CANADA’S MIXED ECONOMY © David Watts 15/10/2004

Canada is a mixture not only of peoples & cultures but of economies & economic models

Our history is a blend of stories of huge private ventures such as the Northwest Company and the CPR, and of public enterprises such as Medicare, utility companies and the CBC.

Unlike our neighbour Canada has never adopted unrestrained Darwinian capitalism and an outspoken former Canadian who did had to leave Canada to seek his fortune elsewhere

But neither has Canada been a model of planning like Scandinavia or our European parent states of Britain and France that have had social democratic governments

Canada has borrowed from different models but not modeled herself on any one. Canada is a liberal democracy with both capitalism and socialism in our culture and economy.

We may ask whether Canada would exist at all had it not been for the mix of economic systems that we have experienced and the push-pull relationship between them.

The tension between fur traders and settlers—those who ran in the woods and those who lived off the soil—was as deep as between Québec sovereigntists and federalists today.

And the seesaw between free trade and mercantilism or protectionism in Britain was mirrored in British North America. Confederation itself came from this alternation:

Britain’s adoption of free trade in 1846 forced her North American colonies into Reciprocity with the United States.

And Americans’ cancellation of Reciprocity forced Canadians to federate with each other

But this story goes back long before Confederation.

On both our east and west coasts, European development began with trading monopolies.

On the Bay of Fundy and along the St. Lawrence, France’s Company of 100 Associates opened up the fur trade. On the Pacific this was done by Britain’s Hudson Bay Company.

Immigration finally led both France and Britain to take back powers they’d given private companies. New France became a Crown colony in 1663, Vancouver Island 200 yrs later

On the plains this course was more drawn out. After the Hudson Bay Company’s lease of Rupertsland ran out, a new monopoly was granted: to the Canadian Pacific Railway.

In order to build a transcontinental railway through unpopulated territory, CPR needed protection from American railroads that could built branch lines across the border

In exchange for this monopoly and the huge grants of land it received, the Company undertook to build settlements along its line and recruit immigrants to populate them.

This was controversial in eastern Canada. The Mackenzie Liberals, who replaced Mac-donald’s Conservatives, believed the project should not be turned over to private interests

It was only after the Liberals tried unsuccessfully to build the railway as a public project that Canadians consented to place the future of the west in the hands of another syndicate.

On many occasions Canadians have set up public enterprises to secure their priorities. Over 75 years federal governments of both main parties have created crown corporations

After World War I the Conservatives created Canadian National Rail to save private lines facing bankruptcy. In the 1930’s they set up CBC for a Canadian voice in broadcasting.

In 1975 the Liberals created Petro-Canada to have a presence in the oil patch. Three years later with CN and CP withdrawing from passenger business they set up VIA Rail Canada.

At a provincial level governments of many political stripes have set up public companies too Party label and ideology have not kept them from responding to a public need.

A free enterprise Social Credit government created British Columbia Ferries Corporation.

Many provinces have had publicly owned systems for utilities such as hydro and transit.

A mixed economy is part of Canada as much as bilingualism and multiculturalism. These are not drains on the public purse. They are part of the adhesive that holds us together.

We do not see support for our culture and agriculture as “unfair trade practises” any more than our neighbour sees funding of its aerospace industry through the military and NASA

But neither can we reject a role for private capital, remembering how much of Canada’s development we owe to such enterprises as the Hudson’s Bay and CPR.

Ideas of what is private and what is public have changed over time. Matters once viewed as “personal information” are now considered “public interest” and reported in the media.

Similar changes have taken place with companies. Private enterprises have been acquired by the state for a public project, while longstanding public utilities have been sold off.

Sometimes the purpose for which an enterprise was set up no longer exists. With email and courier companies, we may no longer need a publicly owned postal system.

Sometimes a public transport company needs more money to expand or modernize than the taxpayers can or wish to provide. Selling shares is a way to attract this capital.

Sometimes a new management style is required in a new market—more than can be obtained by recruiting a few experts from the private sector to run an old enterprise.

Sometimes circumstances call for a combination of public and private funding input in we now call “P-3” enterprises. That’s not so different from the blend that built the CPR.

In ventures like this it’s important that the interests of each party be spelled out. Our first PM lost his job when this became blurred. He later came back to complete the project in a way that benefited both the Canadian public and the private company that took the risk.

In any enterprise we need to ask the question Why? “Because” is not a sufficient answer.

Dogmas of “privatization” or “nationalization” make no more sense than earlier rulers’ belief that a country should be Catholic or Protestant because “that’s the way it is.”

Canada’s experience is too rich to express in a single ideology or economic outlook. It is a wealth of ideas as much as resources and cultures that make this a land of opportunity.