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Stephen McBride

Paradigm Shift:
Globalization and the Canadian State

Halifax: Fernwood Publishing, pp. 188, index, bibliography

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Neoliberalism came on to the political scene as a project of the New Right and major corporate interests with the crisis of Keynesianism in the 1970s. Neoliberalism today represents an ideological discourse, administrative and regulatory practices, a system of inter-state relations, and social form of political power across the advanced capitalist countries and, indeed, the vast majority of the world. In Canada, Bob Rae, Roy Romanow, Gary Doer and Jean Chretien have all governed as neoliberals, as have champions of the New Right such as Brian Mulroney, Ralph Klein, Mike Harris and Bernard Lord. Even when we elect social democratic or liberal parties into government, we get neoliberal governance. The ‘stylized’ characteristics of neoliberal governance and social reproduction can be identified: growing social inequalities within and between countries; a deterioration of social infrastructure and equitable access to public services; deregulation, privatization and marketization of the public sector; prioritization of the circulation of money and commodities over democratic sovereignty in international agreements; and financialization of the economy and corporate governance structures. These social processes lie at the heart of the state, administration and power today. It is striking how poorly understood they are: most social science explanations of these developments invoke a naturalistic efficacy of markets over states (although postwar development records superior performance and well-known market failures are again haunting us) or a deterministic societal re-organization because of autonomous technological developments (although why new technologies should narrow rather than extend social choices as human capacities increase is not clear).

Stephen McBride’s valuable new book, Globalization and the Canadian State, provides a quite different understanding of neoliberalism and the contemporary state. For McBride, naturalistic, autonomous processes occurring either through the spread of global markets or technological development external to the state or social conflict are not adequate to explain globalization and neoliberalism. Indeed, they serve more as justifications of political conclusions about the lack of policy alternatives because of an alleged decline of the nation-state. Instead, it is necessary to see “states as integral actors in the globalization process, to recognize that states clearly favour some sectors of their own societies at the expenses of others. We need, then, to analyze the domestic and international forces that have successfully induced states to identify their interests by way of fostering globalization” (29). The ‘state’ and ‘politics’ need to be ‘brought back in’ as explanations of both globalization and the neoliberal state.

McBride makes several specific claims. First, the processes that formed neoliberalism and globalization were not fought against the state but through the state as particular class strategies, as “matters of choice rather than necessity” (31). Second, Canada cannot be looked upon as a victim of these processes, as many on the political Left have argued, as the Canadian state “remains deeply wedded to market liberalization at home and abroad” (30). Third, the consolidation of neoliberalism has led to new modalities of state administration such that “retrenchment took form in a variety of discrete measures, including financial stringency, decentralization of federalism ..., privatization and the contracting out of service delivery” (17). Fourth, as political processes, neoliberalism and globalization have seriously eroded democratic sovereignty through quasi-constitutional agreements that “reflect the neo-liberal concern with constraining the state and freeing investors and markets from state intervention” (17). Political alternatives can neither avoid addressing the political sources of the neoliberal state nor proposing quite distinct administrative forms.

Paradigm Shift develops these contentions in two conceptual chapters and six empirical policy chapters. The two conceptual chapters neatly compress many arguments about the nature of globalization, reviewing neoliberal, Weberian and Marxist interpretations. McBride sides with what he calls a ‘post-sceptical’ view that globalization is neither new nor determined structurally; rather states have facilitated globalization as part of an effort “to recast labour/capital relations on terms more favourable to capital” (30). The empirical chapters are spirited analyses of the transformations that have occurred in the governance and administration of the Canadian state over the long decades of neoliberalism (no other text has adequately done this to date). The changes make for very sober reading for anyone concerned with democracy and social equality. Chapters 2 and 3 present Canada’s historical place in the world economy and commercial policy. The realignment of business interests around a project of continentalism and free trade, as mapped out by the Macdonald Royal Commission, was critical to establishing the neoliberal agenda. The transformations that ensued are tracked in Chapter 4. McBride shows how ‘competitive austerity’ through the 1990s has led to fiscal contraction, systematic cuts to the welfare state especially with the CHST, and the general commercialization of the public sector. These measures have led to the all too easy to predict consequence of increased social inequalities (only partly compensated by the work intensification of longer hours).

The ‘new trade constitutionalism’ traced out in Chapters 5 and 6 is especially valuable. The extension of neoliberal principles into the world trading system via NAFTA and the WTO are shown to go well beyond trade in commodities. For example, the General Agreement on Trade in Services, which follows clauses in NAFTA, are part of a wider trade agenda, although services are not traded but consumed where they are produced. Thus the new trade principles extended to services are in fact investor protections for the internationalization of capital and privatization of state enterprises and public services. The compound impact of measures such as these, McBride contends in Chapter 6, is to systematically constrain Canadian political institutions and transform our idealized view of the exercise of sovereignty. The final chapter records the protests against globalization that has made “popular sovereignty increasingly threadbare” (151), and hardened the administration of policing and security. McBride concludes that an alternative policy agenda will have to address democratic sovereignty, re-regulating capital and human security.

It is at the point of offering an alternative agenda that some of the flaws of the analysis are revealed. Neoliberalism is not just free trade agreements, market-based administrative practices and constraints on state sovereignty. Neoliberalism needs to be located in the new configuration of social power that emerged out of the 1970s turning point that provided its material foundations. It is certainly true that national business classes became as a whole more outward and market oriented in their accumulation strategies (the shift of Canadian capitalists away from protecting and developing the national economy being one of the most notable). But this strategic turn issued from a structural economic crisis that led productive capital to seek a new spatial fix in low wage zones (often in Mexico or the U.S. south, but also in greenfield sites distant from major cities), a squeeze on workers’ incomes that made effective demand more export dependent, and the massive financialization of the economy as debt, credit and speculation increased. The re-emergence of finance capital (the inter-penetration of financial and industrial sectors through the new modalities of equity holdings in various types of funds) has been an essential feature of the restructuring process. Finance capital is the central component of political power today and critical to neoliberal governance in terms of banking deregulation, macroeconomic policy, privatizations, extension of trade agreements into services and international investor protections. These developments merited separate and detailed examination in the text.

It is the social form of power represented by finance capital that a more inward-oriented economic policy, capital controls, and a state administration concerned with meeting social needs rather than fostering market competitiveness and protecting investor rights, will have to challenge. The social agencies that would have to undertake such a project – a project that would require substantial thinking through of issues of democratic sovereignty at international, national and local levels – is left unclear by McBride, though he is certainly correct that the numbers of citizens dissatisfied with neoliberalism and current state administration is growing. Only the faintest images of such an agency can be found in the street protests today in Canada and around the world during economic summits, but with completely contradictory programmes with respect to democratic sovereignty.

These are, however, only minor flaws. McBride has produced a text that is a powerful synthesis of an alternative perspective of the social processes of globalization and the transformations of the Canadian state. It will be valuable to researchers and yet accessible to students for teaching. At a time when it is clear that twenty-five years of neoliberalism has compounded our problems and not resolved them (from growing inequalities and market failures from privatizations to corporate governance scandals), Paradigm Shift is a necessary counterpoint to the conventional wisdom of so much of the current thinking of political science and the new public management. The power and inventiveness of McBride’s analysis of the contemporary Canadian state stems less from spinning fashionable new concepts but from re-establishing what we used to know well in political science about the limits of market co-ordination, the capacities of state administration in capitalist societies, and the constraints and possibilities of democratic sovereignty, before neoliberal economics became so promiscuous in the social sciences and policy-making. McBride deserves great credit for not only ‘bringing the state back in’ but also ‘social conflict’ in our understanding of market processes and public administration.

Gregory Albo
Department of Political Science
York University, Toronto