Intro to the Study of Intro to the Study of Political EconomyPolitical Economy

(continued)(continued)October 1

The Politics of Economics

Mercantilists Physiocrats Classical Economics (Political Economists) Marxism Neoclassical Economics Keynesianism Neoliberalism

Marx and Engels

The Communist Manifesto, 1848; Capital: A Critique of Political Economy, Vol. 1, 1867.

Capital “comes [into the world] dripping from head to foot, from every pore, with blood and dirt.”

“The history of all hitherto existing society is the history of class struggles.”

“The proletarians have nothing to lose but their chains. They have a world to win. Workers of all countries, unite.”

Marx and Engels

“The bourgeoisie, historically, has played a most revolutionary part.”

“The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society.”

“The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together.”

Neoclassical Economics

A return to classic (free market) economic thought

A move toward abstract theory and models and away from historical analysis.

The foundation of modern economics as an academic discipline.

John Maynard Keynes

The General Theory of Employment, Interest and Money, 1936

Amid the great Depression, Keynes argues that the state had to play a greater role in ensuring sufficient demand and directing investment.

John Maynard Keynes

Keynes was a reformer, but he was not anti-capitalist, he was not a socialist.

“Ought I to join the Labour Party?...To begin with, it is a class party, and the class is not my class…the Class War will find me on the side of the educated bourgeoisie.”

Neoliberalism

Friedrich von Hayek, The Road to Serfdom, 1944

Milton Friedman, Capitalism and Freedom, 1962

Neoliberals advocate free market economics and minimal state intervention in the economy (at least in terms of social policy and activist industrial policy).

Production, Profits, Classes

Oct. 1

Overview

The relevance of class in Canada. Class divisions or categories. Class politics in Canada. The rise and decline of the welfare state in

Canada.

Economic and Social Class in Canada? There is a common (mis)perception that

there are no class divisions in Canadian society.

Class issues have often been overshadowed by religious, ethnic, language and regional politics in Canada.

Class divisions in Canada

Even if they haven’t always been the focus of political debate, there are huge disparities in income and wealth among Canadians.

Poverty generally tends to result in social stigmatization, lower levels of education, greater health problems and an earlier death compared to higher income Canadians.

The wealthy are able to provide advantages for their children that others lack, and the absence of inheritance or estate taxes in Canada facilitates the passing on of family wealth and advantage to subsequent generations.

Class Categories

Class categories are usually described in one of two ways.

1) Class positions are gradients along the scales of income, wealth, occupation and education.

2) Class positions are positions in the economic system, related to ownership of productive property, control over conditions of work and control over labour.

Relations to productive property

The owners and managers of productive property, or the means of production. The bourgeoisie.

Small business owners, farmers, self-employed professionals. The petite bourgeoisie.

Salaried professionals, especially those in the public sector, such as civil servants, teachers, nurses. The new middle class.

The workers or labourers, who sell their labour power for a wage or salary. The proletariat.

Class Analysis

Business owners and their employees have, at a basic level, conflicting interests over levels of pay and benefits, conditions and pace of work, and control over the workplace.

At the level of the wider society, business owners and workers have different interests when it comes to labour legislation, taxation levels and policies, and social programs among other issues.

Class Politics in Canada

Historically, working class movements in Canada have fought for the right to form unions and bargain collectively over wages, benefits, conditions of work and the length of the workday and workweek.

They have pushed for various social programs, including social assistance, public pensions, unemployment insurance, public health care and child care programs.

They have increasingly pushed for policies dealing with pay equity and sexual and racial harassment.

Keynesianism and social programs in Canada The collapse of the Canadian economy during

the Great Depression of the 1930s, the protests in that decade, the labour militancy of the 1940s, the rise of the Co-operative Commonwealth Federation (CCF), and an international shift to Keynesian economic policies led to the development of social programs in Canada in the post-war period.

The Rise 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. amended (1971)Spouse’s Allowances (1975)Canada Child Tax Credit (1993)National Child Benefit (1997)

Corporate militancy

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

Corporate demands on the state

Business in Canada mobilized to push for the Canada-US Free Trade Agreement and subsequent forms of continental integration and globalization.

Business has pushed governments at all levels to lower taxes.

Business continues to fight environmental regulations, including the Kyoto Accord.

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

Total Public Social Expenditure as a Percentage of GDP, 2001

Denmark 29.2Sweden 28.9France 28.5Germany 27.4Belgium 27.2Switzerland 26.4Austria 26.0Finland 24.8Italy 24.4Greece 24.3Norway 23.9Poland 23.0Netherlands 21.8United Kingdom 21.8

Portugal 21.1Luxembourg 20.8Czech Republic 20.1Iceland 19.8Spain 19.6New Zealand 18.5Australia 18.0Slovak Republic 17.9CANADA 17.8Japan 16.9United States 14.8Ireland 13.8Mexico 11.8South Korea 6.1

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.