFor the past few years Canada began to transform after the post war expansion, economically and socially Canada progressed. The living standard of the Canadian citizens improved which was fuelled by the rising of the real wage-which doubled in the generation as well as dramatic expansion of the social wage. This was inclusive of the national Medicare and Canada pension plan. This showed that Canada was catching up with the US economically and surpassing it socially. Moreover, Canada carved a unique and in some way independent role for the nation in the global economic military, and political affairs. Canada hosted Expo 67 in Montreal which showed hope and confidence as well as momentum which was officially opened by the Prime Minister Lester Pearson. Compared to other countries, the recipe ofstrong profits and business investments and the Keynesian welfare-stat was fine-tuned and thus began to disintegrate. It was predicted that the capitalism would eventually experience the full-employment sickness. Workers were empowered by the long run employment which increased the capitalist employers in the maintain ace of complaint disciplined and the low cost workforce. Therefore, confident workers of the high class won the larger and larger shares of economic pie. The GDP of Canada grew steadily through the post war time/era which peaked in the 1970s. The power of the business was constrained by the employers, workers demanding changes in the workplace and in society.Neoliberalism therefore, represents a multi-faceted global strategy by the scholars (which is in both the financial and real sphere economically) to change the whole ship around. Hence, it is important to consider how that transition or strategy has being successfully. This strategy has empowered many and put the employee/workers on the defensive side. Despite f all this success however neoliberalism has not led to creation of world economy that is stable, efficient and successful in meeting the human needs. In Canada, the neoliberalism has being harshly applied consistent with the trend which also reflects the unique characteristics of Canadian capitalism.The review of the neoliberalism in Canada can be identified into three crucial transition points. The following are the crucial transitions

Monetary policy which was attributed by the drastic shift in the early year of 1980s

The Canada-U S free trade which was implemented in 1989

A dramatic rise in the economy’s reliance on the resource export and extraction.

Monetary policyThe advent of the neoliberalism in Canada was the rate of interest shock teat happened early in the 1980s, which was overseen by the banks of Canada’s then later Governor Gerald Bouey. The monetary shift which was an action by an unelected economic authority, created a foundation for that advent of neoliberal macroeconomic priories. It was to be evident by abandonment of the full employment moreover, prioritizing of the interest of the financial wealth and as well as ushering of new ideology of the tough love capitalism. The time when Canada was governed by the Trudeau Liberals that represented one of the last gasps of the post war Keynesian interventionism. The central bank could intervene by directly controlling the growth of the money supply following the new-disproven belief of the hard core monetarists. At this time the credit growth curtailed and the interest rate shot up. The lending rate at this time reached the historic incredibility peak of 22.75 per cent in 1981 during summer.CONCLUSIONIt is evident that neoliberalism has played a key role in the transformation of the Canada economy from recession. It was attributed by the se of the Keynesian tools of economics. In the successive political and fiscal attack on program the scale of the government shrinks rapidly. Therefore for a good a good economic growth a constitution should be formulated which will enhance in the development of the economy. Constitutional reform in Canada cannot divorce from its materialist base. It is not agnostic towards power relations. The Atlantic Provinces are situated in a particular structural economic relationship with Canada, the continental (North American) economy and the global economy. It does not mean that there is a simple causal relationship between extreme economic dependency and constitutional docility. It merely locates provincial constitutional concerns and interests in a wide framework which helps to explain their motives

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