Two books that every social democrat, labour activist and self-styled progressive in Canada should read

In the winter of 1995, I taught a course on Comparative Political Economy at the Kiev-Mohyla Academy in Ukraine. One subject stands out in my memory, both because of its poignancy in that historical and geographic context and its relevance to our own: the role of labour in economic policy. Were there still agreeable, meaningful options that latter-day social democrats with a simple, direct, undeceived intelligence could believe in, but that would still serve to distinguish them from their fellow liberal democrats?

I remember being particularly fascinated by the example of the Swedish Labour Organization (LO) and its role in Swedish economic policy making, typically under Social Democratic governments. In the early 20th century, socialists and trade unionists were able to create a strong and unified organization of the working class. Swedish employers responded by creating a highly centralized national employers' association, forcing a comparable parallel centralization on the unions. Paradoxically, the very intensity of class conflict in Sweden had created the conditions for organized class cooperation and peaceful industrial relations.

During the long period of Social Democratic rule from 1932 to 1976, the LO came to exercise considerable power, but its leadership also came to recognize and accept a quid pro quo: that the welfare of Swedes depended not just on the strength of socialist ideas and working class organization , but also (in this small, open export-driven economy), on the operation of a dynamic and competitive capitalist economy that could compete internationally and increase the size of the national economic pie.

The neoliberalism and economic globalization of the past two decades have not left the Swedish model of cooperative social democracy unscathed, but they have not destroyed it, either. This enduring success can be explained in public choice terms. A sufficiently large percentage of the labour force is directly represented in the LO that leaders and members alike can see that by propping up inefficient industry at the expense of more profitable sectors, they end up hurting themselves. The costs of such policies cannot simply be displaced onto others--there are no "others". Hence unions are not only useful in sharing the benefits of growth more equitably, but also in sharing the costs of adjustment and decline more equitably as well. Back in 1994-95, I couldn't help but think how much NDP governments then struggling with the difficult economic conditions in Canada could have benefitted from that kind of industrial relations.

That is why Bob Rae's From Protest to Power: Personal Reflections on a Life in Politics (Viking, 1996) and Janice MacKinnon's Minding the Public Purse: The Fiscal Crisis, Political Trade-Offs, and Canada's Future (McGill-Queen's, 2003) are political memoirs of a particularly instructive kind. They describe social democratic governments attempting to implement their values under the most straitened of economic circumstances. The combination of recession, free-trade adjustment, high interest rates and debt crisis that characterized the Canadian political economy in the early and mid-1990s did not force these leaders to simply adopt the policies of their Conservative opponents, but it did force a painful re-thinking of many cherished beliefs on the left. Foremost among these was the commonly-held view that "globalization" was primarily an ideological construct, and that the unions and NDP governments should simply refuse to go along with it.

Rae claims that when organized labour failed to support his proposal for a "Social Contract" in Ontario that would in effect alter collective agreements to save jobs and reduce public debt, it missed a glorious opportunity to demonstrate to Canadians that unions were not a narrow, self-seeking interest group. Based on the historical success of the Swedish model, I am inclined to agree with him.

"Collective bargaining had shown its strength in dealing with a world of more; the issue was, for both the private and public sectors, how well could collective bargaining respond to a world of less. ...Darryl Bean of the Public Service Alliance of Canada opined that he couldn't see any difference between us and the worst of the Conservatives...[Bob] White asked, "Why can't Ontario just do like the Reichmanns and declare bankruptcy, maybe pay 50 or 60 cents on the dollar?...I learned that the leadership of the public-sector unions were more interested in the "sacredness" of contracts than they were in the importance of jobs, more concerned with protecting the full benefits of survivors than the fate of the people tossed overboard. They, as does Buzz Hargrove, think that this makes them better socialists. I disagree. It puts short-term expediency before long-term solidarity. ...Every social democratic government in existence across the world has had to learn this lesson, and every trade-union leadership has had to come to terms with the consequences. I am convinced that if we had been able to persuade the leadership of the trade-union movement, and the professions, of the necessity and logic and fairness of what we needed to do, we would still be in government today." (From Protest to Power, pp.206-207, 210, 216.)

MacKinnon relates a similar story:

"In 1993 Saskatchewan led the way out of the quagmire with the bold stroke of a four-year plan to actually balance the budget...by leading the way out of the debt trap and doing so with compassion for the less fortunate. ...To my horror, the response to my argument was that there was only one choice that was both politically sensible and would save us from abandoning fundamental NDP principles --default. ...I would have liked to ask Bob White if his idea of default meant offering up the pensions of his members, since many pension plans had invested in what were considered safe government bonds on which White and the others were now proposing that we default." (Minding the Public Purse, pp.115, 118-19, 121).

In crass political terms, the Romanow-MacKinnon strategy can be termed a success because Saskatchewan has continued to elect NDP governments; the Ontario NDP and its Social Contract can be considered a failure (even by Rae's own admission) because of the NDP's resounding defeat in 1995. But arguably both have been vindicated by the contrast between their policies and those of their Conservative opponents. In Saskatchewan, it is plain (if ironic) that the Tories' cynical plan of building hospitals in constituencies where there were more gophers than people helped to create a mess that Romanow and MacKinnon had to clean up. In Ontario, simply applying neo-conservative policies would hardly have softened the blow of losing 300,000 manufacturing jobs between 1989 and 1992; nor could it have saved Spruce Falls or DeHavilland, the restructuring of which were two of the most notable achievements of the Rae government. It might have brought on the Walkerton crisis a few years sooner, however.

In British Columbia, one of the greatest achievements of the Harcourt NDP government was the way it was able to draw upon its strong roots in both the labour movement and the environmental movement in order to hammer out broader social compromises which formed the basis for the land use plans and the government's approach to the treaty process. (The B.C. Liberals had a much flimsier basis for their policies, and still operate far too much according to the wonkish whimsy of Gordon Campbell.) Unfortunately, the NDP's failures also prove the point: labour-environment compromise; an emphasis on consultation, transparency and due process; and a commitment to institutional and constitutional reform in the first half of the nineties gave way to "process is for cheese", "environmentalists are the enemy", and "proportional representation is for losers" in the late nineties. MacKinnon's observations about British Columbia during this period are worth repeating, for they illustrate the costs of abandoning consensus-building, due process, and compromise as guiding principles:

"The resignation of Harcourt and the defeat of Cull in the 1996 election dramatically changed the dynamic of the finance ministers' club. Cull's replacement, a law professor, Andrew Petter, was bright and moderate, but as he readily conceded he was not calling the shots. While Harcourt had run a decentralized ship in which able ministers such as Cull could chart a course and get the backing of both premier and cabinet, the new premier, Glen Clark, ran a much more centralized operation. A demoralized Petter regularly bemoaned his new premier's practice of calling finance officials to his office to vet their recommendations before treasury board meetings, without the courtesy of even informing the finance minister. A finance minister who is not calling the financial shots and does not have the backing of the premier is like a rudderless ship being tossed to and fro by each passing wave.[So that's how the Fast Ferries project got past the treasury board officials!--MC] The advent of Clark also marked a change in British Columbia's approach to the rest of Canada. ...With politics rather than policy driving the agenda, Clark took a much more hard-line approach to Ottawa, a tack that was more in tune with British Columbians' distrust of the east but made reaching compromises difficult, if not impossible..." (Minding the Public Purse, pp. 163-64).

Rae and MacKinnon help us to see that the Bob Whites, Buzz Hargroves, and Glen Clarks of this world, whatever their undoubted merits as negotiators and political combatants, are also increasingly anachronisms. The lessons they hold for governments attempting to navigate the uncertain economic waters of the early 21st century are mostly of the negative kind.