Social Policy, Inequality and Neoliberalism: The Breakdown of the Postwar Settlement

February 25

The Franchise: From a privilege to a right At the time of Confederation, the vote was generally

restricted to white males over the age of 21 who met various property or income qualifications.

From 1867-1885 eligibility was determined in by the provinces. Again from 1898-1920 the provinces determined eligibility but with some federal oversight.

Property and income based restrictions were gradually eliminated by 1920.

Electorate as Percentage of Population In the first three elections after Confederation (1867-

1874) between 11 and 12% of the population was eligible to vote.

From 1887-1917 between 20-30%. From 1917 to 1921, the electorate went from 28% to

51% of the population. The lowering of the voting age in 1970 added some

2 million Canadians to the electorate.

Source: http://www.sfu.ca/~aheard/elections/historical-turnout.html

Class Struggle and Political Reform Farmer’s Siege of Ottawa, 1910 Winnipeg General Strike, 1919 Formation of Progressive Party, 1920 Formation of Communist Party of Canada, 1921 Turmoil of the Great Depression: formation of Social

Credit party, formation of the Cooperative Commonwealth Federation, On-to-Ottawa Trek and the Regina Riot.

Rise of industrial unions, 1930s and 40s.

CCF

Co-operative Commonwealth Federation (Farmer, Labour, Socialist), formed in 1932.

In 1933 it produced, as a statement of principles, its “Regina Manifesto.”

As a social democratic party, it was influenced by the British Labour Party, but it also had a very strong origins amongst agrarian interests, particularly in Saskatchewan.

Initially, trade union involvement was basically non-existent, but there were members of small socialist and labour parties along with social democratic academics.

CCF becomes NDP, 1961

The Labour Movement

in Canada

Labour Movement

Four major waves of working-class resistance and labour militancy when the labour movement expanded its membership and its goals:

1. the 1880s,

2. the end of First World War,

3. during and after the Second World War,

4. and the decade after 1965.

Development of unions in Canada Until 1872, union activity was illegal in Canada. Yet

workers had formed unions and went on strike regardless.

By the 1830s and 40s, larger towns and cities in British North America saw the rise of craft unions organized around specific trades such as printers, carpenters, shoemakers, tailors, cabinet makers or other skilled workers.

In the 1850s and 60s, some local craft unions began affiliate with the emerging national organizations in the United States. Thus beginning the growth of international unions across North America.

The Nine-Hour Movement of 1872

Early in 1872 a meeting in Hamilton launched the movement which spread across southern Ontario and Quebec, with workers creating local Nine-Hour Leagues.

Thousands of workers in Hamilton, Toronto, Brantford, Stratford, London, Oshawa, St. Catharines, Sarnia, Guelph, Kingston, Montréal, and Halifax went on strike to secure the nine-hour day.

It included printers at the Globe newspaper in Toronto owned by George Brown, a prominent Liberal and arch rival of Sir John A Macdonald. When his employees joined the strike, Brown had them charged for engaging in a seditious conspiracy.

The Nine-Hour Movement of 1872 In response, 4,000 workers demonstrated to protest

the arrests of the striking printers. This led to the Trade Unions Act which legalized

union formation. However, it did not require employers to recognize unions or engage in collective bargaining.

In 1876, federal legislation granted some legal room for picketing.

A national labour organization, the Trades and Labor Congress of Canada (TLC) was established in 1886.

Knights of Labor

“The 1880s were a decade of unprecedented working-class militancy, centred in the emergence of an organization called the Noble and Holy Order of the Knights of Labor, a body different from the trade unions inasmuch as it sought to bring all workers into one grand organization” (Palmer, 1992: 120).

“We mean to uphold the dignity of labor, to affirm the nobility of all who earn their bread by the sweat of their brow.”

Knights of Labor: Tactics

The leadership of the Knights spoke of class co-operation rather than class struggle and tended to dislike strikes, but the Knights were involved with most of the major labour struggles and strikes of the 1880s and early 1890s.

The Knights actively engaged in electoral politics from the early 1880s.

The Knights organized some of the first Labour Day celebrations in Canada, e.g. Toronto, 1882.

Winnipeg General Strike, 1919

metalworkers struggling for union recognition asked for support, as a result some 25,000-30,000 workers went on strike, strike lasted 6 weeks.

Essential services were maintained during the strike as authorized by the Central Strike Committee.

the North-West Mounted Police fired into a crowd killing two strikers.

Winnipeg General Strike, 1919

Workers in other cities struck in sympathy with Winnipeg.

Victoria, Vancouver, New Westminster, Prince Rupert, Calgary, Edmonton, Medicine Hat, Prince Albert, Regina, Saskatoon, Brandon, Port Arthur, Toronto, Montreal, and Amherst, Nova Scotia, all saw general strikes called to support the workers in Winnipeg and to protest the arrests of strike leaders.

Industrial Unionism

“The great watershed was the 1940s. Before that point, almost every effort by various labour movements to win a permanent place in Canadian industrial and political life was beaten back by hostile employers and a generally unsympathetic state.”

“It was only during and immediately following World War II that unions made the breakthrough that allowed them to operate, within a tightly controlled framework, in most mass-production, resource, and transportation industries” (Heron, 1996: xviii).

Industrial Unionism

breakthrough for industrial unionism in the manufacturing sector came in 1937 with the strike for union recognition at the GM plant in Oshawa.

1943, one in three union members in the country was on strike.

Rise of Institutionalized Collective Bargaining

1944 Privy Council Order PC 1003: established a process to allow workers to certify a

union, once a union was certified the employer was

obligated to recognize the union, it also established grievance-arbitration procedures

which involves a mechanism for the resolution of grievances without resort to strike action;

banned strikes during the life of a collective agreement, banning sympathy or solidarity strikes

Rise of Institutionalized Collective Bargaining

1945 Ford Windsor strike; workers blocked the plant with cars; arbitration and Justice Ivan Rand came up with what has been known as the Rand formula; all members of bargaining unit pay dues, but does not compel them to be members of the union, union dues to be paid automatically by check-off

Postwar bargaining system

institutionalized the labour movement, incorporated them into the system.

Grievance procedures meant that disputes were settled by professionals rather than rank and file membership;

institutionalized procedures rather than mobilization or strikes;

union leaders were pushed to police their own members to prevent them from striking during the term of the collective agreement;

Cold War era of the 1950s meant that Communism and radicalism in general was suppressed by government, business and unions.

Rise and Fall of the Postwar Settlement in Canada End of WWII ushers in era of Keynesian

demand management, development of welfare state and institutionalized collective bargaining regime.

Economic turbulence of the 1970s and the corporate response turns the tide in the direction of ne-liberalism.

The Shift to Keynesianism

Great Depression of the 1930s War economy, 1939-45 Foreign models: Franklin Delano Roosevelt

(1933-45) in USA, Labour Party government (1945-51) in Britain.

Prestige of our good ally, the Soviet Union! Rise of the CCF Rise of industrial unionism

Rise of the Postwar Settlement in Canada 1943 Report on Social Security in Canada 1945 White Paper on Employment and

Income commits the government to goal of “high and stable levels of employment”

1946 Rand Formula: collective bargaining

Labour Militancy in the 60s and 70s There was a significant burst of labour militancy in the

late 60s up until the mid 70s, led by young workers, often rebelling against their own union leadership as well;

Canada had more strikes and more workers on strike than any advanced capitalist country other than Italy; about a third of these were illegal wildcat strikes;

Late 60s also saw the beginning of the unionization of the public sector.

In 1972, Quebec’s public sector workers engaged in a public sector general strike, perhaps the biggest strike (and among the most radical) in Canadian history.

The Growth of Social Programs

Old Age Pensions (1927)Blind Persons’ Allowance (1937)Unemployment Insurance (1941)Family Allowances (1944)Old Age Security (1951)Hospital Insurance (1957)Canada Pension Plan (1966)Canada Assistance Plan (1966)Guaranteed Income Supplement (1966)Medical Insurance (1968)U.I. expanded (1971)

The Backlash: Business Militancy and Social Conservative Movements

Onset of Inflation (%) in Canada1971 2.9 1982 10.9

1972 4.7 1983 5.7

1973 7.8 1984 4.4

1974 10.8 1985 3.9

1975 10.8 1986 4.2

1976 7.5 1987 4.4

1977 8.0 1988 4.0

1978 9.0 1989 5.0

1979 9.1 1990 4.8

1980 10.2 1991 5.6

1981 12.4 1992 1.5

Rising Unemployment (%) in Canada1967 3.8 1987 8.81969 4.4 1989 7.61971 6.2 1991 10.31973 5.5 1993 11.41975 6.9 1995 9.61977 8.0 1997 9.21979 7.5 1999 7.61981 7.6 2001 7.21983 12.0 2003 7.61985 10.6 2004 7.2

The International Context:American Leadership Challenged The ‘Nixon shock’, the US ends the

convertibility of the US dollar to gold, 1971 OPEC oil embargo and oil crisis, 1973 The United States withdraws from Vietnam,

1973 proposals for a New International Economic

Order, 1974 Iranian Revolution, 1979

The Backlash

The combination of domestic social movements, international economic turbulence and international political uncertainty

led to a social and political backlash against the welfare state and the rights of labour.

Corporate militancy

The period from the mid-1970s onward has been described by some as class politics (or class war) from above, as the business sector has aggressively mobilized to defend their interests in Canada and elsewhere.

The Backlash: American Right-wing Populism Barry Goldwater, Republican presidential

candidate, 1964. Ronald Reagan, Governor of California,

1967-75. Richard Nixon elected US president, 1968.

The Backlash: The Christian Right The rise of the American religious right in the

1970s. groups like The Moral Majority. leaders include Jerry Falwell and Pat

Robertson. issues such as abortion are central to the

backlash.

The Backlash: Corporate OrganizingAmerican Business Roundtable, 1972

International International Chamber of Commerce, 1919 Mont Pelerin Society, 1947 Bilderberg Conference, 1954 World Economic Forum, 1971 Trilateral Commission, 1973

Trilateral Commission Report – The Crisis of Democracy 1975

Trilateral Commission:The Crisis of Democracy “In recent years, acute observers on all three

continents have seen a bleak future for democratic government” (1975: 2).

“The image which recurs in these and other statements is one of the disintegration of civil order, the breakdown of social discipline, the debility of leaders, and the alienation of citizens” (1975: 2).

“This pessimism about the future of democracy has coincided with a parallel pessimism about the future of economic conditions” (1975: 3).

The Crisis of Democracy

“Changes in the international distribution of economic, political, and military power and in the relations both among the Trilateral societies and between them and the Second and Third Worlds now confront the democratic societies with a set of interrelated contextual challenges which did not exist in the same way a decade ago” (1975: 4).

The Crisis of Democracy

“The problems of inflation, commodity shortages, international monetary stability, the management of economic interdependence, and collective military security affect all the Trilateral societies” (1975: 4-5).

“Given the relative decline in its military, economic, and political influence, the United States is more likely to face serious military or diplomatic reversal during the coming years than at any previous time in its history” (1975: 5).

The Crisis of Democracy

“in recent years, the operations of the democratic process do indeed appear to have generated a breakdown of traditional means of social control, a delegitimation of political and other forms of authority, and an overload of demands on government exceeding its capacity to respond” (1975: 8).

The Crisis of Democracy in the United StatesSamuel P. Huntington: on the dangers of the

“democratic upsurge” of the 1960s

“The vitality of democracy in the 1960s raised questions about the governability of democracy in the 1970s” (1975: 64).

The Crisis of Democracy in the United States “The essence of the democratic surge of the

1960s was a general challenge to existing systems of authority, public and private. In one form or another, this challenge manifested itself in the family, the university, business, public and private associations, politics, the governmental bureaucracy and the military services” (1975: 74-75).

The Crisis of Democracy in the United States

“People no longer felt the same compulsion to obey those whom they had previously considered superior to themselves in age, rank, status, expertise, character, or talents.” (1975: 75).

The Crisis of Democracy in the United States “At the end of the 1950s…about three-quarters of

the American people thought that their government was run primarily for the benefit of the people and only 17 percent thought that it primarily responded to what ‘big interest’ wanted. These proportions steadily changed during the 1960s…By the latter half of 1972, only 38 percent thought that government was ‘run for the benefit of all the people’ and a majority of 53 percent thought that it was ‘run by a few big interests looking out for themselves’” (1975: 78).

The Crisis of Democracy in the United States “some of the problems of governance in the

United States today stem from an excess of democracy.”

“Needed…is a greater degree of moderation in democracy” (1975: 113).

The Crisis of Democracy in the United States “the effective operation of a democratic political

system usually requires some measure of apathy and noninvolvement on the part of some individuals and groups. In the past, every democratic society had had a marginal population, of greater or lesser size, which has not actively participated in politics. In itself, this marginality on the part of some groups is inherently undemocratic, but it has also been one of the factors which had enabled democracy to function effectively” (1975: 114).

The Crisis of Democracy in the United States “Marginal social groups, as in the case of the

blacks, are now becoming full participants in the political system. Yet the danger of overloading the political system with demands which extend its functions and undermine its authority still remains. Less marginality on the part of some groups thus needs to be replaced by more self-restraint on the part of all groups” (1975: 114).

The Crisis of Democracy in the United States

“We have come to recognize that there are potentially desirable limits to economic growth. There are also potentially desirable limits the indefinite extension of political democracy” (1975: 115).

The Backlash in Canada

In Canada, the backlash was, to some degree, delayed. While 1968 saw the victory of Nixon in the US, Canada experienced ‘Trudeaumania’ in the same year.

Still, the Canadian corporate elite would engage in a similar process of organizing as occurred elsewhere.

Institute for Political InvolvementA Report on the Prospects for Increased Involvement

of Business People in the Canadian Political System. April 1978.

“The premise of the enquiry is that the business-government relationship is generally ineffective and frequently counter-productive, while the political component of the relationship has remained neglected and unexamined…the process of public policy formulation would benefit from greater business participation” (1978: 1).

Institute for Political Involvement “To be credible, the private sector must

demonstrate its capacity to develop practical solutions to pressing national problems, particularly in identifying workable alternatives to further government actions” (1978: 4).

James Gillies. 1981. Where Business FailsJames Gillies: on the failure of business in Canada to

play an effective role in the public policy process. “As Canada entered the last two decades of the

twentieth century, the interrelationship between business, particularly between the chief executive officers and directors of large corporations, and the federal government was, at best, strained” (1981: 1).

Where Business Fails

“In Canada, from Confederation until after World War II, the goals of society and the corporation have been perceived to be much the same...Consequently, until the 1960s there was relatively little criticism of corporations; there was a congruence between the public and private sector” (1981: 18).

Where Business Fails

“According to CEOs, the reasons for the deterioration of business relations with Ottawa during the 1970s fall into two broad categories: first, the failure of business to have sufficient impact in the determination of the public interest; and, second, the failure of the government to operate effectively” (1981: 29).

Where Business Fails

“the planning and execution of an effective business-government relations strategy must become a highly professional activity…Corporate management must understand how governments make decisions…They must devise corporate strategies that are pro-active and include political action, public debates, massive educational programmes, advocacy advertising, and other activities and costs that many corporations have assiduously avoided” (1981: 139).

Canadian Council of Chief Executives (CCCE) Founded in 1976 as Business Council on National

Issues (BCNI). CCCE – 2001. composed of the chief executive officers of 150

leading Canadian enterprises, widely recognized as Canada's most influential business organization.

The companies they lead collectively administer C$3.2 trillion in assets, have annual revenues in excess of C$750 billion.

Thomas d'Aquino was the CEO and President of the BCNI/CCCE for 28 years, on January 1, 2010 he was replaced by John Manley, the former cabinet minister during the Chrétien government.

Business Organizations

Canadian Chamber of Commerce (CCC), 1925

Canadian Federation of Independent Business (CFIB), 1971

The Backlash: Corporate and Advocacy Think Tanks Conference Board of Canada, 1954 C.D. Howe Institute, 1973 Fraser Institute, 1974 Atlantic Institute for Market Studies (AIMS),

1994 Montreal Economic Institute, 1999 Frontier Centre for Public Policy, 1999

The Backlash: Neoliberal Citizen Groups National Citizens Coalition, 1967 Canadian Taxpayers Federation, 1990

The Backlash: Conservative Foundations corporate or family foundations that donate money

to non-profits corporate foundations are set up at arm’s length

from corporation to engage in ‘good works’ family foundations are set up by wealthy families

and individuals to provide funding to causes these foundations have been important pools of

resources to fund think tanks e.g. Donner Foundation, John Dobson Foundation

The Backlash: Socially Conservative Groups Alliance for the Preservation of English in

Canada, 1977 REAL Women, 1983 Focus on the Family Canada, 1983 Catholic Civil Rights League, 1985 Reform Party, 1987 Defend Marriage Coalition

Crisis of Keynesianism

economic difficulties, a crisis of public finance (rising public sector deficits and debt), and concerns about global competition provided the context for the shift away from Keynesianism and toward neoliberalism.

Foreign models: Margaret Thatcher (1979-1990) and Ronald Reagan (1981-1989).

End of Keynesianism

In 1979, the American govt turned to high interest rates to squeeze inflation and the Bank of Canada followed, these high interest rates led to the most significant economic recession since the 1930s, but it served the purpose of squeezing inflation and disciplining labour.

Canadian Govt Response

Restraint imposed on labour, especially public sector workers.

Anti-Inflation Program (wage and price controls) 1975-1978

Public Sector Compensation Restraint Act (“6 and 5” program) 1982-1984

Federal Govt Response

Monetary Restraint

From 1975 onward, Canada’s central bank, the Bank of Canada, was committed to monetary restraint.

Particularly in the 1980s, the Bank of Canada followed the lead of the US Federal Reserve in using high interest rates to defeat inflation.

Federal Govt Response

Restraint imposed on transfers to provinces

Established Programs Financing (EPF): block funding arrangement replaced cost-shared programs for health and post-secondary education, 1977

Major Privatizations by Federal Government de Haviland 1986 Canadair 1986 Teleglobe 1987 Canadian Development Corporation 1987 Air Canada 1988 Petro-Canada 1991 Nordion International 1991 Telesat 1992 CNR 1995 NavCanada 1996

Federal Govt Response

Massive spending cuts,

especially in 1995 budget.

Canada Health and Social Transfer (CHST)

replaces EPF and

Canada Assistance Plan (CAP)

Federal Govt Response

“The 1995 federal budget marked a fundamental shift in the role of the

federal state in Canada”

(McBride, 2005: 106).

Social programs in retreat

Corporate interests have mobilized to advocate neo-liberal policies including:

free trade agreements, the deregulation of foreign investment in Canada, tax cuts, the privatization of public services, and reductions in social spending.Successive federal governments have responded by

restraining social spending and attempting to reduce the role of the state in the economy.

Canada in comparison

Canadians tend to compare ourselves with the US and point to stronger social programs and public health care, but compared to other rich developed countries, Canada spends relatively little on social programs and has a relatively high degree of social inequality.

In 2007, UNICEF ranked Canada 12th among 21 ‘rich countries’ in child well-being.http://www.unicef.org/media/files/ChildPovertyReport.pdf

Corporate Restructuring

At the same time that the state was engaged in this shift to neoliberalism; employers were responding through economic restructuring to deal with the labour militancy and the economic turbulence. The corporate sector responded by:

re-organizing workplaces, speeding up production, introducing new technologies in a process described

as lean production, they also investing internationally, and moved to support trade and investment

liberalization.

Growing Inequality under Neoliberalism “From 1946 to 1980, family incomes grew at all

points in the distribution, so incomes shares remained roughly unchanged, and median family incomes and living standards rose rapidly. In the 1981 to 2006 period, when the gains from growth went to the top end of the distribution, real incomes for most families stagnated” (Osberg, 2008:17).

“After 1995, ongoing changes in transfers rapidly reduced the redistributive role of the Canadian state” (Osberg, 2008: 30).

Growing Inequality under Neoliberalism “Declining unionization, a lower minimum

wage, higher unemployment, less social insurance protection and more openness to international competition probably interact strongly in their impacts on inequality. If so, they should be viewed as a ‘policy package’, to contrast with the policy package of the period before 1980” (Osberg, 2008: 34).

Conclusion:

Canadians tend to consider their society to be a kinder, gentler, more egalitarian version of the United States.

However, the more generous welfare state in Canada only emerged in the 1960s. And by international standards, Canada looks more like the US than different.

By the 1980s, many of these programs were beginning to be whittled away. In the mid-1990s, Canadian governments made a serious shift to fiscal restraint.

Wal-Mart Nation: Tales from the Big Box Wars Documentary, 43 min long, available from

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