From World Order to Global Disorder : States, Markets, and Dissent [1 ed.] 9780774855570, 9780774813600

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From World Order to Global Disorder

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From World Order to Global Disorder States, Markets, and Dissent

Dorval Brunelle Translated by Richard Howard

© UBC Press 2007 Originally published as Dérive globale © Les Éditions du Boréal 2003 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without prior written permission of the publisher, or, in Canada, in the case of photocopying or other reprographic copying, a licence from Access Copyright (Canadian Copyright Licensing Agency), www.accesscopyright.ca. 16 15 14 13 12 11 10 09 08 07

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Printed in Canada on acid-free paper Library and Archives Canada Cataloguing in Publication Brunelle, Dorval, 1941From world order to global disorder : states, markets, and dissent / by Dorval Brunelle ; translated by Richard Howard. Original French title: Dérive globale. Includes bibliographical references and index. isbn 978-0-7748-1360-0 1. Globalization. 2. Regionalism. 3. Canada – Politics and government – 1935-. 4. International economic relations. I. Title. JZ1319.B7813 2003

327.101

C2007-902091-7

UBC Press gratefully acknowledges the financial support for our publishing program of the Government of Canada through the Book Publishing Industry Development Program (BPIDP), and of the Canada Council for the Arts, and the British Columbia Arts Council. This book has been published with the help of a grant from the Canadian Federation for the Humanities and Social Sciences, through the Aid to Scholarly Publications Programme, using funds provided by the Social Sciences and Humanities Research Council of Canada.

UBC Press The University of British Columbia 2029 West Mall Vancouver, BC V6T 1Z2 604-822-5959 / Fax: 604-822-6083 www.ubcpress.ca

i dedicate this book to my closest collaborator,

Marina Greciano

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Contents

Abbreviations

ix

Preface

xiii

Introduction

1

1

Building the Postwar Order

11

2

Welfare States and Social Rights

35

3

Internationalism versus Regionalism in the Cold War

51

Canada and the Cold War: The Shift to Regionalism

77

Canada-US Free Trade: From the Regional to the Global

97

4

5

vii

Contents

6

Features of a Global Order

111

7

Consultation or Contention: Social Movements and Globalization

129

Conclusion

145

Notes

156

Bibliography

181

Index

189

viii

Abbreviations

CAP

Common Agricultural Policy

CARIFTA

Caribbean Free Trade Association

CIFE

Council of Industrial Federations of Europe (Conseil des fédérations industrielles d’Europe)

CNPF

National Council of French Employers (Conseil national du patronat français)

CUFTA

Canada-United States Free Trade Agreement

CMIT

Committee of Ministers on Internal Trade

EC

European Community

EEC

European Economic Community

EES

European Economic Space

ix

Abbreviations

EFTA

European Free Trade Association

ECAFE

Economic Commission for Asia and the Far East

ECOSOC

Economic and Social Council

ECLA

Economic Commission for Latin America

ECLAC

Economic Commission for Latin America and the Caribbean

FTAA

Free Trade Area of the Americas

GATT

General Agreement on Tariffs and Trade

IBRD

International Bank for Reconstruction and Development

ICC

International Chamber of Commerce

ICFTU

International Confederation of Free Trade Unions

ILO

International Labour Organization

IMF

International Monetary Fund

ITA

Internal Trade Agreement

ITO

International Trade Organization

LAFTA

Latin America Free Trade Association

LAIA

Latin American Integration Association

MAI

Multilateral Agreement on Investment

x

Abbreviations

MERCOMUN

Central American Common Market

MERCOSUR/L

Southern Common Market

MNC

multinational corporation

NAFTA

North American Free Trade Agreement

NEP

New Economic Policy (US)

NGO

non-governmental organization

NTB

non-tariff barrier

OAS

Organization of American States

OEEC

Organisation for European Economic Co-operation

OECD

Organisation for Economic Co-operation and Development

PICE

Economic Integration and Co-operation Program (BrazilArgentina)

TB

tariff barrier

UNECA

United Nations Economic Commission for Africa

UNECE

United Nations Economic Commission for Europe

UNESCAP

United Nations Economic and Social Commission for Asia and the Pacific

WEF

World Economic Forum

WSF

World Social Forum

WTO

World Trade Organization

xi

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Preface

T

he purpose of this book is to look at presentday globalization through the framework created in the aftermath of the Second World War. With its clear-cut demarcations between international, national, public, and private, this framework was put to the test with a measure of success on numerous occasions over the ensuing years, but eventually crumbled under the onslaught of a new set of political and economic forces. By juxtaposing today’s global order with that of the postwar period, this book highlights the major pitfalls that mar our globalization and its fascination with chaos. This study owes an important intellectual debt to Susan Strange’s States and Markets and Robert W. Cox’s Production, Power, and World Order. I was most impressed by their unconventional approach to their respective disciplines, the former in the field of international relations and the latter

xiii

Preface

in political economy, and it is this unconventionality more than anything else that prompted me to write this book. Yet unconventionality is a feeble pretext without an objective, and my objective here has been to further understanding of the complex relations among basic institutions and the means at our disposal for reforming or changing them. I first tested this approach in a course on globalization that I have been giving for over ten years now and in countless talks to civil society organizations. In both cases, I was reacting to momentous events for which there were no ready-made explanations. For instance, why would Canada and the United States open free-trade talks when they already had the world’s most integrated economies? What was the meaning of this free trade as opposed to free trade between, say, Canada and Costa Rica? What were the consequences of such a decision on the multilateral system? How might this free trade affect the Canadian polity? What were we citizens to do about this? All these questions, and many more, were raised over the years. Answers were needed and it was our responsibility as citizens and researchers to provide them. Research and social mobilization in Canada and the Americas generally – under the aegis of the Hemispheric Social Alliance, for example – have played an important role in advancing popular awareness on these issues, as witness the demise of the Free Trade Area of the Americas project in 2005 and the mounting criticism of free trade and liberalization throughout the world. Unfortunately, neither research nor mobilization has had a comparable impact on the ongoing process of integration within North America.

xiv

From World Order to Global Disorder

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Introduction

T

o understand what sets today’s global order apart from the world order built in the aftermath of the Second World War, I propose to compare the two, beginning with the framework on which the old order rested and going on to look at the 1989 Canada-US free-trade agreement as the forerunner of globalization. I will show how the postwar order was buttressed by a broad vision that, for the first time, brought together three complementary and mutually reinforcing objectives – security, justice, and welfare – that were entrusted to a complex network of international and national institutions. Globalization, however, has a single core purpose in the accumulation of wealth, an objective that supersedes all others, just as the institutions created to support it override those of postwar reconstruction. Unlike the earlier order based on a clear division of labour between the public and private spheres, the global order engages in the dismantling of state jurisdictions which,

1

Introduction

in turn, leads to a redefinition of responsibilities linking governments, international organizations, and big business. Now I am well aware that this distinction may seem abrupt, but there is no consensus around the precise meaning of globalization1 and I do not propose to add to the existing definitions, since I do not see that search as a determining factor at this time. However, to justify what follows I should explain what I believe to be the negative features of globalization. A world view stems from a set of interconnected principles and objectives that are attached to various national and international institutions. It embodies a homology and complementarity of principles, objectives, and levels of intervention that in turn depend on two fundamental divisions and differentiations – first, between international or regional and national and, second, between public and private spheres. These divisions and differentiations accommodate a state separate and distinct from civil society and the domestic market. A “global” approach does exactly the reverse, since it relies on a single overarching strategy, which is the removal of barriers between international and national and public and private spheres for the benefit of private right holders. A global perspective is neither holistic nor universal, international nor national, but highly focused on its objectives and all-encompassing in its means. It targets all normative and regulatory obstacles, especially those that prevent private predatory practices against common or collective goods. In this sense, it has a profound effect on the redefinition of relations between the state, civil society, and markets and between collective and individual rights as well.

2

Introduction

My goal in writing this book is thus both simple and ambitious. Comparing two historical moments separated by some fifty years, I want to distinguish a world order that emerged in the immediate postwar period from a global order surfacing in the dawn of the new millennium. I want to distinguish a vision steeped in universalism and internationalism from the particularizing, selective approach that now prevails. And even though the postwar vision was, as we shall see, deeply steeped in liberal philosophy and tradition, its overall objectives can still be effective in critically questioning the present global order. I have no intention here of basking in nostalgia or reviving a liberal world view, but I do believe there is still much meaning in the broad perspective on which the postwar world order was built, and the best way to separate the substance of its objectives from the trumpery of liberalism – winnow the wheat from the chaff – is to look at the founding parameters and how they were given effect. The qualification of the postwar world order as universal and inclusive does not mean that it was without blemish, just as I do not claim that globalization is devoid of loftier ideals. The opposition between the two is basically set up for methodological purposes and each case should be seen as an ideal type. The past decade or so has seen a significant collective critical effort to find ways of reforming the global system and alternates to market liberalization, but, to my mind, these attempts suffer from a fatal flaw – an amnesia that clouds the deep-seated sources of our present difficulties. This is why I have chosen to begin by looking at the founding

3

Introduction

principles of the postwar world order, examining the inner logic that links state action domestically and the postwar international system at a theoretical or abstract level. This process will illustrate the shortcomings that dogged the implementation of some lofty ideals. It will also help us understand why, instead of creating a single world market, the compromises made over the years have led to the coalescence of economic blocs, and how this outcome, far from fostering solidarity among peoples and a fairer redistribution of wealth, is taking us along a path towards aggravated economic inequality and social exclusion. As far as the analysis and interpretation of globalization itself are concerned, I intend to begin my examination with the reasoning that led to the free-trade negotiations between Canada and the United States in 1985, primarily because I will use that free-trade agreement as the foundation on which economic globalization as we know it was built. Doing so will enable me to clarify some of the major differences between a world order and a global order. Since my whole argument rests on a clear-cut contrast between two concepts, a word of explanation is warranted. I choose to start with the world order as created in the aftermath of the last general conflict because the scope and ambition of the thinking that produced it were such that the overall plan had little in common with anything done before. Although exchanges on a grand scale and international relations are ancient, as writers such as Arnold Toynbee, Fernand Braudel, and Immanuel Wallerstein have shown, the normative and institutional framework set up in the 1940s was unique.

4

Introduction

The labours of historians are indispensable for anyone wanting to analyze the basic features of modern capitalist internationalization, whether in terms of capital mobility, trade flows, and migratory patterns or to clarify the roles of institutional, technological, and ideological innovations or progress in political economy. Although these and many other factors are essential for understanding international capitalism over the long term, the Second World War was still a pivotal moment for launching an audacious plan to build institutions that should have brought lasting peace to a tormented world. Indeed, this normative postwar institutional system staked out such highly original conceptual and institutional ground that it could well represent an ideal starting point and standard of comparison with the present global order, showing us the facts in a wider perspective and affording us a deeper grasp of today’s complex issues. In this sense, the amnesia evoked earlier as an obstacle to understanding our present predicament has to do not with indifference to long-term historical cycles or trends but with short-term memory loss that blurs the significance of a normative and institutional framework established some sixty years ago. This framework has had a direct and immediate impact on our present global order – much more than any other previous legal or institutional innovation. But my argument goes farther than this and evolves as follows: just as the previous world order was heir to the many international meetings held in the period 1944-48, when a given set of parameters and institutional innovations was sanctioned and applied, the present global order is heir to the free-trade agreement between Canada and the United

5

Introduction

States that helped define a new set of parameters and institutions, ushering in a new wave of “global” market integration. The most striking difference between these two processes is that the former rested on a top-down approach from states to economies while the new approach operates the other way, bottom-up from markets to states. This reversal highlights the contrast between the role played by politics in setting up the postwar order and today’s domination by market forces that are immune to politics, understood as the pursuit of the common good and the redistribution of wealth. Moreover, as we shall see, post– Second World War politics were basically universal and inclusive, whereas today’s politics are particularistic and selective, just as markets are. Virtually all political entities were invited to join in and build the postwar order, while globalization works from a narrow slate of candidates for market integration with massive exclusions at the planetary and local levels. Finally, since the Canada-US relationship is still the world’s biggest bilateral trading association, it is quite understandable that this unique relationship should serve as a laboratory for defining and implementing an alternative to the inclusive world economic system still leading in theory but ever creakier in practice. I propose to show how this model of integration pioneered by Canada and the United States in the mid-1980s, having swallowed Mexico in the 1990s, will now go on to embrace Latin America and other partners throughout the world. In this sense, the plan to globalize the world is unquestionably an American plan, as New York Times political columnist Thomas Friedman reminded us with his trademark cynicism when he wrote

6

Introduction

“Globalization is us,” a phrase soon picked up by its champions as well as its detractors and recast as “Globalization is US,” implying that “Globalization is the United States.”2 Angle of Analysis Understanding an institution or cluster of institutions requires us to look beyond origins and functions and concentrate on common founding principles and underlying logic. To this end, I propose to delve into the rationale of the architects of the political and economic order in the wake of the Second World War, framing the issue as it was seen at the time. This will help us understand the complementarity among institutions at the international level and between these institutions and the ones emerging within the nation-state. Many readings of that period relay little more than a set of unrelated, ad hoc postwar responses to a spurious set of economic, political, social, and legal challenges. They find no common thread because they see no connection between, for example, the Bretton Woods conference3 of July 1944 and the 1948 Universal Declaration of Human Rights on one hand and state intervention based on a mixed economy and welfare on the other. I will show how these events are interconnected and why, as the failure to recognize this fact is hugely problematic. In the following pages, whether I am trying to explain the postwar or global order, I will go after founding principles and related broad objectives to pinpoint the main impediments to their implementation. This approach goes a long way towards explaining how the shift from one order to the other does not stem from a choice between options but is driven by inconsistencies

7

Introduction

within a conceptual framework. As we shall see, the shift to a regional or continental model of development in the Canada-US Free Trade Agreement involved a renunciation of multilateralism by the Canadian government while increasing US manoeuvrability at both the multilateral and bilateral levels. Before proceeding, I owe a final methodological clarification that has an important bearing on my argument. My angle of approach incorporates Jean-Paul Sartre’s notion of “constituent thought.”4 Constituent thought, or constituent thinking, is a theoretical argument or set of arguments which plays a foundational role, in that other thinkers or practitioners create their own rationales within the parameters it defines. Marx, for example, was not just the author of a theory but a creator of constituent thinking that was put to use by all who proclaimed themselves Marxists and either taken up or taken apart by most thinkers and researchers in the hundred or so years after his death. In other cases, the identification of constituent thinking can be much more demanding, as would be the search for the thinking at the origin of liberalism. The notion of constituent thinking therefore overlaps with that of theoretical framework and, though seemingly close in meaning to “paradigm” as defined by Thomas Kuhn,5 has one central difference in being foundational, not only in a theoretical and empirical sense, but in a practical sense as well. Originally, the idea of constituent thinking came down from constitutional law. Legal theoreticians and practitioners rightly insist on the importance of constituent thinking in interpreting the provisions or clauses of legal texts beset

8

Introduction

by terminological ambiguity. This involves winnowing through the writings and other documents that were published, distributed, and discussed before or even some time after the framers of a constitution got down to work, and identifying the ones with significant impact on its final draft. A classic case that springs to mind is the Federalist Papers, a series of articles by Alexander Hamilton, John Jay, and James Madison designed to rekindle debate around the promulgation of a new US constitution and published in the New York Independent Journal between November 1787 and April 1788. A more extensive use of constituent thinking might forage for actions more distant in time and space that throw new light on the emergence of a particular economic and political system. This is how I intend to focus on the rationale behind the postwar order and the Canada-US regionalism that led to globalization. My aim here is to draw attention to a specific issue of importance that we tend to underestimate: defining the parameters of an alternate globalization. Piecemeal thinking, like piecemeal answers, has its uses, but prevents us from stepping back as we must when designing an alternate world framework. In any case, I am not setting out to define strategies or endorse any course of action. Rather, in revisiting the postwar framework and institutions, I shall bring out everything that separates us from that era in terms of ideas, and everything we owe it in terms of achievements. In this regard, there are, it seems to me, three important reasons to renew acquaintance with the objectives of the founders and architects of the post–Second World War order: first, this world order was steeped in lofty views and

9

Introduction

broad concerns that had no equivalents at that time and have found none since; second, its early collapse was basically due, as we shall see, to internal contradictions inherent in a social-liberal world view that, incapable of achieving genuine social and equitable economic internationalization, went on to commit all its strength and credibility to the pursuit of globalization; and, third, the constituent thinking behind that postwar order is still as valid today as it was sixty years ago, not only in abstract terms, but in practical terms for defining alternatives to market globalization. This brings me to my last objective. The idea behind this book is not merely to compare foundations, frameworks, and institutions, but to sort out the roles of governments and other economic and social stakeholders in the post– Second World War environment and today’s global conjuncture. The juxtaposition is interesting and revealing because it allows me to show how certain economic and social forces were enlisted in the process while others were left behind. It also enables us to follow this process as it affects groups that are either reintegrated or expelled from its successor, the present global order. These are, as we shall see, issues that go a long way towards explaining the nature of the current opposition to market liberalization and globalization.

10

1 Building the Postwar Order

T

he future of liberalism came under growing threat as the 1930s wore on and economic depression crept across the world. One by one, governments in Europe, Latin America, and Asia, three continents encompassing the vast majority of that era’s sovereign states, moved towards various authoritarian forms of statism. The Scandinavian countries, Britain, Mexico, Canada, and the United States were almost alone in resisting this turmoil, although Canada and the US did see a number of their constituent states and provinces drawn to forms of “illiberalism,” as seen in the emergence of new parties such as Social Credit in Western Canada and the Union Nationale in Quebec and the rise of grassroots leaders like Huey Long in Louisiana. In this highly charged atmosphere, with liberalism under fire from all sides, New York Herald Tribune columnist Walter Lippmann brought out, in 1936, a book promised to

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a brilliant future: The Good Society. The French edition was published as La cité libre1 with an introduction by André Maurois, who summed up the writer’s argument as follows: Liberal capitalism has organized the planet, giving the average man a more satisfying way of life than the lord of yore and fostering the emergence of free states where unequal individuals are all nonetheless subject to the same laws. Yet one cannot say that it succeeded completely, and the intellectual inroads of collectivist ideologies are proof of the relative failure of a system they have brought into discredit. But why such failure? According to Lippmann, because capitalism ceased to be liberal. Economic liberalism was founded on statistical compensations among millions of desires, ambitions, and plans. But large corporations have made this mechanism unworkable. Legislators ought to have left the economic system alone and secured its free operation through laws aimed at trusts, monetary reserves, and savings-holder protection. But they failed to do so. Monopolies amassed outrageous fortunes which little by little transformed aristocratic governments into self-styled democracies that were actually plutocratic. The doctrine of laissez-faire was, for a long time, an impediment to any legislation protecting work and leisure … But why blame liberalism for the lawmaker’s mistakes? A constructive liberalism can be imagined that would give governments a controlling but not a commanding role.2

Clearly, the renewal of liberalism – or its rehabilitation, as the case may be – called for a radical change of direction: untrammelled capitalism should be abandoned and some

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form of controls imposed. Walter Lippmann’s argument was clearly inspired by his friend John Maynard Keynes, whose General Theory of Employment, Interest and Money was published in the same year. In his “Concluding Notes on the Social Philosophy towards which the General Theory Might Lead,” Keynes had this to say about capitalism: In some other respects, the foregoing theory is moderately conservative in its implications. For whilst it indicates the vital importance of establishing certain central controls in matters which are now left in the main to individual initiative, there are wide fields of activity which are unaffected. The State will have to exercise a guiding influence on the propensity to consume partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in other ways ... I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment ... But beyond this, no obvious case is made out for a system of State Socialism which would embrace most of the economic life of the community. It is not the ownership of the instruments of production which it is important for the State to assume. If the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic reward to those who own them, it will have accomplished all that is necessary.3

These excerpts are revealing because they call for a sweeping reform of liberal capitalism that does not question laissez-faire as such but rather the state’s failure to shelter economic life from monopolistic influences.

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The Lippmann Symposium Keynes’ book was probably too heretical to have an immediate and profound impact at the time: by contrast, no sooner had Lippmann’s essay appeared in Paris than a symposium was convened in the summer of 1938 to test the new ideas. This gathering was not intended merely to stir up discussion around the publication of a book: it was called primarily to gauge the current state of liberalism and redefine the liberal agenda. The Paris organizers brought together contemporary stars of liberal thought, including Raymond Aron, Friedrich von Hayek, Étienne Mantoux, Robert Marjolin, Ludwig von Mises, Michael Polanyi, Wilhelm Röpke, Louis Rougier, and Jacques Rueff.4 The symposium was a turning point and at the same time a highly symbolic event, creating a deep rift between the proponents and adversaries of state intervention that marked liberal thinking for decades to come.5 The event could hardly have been better timed: in August of 1938, opinions were hardening on whether France should continue to oppose the expansionist aims of Nazi Germany.6 Liberalism had been battered in the world press since the end of the Great War, and the feeling among liberal intellectuals gathering in Paris barely a year before the outbreak of a second general conflict was that matters could hardly look worse. The merest glance at a map would confirm that liberalism was regressing everywhere, even in the English-speaking world, while in public debates and the press, liberal politicians, philosophers, and strategists were everywhere under siege. Contributors to the symposium, trying to explain this situation, offered some rare insights. Röpke and Rougier,

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for instance, ascribed the restrictions choking the market economy and the drift towards authoritarian government to one fundamental cause: the irruption on the political stage of factions and splinter groups bereft of open allegiances and lofty principles. If the relevance and legitimacy of liberalism, its principles and norms, were basically tied to the unfettered operation of the economy where its practical benefits were first felt, the political arena still obeyed the laws of nature. In other words, unlike the economy, politics went on without the rule of law and without competition, simply the law of the jungle. Therefore, in order to save the liberal economy, liberal thinkers, economists, and philosophers would have to adapt the rule of law and principle of competition to the political sphere. If Adam Smith’s vision and outlook had dominated economics for more than a century and a half, the time had come for Immanuel Kant’s thinking to play a similar role in politics. Smith had preached free competition, free trade, and open markets: his liberal theories saw the primary role of government as removing impediments to the free flow of capital and labour – the factors of production. Following Kant’s thinking, relations between governments and citizens should be framed in legal terms, with citizens fully protected against government intrusion into their private lives and affairs. In other words, the fundamental public mandate of government should be to shelter and protect under law both private and public relations among its citizens. Law was central to such a project because, according to Kant, it is law’s function to “limit individual freedom in accord with the freedom of all; and ... public law is the sum of the laws that make such general agreement possible.”7

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Yet if the emphasis is put on law, how could a subject be legally bound to the state and at the same time retain his autonomy? The answer lay in sheltering citizens’ legal compacts, contracts, and other agreements from government policy: it was essential to recognize the inherent rights of citizens, not as subjects or voters, but as human beings. These fundamental rights must be enshrined in a separate legal instrument that would have the weight of constitutional law. In fact, support for civil and political rights was essential to the very survival of the liberal economy but, over the years, these rights had been superseded by legal and other advantages lavished on corporations. Lippmann had seen this clearly when he wrote at the beginning of his book: It gradually dawned on me that Adam Smith would not have regarded the corporate capitalism of the nineteenth century as the “obvious and simple system of natural liberty” which he had imagined, for he had been careful to say that it was the duty of the sovereign to protect as far as possible “every member of the society from the injustice or oppression of every other member of it,” and it was plain from the whole tenor of his book that he meant something more substantial than the equal right of the rich and the poor to drive hard bargains. Yet the doctrine which has come down from him and from the great liberals of the eighteenth century has in our time become the intellectual defence of much injustice and oppression ... I seek to find out why the development of the liberal doctrine was arrested and why liberalism lost its influence on human affairs. In order to do this I have tried to ... indicate certain vital points where, because the liberals failed to develop the promise

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of liberalism, they ceased to interpret experience and to command the interest of the people.8

The full recognition and sanction of civil and political rights thus served the dual purpose of strengthening the market economy and introducing freedom of choice to the political system. If vested interests, splinter groups, and factions could overrun and dominate political life and make off with the economy, it was essentially because the political order was in disarray to begin with. Thwarting this menace called for healthy competition between political options and parties committed to the defence and promotion of individual rights and freedoms, thereby excluding groups that rejected these principles. Economic liberalism, to survive, must now be based on a political pluralism that backed two requirements – the rule of law and the protection of civil and political rights. Given these, the rule of law could be used to build a new political order that could in turn strengthen the liberal economy. Once established, the idea that economics, politics, and law were tightly interwoven still had to be institutionalized. Of course, government was the defining authority in this passage to a political liberalism that would control the economy according to Lippmann or command it according to Keynes. In either case a dual mission fell to government – the advancement of civil and political rights on one hand and overall management of the economy on the other. Around the political management of the economy and the nature of these involvements, irreconcilable disagreements emerged to create a profound and continuing rift between two liberal schools of thought: those who remained

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faithful to the “classic” liberal ideals of von Hayek, for whom government must be satisfied with the negative role of removing obstacles to the free operation of the marketplace, and a new faction that preferred the name “neoliberal”9 and chose to promote a more active state intervention in the economy. These latter liberals would rally around the ideal of an interventionist state based on Keynes’ thinking. This split within liberalism set those who believed that the economic system was self-adjusting over the long term, though after a prolonged interregnum of high unemployment and dire poverty, against those who claimed that poverty and unemployment were scourges and not unfortunate prerequisites on the road to prosperity. Von Hayek and Röpke argued that unemployment and poverty should be attributed to political tinkering with economic laws, whereas Keynes, in the “Concluding Notes” to his General Theory, held that “the outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”10 Keynes showed that government intervention could become necessary in certain short-term situations for reasons that stemmed, not from the economy as such, but from the political economy in its broadest meaning – that is, for reasons of public management of the national economy, especially in maintaining high levels of employment.11 If he found some saving grace in the protectionist case, it was less philosophical than pragmatic. The growing core issue was defined by Jacques Rueff in these words: “The essential problem, the one holding all the others back, is that of

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determining which interventions are acceptable, and which are not incompatible with the price mechanism.”12 Two quick conclusions can be drawn from this overview of the ongoing debate among liberals at that time. The first is the importance of this new focus on the rule of law that was to bring governments to acknowledge and enforce civil and political rights – a requirement that hinged on the acceptance of political pluralism. In turn, this rights recognition process would help to implement the laws of supply and demand in the political sphere, extending the market rationale already at work in the economy. However, the political endorsement of the principle of competitiveness must certainly not be seen as recognizing that “might is right.” The second conclusion is that, once the idea was established of setting up a pluralistic political system, the spectrum of opposing forces in this future political order would have to be defined. This defining process would disqualify radical political positions as well as those challenging the legitimacy of pluralism itself – a consequence of special importance for classical liberals who disagreed with the legitimacy and validity of political meddling in economic and private affairs. Meanwhile, Ludwig von Mises, Friedrich von Hayek, and other anti-interventionists would turn to channels outside the political arena to promote their theories and ideas, particularly among the business élite and students. It was they who founded the Mont Pelerin Society in 1947 and moved on to teach economics in the United States and launch influential periodicals over the years.

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In the period leading up to the Second World War, observers and analysts were concerned that so many governments had somehow been moved to invade and absorb other countries, exercising unbridled powers that imperilled world security and imposing measures that directly impinged on the personal security and welfare of their own citizens. The framers of the postwar world order sought to overcome these forces by implementing a legal system based on the age-old distinction between public and private spheres of activity on one hand and between national and international levels of intervention on the other. In practical terms, the threats that liberals felt had to be faced were continuing class conflicts at the national level and the coalescence of economic and political blocs internationally. Class struggles posed the specific problem of dealing with collective issues in an individualistic ideology and were solved by diluting class conflicts in a national ethos where the state stood as guarantor of social rights. The menace of international blocs would be warded off by founding a world economy on a universal association of independent, legally equal states, each committed to the expansion of its national economy with the aim of improving the general and national welfare. Thus emerged parallel universalities, first of citizens as equal holders of both individual and social rights within the nation-state and, second, of equally sovereign states on the world stage. Yet, if this liberal world view was in many cases legally enacted, it was never effectively implemented, since governments had to contend with unquenchable group interests nationally while condoning the survival of colonial empires at the international level. The net result

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of this schism between law and fact was that universal access to economic and social rights in particular saw many setbacks in each and every state, just as the failure to acknowledge the de facto equality of states never produced a truly universal community of united nations. The postwar period witnessed much state encroachment on collective rights in the name of individual rights just as, symmetrically, self-serving state interests in the countries of the North were evoked to undo agreements between weaker partners in the South, agreements that would have afforded them more access to northern markets. My comments up to this point have aimed to reinforce my premise that there was indeed a form of constituent thinking or overall logic behind the founding of the major international organizations in the years 1944-48 and, by the same token, this thinking or logic played a major role in defining the legal concepts on which this new order was built. In this process, the main conceptual tools used – especially the four core ideas of public, private, national, and international – assumed new, expanded, and original meanings that explain the postwar separation of public and private realms internally and national and international spheres externally. In this sense, then, the postwar order established a new division and complementarity between governments’ domestic and international activities.13 Welfare in the International Agenda It would be a daunting task indeed to explain the wealth of ideas and plans that emerged from the debates raging around these questions shortly before and during the Second World War – particularly the issue of finally, after two

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world conflicts in rapid succession, establishing a durable peace. Among these outpourings were the essays, studies, and analyses published by French and other exiles taking refuge in Britain, the United States, Canada, and Latin America14 and books brought out by the likes of Clarence K. Streit, Wendell Willkie, Herbert Hoover, Henry A. Wallace, and Sumner Welles, all idealizing the construction of a just and peaceful postwar world.15 We can gain a sense of the long-term importance of this intellectual output by recalling that four twentieth-century classics appeared in just one year, 1944: Karl Popper’s Open Society and Its Enemies, Friedrich von Hayek’s The Road to Serfdom, Karl Polanyi’s Great Transformation, and Georges Gurvitch’s Déclaration des droits sociaux. To these four we should add the more practical output of Denis de Rougemont, Edward Carr, Léon Blum, and Alvin Hansen, among others.16 But of greatest import, to the English-speaking world at least, were William Beveridge’s two reports, Social Insurance and Allied Services (1942) and Full Employment in a Free Society (1944), both of which were to have a momentous impact on the social state in the following years.17 Although the above works are indispensable for clarifying the issues, meaning, and scope of the new world order, they lack the relevance to our concerns of James T. Shotwell’s Great Decision, also published in New York in 1944. Written from first-hand knowledge, Shotwell’s study casts a most interesting light on how and why the mandates and missions of the major international organizations set up in the wake of the Second World War were divided and distributed.18 The Canadian-born historian and sometime Columbia University teacher had this to say in his Great Decision:

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It is therefore time to think about the edifice of world peace as a whole and not merely the separate parts of it which are being created to deal with the most pressing problems such as relief and rehabilitation. All of these activities overlap and call for political judgments. The field of welfare cannot be organized without regard to that of security. Machinery to guarantee freedom from hunger or to stimulate sound economic practices will be worthless if we emerge from the second World War only to go into a state of preparedness for the third World War. The international organization will be an incomplete and unbalanced scheme unless we keep in mind the interplay of one subject with another, and above all, the necessity of working out a political co-operation to preserve the peace.19

To accomplish all this, the “international organization” in question had to be equipped to achieve the three major objectives of security, justice, and welfare, all subsequently enshrined in the Charter and mandate of the United Nations Organization.20 The first two were thus far the only ones recognized in international covenants, treaties, or agreements, for the obvious reason that welfare was preeminently a national prerogative with nothing to commend it to any kind of international authority then existing. From Shotwell’s standpoint, then, the presence of welfare as the third objective accounted for the originality of the UN Charter endorsed at San Francisco in March 1945. This Charter created four entities instead of the usual three: a General Assembly (ch. iv), a Security Council (ch. v), an International Court of Justice (ch. xiv), and an Economic and Social Council (ch. x) to oversee the United Nation’s “specialized agencies” (art. 57) and be the

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“co-ordinating centre for all agencies involved in the various aspects of human welfare.”21 The Charter unquestionably contributed to the founding of a “new world order ... by urging peoples, behind their governments, to act directly on international affairs” and matters pertaining to their own social welfare. As Shotwell wrote in August 1945 to introduce the French translation of his book, “[the UN Charter] requires different approaches for each issue: a crisis plan for security involving the police and the use of force, a cooperative system for the well-being of citizens; law and an international legal procedure for justice.”22 Security, however, would tower over the welfare issue to dominate the international agenda from the start . The Charter gave the Security Council decision-making power (art. 25) while the Economic and Social Council could at best make recommendations (art. 62, para. 2), essentially because welfare or prosperity issues were still seen as primarily domestic.23 Nonetheless, to promote welfare and counteract a traditional state propensity for economic isolation and protectionism, the new order should facilitate commodity market expansion as the sole guarantee of a prosperous world economy. Shotwell pleaded in favour of “a major reform if not a revolution in world economics” that would dismantle barriers to trade and foster economic liberalization: “We are not talking of total free trade any more than of total disarmement, but only of the reduction and limitation of trade barriers so as to strengthen instead of check the healthy flow of commodities and services where they are most needed in a world which will need them badly.”24 The failure of the League of Nations security and justice model to prevent the Second World War was used to shoe-

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horn in a welfare mission promising universal peace and prosperity. This mission promoting full employment at the world level was enshrined in the 1944 Philadelphia Declaration reinstating the International Labour Organization (ILO), but dropped when the US Congress refused to accept the new International Trade Organization (ITO) endorsed at Havana in 1948. Thus, full employment was denied propositional status within the UN system and fell into abeyance, even though the United Nations’ international organizations continued to work closely with national governments in numerous other areas.25 Full employment was left as the purview of the welfare state while international economic institutions concentrated on expanding world markets. There was a coherence running through all these compacts and treaties – the Bretton Woods agreements, the United Nations Charter itself, the General Agreement on Tariffs and Trade (GATT) that came out of the 1947 International Conference on Trade in Geneva, and, finally, the 1948 Universal Declaration of Human Rights. This coherence and the implicit complementarity between the organizations involved should be interpreted on two levels: first, they reflected functional connections among organizational missions and, second, they sprang directly from a socialliberal world view that attempted to link political pluralism and the promotion of welfare. This postwar order was, in fact, far more liberal than social. Not only were the basic ideas used to design and construct this order permeated by liberalism, but the conceptual mapping behind the process was liberal as well. According to most thinkers and political players of the day, this liberalism seemed all the

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more irrefutable and likely to command worldwide consensus since no alternative was present to challenge it at the time, not even from the USSR. And this is probably why a number of architects of the postwar order, including President Franklin D. Roosevelt himself, made the mistaken assumption that the Soviet rulers would not be all that reluctant to recognize this design and master plan – joining would require them only to curb their totalitarian statist zeal. The coexistence in this world system of universalism and liberalism was problematic inasmuch as it pushed the limits of liberal thinking that saw boundaries between individuals – and boundaries between countries – as taking precedence over solidarity or unity. But there is a contradiction here, since welfare must rely on some form of solidarity and redistribution at the domestic level, just as international prosperity must rely on the sharing of wealth between unequal partners. This contradiction would be played out most tragically in the Latin American nations and the newly independent Third World nations of Africa as their governments strove to break their economic and political ties to dominant partners or former mother countries. Furthermore, far from developing a clear consensus on charters and declarations that could win support from the broadest range of political systems, this liberal view would end up littering the planet with a jumble of treaties, agreements, and protocols heralded by fine statements – though we may wonder whether they ever really did promote democracy and help achieve a better planetary distribution of wealth. Moreover, some accords would prove vulnerable, as the fate of the 1948 Universal Declaration of Human

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Rights shows only too well. For three decades following its signature, dissent swirled around the extent and content of the obligations that were supported by governments, so that not one but two legal instruments would be needed to give the declaration effect: an International Covenant on Civil and Political Rights (ICCPR) and an International Covenant on Economic, Social and Cultural Rights (ICESCR).26 To achieve their ambitious objectives, the framers of the postwar order decided to retain a “functional method of international co-operation, thinking first of the job to be done and then finding the best way to do it, [which] means to create international organizations as the need arises.”27 This procedure was in marked contrast with the idealistic approach that would have foreseen all possible eventualities or the realistic approach that would have attached more importance to regional agreements and the creation of regional organizations. At all events, the universal functional approach did attempt to deal with regional realities, as demonstrated in Chapter viii of the San Francisco Charter on “regional arrangements” and Article xxiv on regional accords in the 1947 GATT.28 In this connection, it is interesting to recall that there was actually a dual institutionalization process under way in the 1940s, first at the planetary level and, second, at the regional or continental level. Both involved dense series of meetings, an example being the Mexico Conference of 21 February to 8 March 1945 that produced the Act of Chapultepec, followed three and a half months later by the San Francisco Conference that signed the United Nations Charter on 26 June. Moreover, the wording of declarations and other texts was surprisingly similar on both levels. This

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poses a problem, since the theoretical status and policies of regionalism were never clearly defined and the case-by-case process was strategically weighted to extend much more credit to regional arrangements involving Western nations than to arrangements among developing countries. These contradictions were given another focus in the 1944 meeting at Bretton Woods, New Hampshire. For reasons that are not easy to explain and even harder to justify, the only official memory economic history has preserved of the Bretton Woods Conference is the face-off between the theories of Englishman John Maynard Keynes and American Harry Dexter White. Their rivalry is well known and documented. Keynes wanted to create a single international financial body and world currency, while White favoured two organizations – a fund, the International Monetary Fund (IMF), and a bank, the International Bank for Reconstruction and Development (IBRD). As far as international monetary policy was concerned, White opted for the status quo, which meant maintaining the US dollar as the universal currency with a fixed exchange rate based on the gold standard. Interesting and important as it may have been, this rivalry embodied two views from the developed countries and had little to offer the delegations of most of the forty-four countries present at Bretton Woods. In fact, there was a third issue at stake at the Bretton Woods Conference, an issue that from the outset undermined the so-called economic universalism promoted by the liberal postwar program, even before the Cold War.29 To understand this, we must look more closely at the conference and the positions argued by representatives of less developed countries, some of which had contributed

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substantially to the Allied victory. Eduardo Suarez, Mexico’s Minister of Finance and Public Credit, suggested that the future world economic organization be empowered to speed the rebuilding of war-torn economies and foster development in less economically advanced states.30 However, since centre stage was transfixed by the battle between US and British plans, the conference never got back to this proposal. Despite the fact that the dual mission of reconstruction and development was eventually enshrined in the name of this new international body, the IBRD, later the World Bank, did not proceed along these lines. The less advanced countries would receive far fewer loans than the countries of Western Europe. The rebuff at Bretton Woods did not stop the Latin American countries from joining the IMF and the World Bank in 1945-46.31 Barely two years later, however, in 1948, these countries turned to alternate growth strategies, relying on an updated form of economic nationalism to protect themselves from integration schemes concocted by their wealthier partners. Consequently, the melting away of potential partners for the construction of a truly international economic order was due not only to the protectionist stand of the US Congress and the Cold War, but also to the First World’s inability to do justice to the legitimate claims of the so-called “backward” countries, as they were then called.32 Meanwhile, the twenty-three countries actively involved in building this new economic order rallied around the GATT and liberalized trade by applying two basic principles – the most-favoured-nation clause (MFNC) and the national treatment clause (NTC) – among themselves. These two rules actually sanctioned a single

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requirement, seen from two different standpoints: the MFNC was based on non-discrimination among trading partners and the NTC took non-discrimination into the domestic arena.33 Universality and Differentiation In conclusion, I shall return briefly to the principle of universality. Universality, as we have seen, is based on equality – equality of subjects within a state and equality of states in a well-regulated world order. But as philosophers have taught us since Plato and Aristotle, the indiscriminate enforcement of universality, the treatment of every individual or every state as equal to any other, would create dire injustice for the weak and underprivileged. This is why, to release its full power to promote equality instead of concealing injustice and asymmetry, universality must be coupled with a second principle, differentiation. Differentiation assumes that specific cases and circumstances require specific treatments and even exceptions. The poor man cannot be expected to pay the same tax as the wealthy, just as small countries cannot be expected to contribute like rich ones to the cost of world security. It is for this reason that the new world economic order framed a host of exceptions, as in Article xxiv of the GATT, that were intended to cushion the entry of the weakest economies into the world system by taking their special circumstances into account. Unfortunately, when it came to establishing the postwar order, differentiation was used more to promote inequality than equality. For example, the United Nations system was singled out as an “organization,” not a “state” or “government.” This was done not only because the division of

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labour between the legislative (General Assembly) and executive (Security Council) branches had little to do with the spirit or the letter of what had been understood since Montesquieu by the expression “balance of powers,” or to acknowledge the “soft” status of international law, but also because the mere idea of a world government – a role it did de jure assume, as in officering the Korean War – would have seemed heretical at the outset. In this regard, contrary to what had been imagined by Shotwell and others, the principle of universality received little emphasis in the postwar order, with the security issue dwarfing justice and welfare. Moreover, as far as the legitimacy of the world organization itself was concerned, it is revealing that delegates to the General Assembly, appointed directly by governments, were thus neither elected parliamentarians nor representatives of political parties, but diplomats. In this sense, far from encouraging political pluralism as some liberal philosophers and architects of the UN system would have wished, these appointments had the opposite effect of entrenching a dominant version of statism. The UN system institutionalized a statism that reinforced the executive authority of the state at the expense of democratic pluralism or the welfare of peoples and nations. This was and is in total contradiction with the ideals, principles, objectives, aims, and missions enshrined in so many covenants, declarations, and agreements negotiated at the time. Here again, we see the extent to which the postwar liberal world view strengthened state power on both national and international levels as never before. In fact, “United Nations Organization” was the wrong name for that world

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entity: it might better have been called the “United States Organization” to dispel confusion. But this would have led to even more confusion, as it could be understood to mean an organization of and for states or an organization of the United States of America. Be that as it may, a more important issue is the double institutionalization in the nation-state and the UN system of interlocking and mutually reinforcing executive powers that affirmed the authority of dominant states in the world community.34 In some cases, for example, decisions in the Bretton Woods institutions of the IMF and World Bank do not reflect the principle of universality or majority rule at all but quotas assigned to the wealthiest members. Since marked asymmetries in the world system gave dominant countries a completely unwarranted advantage, they could create and support institutions to impose their own rules and standards on less powerful states. This strategy helped widen the gap between rich and poor countries and plunged the postwar order into turmoil. To complicate matters, the principles of universality and differentiation do not work the same everywhere. In economic matters generally, but particularly in trade agreements, the principles are basically the same at the domestic and international levels, whereas in human and social affairs, they are basically quite different, if not incompatible, at these levels. Thus, while legal monism prevailed in trade, legal dualism prevailed in social and human affairs. This incompatibility had a major consequence: governments had to adjust human and social rights to their economic commitments, not the reverse. Welfare, once the overarching

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objective, had slipped from the status of an independent to that of a dependent variable. Henceforth, welfare would depend on markets, and its cost would create much more tension where the dualism between the market economy and the social system was strongest. The welfare state was therefore an affordable option for some – the developed – countries but unattainable for the majority that lacked the resources to absorb the social impacts of their economic integration within an international market. This barrier between the economic and social realms remained in place mainly for three reasons. The first stems from the dominant world view that sees human and social issues as subordinate or residual, not covered by the law of the marketplace and thus matters for national governments. Second, and more specifically, the postwar order was intended to foster prosperity by establishing commodity and capital markets, while governments were responsible for the social costs of externalizing their economies. Third, the postwar period saw two separate but overlapping markets – a world market for commodities and capital and a national market for labour. These explanations are not mutually exclusive. In fact, they combine to help us understand the extent to which liberalized worldwide commodity and capital markets and flows have commanded a strong state presence at both the national and international levels while at the same time carving a deep breach in the world system between dominant and lesser states. This is a far cry indeed from the ideals and objectives forged in the debates that created the postwar world.

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In the next chapter, I turn to the national scene for a closer look at the central compromise coming out of that order, the compromise between the externalization of the national economy on a world scale and the internalization of society in the welfare state.

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2 Welfare States and Social Rights

T

he writers cited in chapter 1 provided the basic elements of the constituent thinking that framed the post–Second World War order. These elements highlighted the extent to which this order was conceived as a whole, subsuming functions that would later be divided along public and private, national and international lines. My focus now is domestic. And to understand the ramifications of what occurs at the national level when we juxtapose economic and social interventionism, I will be stressing the importance of a clear-cut distinction between the mixed economy on one hand and the welfare state on the other. The Keynesian mixed economy was enlisted to tie the national economy to international markets through the sanction of economic monism, according to which the same principles and economic laws should apply at both levels. With the welfare state, however, not only did objectives, principles, and norms differ at the international and national

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levels but, as I noted earlier, their substance and nature differed between national contexts, which is why we call the phenomenon “social dualism.” The complementarity between national and international economies was played out through the negotiation of trade agreements between states or mediated by international economic organizations. These institutions applied the same basic principles at both levels, gradually making the line between home and world markets less and less permeable over time. This complementarity between markets covered two of the three factors of production – commodities and capital – but it did not cover labour, which remained under state jurisdiction. The postwar order was actually based on a contradiction: though liberalizing commodity and capital flows, it committed governments to a policy that contained and impeded labour mobility internationally while promoting it within countries. In this sense, internationalized production actually heightened the division between commodity and capital markets on the one hand and the labour market on the other. To fully grasp this aspect of the problem – the consequences of imposing the postwar order’s normative frameworks on national economies, in richer countries, at least – we must add William Beveridge’s name to that of Keynes, since he, more than anyone else, was the father of the welfare state. Beveridge followed and entrenched Keynes’ theory and gave new meaning to domestic state interventionism. As we shall see, however, the institution of the welfare state could not elude liberal legalism or, despite its appeal to national solidarity, unreservedly embrace social rights. I intend to show this by canvassing the broad principles of the

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welfare state philosophy and the contemporary debate around the social rights issue. We have already noted how and why, at the international level, the shape of a well-ordered world was based on the three pillars of security, justice, and welfare. The postwar shift to a domestic focus, however, meant redefining the relations between public and private space in the nationstate and extending state involvement to three basic fields: management of the national economy; support for the business sector through subsidies and grants for research and development and job creation; and revitalization of the household unit. In fact, it was the integration of these objectives in one national project that gave a new meaning and dimension to the postwar redistributive mission underwritten by the welfare state compared to the piecemeal interventions of the past. A consequence of this process of integration was the emergence of the family, or household, as an essential national economic unit. In this sense, the challenges of converting a war economy for peace or rebuilding a war-torn world were closely tied to business expansion and the reconstitution of the patriarchal family. The latter meant reducing women’s direct involvement in war work for two basic reasons: to provide more job opportunities for soldiers returning from the front and to reverse the demographic deficit incurred during the war and unleash what became known as the “baby boom.” The welfare state and baby boom were linked, not just demographically, in reproductive terms, but also economically. Families were to play an active official role as consumers. Growth in overall production and the requirements of a broader redistribution of national income were no

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longer based solely on investment and increased productivity: they also reflected levels and patterns of consumption. To entrench the functional interdependence between production and consumption, not as mere processes, but as economic institutions – the business and the household – Beveridge’s welfare state relied on a basic distinction between “fit” and “unfit” for wage earning, based on age and sex. This distinction reinstituted a sexual division of labour that reserved paid jobs for adult men while women threw themselves into housework and the young went to school. The welfare state involved the establishment of a mixed economy along Keynesian lines, the main national economic policies being to achieve balance among the economic aggregates of savings and investments, imports and exports, and taxes and expenditures, channel public investment, and work towards full employment. State intervention should therefore promote economic development and business growth and push individual and family incomes up in a “virtuous circle” of production and consumption. And here is precisely where Beveridge came in: the virtuous circle should instil national solidarity instead of class confrontation between capital and labour so that government, business, and unions could work together, not merely to expand the economy but to improve the lot of each and every citizen. Beveridge argued that, since the Allies had been able to tap into national solidarity to beat the Axis powers, they could now rebuild an even stronger solidarity to destroy the four scourges still afflicting modern societies at home: need, sickness, ignorance, and poverty. In this sense, his reports of 1942 on social insurance and 1944 on full employment bear witness that, just as Keynes was the proponent of

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economic nationalism, Beveridge saw himself as the defender of expanded social nationalism.1 This national solidarity, based on a simple distinction between “fit” and “unfit” for work, would swallow up the old rivalry between capital and labour prevalent before the war. The social policies of the welfare state revolved around this distinction. Full employment combined the objectives of providing work for all employable workers – those “fit for wage earning” in Beveridge’s meaning – and generating national income to fund assistance and redistribution systems aimed at those who could not or “should” not hold gainful jobs, the “unfit.” This last category covered two distinct groups: the young and old who should be kept out of the labour force and those of working age who were temporarily or indefinitely unable to hold jobs. A sound welfare state, according to Beveridge, was one that replaced wage earning with pensions for the old and disabled, and compensated the unfit according to their and their dependants’ needs. Three types of compensation were proposed. The first was a system of mandatory social insurance that came into play where a prior employment contract existed. It was modelled on private insurance schemes covering a given risk and thus all who fell victim to that risk. It was based on a principle of economic solidarity and funded by premiums collected from all stakeholders – businesses, wage earners, and governments. Examples included unemployment insurance and workmen’s compensation for accident or sickness. The second was a system of social assistance that, unlike public or social insurance, could not be based on premiums since its beneficiaries were in permanent or temporary need and unfit for wage earning. Here, national

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solidarity could be invoked for taxation schemes to fund income redistribution programs covering the basic needs of the unfit. Examples of this were pensions for the elderly, war veterans, war widows, and the disabled. The third type of compensation proposed was a system of allowances, unrelated to the other two, with need as the sole criterion. These allowances would also rely on national solidarity since, by definition, a contributory scheme could not be imposed on the needy. However, unlike insurance or assistance, allowances could not be universal for any group because they were no more than wage adjustments and supplements to cover specific needs in certain situations. Such was the case with allowances for extended families and needy mothers. The social security plan William Beveridge proposed in his 1942 Report on Social Insurance and Allied Services had three major components: social insurance to offset the interruption or exhaustion of earning power and measures to alleviate the crushing family expense of such events as births or deaths. Beveridge’s guiding principles began with totality, which set social security above the interests of any group or social class. His second was an organizational principle under which social insurance was merely part of a broader policy of social progress, and the third was co-operation as the basis of an alliance between the state and the individual. Basically, the plan sought to enhance the government’s social security schemes and meet urgent household needs. There would be two types of income redistribution by way of social insurance and children’s allowances. But behind this distinction lurked an interesting and revealing rationale. Beveridge saw wage levels as entirely determined by

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the law of supply and demand and level of productivity, but the marketplace could not respond to the needs of workers with heavy family responsibilities. These were special needs that must therefore be met by society: they were social needs. This is why the first occurrence leading to the interruption or exhaustion of earning power – unemployment – was to be covered with money collected from stakeholders at risk, using an actuarial approach similar to private insurance. But the second occurrence – having a raft of children, for example – had nothing to do with insurance: it called for social solidarity, which was why Beveridge planned to fund these allowances through universal taxation. Delivering these policies and programs, the welfare state assumed two distinct redistributive functions: providing social insurance for fit wage-earners along with the highest level of social assistance to the unfit, and paying pensions to those too old to work, with allowances for those too young. The simplicity of Beveridge’s analytical grid, based primarily on age and secondarily on sex, made it easy to use. He divided the entire population into six groups, with the first four covering the whole working-age population from ages sixteen to sixty-five – wage earners, self-employed, housewives, and all those who, voluntarily or otherwise, did not work. The other two groups were the under-sixteens and the over-sixty-fives, who were either too young or too old to work. But Beveridge also saw that his scheme had to be enriched by a historical approach or the costs of supporting the unfit would soon spiral out of control. Here, he saw a policy to encourage a rising birth rate as an essential corollary to the expected rise in pension charges, just as education

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– and in particular, universal access to education – was needed to better the chances of new generations. In this sense, rebuilding the family supplied the missing link for a comprehensive socioeconomic policy: the political economy had to include a birth promotion impetus that did not exactly speak its name but would be crowned with success by the postwar baby boom. Naturally, there was a chasm between the general rationale I have just outlined and its operational performance in economic and social policies. There was certainly a humane intent to shield housewives and youth from the hardships of wage-earning labour, though basically the housewives were sent home to make room for veterans. There was also a paternalistic intent to rebuild the family institution and raise the birth rate, transfer money from the well-off to the less well-off, support universal access to education and health, and indeed, through all these missions, strengthen national solidarity. But the welfare state was also used to control international labour flows and shield internal job markets from the stress of world competition, especially from less developed countries. Migration policy would in many cases be the hidden face of the welfare state as the law of labour supply and demand was repealed for domestic reasons. When it came to migration, richer states generally and welfare states in particular would endorse policies and programs unrelated to the principles of solidarity and well-being that presumably applied to their nationals. Yet in the end, the fact remained that even these social and national objectives called for a lofty vision of the collective good and an idealistic approach to national solidarity that never really came into focus. Both failures have been

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ascribed partly to lack of political will and funds, but mostly, at a deeper level, to the legalistic liberal approach to the advancement of social rights. The Nature of Social Rights At the very heart of the social rights issue lies the legal standing of these rights from the perspective of their holders as a group or community of citizens compared to their standing as individual rights. I will clarify this with a historical note. Social insurance owed its nineteenth-century start to mutual societies. The first insurance scheme for work hazards in mines and factories was a collective response of worker solidarity. The rights of the worker insured or assisted by his mutual society were written into the contract between the parties. Injured workers thus had claims on these mutual societies based on a collective contract. When governments established public insurance schemes, though, and took over from these institutions, two important things happened: first, a group initiative became state policy, and second, state protection pushed aside the definition of beneficiaries as a group in favour of a broader social policy for which governments were accountable at the ballot box. In other words, unlike other rights that can be tested by law, social rights do not confer any legal title on their beneficiaries as a group, only as qualifying individuals in cases where the state fails to extend benefits. From this standpoint, social rights are not rights in the strict sense: they are not justiciable by the group concerned and they are tied to official political, economic, and strategic considerations. For example, stakeholders in education – teachers, students, office staff, parents – or health – doctors,

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nurses, patients – have little to say when the time comes to define the right to education or the right to health as social rights. Similarly, unemployed workers, social assistance recipients, and so on have no say in the establishment of welfare as a social right. The issue is quite simple: if the definition of social rights and their benefits, allowances, or premiums in terms of health, education, or a decent living standard is left to governments, these rights are actually more like “liberalities,” advantages bestowed by a donor that can be trimmed to the vagaries of an economic or electoral conjuncture or even cancelled altogether. And although social rights thus construed are legitimized through a state appeal to social or national solidarity, this legitimizing process should not overshadow the importance of establishing their validity as rights instead of seeing them as mere ways of promoting efficiency and market economics. To convey an idea of the extent and scope of this misreading of the social right concept – a misreading that reveals the limits of the liberal approach to the question – I will focus on two interpretations of the idea of social right, one from a sociological and the other from a strictly legal viewpoint. The sociological approach I use here is a pluralist approach developed by Georges Gurvitch in his Déclaration des droits sociaux, a book that, sadly, had little impact at the time of its publication in 1944.2 The legal approach is that of Hans Kelsen, who opposed all variants of pluralism advocated by sociologists from Joseph Proudhon on and held that legal dogmatism alone could define the substance and content of rights. In cases where this substance had not been explicitly provided by law, it could be inferred from the constitution or some other

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founding text.3 Pluralists of all stripes challenged this dogmatic claim and the clamp it imposed on law and social issues. Some of them, including Gurvitch, wanted to give “social right” a broader sociological meaning. This definition would vest social rights in groups or communities, making them more than claims on educational, health, and, more broadly, social institutions, like the so-called social rights we find in charters and constitutions. In other words, Gurvitch’s social right was not on the same plane as an individual right, having nothing in common with individual prerogative. He listed the social rights of producers, the social rights of consumers, and the social rights of peoples, along with the rights to work, recreation, retirement, and so on. This broad reading of the notion of social right highlighted the fact that legal rules and norms were historically generated by producers, consumers, and other groups, and not solely by legislatures. Quoting Proudhon in support, Gurvitch held that “social rights must come from independent groups and individuals as active centres of legal life.”4 This was not to say, of course, that the government and its agencies did not play a decisive and essential role in the legislative process. However, these government-approved standards came from somewhere: they came from society, from economic groups and other associations that more or less successfully piloted their normative requirements through government channels. A bank act, for example, is basically a compendium of bankers’ needs and requirements that become their own social rights by Gurvitch’s definition. Gurvitch went even farther: more than a theoretical bias, sociological pluralism was also a “moral and legal ideal”

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because “the democratic principle [was] ... inseparable from the pluralistic ideal.”5 Essentially, pluralism was a basic condition for vesting rights in concerned groups that would then have true claims against the state, whereas the dogmatic legal view saw social rights as mere government bounty on which citizens had no claim beyond the political pressures they could exert through their elected representatives and democratic institutions. A comparison may be useful here. Looking back, we can see that, while the legal framework securing property rights, intellectual property, patents, capital, investors, banks, business concerns, and so on has been deepened, strengthened, and improved, the framework protecting weaker groups like wage earners, working women, and the unemployed has been considerably weakened and in some cases dismantled altogether. Admittedly, this situation reflects the relative weight of the interest groups involved, but it also reflects the fact that the first rights were fully legal, valid, effective, and justiciable, whereas the social rights were state handouts and thus prey to political expediency. Finally, this debate helped to show how the postwar order took a legalistic, dogmatic approach to the matter of recognizing, defining, and validating social rights. Indeed, liberal philosophy generally has problems with the idea of social right as collective right. As the postwar normative framework was being built, concerns centred more around democratization and the recognition of civil and political rights. Yet this did not rule out the inclusion of certain social rights in the Universal Declaration passed by the UN General Assembly on 10 December 1948. Articles 22 through 25 of the Declaration enshrine a number of these rights:

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the right to work, the right to social security, the right to paid leave, the right to unionize, and the right of mothers and children to special care and assistance. As we have seen, however, the effectiveness of these rights was not and could not be fully secured within the liberal parameters of the postwar order. Conclusion The thinking behind the postwar order sought to establish security, justice, and welfare for all through a profound revision and redefinition of the domestic and external functions of the state. Universality would thus apply to equal states in a concert of nations and equal citizens in a welfare state. Where rights were concerned, property rights commanded quasi-universal recognition among states internationally, while social rights fell within the ambit of the individual nation-state. Domestically, there was a conflict that looked like this: the management of the mixed economy required the internationalization of some factors of production – capital, commodities, and, later, services – while the other factor – labour – remained under the jurisdiction of the nation-state. The unrestricted world flow of goods and capital was to act as the lubricant in creating a virtuous circle of security, justice, and welfare for national populations. The quest for the maximum international mobility of goods and capital would thus promote maximum national material affluence. Yet opening borders to international trade helped close them to foreign labour. In this sense, the postwar normative framework introduced, in addition to the prospect of burgeoning world markets and political, military, and

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economic stability, a new “sociality”6 – Max Weber’s term for coming together behind a particular set of values – that made states the proponents and champions of an original coalescence of economic and social nationalism. This two-pronged strategy, propelling a world capital and commodity market and strengthening domestic economies and societies, would facilitate the foreign expansion of private business, foster the transnationalization of governmentregulated economic, trading, financial, and banking activities, and tighten state control over the definition and promotion of social welfare. The outcome was massive imbalance in national levels of social development, stemming from the fact that the postwar order favoured the internationalization of production from rich countries only, though it made all governments, rich and poor, bear the social cost of externalizing their economies. This systemic planetary discrimination was the result of strategies enacted by rich nations, but it also reflected, as we have seen, the limits of prevailing theoretical parameters for the functions of economy and society. These held, for example, that social policy and social programs had to be taken on by governments. Building a single world economy, the postwar framers buttressed national prerogatives in social affairs and, in the process, fell back on social nationalism for two main reasons: first, they were very much in tune with their times and incapable of designing or conceptualizing a world society and, second, as social liberals, they were incapable of moving away from an individualist, statist approach to social rights. In the end, this process of world economic integration and the establishment of a single world market would see

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the number of states increase from around sixty in 1945 to some two hundred at the present time. If this somewhat paradoxical growth is ultimately traceable to the idea that a community’s collective rights should be based on a protecting state, echoing another contemporary notion that colonial empires had to be broken up to reflect natural communities, it is worth recalling that these empires were fragmented for tactical and strategic reasons that in most cases had little to do with the economic, political, or social wellbeing of the populations involved. Moreover, as already mentioned, since economic and social asymmetries were much more significant and present in newly independent and developing countries, the promotion of well-being was bound to be more costly and even unaffordable there. The “nation-state” concept sums up this dual disjunctive role that fell to governments in the postwar order, as “states” used statecraft to enhance their international prestige while “nations” espoused a new sociality steeped in the cause of security, justice, and welfare. Unfortunately, national economies and societies were placed in such opposition that this sociality was more wishful than real, with the result that conflicts, and, in particular, conflicts between labour and capital, were rampant all through these years. Finally, returning to the distinction between the Keynesian mixed economy and the welfare state introduced for analytical and historical reasons at the beginning of this chapter, it is important to render unto Keynes what is his, just as it is important to give Beveridge his due. Keynes was not the architect of the welfare state. He theorized and invented the mixed economy, as we saw in the preceding chapter, whereas Beveridge, building on Keynes’ economic .

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theory and mixed economy concept, set out to create the welfare state. Without a mixed economy to start with there can be no welfare state. At the same time, the use of a mixed economy model does not necessarily imply the establishment of a “welfarist” system: they are two independent processes. This distinction is significant in two ways: first, it helps to explain why, though most governments shifted over to a Keynesian-type mixed economy in the 1940s and ’50s, few would move on to create welfare state systems; and, second, it helps us understand how and why governments can unravel their welfare states without giving up the mixed economy. This distinction will prove useful later on as we look at the state in its current context.

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3 Internationalism versus Regionalism in the Cold War

A

lthough the framers of the postwar order dreamed of a world unified by trade and development, what they actually saw was a deeply sundered world of rival blocs. To understand how these blocs came to be, we have to consider two sets of facts: first, the emerging “struggle of the century,” as outlined in Fritz Sternberg’s Capitalism and Socialism on Trial,1 which would be exerting its own pressures on the international system and, second, the continued existence of colonial regimes as a small number of states hung on to their possessions until the forces of decolonization overtook them in a context of great-power rivalries. To begin with, I focus on the two years separating the Yalta Conference of February 1945, when the world map was redrawn by the great three of the United States, the USSR, and the United Kingdom, and General George C. Marshall’s Harvard speech of 6 June 1947 outlining his

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European Recovery Program, known as the Marshall Plan, on the third anniversary of the Allied landing in Normandy. A comprehensive analysis of these years would exceed my purpose here: I will merely list a few factors. The first and unquestionably the most crucial of these was that the USSR’s presence in Allied ranks reflected circumstances that had little to do with genuine solidarity around a common aim. In fact, at the onset of war in August 1939, Soviet foreign minister Molotov and German foreign minister Ribbentrop signed a non-aggression pact in which the two nations joined forces to dismember Poland in September of that year. It was only Hitler’s Operation Barbarossa, unleashed on 22 June 1941, and the ensuing German invasion of the USSR that brought Stalin into the Allied camp. Not that this “alliance” rallied unanimous support: in the United States, for instance, still at peace until the attack on Pearl Harbor on 7 December, the rapprochement between the two powers came under strong opposition, especially in the State Department. An interesting example of this contradiction between official US policy towards the USSR and political manoeuvring at other levels can be found in the 1942 Rapp-Coudert Committee report on Communist infiltration in New York State schools that recommended outlawing the Communist Party.2 Antagonism between the two allies resurfaced in the immediate postwar years as coalition governments ruling the countries of Eastern Europe were pulled into the Soviet orbit one by one. Winston Churchill understood the prevailing mood early and coined his “iron curtain” metaphor to formalize the rift in a 1946 speech while accepting an honorary degree at Westminster College in Missouri.

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The first and most telling impact on the world system of what the US authorities would soon be calling the Cold War was having to deal with two blocs that imposed their strategic and tactical imperatives on other states, governments, and peoples.3 These pressures would greatly distort the international scene as the Cold War’s logic of confrontation reverberated through all nation-states. The universal vision of a world order vowed to security, justice, and welfare, as planned by the likes of Keynes, Beveridge, and Shotwell, barely survived to see the anniversary of the San Francisco Conference of 1945 before it was replaced by two hostile political and economic systems. The net result of all this was that the Bretton Woods institutions – the International Monetary Fund (IMF) and World Bank – were virtually left in abeyance while the foundations were laid for a new set of organizations to aid the speedy recovery of Western Europe and Japan. The new US economic and military strategy for these regions included unprecedented assistance to face the Soviet challenge. In a symmetrical move, the USSR answered the Marshall Plan with its own Molotov Plan and, suddenly, all economic conjunctures, whether in Latin America, Africa, or Asia, felt the effects of these realignments in the external policies of the two superpowers. From 1946 on, then, the postwar order was split into rival capitalist and socialist blocs, soon to be joined by a third group, which, unlike the others, was not a bloc but a cluster of countries outside the First and Second Worlds for which Alfred Sauvy proposed the name of Third World.4 This process would lead to the development of various overlapping regional economic integration systems representing three superimposed geographic levels of integration.

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At the first level was a world order divided for all intents and purposes into three blocs, with the Third World emerging as a self-aware force after the Asian-African Conference at Bandung in April 1955. At a second level within each of the three blocs, regional political and/or economic ensembles or units, mostly in the Americas and Europe, were formed through treaties, agreements, conventions, and other arrangements negotiated before, during, or shortly after the Second World War, such as the Benelux Customs Union or the Pan American Union. Indeed, the United Nations system itself recognized the validity and usefulness of these projects of continental integration by setting up five regional commissions, one for each continent. To begin with, on a recommendation by the Economic and Social Council (ECOSOC), the Economic Commission for Europe (UNECE) came into operation on 28 March 1947, taking over from various existing regional bodies including the Emergency Economic Committee for Europe, the European Coal Organization, and the European Central Inland Transport Organization. In the same vein, the council approved the creation in 1947 of the Economic Commission for Asia and the Far East (ECAFE), known today as the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), as well as the 1948 Economic Commission for Latin America (ECLA), known since 1984 as the Economic Commission for Latin America and the Caribbean (ECLAC). Other continental commissions, the Economic and Social Commission for Western Asia and the Economic Commission for Africa (UNECA), were established soon afterwards.

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Finally, at a third and last level, the situation became more complex. Here, economic and political integration did not primarily reflect geographic proximity but rather historic ties binding the so-called “backward countries” to the First World and, at times, the Second. Here were the old and the not so old empires – French and Portuguese successor states, for example – countries tied together by preferential agreements, and the British Commonwealth. All these arrangements, in direct contradiction with the principles of universality and differentiation, were somehow incorporated into the political and economic world order until the national independence movements of the 1960s in Africa and Asia and revolutionary movements in Latin America tilted the world political balance of power in favour of the Third World for a very short while. Internationalism versus Regionalism Although no state or group of states should, in a world unified and pacified by trade, claim special economic or political status, in practical terms, political and economic regionalisms could not be denied. The UN system unveiled at the San Francisco Conference of June 1945 could not wipe out existing agreements or prevent the negotiation of new treaties or the extension of older co-operative arrangements. In Mexico City, barely four months earlier, delegates to the Inter-American Conference on Problems of War and Peace had approved the Act of Chapultepec and its Declarations on Reciprocal Assistance and American Solidarity that concluded with these words: “The above Declaration and Recommendation constitute a regional arrangement

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for dealing with such matters relating to the maintenance of international peace and security as are appropriate for regional action in this Hemisphere. The said arrangement, and the pertinent activities and procedures, shall be consistent with the purposes and principles of the general international organization, when established.” 5 The UN Charter could not discount regional agreements, agencies, or activities compatible with UN objectives, and regional agreements for international peace and security were dealt with in its Chapter viii. In other words, political or military regionalism was forever present and still had to be contended with, just as the regional economic commissions would be in the first wave of initiatives coming from the newly created UN Economic and Social Council in 1946. Soon after the Second World War, Britain and the United States submitted proposals to ECOSOC for yet another global body, the International Trade Organization (ITO). At that time, the United States was highly critical of economic regionalism, and its November 1945 Proposals for the Expansion of World Trade and Employment left no doubt on this score: members of the future ITO should give products imported from other members the same favourable treatment as domestic products with regard to taxation and commodity trade regulations.6 The triad of freedom, security, and peace should be based on free enterprise and free trade. This US position was also intended to loosen the colonial powers’ persistent grip on their holdings. In 1946, ECOSOC convened the United Nations Conference on Trade and Employment to consider the proposals. A draft ITO charter was approved in 1948 at a conference at Havana, Cuba. But the Havana Charter was

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never approved by the US Congress, so that, by default, trade liberalization devolved to a quasi-international organization, the General Agreement on Tariffs and Trade (GATT) that came out of a 1947 Geneva conference and administered trade agreements until the 1995 creation of the World Trade Organization (WTO). Clearly, debate on these agreements was coloured by politics as well as economics. The winning approach would be the one that saw customs unions and even bilateral or regional trade agreements as preliminaries to unrestricted free trade. This sympathetic reading made it possible to view initiatives in a way reminiscent of the UN Charter’s approach to political regionalism – to be tolerated as long as it spurred the growth of international trade – which is why GATT Article xxiv covers the creation of customs unions and free-trade areas.7 In hindsight, however, these GATT provisions were clearly too broad for binding interpretation: pragmatism would always prevail, as witness the fact that no fewer than eighty such agreements were sent for GATT review by the 1990s. Moreover, it is impossible to assess the role of these arrangements in liberalizing and developing unfettered international trade: governments signed regional agreements more for practical reasons than to liberalize internal trade or promote international growth. The GATT was never able to do much at this level, as its role was not to question the quality of the arguments for regional deals but to review and assess signed agreements in terms of their compatibility with existing rules and effects on the trading system. This meant that when the substance of these agreements was in compliance with the Article xxiv provisions, a state of grace

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never narrowly defined, the contracting parties had all the latitude they needed to do whatever they chose. This easygoing approach would undermine the legitimacy of basing an allegedly international economic system on a universality of equal partners wedded to the cause of world prosperity. Western Europe To show how this shift to regionalism worked, I want to focus on two cases: Western Europe and Latin America. The former is important because its emergence somewhat belied the great powers’ stated determination to establish a truly universal system and because the European Economic Community (EEC) plan embodied the inclusive liberal interventionist view that had so greatly influenced the shape of the postwar order.8 In other words, the EEC case is instructive basically because it shows universality and differentiation working in a most convincing way, even on a reduced scale. I have added the Latin American example as offering an interesting range of alternative economic regionalisms and because these regionalisms eventually came up against the pan-American plans of the United States in the 1990s. Moreover, both examples can lever a critical review of economic globalization itself. The Second World War was barely over when Greater Europe from the Atlantic to the Urals experienced no fewer than three parallel integration processes. The first was simple enough: it cut the continent into two blocs, East and West, creating two sealed areas of influence – one under the umbrella of the Marshall Plan and the other under the Molotov Plan.9 The second process aspired to create a

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single Western European economic and political space, while the third coalesced around the expansion of Benelux and the European Coal and Steel Community. The net result of the compatibilities and incompatibilities in these competing projects was a layering of integration processes within the European continent. During the war, and increasingly as the war drew to its close, the shape of postwar Europe monopolized minds and debates. Though there was a strong early consensus on the perils of excessive nationalism, disagreement persisted around the development models likely to yield peace, security, and welfare, as eloquently argued in works signed by thinkers like Carr, Daniel-Rops, Maritain, Camus, Sartre, Benda, de Jouvenel, Halévy, de Rougemont, and Monnet. These proposals, however, are not our primary interest; our focus is on the elements of a vast European movement for greater integration. This force included Churchill’s United Europe Movement, Courtin’s French Council of Europe, the Christian Democrats’ New International Teams, the Social Movement for the United States of Europe, the European Federalists Union, and the European Parliamentary Union, as well as the pro-free trade European League for Economic Co-operation founded by Paul van Zeeland. All these organizations convened a European Congress at The Hague in 1948. Its numerous spin-offs show the decisive impact this congress had on the idea of a multilevel model of European integration. It was the European Congress that called for the creation of a European assembly and the establishment of a Court of Human Rights, an economic and customs union, and a European Cultural Centre. But the European Congress’s major initiatives were the

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Council of Europe, founded in 1949 and still thriving, and the European Movement chaired by Paul-Henri Spaak, founded in 1950. Further organizational outcomes of the Hague congress included the 1949 Westminster Economic Conference, which marked a major phase in building the European Community, and the 1950 Social Conference in Rome. Other stakeholders in the European integration process at this time included the national council of French employers (Conseil national du patronat français, or CNPF), which in 1949 brought together the big industrial federations of thirteen countries. These bodies forged a liaison with the Organisation for European Economic Co-operation (OEEC), which then recognized the Council of Industrial Federations of Europe (CIFE) as “the non-governmental international organization with which official relations will be maintained on matters of interest to member nations’ industrial organizations from the employer’s standpoint.” The CIFE would later be involved with the Economic and Social Commissions of the Council of Europe. In 1950, the International Chamber of Commerce (ICC) set up a European Affairs Commission pending the establishment of an Asian and Far Eastern Affairs Commission.10 In March of the same year, this commission presented the Council of Europe with a plan for a single market without central planning and recommended the creation of the European Payments Union. Meanwhile, the European Confederation of Agriculture succeeded the International Commission of Agriculture founded in 1889. From the union perspective, 1948 saw the birth of the International Confederation of Free Trade Unions (ICFTU), followed in 1949 by the European

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Christian Workers’ Movement.11 The first in particular would act as a consultant to the OEEC on Marshall Plan implementation.12 The depth and scope of this political and social movement bent on creating a European community of nations cannot be ascribed to the war itself, essentially because the project of a united Europe had a much longer history. Without going as far back as the Holy Roman Empire of the German Nation (Treaty of Verdun, 843), we need only mention the names of precursors as renowned as Mikhail Bakunin and Victor Hugo, both of whom celebrated the idea of a European federation in the nineteenth century, to realize that this process had profound historical roots. However, the most striking thing about this movement as it came out of the Second World War was not its spirit and objectives, which had already emerged after the Great War, but the fact that the designers and builders of this new plan were applying the principles of the newly formed United Nations at a European level. The European Recovery Program unveiled in 1947 led to the creation of the eighteen-member Organisation for European Economic Co-operation, forerunner of the Organisation for Economic Co-operation and Development (OECD). The OEEC, with its business/industry and trade union advisory committees, was the first postwar regional economic organization to adopt a variant of the tripartite model used by the International Labour Organization (ILO) and ECOSOC. Whether in terms of economic reconstruction or trade liberalization, monetary management, or policy co-ordination, its work was substantial though not directly responsible for the economic and political unification of

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Western Europe. A US proposal to “NATO-ize” the OEEC was rejected, and the organization survived to become a forum for economic co-operation and development as the OECD in 1961. Meanwhile, the economic and, to some extent, political integration of Western Europe was following two separate paths: the three partners of the Benelux, with France, West Germany, and Italy, created the European Economic Community (EEC) by signing the 1957 Treaty of Rome, while the UK, Denmark, Norway, Sweden, Austria, Switzerland, and Portugal formed the European Free Trade Association (EFTA) with the Treaty of Stockholm in 1960.13 Although the basic goals of “the six” of the Treaty of Rome differed greatly from those of the United States and its Marshall Plan, there was a shared obsession with the Cold War and the challenges it posed to the survival of a capitalist economic development model. The innovation of the European Community (EC) lay in the objective of building common institutions and making economic unity the platform for what came to be called the “common home.” During the 1980s and ’90s, European unity would be spared the turbulence of Latin American integration. The European Community, with a geopolitical and economic weight of another order than Latin America’s and, unlike Latin America, positioned strategically between the Cold War antagonists, was subject to different political pressures that protected it from direct military intervention. But the EC structure would be no less seriously shaken as awareness dawned of the effects of market globalization, casting doubt on the traditional vision of the state’s role and even the role of regional institutions. This skepticism called for a

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comprehensive review of basic principles and a redefinition of the terms on which integration could be pursued if the European Community wanted to enjoy a status commensurate with its international aspirations. In the wake of the recommendations of the Delors Report on European economic and monetary union,14 the signing of the Single European Act by the Council of the European Community in February 1986 eased the transition to the Single Market of 1993 as a prelude to fuller economic integration. Similarly, the signing of the Maastricht Treaty on 7 February 1992 committed countries to a monetary union and revived the ideal of a political and social Europe. Meanwhile, EC expansion continued with a 1991 agreement creating the European Economic Space (EES) that would allow the move to fifteen and then, after 1 May 2004, twenty-five member states.15 This tour of events surrounding the emergence of the post–Second World War order has highlighted the multilayered planning of a world system in the broadest sense, a project both audacious and abstract for the planet “as a whole,” in Shotwell’s words. The plan would produce charters and establish institutions to support this lofty vision but was ultimately unworkable in practice. At the same time, we have witnessed the progressive and convoluted emergence of a European process that eventually produced a single alternative continental model in the 1990s. All things considered, this so-called European model picked up where the postwar scheme foundered to successfully create, albeit on a limited scale, something that reflected the spirit and vision of the original architects of the 1940s. In this sense, the European model, with its limited mixed economy and

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transnational welfare state, seems to replicate on a continental level what would have been in store for the entire world had the grand schemes of the likes of Shotwell, Keynes, and Beveridge come to pass. In turn, these considerations raise a few basic questions: Was the postwar scheme a model for the Europeanization of the world system? Does the relative success of the European Union confirm this? But was this project not flawed from the start? Why, then, should such a project be revived at this time? If the EU is a new world order in miniature, is the model extendable and, if so, should it be extended? As we shall see, this model has since come up against a powerful and dominant rival in US-Canada free-trade integration. Latin America The American wars of independence began with the United States in 1776 and went on to engulf the southern colonies of Spain and Portugal that had generally acceded to independence by the 1820s before they turned to war against one another.16 Amid this confusion, two broad geopolitical visions emerged early in the nineteenth century. The first was the Monroe Declaration of 1823 and the second was Simon Bolívar’s dream of a pan-American union debated by a hemispheric congress at Panama in 1826. The opposition between the visions of Monroe and Bolívar are with us still. Another event that goes a long way towards explaining the rift that eventually divided the Americas, with the United States and Canada on one side and Latin America on the other, is the 1814 Treaty of Ghent. Ending the inconclusive War of 1812 between the United States and Britain and negotiated while the great powers of Europe were redrawing

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the map in Vienna (1814-15), this treaty was a milestone that established de jure recognition of the United States as a full-fledged partner in the new concert of nations in return for US acquiescence in Britain’s American holdings. Ghent sealed a special relationship between the signatories under which they never waged war against one another again. The pledge would prove opportune for Canada, given free rein to expand westward along the longest undefended border in the world, while the US government turned its aggressive expansionism west and south in North America before spilling over into Latin America and the Caribbean. But in the meantime, since some European powers still nourished hopes of reclaiming possessions, as in Spain’s case, or extending them, as in France’s or even Russia’s,17 US president James Monroe issued a declaration to Congress on 2 December 1823 that closed the American continent to further European encroachment. His declaration was warmly received by the new republics of the Americas, in part because the United States had thus far shown no taste for territorial expansion. However, the Monroe Doctrine would be used by journalist John O’Sullivan to shore up his theory of “Manifest Destiny” concocted in 1839 to justify, among other things, westward expansion and the ongoing war with Mexico. O’Sullivan summoned Americans to a mission: The American people having derived their origin from many other nations, and the Declaration of National Independence being entirely based on the great principle of human equality, these facts demonstrate at once our disconnected position as regards any other nation; that we

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have, in reality, but little connection with the past history of any of them, and still less with all antiquity, its glories, or its crimes. On the contrary, our national birth was the beginning of a new history, the formation and progress of an untried political system, which separates us from the past and connects us with the future only; and so far as regards the entire development of the natural rights of man, in moral, political, and national life, we may confidently assume that our country is destined to be the great nation of futurity ... The far-reaching, the boundless future will be the era of American greatness. In its magnificent domain of space and time, the nation of many nations is destined to manifest to mankind the excellence of divine principles; to establish on earth the noblest temple ever dedicated to the worship of the Most High – the Sacred and the True. Its floor shall be a hemisphere – its roof the firmament of the star-studded heavens, and its congregation a Union of many Republics, comprising hundreds of happy millions, calling, owning no man master, but governed by God’s natural and moral law of equality, the law of brotherhood – of “peace and good will amongst men.”18

Historically, the pan-Americanism promoted by Bolívar fizzled out in endless squabbling, despite an initial treaty on member states’ territorial integrity and intermittent attempts by Mexico and Peru to set up a mutual security system and a pan-American organization. It would fall to US Secretary of State James Blaine to revive Bolívar’s plan and buttress American political and strategic aspirations by calling the representatives of the hemisphere’s republics to Washington in 1889-90. This pan-American conference established a Commercial Bureau of the American Repub66

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lics that was the forerunner of the Pan-American Union and the Organization of American States (OAS).19 The next stage in the process was, for our purposes, the seventh conference of the Union at Montevideo in 1933, where the Latin American republics proposed a framework for adjoining states to exchange “exclusive commercial advantages.” History would remember two things about this event: Secretary of State Cordell Hull’s words about the urgency of establishing an international economic order and the announcement of a US plan to create an open, non-exclusive “American regional bloc” as a counterweight to rival blocs, in particular the British Empire. Twelve years later, the inter-American gathering that pondered the problems of war and peace at Chapultepec Castle in February and March of 1945 opened a new chapter in the history of pan-American integration. This conference helped the US rally the Latin American republics to the idea of the United Nations and laid the groundwork for far-ranging institutional reform of the Pan-American Union that culminated in the 1948 Bogota Conference and the creation of the OAS. On this occasion, the US delegates brought the Latin Americans a plan for an economic charter of the Americas to strengthen economic co-operation in the hemispheric alliance. Its Declaration of Principles included commitments to lower trade barriers, end economic nationalism, and promote just and equitable treatment for foreign companies and capital, as well as an active endorsement of the private enterprise system. At the same time, the US government agreed that so-called “backward countries” could sign preferential free-trade agreements among themselves and did not openly oppose the proposal by the 67

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Chilean delegation to the UN Economic and Social Council for an Economic Commission for Latin America (ECLA), which was formed in 1948. It would later fall to the Latin Americans to open an initial breach in the multilateral GATT system with the publication of the 1958 Haberler Report, which drew the industrialized world’s attention to the losses by developing nations in the world economy and the deteriorating terms of trade, largely the result of fluctuating prices for the raw materials that accounted for most Third World exports.20 Since its 1948 inception, the ECLA had underlined the need for Latin American countries to get together and develop the interlocking economies essential for an import-substitution industrial strategy. Moving by degrees to more advanced industrial forms, this strategy was intended to alter the export structure and thus the terms of trade in their favour. According to the ECLA, further economic and political integration in the region would also increase its political clout in international trade talks.21 Meanwhile, the creation of the EEC acted as a catalyst and source of inspiration for Latin America, as shown by the signing of the Treaty of Montevideo in 1960 to create the Latin America Free Trade Association (LAFTA). Contrary to what its English title implies, the LAFTA did work to set up a common market and not a mere free-trade area as Latin American and Caribbean states moved slowly towards integration through numerous agreements. The most significant of these at the subregional level were the Central American Common Market (MERCOMUN) created at Managua in 1960, the Andean Pact signed at Cartagena in 1969, and the Caribbean Free Trade Association

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(CARIFTA) of 1968. These years, from the publication of the UN’s second Economic Survey of Latin America in 195122 to the 1960 Treaty of Montevideo, saw a strong flow of arguments from the ECLA, under Raúl Prebisch’s chairmanship, for a Latin American union with two major goals: setting national import-substitution strategies on a sounder economic basis in an expanded regional market of interlocking economies and putting these countries in a better international position to promote the idea of a “third way” in a world deeply divided by the Cold War. Initially, the LAFTA had positive impacts on the growth and development of regional trade, but its ultimate results were very mixed. Regional trade soon flattened out and even fell, in relative terms, during 1978 and 1979; more significantly, despite numerous commitments, there was no convergence of national economic policies. Finally, as the “dependency” or dependentista school did not fail to point out, economic integration never managed to curb the national socioeconomic inequalities that were among the chronic failings of Latin America’s oligarchic regimes. The LAFTA was frequently amended, especially at the Caracas meeting of 1969. These changes did not go far enough, however, and the Caracas commitments foundered dismally, leaving the Action Plan for the 1970s a dead letter. To get out of this impasse or impending collapse for the LAFTA, its members opted for a complete remake of the institution and signed a new treaty creating the Latin American Integration Association (LAIA) at Montevideo on 12 August 1980.23 Like its predecessor, the LAIA sought to create a common market, though with no clear-cut deadlines or procedures. Its immediate aim was more modest: a

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preferential tariff area with room for sector, bilateral, and subregional side deals. These arrangements signalled a change of course to encourage closer relations in bilateral or subregional agreements that could, if countries wished, be expanded to the whole region. This strategy of piecemeal, gradual union, far from achieving regional integration, spawned a welter of trade preferences. And the difficult 1980s, with their litany of military regimes, debt crises, and economic slumps, were not much help: intraregional exports plummeted from 15 to 10.5 percent in that decade. Given its initial goal of making Latin America an integrated economic component of a common market like the European Community, the process had clearly failed. Common Market of the South With this kind of history, the Treaty of Asunción signed by Argentina, Brazil, Paraguay, and Uruguay on 26 March 1991 had a problem of credibility. Between the LAFTA of 1960 and the LAIA of 1980, Latin American countries had negotiated a number of ambitious economic integration schemes that did not achieve very much. This time, however, the inspiration differed somewhat. For one thing, the determining influence in the first Treaty of Montevideo had clearly been the Treaty of Rome, as was still apparent in the preamble to its 1980 successor: “Economic regional integration [should] speed ... economic and social development ... to ensure better standards of life for people” – words lifted from two paragraphs in the Rome agreement. By contrast, the Treaty of Asunción fielded the challenge quite otherwise: “Integration ... is a vital prerequisite for accelerating [the] processes of economic development with social

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justice.” This implied that opening up markets was both economically beneficial and good for the social distribution of wealth, a combination at odds with the prevailing neoliberal dogma of the day. Unlike earlier initiatives, the MERCOSUR or Common Market of the South emerged from a multiple process as a “conceptual hybrid” of EEC and GATT parentage.24 Yet the Treaty of Asunción differs greatly from the Treaty of Rome. Though the aims are similar, the latter treaty does not establish a common normative order, create supranational bodies, or even define general standards like the EEC’s Common Agricultural Policy (CAP). Actually, it is more akin to the 1944 Benelux Convention that established a customs union for Belgium, Luxembourg, and the Netherlands. But the MERCOSUR’s immediate background had less to do with these initiatives than with an integrative process begun by Brazil and Argentina in July 1986, when the Act for Argentine-Brazilian Integration established a joint Economic Integration and Co-operation Program (PICE). The outcomes from this program were positive and the two parties signed a 1988 Integration, Co-operation and Development Treaty to build a common economic space. In July 1990, the process gained fresh impetus with the Act of Buenos Aires that provided for the creation of a common market by 31 December 1994. Given the interest shown by two neighbours, the project was expanded to include Paraguay and Uruguay in 1991. Without being as institutionally minimalist as the 1989 Canada-US Free Trade Agreement that simply provided for a Joint Canada-US Trade Commission (art. 1802), or the 1994 North American Free Trade Agreement with its own

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eponymous Commission (art. 2001), the Treaty of Asunción established two agencies: a political Common Market Council of member states’ foreign affairs and economic ministers (art. 10-11) and an executive Common Market Group co-ordinated by foreign affairs ministries (art. 13). The proposed institutionalization was fraught with complexities. In addition to the Council and Group, the treaty proposed an administrative secretariat of the MERCOSUR (or MERCOSUL, in Portuguese) that would incorporate trade and joint parliamentary commissions and a socioeconomic consultative forum with business and union representatives – yet another idea borrowed from the EEC, which had, as previously noted, introduced tripartism to its own institutions early in the process. This unwieldy structure would clearly be hard to operationalize and at serious risk of escalating into bureaucracy run wild. And as if to heighten its complexity, the ad hoc Common Market Group suggested a heterogeneous decisionmaking process that would maintain the consensual rule but hold out the possibility of separate voting to reflect the “nature and/or level of the standard or decision involved.”25 The MERCOSUR’s institutional shape was further defined in the Ouro Preto Protocol of 17 December 1994. The Council and Group still overlap almost completely, though their membership now includes central bankers (art. 11). A trade agreement that had seemingly departed from the European model to get closer to the GATT system was now seeing a resurgence of European influence, though in substantially modified form. Although the EEC and MERCOSUR have comparable sets of entities – the EEC its parliament,

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council, commission, courts, and socieconomic advisory committee, and the MERCOSUR its council and group, parliamentary commission, trade commission, and socioeconomic advisory committee – the southern organization is weighed down by overlapping functions. Conclusion In the years following the Second World War, shrinking universalism at the world level was easily visible in the attendance at international gatherings. There were forty-one countries at the Philadelphia Conference that revived the ILO in 1944 and forty-four at the Bretton Woods Conference that established the IMF and IBRD in the same year. The 1945 San Francisco Conference welcomed fifty delegations and Havana admitted fifty-four to discuss the ITO towards the end of 1947. The figure had been down to twenty-three at Geneva a month earlier for the signing of the GATT. Yet these numbers fail to tell the whole story, because a look at individual GATT participants gives a different picture altogether: they included four great powers (the United States, the United Kingdom, France, and, until 1949, China), five European countries (Belgium, Luxembourg, the Netherlands, Norway, and Czechoslovakia), eight Commonwealth (Australia, Canada, Ceylon, India, New Zealand, Pakistan, Southern Rhodesia, and South Africa), three Latin American (Brazil, Chile, and Cuba), and three from the rest of the world (Burma, Lebanon, and Syria). This meant that the vast majority of countries economically active in the socalled universal postwar order already belonged to the West or had strong postcolonial or other Western ties.

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If the framers of the post–Second World War order failed to implement universality and differentiation at the planetary level, the builders of regional integration, with the possible exception of the European model, did not fare much better. In fact, as we saw in the case of Latin America, developing countries left out of the decision-making process in such major new institutions as the IMF, the World Bank, and the Security Council were incapable of engaging meaningfully in regional economic or political integration schemes. Of course, East-West confrontation accounts for this to a large extent. It probably also explains why the EEC development model seemed to breathe the spirit of what had been planned internationally. Furthermore, without understating the many differences between the EEC and Latin American experiments with integration, it is worth recalling that both arrangements took a constructivist view of that process – a view strengthened by the presence of Keynesian economic policies at the national level, and, at least in the case of the EEC, the creation of a transnational welfare state. But were these forms of regional integration doomed to be swept away by globalization? The economist Robert Gilpin has argued that the postwar order contained the seeds of profound conflict between two paradigms and that it was impossible to liberalize capital and commodity markets internationally, in line with Adam Smith’s theory, while practising Keynesian economic nationalism at home. As the state cannot both control and liberalize the economy at the same time, a clash was inevitable between the requirements of internal economic and world market integration.26

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By the 1980s, the first-generation economic regionalism that reflected the founding postwar parameters was obsolete.27 A new development approach based on export promotion abruptly overtook the old import-substitution model. This turnabout affected each and every regional economic integration agreement. In the Americas, the debt crisis of the early 1980s wreaked economic havoc for what became known as “the lost decade.” A newly aggressive IMF and World Bank pressured countries to make major “structural adjustments” and use macroeconomic stabilization policies as their route out of underdevelopment. To comply, these countries had to liberalize their markets and privatize public assets on a grand scale. The all-out export drive became the way to meet financial commitments and service a mountain of debt. These realignments in economic policy had far-reaching consequences for the countries concerned, as can be seen in the general economic anomie, political instability, and brutal social eruptions that typified this period. One after another, with Chile and Argentina opening the breach, countries rushed into huge programs of economic reform, both macroeconomic and structural, that embraced the neoliberal model as the magic bullet to resolve a crisis plunging them deeper into chaos. In a conjuncture that impelled every country in this scene of disorder to make a competitive entrance to the world economy, economic regionalism was increasingly viewed as a source of stasis and frustration. Admittedly, the MERCOSUR was still there, but it too might be carried off in the turbulent upsurge of a fresh economic crisis in Argentina or elsewhere. In such a context, it

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was easy to see the drawing force of a US-backed plan to create a Free Trade Area of the Americas (FTAA). Finally, although things did not go as far askew in the European Union as they did in Latin America, for reasons involving strong EU institutions and the commitments of its member states, the EU model still came under growing pressure at the turn of the millennium. Today, as the effects of market globalization pile up, the EU welfare state model and the individual systems of member states are caught in a spiral of mounting social demands just when pressure for labour market liberalization is mounting too. Even though EU institutions have reviewed their founding principles and faced up to the costs of market liberalization in the wake of the Maastricht Treaty and the advent of ten new members, these adjustments have taken such a high toll that the economic and political future of the union is far from assured.

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4 Canada and the Cold War: The Shift to Regionalism

T

he canadian economy is unquestionably the most extraverted of any rich country and the most integrated of any major power. Canada-US integration levels are unique in the world and, given the asymmetry of these partners, integration has led to a continental economy unlike any other. As we shall see, the process has been a matter of neither chance nor necessity. Twice during the twentieth century, at times when the Canadian economy and society faced yawning structural crisis, the federal government ordered royal commissions to review the situation and, if necessary, redefine the parameters of socioeconomic development. In both cases, the recommendations deeply affected the thrust of the country’s economic and political life. I will now briefly review the roles and functions of such bodies and go on to show how the two reports shed light on the continentalization sanctioned by the Canadian government. My approach here reflects my starting emphasis on

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the “constituent thinking” behind theories and projects, this time in the Canadian context. As an institution, the royal commission comes to us from Britain. It is a government creature called into being to look into a specific issue or problem and recommend a course of action. The usefulness and importance of a commission’s recommendations are reflected in their implementation by governments through legislation, ordersin-council, programs, or new administrative entities. The greater the impact, the more significant the commission. Since Canada’s birth in 1867, federal and provincial governments of all stripes have convened hundreds of commissions on every possible subject, problem, or theme from the singular – the collapse of a bridge or review of a murder case – to the contextual – the role of governments in education or artistic creation – and the structural – labour-capital relations, Aboriginal issues, or the status of women. Of course, not all commissions have the same scope or significance. The most important ones have been called in specific situations when it seemed that an issue of major social, economic, and political resonance could not be handled within the existing normative frameworks. Answerable only to Cabinet, commissioners are given expanded powers to fulfill their mandates. In every case, this involves tabling a final report that uses three sources to validate and legitimize its recommendations: the commission’s research to establish applicable theoretical and empirical parameters, briefs and other studies sent to the commission by invitation or otherwise, and hearings held to take the public pulse. In more difficult cases, the commission’s legitimacy rests on the pluralism of its membership, so that on divisive issues

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such as biotechnology or the redefinition of relations between government and the economy, the general strategy has been to appoint commissioners from a wide range of social, political, and economic backgrounds, creating a pluralism that has prompted dissenting commissioners to file minority reports. A royal commission is thus distanced – institutionally and normatively, at any rate – from the government and the issue before it and positioned at a confluence of norms, politics, science, and public opinion. Ideally, a commission would be given all the resources to support the scientific and public legitimacy of its recommendations and thus enable the government to draft a normative framework reflecting the new circumstances. But there is no guarantee of success. A government may even resort to creating a royal commission for purely tactical ends, with no thought of acting on any of its recommendations, as was the case with the Tremblay Commission on Constitutional Problems appointed in 1954 by Quebec premier Maurice Duplessis to review the Rowell-Sirois Report. In other cases, despite good intentions, recommendations may be so far removed from government policy that Cabinet chooses not to act on them, as happened with the Royal Commission on Aboriginal Peoples of 1996. As already indicated, two of the commissions convened in the past century played a special role with a direct bearing on the concerns that interest us here. These were the Royal Commission on Dominion-Provincial Relations, or Rowell-Sirois Commission, that tabled its report in May 1940, and the Royal Commission on the Economic Union and Development Prospects for Canada, or Macdonald

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Commission, that reported in August 1985. The RowellSirois Commission was called at a time when Canada was in profound economic and social crisis during the Depression of the 1930s, and the Macdonald Commission was set up during another crisis, this one in the wake of the 1980 Quebec Referendum and Ottawa’s 1982 unilateral patriation of the Constitution. In both cases, the federal Cabinet gave its commissioners a comprehensive mandate precisely because the survival of the Canadian federation was at stake. Moreover, both reports represented new constituent thinking that would dominate the Canadian polity for years to come. The thinking of Rowell-Sirois would prevail until the next crisis, when the Macdonald Commission explicitly criticized the Keynesian option advocated by its predecessor. Keynesianism in the Canadian Context The circumstances surrounding the federal government’s appointment of the Royal Commission on DominionProvincial Relations on 14 April 1937 were explained by Prime Minister W.L. Mackenzie King in his opening speech to the Dominion-Provincial Conference of 14-15 January 1941: Among the reasons which led to the appointment of the commission in 1937 were representations to the effect that the discharge by the dominion and provincial governments of the respective responsibilities involved expenditures of such magnitude as to demand not only the most efficient administrative organization on the part of all governments, but also the wisest possible division of powers and functions between governments. It was felt, at that time, that unless 80

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appropriate action were taken, the allocation of governmental powers and responsibilities made at the time of confederation would not be adequate to meet the economic and social changes, and the shifts in economic power, which were in progress, without subjecting Canada’s governmental structure to undue strains and stresses.1

Against the encompassing crisis of the Depression years, the commissioners showed how conditions were exacerbated by the fiscal imbalance between the central authority and the provinces and by the overly restrictive division of powers in the British North America Act of 1867 that had pushed vulnerable provinces to the brink of bankruptcy. In this context, the poorer provinces and municipalities were those that fared worse when the time came to alleviate unemployment, an issue that threatened social dislocation. To lighten the provincial burden and equip the central government with the necessary economic and fiscal powers, the commissioners came up with a four-point plan, which the prime minister summed up in these words: 1 That the dominion take over the whole burden of provincial net debt. 2 That the dominion relieve the provinces, and therefore also the municipalities, of the whole burden of relief for the employable unemployed and their dependants. 3 That the dominion be conceded the exclusive rights to levy succession duties, and taxes on personal incomes and corporations. 4 That the existing provincial subsidies be abolished; and that, where necessary, the dominion make to the provinces national adjustment grants, calculated to enable

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the provinces to maintain an average Canadian standard of essential services with an average level of taxation.2

This plan would require but one amendment to the 1867 BNA Act – the transfer of jurisdiction over unemployment from the provinces to Ottawa – a measure so directly inspired by Keynes’ “economic revolution” that it prompted Canadian Secretary of State for External Affairs A.F.W. Plumptre to comment that Ottawa was the world’s first capital to subscribe to the general theory.3 Indeed, in his 1936 General Theory of Employment, Interest and Money, the great economist had argued that full employment should be advocated in a healthy economy and, to this end, employment must not be seen as a dependent variable, subject to the vagaries of production and consumption, as earlier economists had maintained. Employment was thus established as an independent variable and full employment became a central goal for achieving optimal production levels and income distribution between the factors of production – capital and labour. To explain the ravages of the Canadian Depression, the Rowell-Sirois commissioners, as we have seen, pointed an accusing finger at the 1867 BNA Act. Sections 91 and 92 of this act relegated direct taxation – a quintessentially regressive measure that penalized the less well-off – to the provinces, while the federal regime relied on more progressive indirect taxes. The provinces, saddled with exclusive jurisdiction over social and welfare matters, were thus put in an increasingly untenable budget posture as the Depression deepened. For this reason, the Rowell-Sirois Report contained a comprehensive review of the parameters of the

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Canadian political economy. One of its recommendations was that jurisdiction over unemployment, a provincial prerogative under section 92 on property and civil rights, be transferred to the federal government. Keynesianism, as we have seen, was a core component of the constituent thinking of the Rowell-Sirois Commission and would later be constitutionalized with the passage of the amendments to sections 91 and 92 of the BNA Act as agreed with the provinces at the Dominion-Provincial Conference of January 1941. Going even farther, the report recommended giving Ottawa some jurisdiction over the welfare state, which had heretofore been the exclusive responsibility of the provinces. This suggestion was loudly denounced by Ontario premier Mitchell Hepburn, one of the most obdurate opponents of federal demands at the conference.4 Hepburn saw no need to amend the Constitution with a war on: the federal government could handle any emergency with the exceptional powers conferred by the recent passage of the War Measures Act. The merit of Hepburn’s approach was to extend the constitutional status quo for the duration of hostilities, thereby putting off discussions to calmer times. Moreover, wartime conditions might produce an unexpectedly harmful effect since, according to MP Norman McLarty: “If the Dominion is responsible for the employable jobless and leaves the unemployables to the provinces, it is shouldering the smallest part of the burden.”5 Yet the question remained: What would happen after the war, when we could reasonably expect a resurgence of unemployment and demand for social services to have an impact on provinces that lacked the necessary resources? It

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went unanswered. A temporary compromise was reached under which the wartime federal government would operate a Keynesian mixed economy while the provinces retained their welfare responsibilities. This shift to a mixed economy model reflected a radical change in the political economy applied by Ottawa until then, as it tried to offset Canadian overdependence on international trade and increase economic self-sufficiency. However, this shift was easing the Canadian economy away from its historical reliance on transcontinental exchanges – the historian John Bartlet Brebner’s “North Atlantic triangle” – towards greater dependence on intracontinental north-south trade. The Rowell-Sirois commissioners did not fail to recognize this new geographically conditioned reality that would have major ramifications for provincial economies, especially in the Maritimes and Quebec. Cities and regions like Montreal, the Mauricie, and the Saguenay, dependent on transcontinental networks, would be marginalized. Continentalization and the Mixed Economy The postwar period would see the consolidation of two powerful trends: a loosening of trade and financial ties with the mother country combined with a simultaneous surge in trade and investment from our giant neighbour, and a shift in the weight of industry from the east to the shores of the Great Lakes.6 These changes were already under way before and during the Second World War and, for strategic as well as tactical reasons, would be further entrenched during the Korean conflict (1950-53) and Cold War years.

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To understand this process in its strategic and tactical dimensions, we have to borrow the broader, continental view of the other partner in North America, the United States, where, both during and after the war, the economy revolved around natural resources and their accessibility, availability, and security. Sustained economic growth, especially in an ongoing Cold War, required a reliable flow of natural resources to fuel US industry. One of the first important postwar estimates of natural resource needs and availability in the American economy was prepared by Frederic Dewhurst in 1947 for the Twentieth Century Fund,7 and soon followed by an American Petroleum Institute report on “Major Sources of Energy.”8 Scant years later, with the Korean conflict threatening to spark yet another world imbroglio, President Truman ushered in a full-fledged US national supply strategy when, on 22 January 1951, he convened the Materials Policy Commission chaired by William Paley. Building on a comprehensive list of basic products needed for an ever-expanding US economy, the Paley Commission outlined a new supply policy and recommended infrastructural changes to facilitate resource flows for the American market.9 A key element of this policy was to exhaust the natural resources of neighbours and partners before moving on to exhaust one’s own. This approach clearly denied two basic tenets of free-trade ideology and policy: one, that free trade is based on a resource endowment of which the primary beneficiary must be the host country, and two, that resource use must be based on the comparative costs theorem advanced by Ricardo, according to which trade is beneficial between

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countries, even if one country is more efficient, because of differences in internal production costs. These observations prompt me to explore two ideas. First, the typical requirements of a secure supply policy for a dominant partner exert major downward pressure on the value of raw materials insofar as priority of access excludes competition, with the result that the pricing system for these resources is set by that partner, not the law of supply and demand. Second, the use of external resources on a priority basis depends on the costs of extracting and transporting these distant resources being lower than they would be at home. The full significance of this for the continentalization of the Canadian economy can be seen when we remember that the Paley Report, after listing twenty-nine key products essential to the US economy and its secure future growth, named Canada as a major if not a critical source for twelve of them.10 The Paley Report made this crystal-clear when the commissioners, with high-grade iron-ore deposits running out in Minnesota’s Mesabi Range, recommended tapping deposits in Latin America and opening iron and titanium mines in arctic “New” Quebec instead of trying to mine other deposits in the United States itself. Moreover, to ensure a secure flow of resources from the northern tier of the continent via the Great Lakes, they recommended a start on the gigantic infrastructure project that became the St. Lawrence Seaway.11 This recommendation was made at a time when the Korean conflict threatened to degenerate into a third world war, in which case a secure intracontinental supply route was needed in preference to a North Atlantic high-seas route that offered easy targets for enemy submarines.12

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The economic security requirement disrupted optimal resource allocation and distorted the process of specialization based on the comparative costs theorem. In fact, neither was now based on natural resource endowment, labour costs, or even plentiful capital: they were both dictated by the growth requirements of a dominant industrial power and ratified by the acquiescence of the caretakers of the satellite economy. In such circumstances and conditions, the continentalization of the Canada-US economic system during the Cold War was the result not only of a migration of industry and population to central Canada and the central US but also of renewed sensitivity to economic security issues favouring the consolidation of a significant portion of the military-industrial complex around the Great Lakes. This process drew on certain ideas from the economic geography of an earlier era that had developed the concept of “heartland” to designate the industrial core of a country or group of countries closely linked economically, politically, and ideologically. The Canada-US heartland had its equivalent on the Soviet side of the world. The concept was essentially the same there as here – to locate major industrial areas as far as possible from enemy attack.13 Meanwhile, however, this shift of the industrial axis to central North America would have major economic and social repercussions for eastern provinces and states. In Canada, the Maritimes and Quebec would be hardest hit when the 1959 opening of the St. Lawrence Seaway was followed by two major related events. The first was the closing of the Lachine Canal and the relocation, generally outside the province, of a whole string of factories and industries that had stood along the canal and lived on transfers from

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ships to lakers or trains. The new seaway’s second consequence was the marginalization of Montreal, which was soon overtaken by Toronto as Canada’s metropolis. The Montreal Chamber of Commerce, alerted to these processes, promoted the city’s application to host a World’s Fair. With Montreal the site of Expo ’67, the idea was to use infrastructure spending to ease the transition from a manufacturing and transfer economy to a commercial and new transportation hub. Again, it is essential in the Canadian context to see the mixed economy and continentalism as closely associated and thus dispel an ambiguity that leads some to overstate the role of economic nationalism in the years after the Second World War. This is not to imply that economic nationalism and Keynesianism had no impact, simply that nationalism and continentalism substantially overlapped, with the result that Keynesianism in Canada favoured the province of Ontario and forged a political axis linking Toronto and Ottawa at the expense of major eastern cities.14 Finally, economic nationalism and continentalism must be seen in tandem because the evolution of the Canadian system kept it on the brink of economic and political dislocation all through the 1970s and ’80s. The Macdonald Commission was quick to blame Keynes and the mixed economy for this, overlooking the limitations and requirements of economic continentalization. Meanwhile, the Keynesian compromise confirmed the provinces in their role as purveyors of social services, so that, at the end of the day, Canada was made up of ten welfare states – a situation which, as we shall see, had unfortunate effects on the country’s economic union.

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Liberalization and Continentalization Two sets of factors, the first political and the other economic, disrupted the equilibrium between federal and provincial responsibilities and hastened the demise of the Keynesian mixed economy. In domestic affairs, Quebec’s defiance of the federal pact precipitated events and the Trudeau Cabinet seized the initiative to break the stand-off. In May 1980, the Quebec referendum on the Constitution ended in defeat for the Parti québécois government but left the basis of Canadian constitutionalism impaired. Flushed with the success of a campaign that had promised a full constitutional review, the federal government went ahead with its unilateral patriation of the Constitution – still a British statute at that time – and moved to enshrine a charter of rights and freedoms in this framing text. All this would have momentous outcomes that I want to briefly explore. Until this development, the Canadian federal system had operated under a principle handed down from British constitutional law: parliamentary supremacy. This meant that parliaments and legislatures held supreme authority over all matters within their jurisdiction: any tribunal asked to rule on a law’s constitutionality had to apply the legal doctrine known as “pith and substance” to determine the jurisdiction that applied. Coming into the 1980s, however, Ottawa concluded that the principle of parliamentary supremacy had been abused as provincial legislatures passed laws curtailing the rights and freedoms of certain categories of citizens, for example, Aboriginal peoples in Western provinces and the English-speaking minority in Quebec. The time had come to replace the wavering principle of parliamentary supremacy with another, the supremacy of the

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Canadian Charter of Rights and Freedoms. The courts would henceforth determine legal constitutionality based on the Charter. Parliamentary supremacy as derived from British constitutional law was dropped for judicial control, a central feature of the US constitutional system. This shift can be read as a systemic adjustment of the Canadian constitutional order to the US model. Heightening continentalization, it paved the way for full-fledged free trade between the two countries. But there is another side to this story. For several decades, parliamentary supremacy had grown less and less effective for two reasons. First, the lawmakers had less to say as they were less and less able to impose accountability on ministers and Cabinet, where control had migrated. Second, over the years, ministers had come to rely more on third parties – pressure groups, experts, lobbies, stakeholders, and so on – and less on the legislators themselves. Moreover, the rights protected by the Charter tended to be civil and political rather than economic, social, and cultural.15 The Charter, essentially inspired by old-style philosophical liberalism, would prove a most efficient instrument for bringing down any piece of legislation favouring majority or collective rights at the expense of a minority. Yet this further eroded the parliamentary ability to stand for a common good above minority interests. Indeed, the defence and promotion of individualism on such a scale directly challenged the central principle of universalism on which the welfare state was built. I have two final comments concerning the Charter, the first stemming from the idea that it established a new rela-

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tionship between the citizen and political authority and the second from the fact that it also established new relations between corporate entities, whether businesses or organizations, and political authority. Indeed, the Canadian Charter grants the enjoyment of basic freedoms to both natural and legal persons, so that a corporation can invoke freedom of religion to challenge a law prohibiting Sunday shopping and freedom to trade to contest the language rights of the Francophone majority in Quebec. This new role for both citizens and corporations worked against universalism and thus cast doubt on the lawmakers’ defence of majority interests. At the same time, this role strengthened the legitimacy of the executive and the courts, the former in its capacity to deal with claims and other requests from individuals, groups, and businesses and the latter in their capacity to evaluate and interpret these rights according to the Charter. But changes on such a scale could not be put into practice, especially government practice, without further exploration of their consequences in all fields of endeavour. This is basically why Ottawa, shortly after patriating the Constitution and enshrining the Charter, ordered yet another royal commission. The Macdonald Commission The Royal Commission on the Economic Union and Development Prospects for Canada, or Macdonald Commission, was convened by an order-in-council of 5 November 1982.16 The opening pages of the report, tabled three years later, recognized the fact that Canada faced a political as well as a serious economic crisis:

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The 1981-82 downturn was by far the most severe recession Canadians have experienced since the Second World War. Real gross national expenditure (GNE) fell by 4.2 per cent between 1981 and 1982; the only other postwar instance of an absolute decline in output, on an annual basis, occurred in 1954, when real GNE fell by 1.2 per cent during the recession that followed the Korean War ... Furthermore, the recession was much more severe in Canada than it was in the United States, where real GNE fell by only about 2 per cent between 1981 and 1982, and the unemployment rate rose by 2 percentage points.17

The Macdonald Commission was created in a time of crisis recalling the Depression that spawned its direct predecessor, the Rowell-Sirois Commission of 1937. The commissioners were forced to conclude that the Keynesian supply management model of development had failed. There was no more question of government commanding or controlling the economy: the Macdonald Report proposed handing most management and monitoring functions off to the marketplace, that is, to the private sector. The commission’s broad mandate reached out to include proposals for development policies and institutional and constitutional arrangements while reflecting “the spirit of the Canadian constitution” and working from “the assumption that the Canadian federal structure will not appreciably depart from its present form.”18 The commission would receive 1,513 briefs and launch a big research program involving some three hundred experts, who generated seventytwo bound volumes. It would hold two rounds of hearings across the country and produce an impressive three-volume report that totalled 2,110 pages, including five comments

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and dissenting opinions. Its conclusions and recommendations alone filled eighty pages. The commissioners were serious about the threat of a “balkanized”19 Canadian economy and recommended measures to strengthen the country’s “economic union.” The shape of the political economy was redefined as a direct extension of the 1982 Constitution and Charter of Rights and Freedoms. Responsibilities were clearly stated as well: If the economic union was in jeopardy, the fault lay with the role governments had played and their frame of reference – Keynes and the mixed economy. Playing the courtiers, the authors of the report, having cast doubt on the relevance of Keynesianism to deal with current problems, went on to compliment the bourgeoisie on its historic progressive role: The market economy, characterized by decentralization, and sensitive to the shifting cues of the price systems, is also a significant social invention. It is highly flexible and responsive, and it co-ordinates innumerable private economic decisions without resorting to coercion. It was not Henry Ford but Karl Marx who asserted of the bourgeoisie in the Communist Manifesto: “It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades ... 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 ... What earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?”20

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Had these authors not cut their Manifesto excerpt so short, they might have avoided the implication that the old pamphlet was written in defence of the bourgeoisie, simply by quoting from two paragraphs farther on: “A similar movement is going on before our own eyes [similar to what happened when the bourgeoisie broke the chains of the feudal system]. For many a decade past the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeoisie and of its rule.”21 At any rate, the aim was clear: the critique of Keynes was basically designed to prepare the ground for a new political economy based on neoliberal parameters. Less clear, however, was why, even before they let loose at Keynes and the mixed economy, the commissioners recorded a critique of the legislative power and parliamentarism. Why establish a connection between two seemingly unrelated issues, and exactly what connection did they claim existed? The answer involves pointing out that the shift to a neo- or ultraliberal policy rejecting Keynesian interventionism was unthinkable without a comprehensive review of the citizen’s relations to politics and power politics. The commissioners offered this comment on the relations between the legislative and executive powers: “This [federal] system brings together the executive and legislative branches of each government in a manner designed to ensure both decisive leadership and democratic responsiveness through the requirement that the political executive remain in office as long as it retains the majority support of the elected

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members of the legislature.”22 This assessment was immediately followed by an all-out attack on “parliamentary responsible government” as having lost touch with current circumstances, owing to “the continuing influence of money in political life; the unrepresentative nature of legislative bodies; the increasing number of interest groups which interact directly with the bureaucracy and the Cabinet; the excesses of partisan debate; the imbalance in access to expertise between cabinets and legislatures; the manipulative capacity which modern media and sophisticated polling techniques give to governing authorities; the extent to which the administrative state escapes the effective scrutiny and control of elected officials; the difficulties facing legislatures responding to the complexity and sheer volume of policy decisions in contemporary society, in which government assumes major responsibilities; and many others.”23 Paradoxically, having noted the advent of a system of “executive federalism” in the country, the commissioners vowed to strengthen parliamentarism and proudly prised an old proposal for an elected Senate from its eternal sleep. Having thus demolished Keynesianism and its brand of political economy for pushing Canada to the brink of economic balkanization, the commissioners plumped for market preponderance to strengthen the country’s “economic union.” Their recommendations came in internal and external streams. The first, addressed to the Canadian polity and its stakeholders, aimed to push back government involvement in the economy and redefine the division of powers between levels of government, while the external

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recommendation was to open free-trade negotiations with the United States. In the following chapter, I will concentrate on the Canada-US Free Trade Agreement, which is without doubt the central recommendation to come out of the Macdonald Report.

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ttawa’s historic challenge has been to stand guard for sovereignty while doing its best to broker continental integration. I have outlined the general context in which negotiations occurred throughout the Cold War. Continental economic integration had positive effects on some provincial economies, especially those of Ontario, which benefited from the economic fallout of the 1965 Canada-US Automotive Agreement – better known as the Auto Pact – and Alberta, which saw a surge in oil exports to the US market. The process continued in 1989 with the Canada-US Free Trade Agreement (CUFTA) to culminate in the Canada-US-Mexico North American Free Trade Agreement (NAFTA) of 1994 that ushered in a new era of world economic globalization. A review of the main provisions of these agreements reveals their importance in the shift towards a “global integration model,” in contrast with the postwar framework we

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examined earlier. It is interesting to note that free trade in North America has prompted all three partners to negotiate similar agreements with other countries in the Americas and around the world. The NAFTA has been the template for a host of successful bilateral trade agreements – for example, Canada-Chile, Mexico-EU, US-Morocco, and Chile-South Korea – as well as regional free-trade agreements such as the US-Central America Free Trade Agreement-Dominican Republic, or CAFTA-DR. The NAFTA model of economic and institutional integration has been imposing its standards on a growing number of partners for a dozen years and is now poised to supersede the institutions and normative frameworks established after the Second World War. Economic globalization stems from a neoliberal ideology holding that, unless commodities and services are produced and distributed in an untrammelled marketplace, it is impossible to achieve an optimal allocation of resources and income between the factors of production – labour and capital. Historically, to put it mildly, the market has never managed to prove itself, as we saw in Chapter 1. This is the main reason why the 1930s and the Second World War saw the emergence of an interventionist or social strand of liberalism. I have noted earlier that these liberals, especially the Keynesians who called themselves neoliberals at the time, were opposed by the Hayeks of the day claiming to be the true liberals. The irony is that today’s neoliberals are but yesterday’s anti-neoliberals who, during their long years in the desert, patiently wove intellectual and political connections and spun webs of influence. We need only note, in this regard, their founding of the Mont Pelerin Society

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in 1947, the dissemination of their ideas in universities and faculties like the University of Chicago law school, the many publications and telecasts such as those hosted by Milton and Rose Friedman, and, finally, the infamous field tests by General Pinochet’s team in Chile after the September 1973 coup d’état against Salvador Allende’s socialist regime.1 The cumulative effect of all this is worth mentioning since, in the space of four decades from 1939 to 1979, this so-called new strand of neoliberalism gained such ascendancy with the media and the political class as to parade in full political view with the Conservative Party of British prime minister Margaret Thatcher and gain access to the antechambers of power with the 1980 election of US president Ronald Reagan.2 In Canada, the neoliberal approach was promoted from the mid-1980s by the Mulroney Conservatives in Ottawa and Robert Bourassa’s Liberals in Quebec. Thereafter, one by one, governments struggling with huge deficits cast doubt on the interventionist strategy they had formerly supported and joined with the business community to eliminate anything that looked like a barrier to the rule of the marketplace. However, the rationales developed by these neoliberals exempted business monopolies, cartels, trusts, and other protectionist practices and targeted governments as the sole perpetrators of illiberalism. This approach led to major disruptions in the functions and missions of governments that would now have the paradoxical task of superintending their own diminishment. Some commentators have seen this wave of privatization and deregulation as indicating official helplessness to deal with big business and international organizations, apparently not noticing that, in the rich countries at least, the state, far

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from being weakened, was coming out of this liberalization slimming program bigger and stronger than ever. Boiled down to its simplest form, the present-day neoliberal strategy is based on the four pillars of liberalization, deregulation, privatization, and the rollback of social services.3 This strategy leads to one outcome: bringing private attitudes like individualism and competition into the public space on the assumptions that wealth is generated by private initiatives and governments do nothing but spend. Of course, this limiting approach had already been criticized in the nineteenth century by liberals like John Stuart Mill, who showed that public spending in areas like health and education was not expenditure in the strict sense but public investment – an argument that is seemingly lost on the neoliberals of today. As we have seen, the framers of the postwar order had begun by supporting the type of approach in which governments played a role of economic management or control, and this had prompted them to give pride of place to full employment as a core objective of political economy.4 However, this process faced an insurmountable conflict between a reasonably serious, though in some cases rhetorical, government commitment to economic and social progress and a legal and political commitment to civil and political rights as opposed to economic, social, and cultural rights. This conflict would be reflected in a widening gap between the strategy of national economic liberalization pursued by governments believing in the free movement of commodities and capital and the strategy of monitoring and controlling workforces and whole populations, pursued by governments committed to national solidarity.

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Under pressure to internationalize domestic production while attempting to protect their workers and citizens from the stresses of liberalizing a gigantic world commodity and capital market, governments treated the world and domestic markets as separate. Moreover, although the welfare state or, in more general terms, the whole range of interventionist commitments to social programs, labour, health, education, and so on, could be seen by governments as responding to the challenge of internationalization, these strategies still led to the following dilemma: How were governments to reconcile the construction of a single huge world market with the proliferation of increasingly enclosed, fragmented, and diverse national normative spaces? How were they to promote increased mobility for commodities, services, and capital when workforces and citizens generally were subject to growing and ever more complex regulatory control? Since the hermetic seal between international and domestic markets is precisely what neoliberals are against, the core aim of a rational economic policy should be to lift barriers impeding the free circulation of the factors of production, thus melding national markets into a single global market. The resulting competitive stampede thus leaves governments holding the bag for the delivery of services to marginal, poor, and excluded groups. It remains to be seen how this reasoning, which at first glance would seem to stem from internal governance and policy choices, is indebted to the CUFTA and then the NAFTA. Free Trade At the same time, there seemed to be something paradoxical about Canada and the United States setting up a

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free-trade area when they already had the most integrated economies on the planet. Economic theory teaches us that free trade is the first level of integration, a commitment by partners deciding to trade for the first time. Farther on, free trade should be succeeded by a customs union and, eventually, a common market. But in fact there is no paradox at all, since the free-trade agreement the US and Canada were planning had very little to do with what economics textbooks had been teaching over the years. The CUFTA was so extensive and far-reaching that it could have been negotiated only by the closest of partners. Actually, the very first bilateral free-trade agreement of this kind was signed by the United States and Israel in 1985. The second was negotiated with Canada starting in that year and came into force as the CUFTA in 1989. Soon thereafter, in 1991, the Americans embarked on trilateral negotiations with Canada and Mexico that ended with the 1993 signature of the NAFTA that came into force on 1 January 1994. That December, US president Clinton convened the first Summit of Heads of State and Government of the Americas to approve an ambitious plan to create a hemispheric “community of democracies.” Three years later, the second Summit of the Americas, held in Santiago in April 1998, agreed to open trade talks among the thirty-four partners – the thirty-fifth, Cuba, was not included – to create a Free Trade Area of the Americas (FTAA) by 2005. What had begun as a far-fetched deal between two partners thousands of kilometres apart was now, twenty years later, poised to encompass virtually a whole hemisphere. In a sense, this project was both much more ambitious and far-reaching than the successive expansions of the European Union.

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We can otherwise quantify the progress made in a few short years from the texts of the 1985, 1989, and 1994 agreements. Without question, the North American Free Trade Agreement contains the most advanced provisions at this time on services, government contracts, and investments. In particular, its Chapter 11 on investments gives preeminence to investor rights, placing governments and public corporations in a subordinate, disadvantaged position. Chapter 11 also gives foreign investors the option of taking governments to court if they are ever tempted to resort to nationalization. These innovations seemed so important that NAFTA Chapter 11 became a template for the Multilateral Agreement on Investment (MAI) negotiated in the late 1990s under the aegis of the Organisation for Economic Cooperation and Development (OECD). Talks were cut short in September 1998 after an outcry from dissidents the world over, especially France, Canada, and Quebec, who were strenuously opposed to the legal protection granted by governments to investors under the MAI. This legal innovation, the investor protection and guarantee in Chapter 11, was not the only one to be found in the agreement. Indeed, the core objective of the trade talks had been to eliminate non-tariff barriers (NTBs) where previous trade negotiations had focused on tariff barriers (TBs). Opening a Pandora’s box of NTB negotiations was quite a challenge: NTBs cover all possible and imaginable forms and variants of government and government-regulated intervention and interference at all levels in the production, circulation, and distribution of products and services. This situation compelled restraint, and the trade talks dealt mainly with NTBs to exports, and not other forms of assistance

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to production, which come under the heading of “business subsidies.” In many, if not most, cases, however, governments had specifically targeted export and import flows to maximize spin-offs that spurred growth in the national economy. By opening talks on export NTBs, the US negotiators were taking aim at a very specific set of barriers while leaving the other forms of assistance they applied in their own economy intact. For its part, Canada wanted to safeguard supply management in agriculture and the use of public markets in telecommunications, wheat, the distribution of alcoholic beverages, and so on, as the backbone of an economic strategy created generations earlier to foster national development. In the end, the Canada-US Free Trade Agreement went even farther, and we can gain a better understanding of the scope and extent of the talks by listing the many broad sectors covered in it: trade in goods (Part ii); government procurement (Part iii); services, investments, and temporary entry of business people (Part iv), and financial services (Part v). Part ii on trade in goods covered rules of origin (ch. 3), border measures (ch. 4), national treatment (ch. 5), technical standards (ch. 6), agriculture (ch. 7), wines and spirits (ch. 8), energy (ch. 9), trade in automotive goods (ch. 10), and emergency measures (ch. 11). Similarly, Part iv on services with its Annex 1408 contains a fairly long initial list – farm and forestry, mining, construction, distribution, insurance, real estate, and commercial services. To sum up, the CUFTA was innovative in three respects: its liberalization of virtually all economic sectors, including agriculture but excepting cultural products; its scope, with more binding commitments than any previous agree-

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ment for trade in services, business travel, and investment; and the extent of the market access guarantees offered to investors of the other party.5 Nevertheless, every provision in the agreement reflected what is known as a “positive” approach, since the annex to the CUFTA established a list of services explicitly covered by the terms of the agreement. In this regard, the NAFTA would soon innovate in a most original way with a “negative” approach, under which the agreement covers all goods and services produced in a given economy except those explicitly excluded by an attached list. Under the NAFTA, market liberalization became truly universal. To establish the significance of the Canadian and Mexican commitments under the NAFTA and the extent of the harmonization process coming out of the agreement, we will look at it in greater detail, beginning with Article 102, Objectives: The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favoured-nation treatment and transparency, are to: a. eliminate barriers to trade in, and facilitate the crossborder movement of, goods and services between the territories of the Parties; b. promote conditions of fair competition in the free trade area; c. increase substantially investment opportunities in the territories of the Parties; d. provide adequate and effective protection and enforcement of intellectual property rights in each Party’s territory;

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e. create effective procedures for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes; and f. establish a framework for further trilateral, regional and multilateral co-operation to expand and enhance the benefits of this Agreement.

Paragraphs (a) to (d) outline the agreement’s major economic and trade goals, while (e) and (f) cover its administration and institutional framework. This ambitious wording is an interesting summary of the obligations the parties are expected to assume. Throughout the agreement, application of the national treatment (NT) and most-favoured-nation (MFN) rules is universal or nearly so. Where the parties agreed to exclude certain commodities or services from these rules, a complete list is established at the end of the chapter, and the agreement itself provides for the resumption of talks to eliminate these exceptions at a future date, as in Article 1024 of Chapter 10 on government procurement and Annexes vi and vii. The NAFTA endorses what is known as a “gradual” approach to trade liberalization compared to the more conventional “comprehensive” approach by which parties agree to implement and harmonize standards and procedures for a specified set of goods and services. The comprehensive approach is a closed one in the sense that it covers only what is explicitly provided for in the agreement, while the gradual approach knows no limits: once under way, it covers all goods and all services in all sectors. This is where the so-called “negative” approach kicks in. Having agreed on the principle of trade liberalization in services (art. 1201,

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para. 1), each signatory subsequently established its own list of services excluded from the agreement (Annexes i to vi), instead of providing, as was customary, a common enumeration of the services covered.6 By taking a gradual approach based on negative lists, the three NAFTA partners agreed to give universal rein – or quasi-universal, since financial services were out – to the principles and standards enshrined in the agreement. This has been called a “dual” approach since it encompasses both the traditional top-down and the innovative bottom-up approach. The former is based on treaties and pacts drafted by committees of official representatives and experts. In trade matters, this is the one used in the GATT, the GATS (General Agreement on Trade in Services), and, more generally, the WTO. The latter is based on a completely different strategy for reducing disparities among laws, regulations, and business practices in various jurisdictions. This is done by empowering legal experts, government officials, and business representatives to work together on harmonizing particular sectors – transportation, e-commerce, and so on. The bottom-up approach raises two crucial issues: the credibility of standards set by a closed committee as opposed to a duly constituted public body, and the representativeness of the adjudicators.7 From this standpoint, the NAFTA can be seen as the first regional trade agreement outside the European Union that not only covers every sector of the economy but also lays down a genuine transnational normative framework for trade relations that is based on equal treatment for governments and businesses, the very principle on which the US wanted to

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build international economic law in the aftermath of the Second World War. Liberalization and Canadian Internal Policy Once the NAFTA negotiations were complete, the question arose of how external trade policy would impact domestic economic policy. The Canadian answer was provided by yet another commercial treaty, the Internal Trade Agreement or ITA, this time between Ottawa and the provinces. In fact, the ITA can be seen as discharging one of the burdens arising from the NAFTA itself, where Article 105, “Extent of obligations,” reads: “The Parties shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance, except as otherwise provided in this Agreement, by state and provincial governments.” Soon after the NAFTA came into force on 1 January 1994, Ottawa called on the ten provinces and two territories8 to open talks leading to signature of the ITA that came into effect in 1996. The main body overseeing and enforcing the terms of this agreement is the Committee of Ministers on Internal Trade (CMIT) representing each of the parties. It has four basic responsibilities: the ongoing identification of barriers to effective and balanced trade within Canada; the intake of representations by individuals, businesses, business associations, and governments themselves concerning government policies, programs, regulations, and practices impeding trade within Canada; the reduction and elimination of such barriers through consultation, negotiation, and mediation; and reporting to premiers on the condition of Canada’s internal trade and efforts being made to reduce

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or eliminate barriers to interprovincial trade. The CMIT is also intended to provide a forum for governments, officials, and citizens to stay abreast of and contribute to internal trade policy discussions.9 The ITA’s goals and principles are defined in Article 100, which extends its terms to mobility of labour, a major innovation compared to the NAFTA, which covers only the free movement of merchandise, services, and capital. Like the NAFTA, the ITA subjects future harmonization to a substantial requirement, the reduction of trade barriers, that would lead to the necessary normative and regulatory adjustments. It is obvious how the ITA, far from being a simple trade agreement, actually imposes the parameters of a new economic policy that is none other than the one established by the NAFTA. But what is unquestionably more revealing is not the resemblance between the two agreements but the fact that the ITA protocol is a direct descendant of the negotiating protocol for the harmonization strategies enshrined in the NAFTA. In this sense, the ITA redefines the internal political and economic rules based on what was just done in the NAFTA, and so the new parameters of governance for the continent are replicated for the nation. This process calls for a horizontal and vertical shift of power. Along a horizontal axis, power is now concentrated in the executive branch, or Cabinet, at the expense of Parliament. This horizontal shift also affects the judiciary, though in a different way, since its prerogatives are eroded by the NAFTA and ITA dispute settlement mechanisms. Foreign investors, in particular, much prefer expert panels and other mechanisms to national courts. Along a vertical

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axis, hierarchies for executives are strengthened, with the federal Cabinet gaining ascendancy over junior Cabinets while Canadian and Mexican leaders find themselves increasingly subservient to the White House. For these two partners, this situation is all the more complex, since jurisdiction over international trade lies with Congress, not the president. These anomalies need to be resolved to make the trade agreement fully operational. In this NAFTA overview I have attempted to show how, with this kind of free-trade agreement, we move beyond economic integration in the classic sense to governance as the establishment of a new interface between public and private spheres. The public side of governance is best characterized by the bottom-up approach to the harmonization of standards and practices, far removed from the scrutiny of legislatures. And the private side of governance is best characterized by the new strategies of business concerns striving to sever ties with their national economy and society and gain dominance in a global market – or enjoy optimal freedom in foreign markets and, by osmosis, in their home market as well.

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full understanding of the emerging global order cannot be limited to the study of free-trade agreements. The shift towards a global economy was not worked by grafting new stipulations onto old normative frameworks. Were such the case, we could merely repeal change and reinstate the post–Second World War order with all its internationalism and universalism. This is impossible, of course: the postwar institutional map has seen sweeping revision over the years as new bodies arose to serve a global order. Our challenge in unravelling the sense and scope of the new order calls for more than a study of its norms and frameworks: it involves a review of its living institutions as well. Of all the institutions reinstated or reinvented in the wake of the Second World War, the one to see the most farranging transformation is unquestionably the modern state. Strategically positioned at the junction of national and international, and policing the boundary between public and

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private spheres, the state was truly the keystone of the postwar order. It would seem pointless to consider founding a better world order on the reform of international organizations when the key to our critical understanding lies in a review of the functions of the nation-state. And of all the functions entrusted to the state in the years following the Second World War, those associated with welfare were the most prominent and drew the harshest criticism. Indeed, the “decline of the welfare state” became a recurring theme in the social sciences. The past ten years or so have seen major change in the positioning of welfare as a common good. As already seen, its advancement and promotion have depended on the success of a strategy aimed at national economic development, the expansion of national firms, and the prosperity of households. Nowadays, however, governments have set these goals aside to focus their energies on one central institution – the marketplace. What has happened? The conceptual framework developed in the 1940s was based on a core belief in the state’s mission to maintain a hermetic seal between domestic labour and international commodity markets. Governments thus had two distinct responsibilities as guarantors of national solidarity and proponents of an internationalized economy. But the separation of these markets was completely dependent on the simultaneous development of the mixed economy and the welfare state. Therefore, before looking at the issue of the welfare state’s “decline,” I will first examine the changes in the mixed economy, an issue that involves public economic management and the basic tenets of Keynesianism.

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Three basic factors cast doubt on Keynes’ mixed economy model. The first and, from our standpoint, most decisive has to do with the interconnectedness of variables in Keynes. It will be remembered that Keynes’ so-called “revolution” was based on full employment as an independent variable. This meant that employment levels were not determined by such other variables as labour supply and demand or level of output, as economists had argued before Keynes, but by the political goal of full employment. Should a political reversal on full employment return it to purely economic status, we could look for causes in a decline of union power and bellicosity or denial of full employment as a social right. Neither union power nor social solidarity could save a full employment policy if governments were steadily hollowing out these rights, as we saw in Chapter 2 when dealing with their liberal interpretation. The second factor discrediting the mixed economy was the public debt and mounting servicing costs. The early 1970s saw growing unease about government debt levels, which were not a real problem as long as governments were increasing their share of the economy and absorbing and redistributing more of the collective wealth. But debt-level whistle blowers would make inroads and the issue was brought to the fore under pressure from two directions: criticism aroused by the growing power of financial markets, deregulated under President Ronald Reagan and, some thought, poised to engulf any government that failed to toe the line of the new political economy, and criticism from investors who saw the public domain as a huge opportunity for new private investment.

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The third and final factor may seem trivial compared to the other two but was not: it concerned the expansion of international trade talks to include the service sector. A word of explanation is required here. It will be remembered that the distinction between world and domestic markets after the Second World War identified a commodity market that could be internationalized mainly through tariff reduction, and a national market for home goods, services, and labour. Commodities and services were assumed to differ fundamentally in that the former could be regulated by tariffs while services were inextricably tied to their providers and so came under the regulation of labour. A hairbrush is a commodity that travels freely: a haircut depends on the mobility of the barber. Global market development initially relegated the service economy to the nation-state. However, what seemed trivial at the outset grew to involve the whole stream of technological progress that made services mobile, starting with insurance, banking, and investment and gradually encompassing the entire service sector. This process is central in the transition to a global order, with the notion of “service” expanding to cover a heterogeneous array that includes infrastructures, energy, utilities, transportation, airports, mail, education, health, and culture. The semantic shift heralds the metamorphosis of social rights into mere public commodities bound for the private domain. The above factors suggest, not a decline in the functions and responsibilities of the welfare state, but the emergence of a new economic mix. This new type of mixed economy does not have much in common with its predecessor: the emphasis is less on national economic management or control than on the establishment of an original interface

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between the public and private production and distribution of social goods and services. Unlike the Keynesian economy, which tied the quest for collective welfare to a political deal between the economic players of business and labour, the new economy is designed essentially to build wealth through partnership between the political and business communities. This transformation would have major consequences for relations between states and citizens. From Collective to Individual Responsibility The Macdonald Commission had seen clearly when it geared its critique of Keynesianism to the redefinition of government responsibilities. This exercise took matters beyond Beveridge’s simplistic distinction between job fitness and unfitness and put governments at the crossroads of economic growth and social welfare. The political choice to align the state more closely with the business world meant getting governments out of welfare and reinstating an individualistic vision and a particularistic approach to social risks. In this supposedly new approach, government interference with the labour market was scaled back: the policy goal was to instil in individuals a resolve to integrate the labour force. The focus of concern was not a citizen’s status as former worker or laid-off employee but his or her relationship with the labour market as a whole. Entering or leaving the workforce always involved risks – stemming, for example, from industrial concentration or shortcomings in individual training – and it was up to individuals to adjust to requirements and environments. These risks were best tackled with a shared state-individual responsibility for

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easing labour force integration or maintenance. The same reasoning applied equally to education, health, and social services. The state should act as a facilitator of market economy integration. It should relinquish its mission to liberalize the national economy for a new broker role to extend a global order within the confines of that economy. What we see here is a major shift in the state’s role from the management of groups – employed or unemployed, students, the sick, and so on – to the management of individual behaviours related to work, labour, apprenticeship, education, and health. This shift leads to a transformation in our sociality as individualism is subordinated to a globalized market economy where competition and rivalry are the norms. As we have seen, this state-individual relationship differs appreciably from the one we saw in the aftermath of the Second World War. The sheer magnitude of the change calls for further comment. This process makes each individual a solitary microbusiness empowered by the state as an economic agent bent on the advancement of his or her interests over the collective interest. Instead of the guarantor and proponent of a domestic economy steeped in national solidarity, the state has become a guarantor and proponent of market forces empowering economic agents, individuals, or concerns to generate wealth in the most aggressive environment possible. Competitive citizenship is substituted for national solidarity. Finally, the parameters of this new global order have little to do with the welfare state, not just because of the demise of social rights or the commodification of social services, but more fundamentally because, in relinquishing its political responsibility for

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its citizens as a community or nation, the state depoliticizes civil society. Civil Society and Politics To understand the resurgence of the concept of civil society in the post–Cold War context, we must return to the 1940s for a closer look at what the framers of that earlier world order had in mind for economic and social stakeholder involvement. To use a key example, full employment as an economic policy objective could not have been pursued with much effect by governments alone. Given the highly charged atmosphere around this issue, governments engaged in political manoeuvring and bargaining with economic and social players to define its parameters. Here, the nation-state was not backing an essentialist concept of full employment, as authoritarian regimes would, but going after vote-getting political compromises as well. At that time, the liberal approach to the goal of collective well-being was not based solely on tripartism, an ongoing collaboration among governments, businesses, and unions, but encompassed the defence and promotion of group and individual interests and, obviously, ownership or property rights as well. In other words, the balancing of individual and social rights dominated politics and public discourse. The state, with its layers of government, assigned mandates to institutions, jurisdictions, and administrations that took on the same kind of balancing act and responsibility to promote the social good and protect the public interest, all the while standing for individual and group interests as well.

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Politics in this sense was not exclusive to the state but permeated the social fabric. Politics was what individuals, associations, and groups engaged in before and after dealing with states and governments to further their selfish and community interests. To borrow a distinction dear to Antonio Gramsci, civil society and political society are not sealed spheres but complementary ways of looking at the same issue – civil or legal on one hand and political or public on the other. Thus, a labour strike is not just a breach of a civil contract between private parties but also a political act. It is a political act that appeals to other citizens to get involved in an issue – pay levels or parity, workplace safety, etc. – and an intimation to government that civil strife calls for political attention, not political repression. These two faces of politics are seen in the maintenance of public order under civil or criminal law and the restoration of public order by constituted authority. Public order in the first instance is a horizontal issue among citizens, while in the second it becomes a vertical issue between the state and an individual or group. Politics and political alliances and rivalries are intrinsic to civil and political societies. Citizens as legal subjects and political players are committed to their own and group interests. At a more empirical level, politics is made up of an array of viewpoints that breathe their origins yet claim to represent the public interest. Mediation between converging or conflicting views addresses the public interest and the advancement of universality through a more equitable redistribution of wealth. In institutional terms, these views gain autonomy through political programs and parties: historically, political parties have played a core role in

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shaping individual and group interests into a general vision of the public interest. To probe the nature of the post– Second World War relationship between civil society and the state, then, we must consider the balancing contests instigated by political and social players striving to advance causes as their own versions of the common good. Legislatures, caught between pressure from citizens and their groups on one hand and executive branches and governments on the other, have mediated between various ways of defining and promoting the social good. Of the three basic organs of the state – executive, legislative, and judiciary – elected assemblies have had a pivotal responsibility to accommodate social and political demands from civil society and party politics. Since the end of the Cold War, however, we have seen a fundamental shift that casts the executive and judiciary as the new power brokers at the legislator’s expense. Seemingly, the transition to a global order reinforces the legitimacy of referring individual and group demands directly to the executive while depriving civil society of access to a public deliberative institution for open arbitration among conflicting interests for the common good. In other words, civil society as a collection of group interests – banks, chambers of commerce, businesses, universities, unions, and grassroots organizations – has lost a crucial public forum. The public sphere is slowly being privatized.1 This depoliticizing of civil society reflects the emerging dominance of the executive power, the stiffening of political party allegiances and subsequent instrumentalizing of political parties by the executive, and the decline of the parliamentary institution, which has become less and less

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able to enforce executive accountability. Claims now reach the executive directly, allowing it to get around the legislature and distance itself from the nation while practising a minimalist form of democracy that boosts its legitimacy as a purveyor of bounties to meritorious individuals, groups, and special interests. Internal Dimensions of a Global Order As we saw in Chapter 1, internationalization for the post– Second World War framers involved building an international economy on top of a plurality of national economies carved up into as many units as there were nation-states. The nation-state was the keystone of this world order. Globalization would come as a real alternative, heralding an approach that was not so much anti-government as wary of politics and highly receptive to messages from the market economy and private stakeholders. The globalization process meant redefining the functions of government and repositioning its role next to the dominant players – the multinationals, or MNCs. At one level, then, the shift from international to global can be seen as genuinely transforming the recognized roles of the nation-state and multinationals in building a global economy. Whereas national economic management had been central to the concerns of the nation-state, locating product chains and positioning them in foreign markets were now central to the strategies of MNCs and states alike. For this reason, the shift from an international to a global framework can also be seen as a major overhaul of national economies, with state guidance or assistance for national businesses to transnationalize or globalize their activities.

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Yet this global shift also had unprecedented effects on national standards and organizational behaviour. In the past, a continuous government presence in economic and social affairs had a decisive effect on the political and social order: next to private spaces for capital accumulation and the consumption of goods and services, state intervention opened up and developed a public space that was increasingly organized around the recognition, defence, and protection of a range of collective rights. In this sense, the post–Second World War order helped to define a national territory that was relatively homogeneous in normative terms. This homogeneity was strengthened by the existence of a private space for capital accumulation, generated by private initiative and essentially handled by private agents working under the aegis of private law, next to a public space for managing, redistributing, and allocating goods and services that came under governments – central, regional, and local – working under the aegis of public law. The state was responsible for maintaining the separation between private and public systems, ruling on claims of individual and collective rights while expanding the number and scope of its involvements in the public arena. But this balancing act could not work indefinitely. No doubt accumulated public involvement helped to expand and develop the national production and distribution of public goods and services and, at least to some extent, globally generalize their distribution. For a time, then, the state and its institutions were able to bring about relative social justice. However, this did not affect the private sphere, where firms were obliged to compete and transnationalize so that, ultimately, their allegiances would be less and less “national”

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or even “international,” but fully “global” – relying on direct horizontal connections between domestic private sectors and private sectors in third countries. The post–Second World War order was able to foster relatively integrated, interlocking public and private spheres of production and distribution at both the international and national levels. But internationalization was unsustainable without increased government involvement in balancing competing claims from a national economy, open to outside competition and anxious to maximize financial control, and a national society bent on tapping profits and revenues to maximize solidarity. This explains why globalization came as such a complete challenge to classic government regulatory activity. The forces of globalization targeted the legitimacy and validity of government intervention in general and government oversight of the production and distribution of goods and services in particular. This process also reflected the failure of earlier arbitration between collective and individual rights at the national and international levels. From a rights perspective, in fact, globalization has meant transnationalized private production with a reduced public sphere and marginalized collective rights. Its accompanying transnationalization of private rights – affecting property, capital, and investment, for example – destabilizes collective rights, which are left to the nation-state. This pressure results in the growing unsustainability of what Polanyi has called an “embedded” national economy.2 Economies respond increasingly to transnational or multilateral standards, while national societies are increasingly subject to state regulation. Globalization expands private rights to open up new spheres of production and redefines collective rights

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to accommodate requirements from the private sector and thus ward off any conflict between the two. Governability to Governance For obvious reasons, the shift from world to global focus is most apparent at the international level, and I want to illustrate this with the Trilateral Commission of 1973. This initiative was an early sign of movement from the post–Second World War order towards globalization in the thick of the Cold War. The creation of the Trilateral Commission showed that universal institutions like the UN had become dysfunctional and were being written off by the world’s economic and political élites. The Crisis of Democracy, a report produced for the Trilateral Commission in 1975, saw the concepts of democracy and governability as intertwined and offered a plan to meet the new challenge of the “governability of democracies.”3 To fathom this connection, we have to remember that the 1960s and ’70s were marked by the turbulence of the Vietnam War and revolutionary unrest in Africa and Latin America. Following the 1955 Bandung Conference of nonaligned nations that signalled the Third World’s emergence as a political force in international affairs, degraded relations between the First and Third worlds prompted Fidel Castro to convene the 1966 Havana Tricontinental Conference that led to the Organization of Solidarity with the Peoples of Asia, Africa and Latin America. Radicalization had meanwhile spilled over into the wealthier countries of the North to fuel anti-war, anti-segregation, and student movements in the United States and Western Europe. In addition to forcing the focus on war, inflation, instability,

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and exclusion, these events fostered the coalescence of social movements to challenge policies around the world. In the meantime, on 15 August 1971, President Richard Nixon, to reduce inflation, avert a run on the dollar, and offset the impact of military spending on the US balance of payments, announced his ambitious New Economic Policy (NEP). The NEP did two fateful things: it put an end to the compromise hammered out at Bretton Woods in 1944 by suspending the dollar’s convertibility to gold and signalled a major step backwards to US economic nationalism by levying a 10 percent import surcharge. Thus, the Trilateral Commission appeared in a conjuncture when the economic order was in chaotic flux – especially after the oil shock of 1973, followed by another in 1979 – and the democratic process was stressed internationally by the sudden onslaught of newly independent Third World countries holding the balance of power in the UN General Assembly. The commission represented a strategic withdrawal by the US and other developed countries to build their own organizations paralleling world bodies already in existence.4 The economic and political élites of the three capitalist blocs – North America without Mexico, the EEC, and Japan – gave themselves a free hand to “promote co-operation among international allies,” in the words of commission founder David Rockefeller. The commission’s very exclusiveness amounted to an assertion that existing international and regional organizations were no longer suited to this purpose, just as it would soon argue that the nation-state as then constituted was ill-suited to the challenges of governability.

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In other words, it was assumed that democracy as understood and practised up to that time had tied governments down and overburdened the treasury: more effective wealth production required a fundamental change of direction. Governments had to regain some degree of financial and normative autonomy, which meant relegating economic and social stakeholders to their own initiatives, unsupported by the public purse. Governability and, later, governance emerged as responses to a powerlessness to maintain the rules and requirements of representative democracy, especially when it came to the accountability, transparency, and reporting of public deliberations. In fact, we were seeing a new strategy to circumvent the legitimate claims process of social movements and marginalize the impact of all public debates – and with them, the elected legislatures themselves. To sum up, since mutual understanding and co-operation could not flourish internationally in the bodies created for that purpose, parallel commissions and forums were set up that answered for their strategies and actions, not to the public, but to a select set of stakeholders. This pattern would assume increasing importance with the coalescence of the group of the six most advanced countries, the G-6, during a 1975 meeting at Rambouillet called by French president Valéry Giscard d’Estaing.5 This group became the G-7 with the addition of Canada at the 1976 Puerto Rico Summit and, later, the G-8 with Russia’s entry following the Denver Summit of 1997. The same selective approach was used at other levels, for example, to create the G-7 finance ministers and central bankers conference at the 1986 Tokyo Summit. These initiatives were stages in the consolidation of

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their prerogatives by the rich countries of the North. They were used to build political consensus and chart courses of action that bypassed the legitimate deliberative assemblies. This strategy has been tremendously effective. It has enabled the rich countries to forge a common front before appearing at assemblies and other international gatherings; it has also enabled them to impose domestic policy requirements as if they arose from openly and transparently negotiated multilateral compromises. Finally, the most revealing of all such initiatives in the global shift, apparent by the early 1970s, was without doubt the creation of a completely private organization as a relay or intermediary between the ruling political clusters and the needs of the new global firms. At its inception at Davos in 1971, the World Economic Forum (WEF) was a gathering of business and government representatives with limited aims and little impact.6 By 1982, however, the WEF had acquired such credibility and legitimacy that it opened its doors to international economic organizations like the World Bank, the IMF, and the GATT, and played a starring role in the Uruguay Round that culminated with the 1994 creation of the World Trade Organization and the expansion of Canada-US free trade to Mexico.7 This makes the WEF a significant player, albeit a most selective and private one, in defining the new parameters of global integration. Conclusion The welfare state was built on an unprecedented expansion of public prerogatives into economic and social sectors, as eloquently shown by the growth in girth and jurisdiction of public and parapublic agencies. Though

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agreeing on its national significance, we often fail to connect this process with the parallel expansion of state prerogatives internationally – a development that has seen nation-states delegate a range of powers to their plenipotentiaries in world bodies dealing with a host of areas like education, health, culture, youth, immigration, criminality, and security. The simultaneous internal and external expansion of the state has led to a proliferation of national and international entities in the fields of economics, finance, education, health, heritage preservation, fisheries, the environment, labour standards, and human rights. The process has included the emergence of an international public administration funded and maintained by the wealthiest nation-states. Juxtaposing this development with an explosion of state-sponsored non-governmental organizations (NGOs), we perceive internationalization and then globalization as propelled by externalizing state activity. With the planetary extension of their prerogatives, however, many states have lost capacity and flexibility at the national level. Yet this is far from true of every state, and it would be wrong to read the internationalization of state prerogatives, mainly in rich countries, as automatically diminishing national sovereignty. As we have noted, the global shift involves immense changes, mainly stemming from the fact that the process now has three major players: governments, forums or groups of nations, and global business concerns. These three have forged a new synergy that supersedes the old convergence of the post–Second World War order in which government, business, and labour co-operated through international and national organizations. The new alliance includes the

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richest countries controlling the G-8, the OECD, and major international economic organizations like the IMF, World Bank, and WTO. They and the multinationals define the world’s economic agenda. In his 1998 speech at Davos, UN Secretary-General Kofi Annan called on business and international associations to work more closely with the UN and actively support its world missions. His appeal showed how seriously the UN system had declined since its Cold War heyday – a decline closely linked to the abundance of international forums dominated by the world’s richest countries. This decline is also indicative of a vast depoliticizing process in the international arena. The UN system is being marginalized by aggressive US unilateralism and the resurgence of international economic bodies like the World Bank, IMF, and WTO, now operating completely outside the UN and able to ignore any UN decision with which they disagree.8 The global impact of these initiatives has probably been underestimated, especially when they directly affect the management of the main economic indicators – debt servicing, export strategies, zero deficits – impinging on states’ capacity to play the active role in the redistribution of national wealth and advancement of social policies that were central to the post–Second World War order. We are seeing a new architecture emerge at the planetary level to replace structures built under the UN’s aegis in the 1940s. This architecture is ushering in a new order that, far from featuring public debate, openness, and accountability, now works through privacy, selectiveness, and collusion.

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S

o far i have built my case without giving due weight to the role of social players in either the post– Second World War or global order. I would like to complete my overview with this dimension as a basis for understanding the full extent of the changes brought about by globalization. First, however, I want to show how and why this social reality is essential to my analysis. The notion of “constituent thinking” has been introduced in these pages as the general rationale behind the normative and institutional frameworks around which the postwar national and international order coalesced. But ideas and theories themselves, whatever their intrinsic or persuasive worth, cannot be credited with such leverage on standards and institutions. Ideas have to be spread and supported by power, and it is the use of power that explains the hold gained by a theory, doctrine, philosophy, or principle. So the influence of the ideas of Keynes and Beveridge, like

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the ultraliberal pitches that found so many adepts at this time, cannot be ascribed solely to their originators. They are primarily dependent on the ability of states and governments, but also associations, organizations, businesses, universities, foundations, and other pressure groups, to support, defend, and impose them. The postwar order was built by promoters, not proposals. So far, the star player in my argument has been the state, and with cause: that order was devised, negotiated, and constructed by great-power representatives and plenipotentiaries. This was why the state, as the order’s proponent, waxed in strength and power throughout the postwar era. Yet even if state plenipotentiaries and emissaries, executives, commissioners, and other authors of royal commission reports use constituent thinking to define their parameters, programs, or policies, this does not alter the fact that the state itself, like its agencies and commissions, is a constituted power. As such, the state founds its legitimacy, legality, and constitutionality wholly on constituent power. This constituent power lies ultimately with the people, who wield it through all manner of organizations, institutions, associations, and movements. And although citizens confirm their power by casting ballots, they could equally toss it aside, dismantle existing powers and constitutional frameworks, and establish another constituent power – a prerogative they use infrequently, in times of social revolution. Popular constituent power was used many times in the twentieth century – during the war itself, of course, but afterwards in national liberation struggles, civil upheavals, and variously successful attempts to overturn dictatorships and other constituted powers. At the same time, constituent

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power has been usurped repeatedly by armies, militias, and splinter groups. Actually, the use of constituent power is an exception: in the absence of revolutions and other major conflicts, the complete legitimacy and legality of constituted power are assumed. So these qualities are not conferred on constituted power by longevity or force: they are created in the founding moment when constituent power establishes constituted power, and confirmed thereafter by more or less regular elections, if and when these take place. Over time, these qualities of constituted power still emanate from two sources: constitutions that define forms and procedures for the use of power and relations among the executive, legislature, and judiciary, and consultations with citizens and civil society. This second approach to legitimizing constituted power is as essential as the first. Its forms and procedures are generally enshrined in custom yet distinguished by informality. In Canada, the royal commission, descended from British law and practice, offers an interesting example of a quest for legitimacy that reaches beyond the political sphere – a function also performed by parliamentary and other hearings in the United States, the United Kingdom, France, and elsewhere. Tripartism The postwar years saw the emergence of an original form of co-operation called “tripartism” involving government, business, and labour organizations. Tripartism was not meant to replace all other forms of consultation: it was devised essentially to offset a major deficit in the legitimacy of constituted governments during the interwar years. In other words, it was a strategy to put an end to the class

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struggles that had plagued governments before the Second World War. The postwar framers considered it so important that they tried to entrench the practice in the UN system by creating an Economic and Social Council to oversee UN agencies and other civil organizations. By the same token, a number of postwar governments used tripartism to manage their economies. Tripartism will therefore serve as our starting point for a review of social organizations and movements, and I will focus on the national level because that is where this consultative form reveals its full meaning in both theory and practice. Tripartism as a sanctioned form of government-businesslabour co-operation was a determining factor in building a mixed economy and welfare state. Whether practised openly or selectively, or as “clientelism” in Latin America, tripartism had won approval in a number of national settings in Western Europe, Canada, and Latin America and been adopted, as we have seen, by the UN and a number of international organizations, including the ILO and OECD.1 In fact, state intervention was closely linked with tripartism on three separate but interlocking levels: theoretical, programmatic, and institutional. Theoretically, tripartism was a central component of the Keynesian approach; programmatically, it was an essential complement to the legitimacy of the post– Second World War order; institutionally, it was a major boost to a number of international and national organizations. The idea of bringing these three players closer together was nothing new. It had given rise to an array of more or less compatible ideologies across the entire political spectrum, from the extreme right, preaching corporativism and the harnessing of contradictory social forces, to the extreme

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left, practising the fusion of incompatible interests in party politics and the forced socialization of production, and supported by totalitarian or authoritarian states – in a word, by dictators or despots. At any rate, tripartism assumed a new meaning and reach in the Second World War as a substitute strategy and ideology for fascist corporatism and sovietism. The reconciliation of labour and capital – the factors of production – was seen as imperative for enlisting all necessary physical and industrial resources to win the war. In fact, with that war at its height, a number of Allied governments, including Canada’s, yielded to pressing worker demands and offered recognition and legal protection to their unions if they gave up the right to strike for the duration of hostilities. In the United States, Canada, and other countries, union and employer representatives sat in meetings with department heads responsible for defence production. This truce was not imposed solely by the arduous circumstances of wartime or dictated by the goal of offsetting Axis corporatism: it was also tied to something more fundamental – the emerging shape of the postwar order.2 To show how and why tripartism became such a basic component of the postwar order, whatever political manipulation it generated or the political legitimacy of the consent thus secured, we must step back for a closer look at that order’s constituent thinking. Far from a mere convergence of politics (the state), economics (business) and society (labour unions), tripartism was core to the liberal interventionist cause and the new theory of political economy introduced in Keynes’ General Theory of Employment, Interest and Money. In fact, both Keynesianism and tripartism had

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been successfully applied by Nazi economic minister Hjalmar Schacht and central to Germany’s rebound in the early 1930s. Like others, Keynes had ascribed this success to Schacht’s capital-flow controls and infrastructure-building program made urgent by the Nazi authoritarian corporatist thrust. Tripartism could be seen as an important strengthening factor in the mixed economy since it raised total output and defined the end objective as the optimal distribution of income among the factors of production. From a sociological standpoint, the most novel aspect of Keynes’ theory lies less in the linkages he found among abstract economic variables like capital, labour, interest rates, and employment than in the social content with which he infused them. For Keynes, the idea of capital denotes, not an abstraction but a practitioner, a capitalist, and beyond this a class of capitalists, just as his idea of unemployment is linked to a particular quantity of available labour. This is not to say that Keynes was in any way close to the Labour Party. On the contrary, he was concerned less with workers’ earning levels than the idea that capitalists, employers, and other business people should “place their intelligence at the service of the community on reasonable terms.”3 Keynes went much farther than his predecessors in criticizing “classical” liberalism: we can judge this by looking at a less well-known work than the General Theory, his Laissez-faire and Communism published in 1926. In this little book, Keynes makes two points of importance for my purpose here: he challenges the central idea of liberalism that individual interest coincides with social interest and goes on to ascribe social progress to the emergence of semiautonomous bodies, interposed between the individual and

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the state, that are designed to promote the public interest. In other words, co-operation between economic stakeholders is an essential part of promoting the public interest because it can also avoid two opposing hazards: the foldback into strictly personal interests and complete nationalization of the means of production.4 This is where Keynes struck Hayek as inconsistent. That non-interventionist liberal saw very clearly that the economic concepts of capital, labour, or unemployment were pure fictions that should not carry sociological or political messages: they expressed and entrenched a strictly individualistic view of an array of relationships among utterly free and equal individuals. In this sense, political and economic interventionism was predicated on the substitution of group interests where individual interests had prevailed.5 Keynes did not relegate the state to a negative role, however: he saw that proponent of the common good and overseer of capitalist production as a collective capitalist. And the factors of production underpinning the economy – capital and labour – should become collective forces as well. In Keynes’ economic scheme, the unproductive “rentier” or non-wage earner inherited an incidental, passive role to be transformed into an active investor one. Here, tripartism fit perfectly as encompassing both factors of production plus the state. It was also a dominant factor in operationalizing the postwar order, a role I will briefly explain. As we have seen, the years between the wars were marred by incessant labour and social strife that spilled over into various popular fronts advocating a variety of solutions to bury class conflict – Soviet Communism, German Nazism, Italian fascism, and the authoritarian corporatism of Portugal and Spain.

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In this conjuncture, nothing could have been more foolhardy than a return to the individualistic brand of capitalism that had driven the turbulence of the 1920s and ’30s. Further, some form of labour-capital co-operation was needed to legitimize state intervention. But there was a downside to this co-operation in the mixed economy, where the forces of labour and capital were expected to join governments as universal players. This strategy conditioned capital and labour to claim that their interests coincided with those of the nation as a whole. In other words, tripartism excluded other stakeholders: national capital accumulation took precedence over international capital and national labour issues dominated all other social issues, including the predicament of those without access to the workforce – non-wage-earning women. The End of Tripartism In some cases, tripartism would be scrapped abruptly, as in Canada when Prime Minister Mulroney abolished the federal Economic Council shortly after taking office in 1984, though at the regional level of the MERCOSUR and the European Union the formula has endured.6 Three factors make tripartism incompatible with the present global order. The first has to do with the national arena, the second with the issue of social exclusion, and the third with the legal status of the consultation process. I will visit these in succession. To begin with the first factor, these three players’ involvements in the national arena did not have the same meaning or the same consequences. Labour was in a special position, confined to the national economy, while both

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government and capital were active internationally as well as nationally. As long as the main challenge was the reconstruction of the national economy, capital was a good corporate citizen and even subscribed to Keynesianism. National business organizations prevailed over international ones and national capital held sway over international capital, but this situation could not survive the resurgence of world expansion and capital soon overflowed the confines of the national economy. Labour was the preeminent national player: without international mobility or effective international standards, labour organizations relied totally on the nation-state. Coming to the second issue, exclusion, we must single out labour again. In purely formal terms, worker representation in tripartite institutions was based on unionization figures: at a much more substantial level, the union movement found itself, somewhat by default, assuming responsibilities and expectations that went far beyond the immediate interests of its membership. For the representatives of a factor of production called “capital,” the requirements were simple – a matter of profits and margins, productivity and performance, outlets and markets. For those defending the interests of another factor of production called “labour,” claims went beyond wages, workplace safety, or unemployment to touch social issues such as poverty, health, and education. Despite this major workload, unions would stand out from the two other players by a general support for tripartism that continues to this day. Yet this did not prevent the exclusion of whole segments of society, among them women’s and student movements. Indeed, when tripartism enlisted union representatives in defence of work and not

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just of workers, they were left in a quandary over issues like unemployment, women’s work, youth labour, and environmental protection. Quite simply, tripartism could not prevail in the riptide of pressing mid-twentieth-century issues. The third reason for tripartism’s rejection or reconversion was by far the most important, and had to do with the dual legal and political status of civil society itself. Like most institutions and organizations, civil society can be seen from these two different perspectives. Its legal dimension involves citizens as individuals or corporations that have rights and assume obligations that, stemming from contractual arrangements negotiated by these private or public parties, are generally consensual. From a strictly legal standpoint, individuals, associations, companies, and multinationals are separate and equal in civil society. However, when we look at them from a political standpoint, equality has no meaning: a stakeholder is not now a legal abstraction but an entity with its own assets, power base, and constituency. Looking now at a tripartist consultation process, labour and capital are clearly not equal, and their power to influence governments will depend on factors that have little bearing on actual issues. With labour penned in by the power base of its own organizations, tripartism runs a significant democratic deficit. In a vibrant and assertive civil society, labour interests cannot outrank all others, and tripartism cannot survive unless it is expanded to include other organizations. These explanations go a long way towards showing how frail the hope was of three-way consultations among government, capital, and labour from the outset. It would be all the harder to revisit that hope today, when, amid the

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onslaught of globalization, channels of consultation with a growing number of social and economic stakeholders have increased, and one of these channels, the one linking government and big business, now has the strongest influence on institutions and the shape of normative frameworks. Institutions of Civil Society Throughout the Cold War, support for tripartism and the creation of economic and social committees never deterred social movements and organizations from political involvement: women, students, anti-segregation and national liberation movements, pacifists, and many other activists filled the public space. Nor could it be claimed that social movements maintained a national focus in those years. The internationalization of these players is no recent development. We need only cite grassroots movements against dictatorships, colonial wars, US invasions of Latin America, the Vietnam War, or even the groundswell of student activism in the 1960s and early ’70s as evidence of this. Moreover, the advent of what I have termed new “relays” in the global order, such as the WEF, along with a new direct, intimate link between political and economic élites, has not brought an end to official consultation and participation in public business by civil society organizations.7 On the contrary, in some cases in the EU and even North America, we have seen government consultations expand to organized civil society and determination to maintain a civil dialogue. Yet this dialogue is not entered into without problems and compromises: next to the established players, groups, and organizations with autonomous structures and relative financial independence, we have all the NGOs

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that are directly or indirectly dependent on government funding to survive. This dependence can range from charitable status to an outright ban on political activism. Governments soon grasped the advantages of directly funding civil society organizations – known in the UN system as non-governmental organizations, or NGOs – that would take positions similar to their own or be effectively silenced. Governments and international institutions seem increasingly drawn to this tactic when they are fielding challenges on several fronts: it can serve a cynical purpose when screening stakeholders and their associations, just as it can express a desire to lessen disorder, dissent, and conflict and thus enhance the validity and effectiveness of the consultation process. However, in a context where legislatures are increasingly bypassed by governments and their executive powers, official consultation and participation involving civil society do little to alleviate yet another looming democratic deficit. The Dispersal of Contention Things have changed dramatically in the international arena since the 1997 APEC summit in Vancouver and Seattle’s WTO ministerial meeting of December 1999. These days, every international gathering and regional event offers a window for the foes of globalization to demonstrate their stalwart opposition to the market liberalization process. We saw this happen around the Organization of American States (OAS) General Assembly at Windsor in June 2000, at the annual meetings of the IMF and World Bank since the one held in September 2000 in Prague, as well as during that December’s meeting of the European Council in Nice, the

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third Summit of the Americas at Quebec City in April 2001 and the G-8 Genoa Summit that July. Opposition has also descended on private meetings like the annual World Economic Forum at Davos held yearly in January and the Montreal Economic Conference held yearly in May. In referring to present-day social and political challenges, I make no claim that the decades following the Second World War did not see demonstrations of every type and form. Nothing could be farther from the truth – as witness, for example, the marches to Aldermaston and Washington over nuclear arms, racial equality, and the Vietnam War. But the major novelties in today’s storm over globalization are the greater numbers of organizations, associations, and movements opposed to the process and the fact that opponents are targeting international and regional conferences, forums, and meetings as well as national ones. There are at least two reasons why this is happening. First, the mounting popular resistance to globalization is basically the outcome of a growing political awareness prompting groups of all kinds to challenge the legitimacy and validity of the neoliberal credo. The adversaries of globalization have developed a critical interpretation of the side effects of structural adjustments and free-trade agreements on North-South economic relations, wage levels, and living standards. Some commentators focus on the misconceptions underlying these challenges because liberalization is supposedly good for everyone, North and South, and the opponents of globalization have no serious grievance to foment: at the very most, they concede that some workers have to pay the cost of the adjustments that accompany free trade or restructuring, even though, they say, the

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consumers always come out ahead. Others see this opposition in positive terms and interpret the new awareness as a genuine phase of the globalization process. In any case, the challenge to globalization seems to be here to stay. A second reason why opposition to globalization is likely to endure is that these demonstrations, alternative forums, and other campaigns represent the other side of the globalizing coin. To the extent that extreme market liberalization relies on a negotiating process with heads of government and large corporations face to face, the process itself is fundamentally flawed and discredited. This new governance is typified by selectiveness, secrecy, and confidentiality: its indifference to legitimacy is bound to nourish permanent opposition. From this standpoint, globalization is creating a democratic deficit indispensable to its untrammelled rule, but the disregard for legislatures is bound to haunt the process for its duration. Under the post–Second World War order, contestation and dissent primarily targeted governments and other national stakeholders. Disputes between employers and unions, for example, were resolved at the national level, while the shift to a global order holds out fewer and fewer solutions, economic or political, that are workable at the level of the nation-state or the planet itself. This poor result can be ascribed to shrinking public space at home and the emergence of new, selective relays or substations of globalization, examples being G-8 conferences and world forums where economic and social stakeholders are not welcome. The Chilean jurist Diego Carrasco has proposed a nomenclature that can help us understand this:

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The status of civil society in treaties can take different forms. It may be that of observandi or observers, such as the one we have before the assemblies of the United Nations. Or it may be as consultandi or concurrendi, when the assemblies or bodies allow the civil society organizations to voice their opinion or be part of an agreement of some kind. Thirdly, there is that of proponendi, when the organizations are invited to propose specific clauses in treaties, such as the well-known labour clauses, democratic clauses or, as in the case of some treaties in Europe, to sit on administrative committees comprising civil society and the states. Lastly, there is the status as resolutio, the highest level, where civil society may appoint a representative who does not have decision-making powers, but may settle disputes that are regulated by a treaty.8

The problem with the present process at both the national and global levels is that business organizations and associations are afforded an exaggerated status that creates permanent asymmetry. Indeed, the consultation process extended to non-business civil society organizations in general – labour unions, environmental groups, women’s movements, etc. – pales by comparison to the efficient resources made available to business. And although the tripartist consultation process of the postwar period was unable to accommodate the claims and demands of social movements, the new consultation mechanisms advocated by the globalizers are even less appropriate. All of this is further exacerbated in a context where the reconciliation of government and business tends to dismantle the public system itself, a result that is bound to spur contestation and dissent.

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Yet consultation and protest are far from incompatible. We see social and economic stakeholders such as labour unions accommodate one while using the other to gain leverage for their own claims. However, for the foreseeable future at least, anti-globalization movements are going to expand for as long as globalization itself is expanding.

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D

id the shift towards a global order stem from the limits of the post–Second World War framework, or was it a response to outside forces? If we lean towards the second, we might as well go back to the constituent thinking of that day and reason another outcome. If we favour the first, however, we have to cast doubt on its constituent thinking and implementation process, along with the liberal credo that ran through them both. This is not to imply that an alternate globalization has to be designed from scratch, as if nothing could be salvaged from the initial framework or the institutions it has built. But if there is one lesson to be drawn from our dilemma, it is that the world view that presided over the postwar order should be revisited and rethought without cutting the economic off from the political and both from the social, or separating missions into air-tight compartments like trade, labour, agriculture, food, and so on.

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Initially, the triad of security, justice, and welfare proposed by Shotwell and others was an attractive notion, though from a more contemporary standpoint clearly deficient in disregarding issues of gender, First Nations, and the environment. But the analysis advanced in these pages points to another conclusion, that the challenge of promoting a new world order is primarily political, and a credible solution to this challenge will necessarily fall within the purview of the nation-state and no past, present, or future international organization. This does not mean that international organizations cannot act as essential facilitators in that process. For want of legality and legitimacy, however, international or regional or even private entities are legally and politically unqualified to build whatever institutional and normative framework an open and just public order requires. In this regard, the ongoing debate on the emergence of a worldwide civil society and the promotion of a stronger role for the UN’s ECOSOC is most interesting and certainly deserves to be pursued, if only because a consultation process at that level raises the same kind of issues we have seen in consultations with civil society nonbusiness organizations at the state level. And if a workable solution cannot be found there, what would be the use of negotiating internationally?1 However intense and extensive direct lateral interactions between organizations, associations, groups, and coalitions may be, and however advanced the transnationalization of activities and practices, the nation-state still remains the sole instrument through which universality at both national and international levels can be pursued. Now this must not be taken to suggest that politics and policy have to be

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state-centred or that the organizations of civil society must be subservient to the state. The fact that the present approaches to civil society by governments and international organizations are aimed at depoliticizing that society must not deter stakeholders, their associations, and social movements from resisting encroachment on their prerogatives. After all, civil society is the quintessential home of politics and the constituent power underpinning the political structure. However, we must realize that, from the battlements of the state with its array of bureaucracies, the idea that political authority should be exclusive to a political sphere apart from civil society looks very relevant indeed: it reassures the powers that be that its use is a situational privilege and thus always legitimate and lawful. These thoughts recall the importance of distinguishing two sets of practices in which individuals may engage as legal persons or citizens: civil and political. The first evokes the lateral or horizontal relations that bind subjects and citizens individually and collectively in their associations, organizations, and enterprises, and the second, the vertical practices that bind subjects and citizens individually or collectively to constituted power. Horizontal practices rely on what is sometimes called “negative intervention” on the state’s part, which rules out official meddling as long as the law is unbroken and public order undisturbed. Vertical practices, on the other hand, rely on positive intervention in which the state has to commit specific resources to foster or restrict access to the political sphere. Even so, civil relations between citizens and organizations should not be construed as apolitical compared to relations with the state apparatus. Questioning or taking to

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task an organization, enterprise, or monopoly is a political act like questioning or challenging a government decision. In a so-called open society, both are the citizen’s prerogatives, while the reverse is not true: government cannot challenge citizens or organizations except in compliance with the law and appropriate procedure. But our distinction between horizontal and vertical has an interesting side effect in recognizing innovative, nonmarket practices that bring individuals and groups together in different ways and on various grounds. Here is the locus of grassroots lines of defence against the dominant modes of production and consumption, without which abstract visions of emancipation remain pure utopias – the home of community initiatives, the social economy, co-ops, mutual insurance companies, friendly societies, and the like. The extent and scope of possible defences against market rule are innumerable, with angles of resistance ranging from the promotion of local economies to the enactment of new protections “against the predatory attacks of globalization.”2 This commentator, Boaventura de Sousa Santos, lumps cosmopolitanism, the defence of a common human heritage, democratic control, and new social practices together as “counter-hegemonic.”3 He adds, opening up a world of possibilities: “In a period of structural pessimism like ours, there is a tendency, on the one hand, to be overly complacent about what exists and is familiar and, on the other hand, to be overly suspicious of what is just emerging and therefore unfamiliar. Against this pessimism it is imperative to adopt an attitude of tragic optimism. Tragic optimism consists in seeing what is emerging while acknowledging its fragile promise.”4

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Fix or Nix? The promise of tragic optimism is fragile indeed when extreme market liberalization fuels the use of discriminatory, punitive, and harmful civil practices. This is the danger of what De Sousa Santos calls “social fascism,” defined as “an array of social processes whereby large masses of the population are irrevocably excluded from any social contract.”5 He adds: “Those who live under the yoke of social fascism are deprived of shared yardsticks and equivalences and therefore excluded from stabilized expectations,” meaning that they are deprived of wages, jobs, social insurance, and the ability to plan their lives. They live in an ongoing chaos of expectations where the most trivial acts can reverberate most dramatically. The idea of “social fascism” breathes urgency and raises the degree of civility with which contestation should be pursued. Extreme cases like uprisings have their own requirements and it would be presumptuous to try bending them to our purposes. More developed nations are generally more open and flexible: the possibility of reform is probably still present and the opposition between “nix or fix” not as clear-cut as in other settings. An example may clarify the sense and scope of my argument. When, in 1998, the White House asked Congress to approve $18 billion in supplementary appropriations for the IMF, Congress agreed on condition that the International Financial Institutions Advisory Commission, with Allan Meltzer as chair, look into both the IMF and the World Bank.6 The Meltzer Report proposed a major reform of these banking and financial organizations and full privatization of various IMF and World Bank operations. It is not my purpose to review the whole report, but I will make two

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comments. First, even though the idea of abolition – the nix – was abandoned, the main thrust of the Meltzer Report was to strengthen the hold of US policy over both institutions. Second, the minority report by Jerome I. Levinson swung the other way to recommend increasing the resources of both institutions and extending their mandates to protect labour “core rights.”7 Although contradictory, the two options reflected two equally unjustified and indefensible visions of US unilateralism in global affairs and financial policy. The specific problem here is that two domestic issues – the crushing US debt and US labour standards – were used as pretexts for imposing a national decision on international bodies. We saw Congress acting as a world legislature without legitimacy or accountability outside the US itself. Yet its decisions do have universal application, and Congress is the only legislature in the world with full access to and control over the free-trade agreements and other normative deals negotiated by the White House. In turn, this imperial position marginalizes legislatures everywhere else, making national laws ineffectual on an increasing number of thorny issues like the environment, culture, labour standards, and food sovereignty. This sheds new light on the notion of “political decline” as characterizing the powerlessness of national assemblies to function as public deliberative bodies and the collateral incapacity of the media to operate as open forums. At this stage, the conscription of civil society cannot offset the democratic deficit or end the complicity that has settled in between government executives and the business community. Though consultations are needed, they cannot replace the reform of parliamentary institutions and

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political parties. As things are now, pending legislative regeneration and the reform of traditional parties, not to mention the prickly issue of the media and information monopoly – in short, without credible, effective deliberative bodies – part of the solution probably lies with alternative bodies like the World Social Forum (WSF) that met for the first time at Porto Alegre, Brazil, in January 2001. Proliferating Social Forums The WSF’s third consecutive session at Porto Alegre on 27 January 2003 attracted more than 100,000 participants, twice the figure for 2002 and ten times that for 2001.8 It was unquestionably the most impressive of the three for a number of reasons: the enthusiasm of the crowd at the election of Luis Ignacio Lula da Silva, or “Lula,” of the Workers’ Party as Brazil’s president;9 the exponential increase in the critical viewpoints and perspectives from which market globalization was analyzed;10 the many opportunities for activists to meet; access to direct information on the underlying causes of the pending crises in Venezuela and Colombia, the privatization of water in Bolivia, or the criminal behaviour of Canadian multinationals in Chile – information and reviews that were either unavailable or falsified by governments and media; and, finally, the sight of Palestinians and Israelis, Iraqis and Americans publicly renewing their ties. To shape discussion, the WSF International Council had organized the event around five major topics:11 democracy and sustainable development; principles and values, human rights, diversity, and equality; political power, civil society, and democracy; worldwide democratic organization

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and the fight against militarization; and the media, culture, and alternatives to the hegemonic globalization of the multinationals. The council’s most interesting innovation was the Grand Mural of Action Proposals to memorialize the ideas coming out of seminars, round tables, and workshops. Yet we must not misconstrue the status and reach of the WSF. This is not a deliberative entity. Its Charter of Principles from the 2001 gathering is clear about the process. The forum is a meeting place to debate ideas, define solutions and courses of action, and promote networking by associations and movements from civil society that oppose neoliberal market globalization and the domination of capital and imperialism, and are committed to building a more humane planetary society, respectful of human rights and the environment. This position of principle has a number of consequences: the WSF is a world process in which the international dimension plays a leading role; the WSF favours solidarity against the divisive practices and strategies of governments, MNCs, and international agencies; and the WSF convenes organizations and movements from civil society but does not intend to set itself up as representing these or any other groups, so that no one has authority to speak or act for the WSF or claim to reflect the opinions of forum participants. According to Article 6 of its Charter, the forum is not a “locus of power” and must be content to circulate decisions made by groups without ranking, censoring, or changing them. Finally, the WSF is pluralistic, diversified, nondenominational, non-governmental, and non-partisan, so political parties and military organizations cannot participate in it – heads of government and parliamentarians are invited on a personal basis.

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This resistance or suspicion of politics and the political classes certainly has its naive side, but it makes sense. We must remember that governments coming out of the Cold War refused to learn from the failures of the socialist and welfare states and, instead of developing and generalizing a new, original form of social democracy, tried to seize the advantage by building the so-called neoliberal state. Although some political parties resisted, governments rushed in with dazzling single-mindedness. Meanwhile, in sync with domestic activities, large organizations were signing up for the doctrines of neoliberalism. And despite the seeming openness of the UN and its agencies to organizations and movements from civil society invited to forums in Rio de Janeiro, Beijing, and Copenhagen, realities fell far short of expectations every time. After these experiments and disappointments, more and more activists called for a forum on the fringe of the daydream consultations staged by international organizations and national governments. Further, the new alliance of governments, business, and international organizations expanded the ranks of predators of the public interest to the nation-state itself. This reversal in the historic position of governments as protectors of the common interest and proponents of the common good shifted the defence of the public interest outside the precinct of constituted power. By some kind of default, the stakeholders of civil society took to the streets to defend a collective heritage, thus assuming a role and position that governments could no longer sustain. And in fact, one of the most revealing results of this reversal of government roles is the paradoxical situation in which it puts the legislators, some of whom are trying for renewed legitimacy by

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moving closer to social movements and civil society – an example being the current rapprochement of the World Forum of Parliamentarians and the WSF, which recognizes policy as also civil society’s concern. Meanwhile, between WSF ii and iii, at least seven other forums were staged: the Buenos Aires social forum on debt in August 2002, Florence’s European social forum that November, the thematic social forum in Ramallah, Palestine, the first Moroccan social forum at Bouznika that December, and, in January 2003, the African social forum at Addis Ababa, the Asian social forum at Hyderabad, and the PanAmazonian social forum at Bélem. The year 2004 saw a second European social forum at Saint-Denis in December, a Mediterranean social forum in Spain, and the first Social Forum of the Americas in Quito, not to mention a host of smaller gatherings around the world. And the process goes on: WSF iv in India in 2004, WSF v at Porto Alegre in 2005, WSF vi in three cities on three continents – Bamako, Caracas, and Karachi – in 2006, and WSF vii at Nairobi in 2007. The WSF is now an established institution with innumerable spin-offs at the regional, national, and local levels. The WSF International Council encompasses hundreds of agencies including Greenpeace and Global South, national and international unions, research centres such as the Consejo Latinoamericano de Ciencias Sociales, the Transnational Institute, the World March of Women, and the Continental Social Alliance. If we added the many coalitions within coalitions, we would soon be reckoning in the thousands, which raises questions: do these multiple affiliations strengthen social movements or merely dissipate

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talents and energies? Can we handle these scattered and overlapping causes in some other way? Can we actually oppose the WTO, the World Bank, the IMF, or the Free Trade Area of the Americas from such platforms? Two complementary factors make transnationalizing strategies the main focus of social movements nowadays: first, their major issues – privatization, the rollback in social services, the environment, gender, first nations claims, human rights, and so on – are now fully planetary and, second, these issues are being ignored or excluded from the political arena. We are facing what François Houtart has called “a delegitimization of the economic system” that typifies nation-states relinquishing their political responsibilities as guardians of the public interest and heritage in favour of privatization.12 Behind what we generally call the “neoliberal option,” in fact, something much more momentous is going on. Governments have reversed their role as public guardians and are eager to barter public assets and national resources that have in many cases been preserved by citizen activism. However, no constitution makes governments owners of collective assets: peoples or nations own their natural resources, lakes, rivers, and seashores, with their governments as trustees. Yet we now have predator states usurping the right to turn public property into private property. And this is why, under pressure from the highest reaches of governments and their business-oriented friends, the world’s citizens have such a tremendous task before them. Their unifying social forums have become indispensable in the quest for another, better, and fairer world.

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Introduction 1 An overview can be found in David Held and Anthony McGrew, “The Great Globalization Debate: An Introduction,” in The Global Transformations Reader: An Introduction to the Globalization Debate, ed. Held and McGrew, 1-45 (Cambridge: Polity Press, 2000). 2 Here is an excerpt from the article in question: “The US has the world’s most diverse and efficient capital markets, which reward, and even celebrate, risk taking. Anyone with an invention and a garage can hope to raise millions overnight ... It has multiple economies, with a single currency, on a single continent that looks to both the Pacific and the Atlantic. And most important, its big multinational companies and little entrepreneurs think globally and excel in almost everything that is post-industrial: software, computing, package delivery, consulting, fast food, amusement parks, advertising, media, entertainment, hotels, financial services, environmental industries

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and telecommunications. Globalization is us.” (Thomas L. Friedman in the New York Times, 9 February 1997). 3 See Paul Hirst and Grahame Thompson, Globalization in Question: The International Economy and the Possibilities of Governance (London: Polity Press, 1996), 45-49. 4 See his Critique de la raison dialectique, preceded by Questions de méthode (Paris: Gallimard, 1960). See also Antonio Negri, Le pouvoir constituant (Paris: Presses universitaires de France, 1992). 5 See Thomas S. Kuhn, The Structure of Scientific Revolutions, 2nd ed. enlarged (Chicago: University of Chicago Press, 1970), 43-51. Chapter 1: Building the Postwar Order 1 It is worth noting that Cité libre was also the title chosen by Pierre-Elliott Trudeau and collaborators when, in June 1950, they launched their political journal dedicated to a critique of the provincial cronyism and the unbridled liberalism practised in Quebec at the time under Premier Maurice Duplessis. See Dorval Brunelle, Les trois colombes (Montreal: VLB Éditeur, 1985), 91-92. This work is available online at: http://classiques. uqac.ca/contemporains/brunelle_dorval/brunelle_dorval.html. 2 André Maurois, “Préface,” in W. Lippmann, La cité libre, trans. Georges Blumberg (Paris: Médicis, 1938), 9 and 10. 3 John Maynard Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1951 [1936]), 377-78. 4 The complete list would further include the following names: R. Auboin, L. Baudin, M. Bourgeois, J. Castillojo, J.B. Condcliffe, A. Detoeuf, B. Hopper, B. Lavergne, L. Marlio, M. Mercier, A. Piatier, S. Possony, A. Rüstow, M. Schutz, and M. van Zeeland. See Emil M. Claassen, Les fondements philosophiques des systèmes économiques: Textes de Jacques Rueff et essais rédigés en son honneur (Paris: Payot, 1967), 458.

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5

6

7

8 9

The two opening speeches were given by Louis Rougier and Walter Lippmann. I would not wish to imply that the liberal camp had formerly been unanimous: on the contrary, there were massive disagreements between interventionists and non-interventionists in the nineteenth century and we have only to revisit the bitter controversies around the opinions of John Stuart Mill, seen by some as the “father” of social liberalism, to be convinced of this. Yet the present schism did not originate there, but rather in the revolutionary or deeply original and ground-breaking quality of the solutions advanced by Keynes. Political options were quite polarized at the time in France. Barely four months earlier, in April of 1938, Jacques Doriot, ex-Communist and founder in 1936 of the fascist Parti populaire français (PPF), published a pamphlet advocating support for Franco, Mussolini, and Hitler. The same Doriot had published a previous pamphlet, La France avec nous! (Paris: Flammarion, 1937), including an article on the economy entitled: “L’économie libérale est bien morte!” (“The liberal economy is dead indeed!”). Immanuel Kant, Principles of Politics, including his essay on Perpetual Peace: A Contribution to Political Science, trans. W. Hastie (Edinburgh: Clark, 1891). Available online: http:// oll.libertyfund.org/Texts/Kant0142/PrinciplesOfPolitics/ HTMLs/0056_Pt03_PoliticalRight.htm. Walter Lippmann, An Inquiry into the Principles of the Good Society (Boston: Little, Brown, 1937), 15. This initial label must not be mistaken for its current designation, by which neoliberalism now stands for the classical school that includes Friedrich von Hayek and Milton Friedman, among others. There is a intriguing change of meaning over these thirty or forty years of history that would be interesting to ponder but is not my concern here. On the rift in question

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10 11

12

13

14

and the coalescence of the interventionist school that claims the neoliberal label, see Jacques Cros, Le néo-libéralisme: Étude positive et critique (Paris: Médicis, 1951), which I have used in this section and which provides a more comprehensive analysis of the Lippmann symposium. Keynes, The General Theory of Employment, Interest and Money, 372. In his White Paper on Employment, William Beveridge, the British economist viewed as the “father” of the welfare state to be discussed in Chapter 2, took the same point of view, especially when, for reasons of public liability, he raised the possibility of government nationalization and planning. This was the topic before the first working session of the Centre international pour la rénovation du libéralisme on 13 March 1939, with Jacques Rueff as rapporteur (Claassen, Les fondements philosophiques des systèmes économiques, 458). The symposium had led to the centre’s creation, which prompted certain Socialist Party and union leaders to ask to participate. This same “preliminary note” is the source of the following quote: “A delegation that included René Belin, Louis Lacoste, Spinasse, and Louis Vallon asked to take part in the Centre’s deliberations. It was agreed that, in working sessions, the basic argument and oversight of discussions would fall in turn to a liberal and a socialist.” In this sense, the word “international,” coined by Jeremy Bentham in 1802, does not and cannot have the same meaning today that it did over two hundred years ago. For instance, Jacques Maritain, Georges Gurvitch, and Antoine de Saint-Exupéry, as well as other writers published by Éditions de la Maison française in New York. On this intellectual diaspora and its inner conflicts, see Emmanuelle Loyer, Paris à New York: Intellectuels et artistes français en exil (Paris: Grasset, 2005).

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15 See the symposium prepared by various authors and published under the title Prefaces to Peace (New York: co-operatively published by Simon and Schuster, Doubleday, Doran and Company, Raynal and Hitchcock and Columbia University Press, 1943). See also Clarence K. Streit, Union Now: The Proposal for Inter-Democracy Federal Union (New York: Harper and Brothers, 1940); Wendell L. Willkie, One World (New York: Simon and Schuster, 1943); Herbert Hoover and Hugh Gibson, The Problems of Lasting Peace (Garden City, NY: Doubleday, Doran, 1942); Henry A. Wallace, Century of the Common Man (New York: Reynal and Hitchcock, 1943); Sumner Wells, The World of the Four Freedoms (New York: Columbia University Press, 1943); or even Javier Marquez, Bloques económicos y excedentes de exportación (Mexico: Banco de Mexico, 1943), to which I shall return below. 16 See Denis de Rougemont, The Devil’s Share (New York: Pantheon Books, 1944); Edward Hallet Carr, Nationalism and After (London: Macmillan, 1945); Léon Blum, À l’échelle humaine (Paris and Montreal: Gallimard-L’Arbre, 1945); and Alvin H. Hansen, America’s Role in the World Economy (New York: Norton, 1945). 17 William H. Beveridge, Social Insurance and Allied Services (London: Allen and Unwin, 1942) and Full Employment in a Free Society (London: Allen and Unwin, 1944). 18 James T. Shotwell, The Great Decision (New York: Macmillan, 1944), 202. Shotwell was especially well positioned to be a starting point for an overall understanding of the postwar order, since his many reports and functions had given him a highly visible role in a number of conferences, while his breadth of vision and experience enabled him to build connections and complementary relations among his own responsibilities and the events occurring at that time in Yalta, Mexico City, and Bretton Woods. The writer had already played a leading role

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as a member of the US commission set up by Colonel House to prepare the 1919 Peace Conference and was also a member of the International Labour Office. During the Second World War, he had been a consultant to the Department of State and a member of the Commission to Study the Organization of Peace which, from 1941 to 1945, was “engaged upon an analysis of the technical as well as the political problems involved in the elimination of war as an instrument of national policy” (ibid. vii). 19 Ibid., 275. 20 The first step in this direction was taken at the Dumbarton Oaks Conference of October 1944, when the plan presented extended the jurisdiction of the international organization to come – the future United Nations – for maintaining peace and security as promised by the Moscow conference on economic and social problems of the previous year. But for this addition, the other proposals “looked a lot like the ones in the Covenant of the League of Nations in dealing essentially with security and justice. Accordingly, a completely new agency was added to the old system, the Economic and Social Council” (see ibid., 224). 21 The creation of the Economic and Social Council, or ECOSOC, involved much manoeuvring by the United States, the United Kingdom, and the USSR. The British wanted the Security Council to look at economic issues as well, but the Soviets definitely did not. The final agreement was on a US suggestion for two separate councils. Another controversial issue involved the future international economic institutions. The United States wanted them to be run directly as ECOSOC departments and, again, a compromise was found wherein they would be made specialized institutions, with the exception of the International Monetary Fund and the World Bank. In practice, ECOSOC would have little

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22

23 24

25

26

effective authority and the new international economic institutions would be largely unconnected with the United Nations. See Pierre Gerbet, Victor-Yves Ghebali, and Marie-Renée Mouton, Les palais de la paix: Société des Nations et Organisation des Nations Unies (Paris: Richelieu, 1973). Shotwell, The Great Decision, 224. With regard to powers, the Charter provides that “the Economic and Social Council may make or initiate studies and reports with respect to international economic, social, cultural, educational, health, and related matters and may make recommendations with respect to any such matters to the General Assembly or to the Members of the United Nations, and to the specialized agencies concerned” (art. 62, para. 1). Ibid., 152. Ibid., 155. This is the reason he gave: “Unlike the problems of national security and international justice, those of a nation’s welfare are primarily domestic ... The economic situation is reflected in politics, not only in the United States, but in every country which has developed constitutional government. For the determination of economic policy has everywhere been taken over by the legislative branch of the government in order to ensure the fullest measure of responsibility to the electorate” (ibid., 152). International organizations working in the field of labour rights (ILO), food and agriculture (FAO), education, culture and science (UNESCO), and so on all worked closely with their counterparts, that is, with the corresponding departments at state level. In this sense, the international organizations in question acted as world departments and contributed to the implementation of a world administration within the UN system. Shotwell, The Great Decision, 215. It was Shotwell again who most clearly delineated this complementarity between defence of rights and the other missions when he wrote: “The first step

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to be taken to safeguard freedom in the postwar world seems to most people too obvious to admit of argument. It is the proposal that there should be an international Bill of Rights to which all nations should subscribe, safeguarding the rights of citizens within the state against the encroachments of their own governments. This proposal is based on the Bill of Rights in the Constitution of the United States and subsequent amendments to the Constitution and upon the still more basic institution of courts of justice provided with such implements as the writ of habeas corpus” (ibid., 196). 27 From Shotwell again: “No impairment of sovereignty is necessary when nations co-operate with each other on these terms, provided that the scope and the procedure of their co-operation are both consonant with the fundamental interests of the participating state” (ibid., 222). 28 Three comments are called for here. The first has to do with the notion of “region,” which, unless defined, covers disparate entities from the British Commonwealth and the USSR to agreements made in Latin America by way of regional organizations of “backward countries,” as they were still known at the time. The second arises from the fact that, under the so-called “functional” approach, the UN framework differs essentially from that of the League of Nations inasmuch as it is based on two principles, universality and differentiation; that is, the UN incorporates the principle of varied responsibility, whereas the League supported only the traditional theory of “the equality of all states and the universality of obligation” (ibid., 215). The third comment concerns the fact that “the GATT treaty’s loophole for free-trade areas in Article xxiv has puzzled and deceived prominent scholars, who trace its postwar origins to US aspirations to promote European integration and efforts to persuade developing countries to endorse the Havana Charter. Drawing from archival records, this article

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29

30

31

32

shows that in fact US policymakers crafted the controversial provisions of Article xxiv to accommodate a trade treaty they had secretly reached with Canada. As a result, the free-trade area exemption was embedded in the GATT–WTO regime, even though neither the Havana Charter nor the US-Canada free-trade agreement was ever ratified. Theoretically, the case is an important example of how Cold War exigencies altered the policy ideas of US officials” (abstract of an article by Kerry Chase, “Multilateralism Compromised: The Mysterious Origins of GATT Article xxiv,” World Trade Review, no. 1 (March 2006): 1-31. It is important to underline that the “economic universalism” alluded to here included most Western nations and their territories; it was only with the 1950s and the spate of African independence that something called the Third World would emerge in full view. On this issue see Victor L. Urquidi, “Bretton Woods: Un recorrido por el primer cincuentenario,” Comercio Exterior 44, 10 (October 1994): 838-47. The text of the Mexican motion on reconstruction and development can be found in a box on pp. 839-42. The author begins by recalling that the forty-four countries attending included nineteen from Latin America: a twentieth, Argentina, had been excluded because of its wartime political affiliations. The World Bank website has fortyfive countries attending Bretton Woods, including fifteen from Latin America. The Latin American nations signed the Bretton Woods agreements and joined the World Bank during 1945 and 1946 in the following order: Bolivia, Honduras, Paraguay, Guatemala, Ecuador, Mexico, Chile, Costa Rica, Brazil, Uruguay, Nicaragua, Panama, El Salvador, Colombia, and Venezuela. As an interesting case in point, Mexico did not join the GATT until 1986. On the GATT itself, see Jean-Paul Frétillet and

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Catherine Véglio, Le GATT démystifié (Paris: Syros, 1994), 59; Michel Rainelli, L’Organisation mondiale du commerce (Paris: Découverte, 1999); Annie Krieger-Krynicki, L’Organisation mondiale du commerce: Structures juridiques et politiques de négociation (Paris: Vuibert, 1994); and Steven Shrybman, A Citizen’s Guide to the World Trade Organization (Ottawa: Canadian Centre for Policy Alternatives/ Toronto: James Lorimer, 1999). 33 The NT and MFN rules are also interlocking inasmuch as they represent static and dynamic functions in an overall freetrade strategy. For liberalization to be an ongoing process, more is needed than conferral of national treatment: negotiations have to carry the liberalization process forward and remove barriers cumulatively and irrevocably. Talks should end, then, in the complete liberalization everyone claims to be looking for. 34 Without mincing words, we could say that, for governments in the rich nations, international economic organizations are truly offshore economic departments. Chapter 2: Welfare States and Social Rights 1 One can go even farther in this regard and see the principle of national solidarity as a founding principle of the welfare state itself. See also Dorval Brunelle, Droit et exclusion: Critique de l’ordre libéral (Paris and Montreal: L’Harmattan, 1997). 2 Georges Gurvitch, La déclaration des droits sociaux (New York: La Maison française, 1944), published in English as The Bill of Social Rights (New York: International Universities Press, 1946). See also his L’idée de droit social (Paris: Sirey, 1933). 3 The idea of deductibility from a basic norm was developed by Hans Kelsen in his Pure Theory of Law (Berkeley: University of California Press, 1970 [1934]). See paragraph 6 entitled “Legal order,” on p. 44. This idea was widely criticized. See, for

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instance, Paul Amselek, “À propos de la théorie kelsénienne de l’absence de lacunes dans le droit,” Archives de philosophie du droit 33 (1988): 283-99. 4 Gurvitch, La déclaration des droits sociaux, 31. 5 Ibid., 68-69. 6 See Max Weber, Economy and Society (Berkeley: University of California Press, 1968), esp. Ch. 1, “Basic sociological terms,” 3-62. Chapter 3: Internationalism versus Regionalism in the Cold War 1 To borrow from the French title, Le conflit du siècle: Capitalisme et socialisme à l’épreuve de l’histoire (Paris: Seuil, 1958), published in English as Capitalism and Socialism on Trial (New York: Greenwood Press, 1968). 2 Anti-communism was a hot wartime issue in Canada and Quebec as well as in the United States: see René Bergeron, Le premier péril (Montreal: Fides, 1943). A quote from Pope Pius XI that heads a chapter sets this book’s tone: “The primary threat ... the biggest and most pervasive threat is surely Communism ... This is a universal threat to the entire world.” The reference to the Rapp-Coudert Committee is on p. 112. In February during the same year of 1942, the US government lifted the postal ban on the distribution of US Communist publications and that summer saw the release of Communist political prisoners rounded up when hostilities began (ibid., 44). 3 Historians see the Cold War as originating with the Truman Doctrine as defined in a speech by the US president to Congress on 12 March 1947, in which he asked for $400 million to fight the threat of a Communist uprising in Greece and Turkey. See John Lewis Gaddis, The United States and the Origins of the Cold War 1941-1947 (New York: Columbia University Press, 1972), 346-52.

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4 Alfred Sauvy coined the expression “tiers monde” (Third World) in an article published by L’Observateur, 14 August 1952. 5 The text of the Act of Chapultepec can be found on a Yale Law School website at: http://www.yale.edu/lawweb/avalon/ intdip/interam/chapul.htm. 6 United States, Department of State, Proposals for Expansion of World Trade and Employment, November 1945, Chapter iii General Commercial Policy, Section A – General Commercial Provisions, paragraph 1, p. 11. 7 See Chapter 1 above, note 28. 8 A complete study should clearly include all other regionalisms in Africa, Asia, etc., not to mention the socialist bloc with its own full range of economic and political agreements and conflicts. 9 Initially, the Marshall Plan covered all Europe, but Stalin refused to bend and launched an alternate scheme. 10 The ICC was initially set up after the Great War, in 1919. On this and other organizations cited, and their involvement in European integration, see Lucien de Sainte-Lorette et al., L’intégration économique de l’Europe (Paris: Presses universitaires de France, for the Carnegie Endowment for International Peace, 1953). 11 The ICFTU includes ninety-five organizations in seventy countries. The European wing represented twenty-three million workers in October 1952 and sat on the Trade Union Advisory Committee of the Economic Co-operation Administration (ECA) to help give effect to the Marshall Plan. It also served as consultant to the OEEC and UN Economic Council for Europe. 12 As for the plan itself, its main features were European recovery and the suspension of the rules governing economic liberalism; an aid program worth US$13.2 billion over four years; infrastructure modernization, and increased overall production.

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13

14

15

16

According to economist Paul Bairoch in Victoires et déboires: Histoire économique et sociale du monde du xvi e siècle à nos jours, vol. 3 (Paris: Gallimard, 1997), 118, the US$13.2 billion included US$2 billion in donations. See also, on the Marshall Plan and the 1948 Conference on European Economic Cooperation, Marcel Marantz, Le Plan Marshall: Succès ou faillite? (Paris: Marcel Rivière, 1950) and the OECD website at: http://www.oecd.org. The EFTA was created by the Stockholm Convention that came into force on 4 May 1960. It began with seven members: Austria, Denmark, Norway, Portugal, Sweden, Switzerland, and the United Kingdom. These countries were joined at one time or another by Finland, Iceland, Liechtenstein, Greenland, and the Faeroe Islands. It still exists but is down to four countries: Norway, Switzerland, Iceland, and Liechtenstein. See the EU Committee for the Study of Economic and Monetary Union, Report on Economic and Monetary Union in the European Community (1989), available online at: http://ec. europa.eu/economy_finance/euro/origins/origins_4_en.htm. The expansion dates that made “the six” into “the fifteen” were as follows: 1 January 1973, the United Kingdom, Ireland, and Denmark; 1 January 1982, Greece; 1 January 1986, Spain and Portugal; and 1 January 1995, Finland, Sweden, and Austria. Shortly after the wars of independence against their respective empires (United States, 1776; Haiti, 1804; Venezuela, 1811; Gran Colombia, 1819; Mexico, 1821; Peru, 1821), the countries of the Americas would wage war among themselves: Brazil and Buenos Aires (1825-28), Chile, Bolivia, and Peru (1837-39), the United States and Mexico (1836 and 1846-48), within Gran Colombia (1830), and within the Central American Federation (1837-39). See José del Pozo, Histoire de l’Amérique latine et des Caraïbes de 1825 à nos jours (Montreal: Septentrion, 2004).

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17 Russia, which stationed traders as far south as California, eventually abandoned such plans when it sold Alaska to the US government for US$7.2 million in October 1867. 18 John L. O’Sullivan, “The Great Nation of Futurity,” The United States Democratic Review 6, 23 (1839): 426-30, online at: http://mtholyoke.edu/acad/intrel/osulliva.htm. 19 The purpose of this Bureau was to provide information on anything to do with trade and customs legislation. Initially under the Department of State, it would be placed in 1898 under a committee of four representatives of member republics. At the second Pan-American conference held in Mexico City from 2 October 1901 to 31 January 1902, the name was changed to International Office of the American Republics under a council of all representatives chaired automatically by the United States. The fourth conference at Buenos Aires in 1910 saw a further name change to Pan-American Union. Subsequent conferences would expand the mandate of the Union’s Executive Council until the sixth conference at Havana in early 1928 passed the convention that gave the Union its constitutional character. Though this convention, which was never ratified by all the signatory states, was not to come into force, the republics still kept meeting on a regular basis, generally every four years. For the background on discussions up to the 1930s see Orestes Ferrara, L’Amérique et l’Europe: Le panaméricanisme et l’opinion européenne (Paris: Oeuvres représentatives, 1930). There is another fact to be added in this regard: if Canada was never mentioned or invited to these meetings it was because of its status as a dominion within the British Empire, not a republic. The Canadian government left Pan-American matters to the US and did not join the OAS until 1990. 20 See Report by Group of Experts on Trends in International Trade (Haberler Report) (Geneva: GATT, 1958).

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21 See, in this connection, the article by Hermán Santa Cruz, “The Creation of the United Nations and ECLAC,” ECLAC Review 57: 17-33. 22 United Nations, Department of Economic Affairs, Economic Survey of Latin America (New York, 1951 [1949]). This document is seen as the “ECLAC Manifesto,” in Hirschman’s phrase. See Albert O. Hirschman, “The Political Economy of Import-Substitution Industrialization in Latin America,” in Latin America: Problems in Economic Development, ed. Charles T. Nisbet (Los Angeles: University of California Press, 1969). He drew directly on Prebisch’s theses in his 1950 book, Economic Development of Latin America and Its Principal Problems, a work that shaped thinking on this topic worldwide to reflect Prebisch’s dual vision of an industrialized centre and raw-materials exporting “periphery.” See also Raúl Prebisch, Hacia una dinámica del desarrollo latinoamericano (Mexico: Fondo de cultura economica, 1963). 23 The new treaty had the same signatories as the first Treaty of Montevideo: Argentina, Brazil, Chile, Mexico, Paraguay, Uruguay, and the five countries of the Andean group – Bolivia, Colombia, Ecuador, Peru, and Venezuela. 24 José Angelo Estrella Faria, O Mercosul: Princípios, finalidade e alcance do Tratado de Assunção (Brasilia: Ministerio das Relaçoes exteriores, 1993), ix. 25 See Alan Barbiero and Yves Chalouts, Poder e déficit democratico do Mercosul (Porto Alegre: EDIPUCRS, 2003), 65-66. 26 See Robert Gilpin, The Political Economy of International Relations (Princeton, NJ: Princeton University Press, 1987), 60-64. 27 See Christian Deblock and Dorval Brunelle, “Le régionalisme économique international: De la première à la deuxième génération,” in Tous pour un ou chacun pour soi: Promesses et

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limites de la coopération régionale en matière de sécurité, ed. M. Fortmann, S.N. Macfarlane, and S. Roussel (Quebec, QC: Institut québécois des hautes études internationales, 1996), 271-316. Chapter 4: Canada and the Cold War 1 Canada, Dominion-Provincial Conferences, 1927-1941 (Ottawa: King’s Printer, 1951). See the section entitled “House of Commons Chamber, Ottawa, 14 January 1941. Report of Proceedings. Opening Address by the Prime Minister, p. 3.” The expression “shifts in economic power” in King’s speech refers to the pull of the US economy, a power held previously by London. 2 Mackenzie King, ibid., 7. 3 A.F.W. Plumptre, quoted by Alexander Brady in Democracy in the Dominion, 3rd ed. (Toronto: University of Toronto Press, 1955), 55 note 14. 4 Dominion-Provincial Conferences, 13. 5 Ibid., 101. Many premiers agreed that the distinction made by the Rowell-Sirois Commission between “unemployable unemployed” to remain under provincial jurisdiction and “employable unemployed” to be transferred to federal jurisdiction was bound to work against the weaker provinces. See, for example, Hon. T.D. Patullo, Premier of British Columbia, and Hon. W.J. Patterson, Premier of Saskatchewan, in ibid., 39 and 53 respectively. 6 In 1939, Canada’s trade with the United States and the United Kingdom represented, respectively, 50 and 30 percent of its total trade figure. This trade had been complementary, with Canada sending its wheat to the United Kingdom and importing textiles, while the products of its forests and mines, processed with hydroelectricity, were sent to the United States, from which it purchased coal and steel.

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7 This information and what follows comes from a paper by Robert U. Ayres, Resources, Scarcity, Growth and the Environment (Paris: Center for the Management of Environmental Resources, April 2001). See also Frederic Dewhurst, America’s Needs and Resources (New York: Twentieth Century Fund, 1947). 8 Report written by Eugene Ayres of Gulf Oil, 1948. 9 The Paley Report, entitled Resources for Freedom, was issued in five volumes in Washington by the US Government Printing Office in 1952. 10 Resources for Freedom as reissued in New York by Arno Press in 1972: “The areas to which the United States must principally look for expansion of its mineral imports are Canada, Latin America and Africa, the Near East, and South and South-East Asia” (60). Key products are listed by country, 91ff. 11 Ibid., chapter 30, “Preparing for Emergency Production,” 16567. The Commission recommended that “development of the St. Lawrence Seaway be initiated in the near future for transportation purposes. A strong economic case exists for the development of the St. Lawrence Seaway and the stream’s power potentialities, even without regard to national security, but the security aspects of the project make it overwhelmingly expedient to proceed with its development as early as possible” (167). See also Kari Levitt, Silent Surrender: The Multinational Corporation in Canada (Montreal and Kingston: McGill-Queen’s University Press, 2002 [1970]). 12 From the outset (p. 3), the Paley Report linked security and supply issues to the possibility that the Cold War might turn hot. 13 The “heartland” theory is associated with Halford J. Mackinder, a British geographer writing in the early twentieth century. 14 The 1965 Canada-US Auto Pact would resoundingly confirm this development.

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15 Let us not forget that “economic rights” did not involve the rights of companies but social and labour rights, like the right to organize, form unions, negotiate collective agreements, and so on. 16 The commission’s chair, former finance minister Donald S. Macdonald from the Trudeau years (1975-77), had also been a member of the Trilateral Commission founded in 1973 by David Rockefeller. 17 Canada, Report of the Royal Commission on the Economic Union and Development Prospects for Canada, vol. 2 (Ottawa, 1985), 44-45. See also Stephen McBride, Paradigm Shift: Globalization and the Canadian State, 2nd ed. (Halifax: Fernwood, 2005). 18 Ibid., vol. 3, 640-41. 19 Ibid. The word is used repeatedly in the report, appearing first in volume 1 (p. 7). 20 Ibid., vol. 1, 42. Keynes is first referred to on p. 28. 21 Karl Marx and Friedrich Engels, The Communist Party Manifesto (1848), available online at: http://www.mondopolitico.com/ library/communistmanifesto/communistmanifesto_pt1.htm. 22 Canada, Report of the Royal Commission on the Economic Union and Development Prospects for Canada, vol. 1, 18-19. 23 Ibid., 19. Chapter 5: Canada-US Free Trade 1 The literature on neoliberalism as a school of thought and the role of rightist think-tanks in fine-tuning basic positions is extensive, one example being Keith Dixon, Les évangélistes du marché: Les intellectuels britanniques et le néolibéralisme (Paris: Raisons d’agir, 1998). For a literature review, see Roger Charland, “La mondialisation: L’idéologie de la fin du millénaire,” Hermès: Revue critique 2 (autumn 1998), http:// www.microtec.net/charro/.

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2 For an insider view of this “conservative revolution” that is demagogic, smug, and overrated see Martin Anderson, Revolution (New York: Harcourt Brace Jovanovitch, 1988). 3 In labour market terms, deregulation becomes pliancy. 4 The article by Edward Hallett Carr, “Nationalisme et après?” in Nations et fédéralisme, ed. Daniel Rops (Paris: Plon, 1946), 3-86, is eloquent of this whole school, which prioritized the goal of “full employment”: these writers saw unemployment as a primary cause of the war itself. Carr made a basic distinction between two aspects of social justice, full employment and ending poverty: the latter depends on level of development, which “blocks the way to achieving the ideal of world unity and imposes a division and differentiation of approaches even for reaching goals that are acknowledged as common to all humanity.” Full employment, however, can be achieved only in a “modern industrial state” (79, our translation). 5 On this point, see the annotated edition of the Canada-US Free Trade Agreement published in 1987 at the instigation of the Government of Canada. 6 On the benefits of this approach, see a letter of 20 December 2000 from Robert Vastine, chair of the Coalition of Service Industries, to Charlene Barshevsky, US trade representative in the Clinton administration, when free-trade talks were starting between the United States and Singapore: “We ask that the US negotiators choose the most effective structure for the FTA negotiations, especially given their impact as precedent. There is a strong case that these negotiations be based on the ‘negative list’ approach used in NAFTA, rather than the more limited and confusing approach used in the GATS which requires that the only sectors included in the agreement are those listed (positive list). The NAFTA approach is based on the presumption (appropriate for a free trade agreement) that all barriers in a given sector will be removed across all modes

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of supply, with stated exceptions and phase-outs. The negotiation is simplified because it is the exceptions that become the focus of the negotiations, and these should be as few as possible. We do not believe it is necessary to incorporate the NAFTA reservations for the 50 States. This was a one-time only event where State reservations were allowed carte blanche.” (The full text is available online at: http://www. sitrends.org/ideas.) 7 On the “dual approach,” see Boris Kozolchyk, “NAFTA in the Grand and Small Scheme of Things,” National Law Center for Inter-American Free Trade, 3 May 1994. For a different reading, see Ruth Caplan, Alliance for Democracy, “Briefing on the Free Trade Area of the Americas: Critical Analysis and Alternatives,” 9 April 2001: “NAFTA follows the top down negative list approach” (http://www.thealliancefordemocracy. org/html/eng/1329-AA.shtml). 8 Canada had only two territories at that time; with the creation of Nunavut in 1999, it now has three. 9 Bruce G. Doern and Mark MacDonald, Free-Trade Federalism: Negotiating the Canadian Agreement on Internal Trade (Toronto: University of Toronto Press, 1999), 43. See also Ricardo Grinspun and Yasmine Shamsie, eds., Whose Canada? Continental Integration, Fortress North America, and the Corporate Agenda (Montreal and Kingston: McGillQueen’s University Press, 2007); and Stephen Clarkson, Sarah Davidson Ladly, Megan Merwart, and Carlton Thorne, “La dure réalité de la gouvernance continentale,” in L’ALENA: Le libre-échange en défaut, ed. Dorval Brunelle and Christian Deblock (Montreal: Fides, 2004). Chapter 6: Features of a Global Order 1 See Francis Fukuyama, “Social Capital and Civil Society,” paper delivered to the IMF Conference on Second Generation

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2 3

4

5

6

7

8

Reforms, 1 October 1999. Available on the IMF website: http:// www.imf.org. Karl Polanyi, The Great Transformation (New York: Farrar and Rinehart, 1944). Michel Crozier, Samuel P. Huntington, and Joji Watanuki, The Crisis of Democracy: Report on the Governability of Democracies to the Trilateral Commission (New York: New York University Press, 1975). See the Trilateral Commission website at: http://www.trilateral.org/moreinfo/faqs.htm. In his influential book, Between Two Ages (New York: Viking Press, 1970), Zbigniew Brzezinski called for the creation of a new world authority. The G-6 included France, the United Kingdom, West Germany, Italy, the United States, and Japan. The European Union was admitted as an observer. The first European Management Forum was convened at Davos by Klaus Schwab in January 1971. This gathering became the World Economic Forum in 1987. The 1982 conference produced an informal meeting, held that same year, of the trade ministers from seventeen countries in Lausanne that suggested a new round of multilateral talks. Unlike the IMF and World Bank, which are still for all intents and purposes members of the UN system, the WTO is not, with the result that the UN has a representative at the WTO and the WTO is accountable to neither the ECOSOC nor anyone else.

Chapter 7: Consultation or Contention 1 And in several Canadian provinces, including Quebec. See Dorval Brunelle, La désillusion tranquille (Montreal: Hurtubise HMH, 1978). 2 See Giovanni Arrighi, Beverley J. Silver, et al., Chaos and Governance in the Modern World System (Minneapolis, MN: University of Minnesota Press, 1999). 176

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3 Keynes, General Theory of Employment, Interest and Money, Concluding Notes, 386ff. 4 We must not confuse tripartism, which is basically voluntary, with corporatism, which involves state co-optation, regulatory power, and monopoly of representation. 5 A key to understanding the fury of anti-interventionists may be found in Hayek’s The Road to Serfdom (Chicago: University of Chicago Press, 1944), in which he denounces interventionism in all its forms. 6 The European Economic and Social Committee was unquestionably the body that embarked on the most interesting thinking about the new role of civil society. See European Economic and Social Committee, “The EESC: A Bridge between Europe and Civil Society,” in Proceedings of the First Convention, Brussels, 15-16 October 1999. 7 As a case in point, the WEF held in New York in January 2002 even innovated by opening the proceedings to “non-profit organizations” in addition to what, for symmetry’s sake, were labelled “for-profit organizations.” 8 Diego Carrasco: “FTAA – Committee of Government Representatives on the Participation of Civil Society,” 24 October 2000, online at: http://www.ftaa-alca.org/SpComm/SOC/ Contributions/BAires/csw151a1_e.asp. See also Jean L. Cohen and Andrew Arato, Civil Society and Political Theory (Cambridge, MA: MIT Press, 1992). Conclusion 1 See John Foster and Anita Anand, eds., Whose World Is It Anyway? Civil Society, the United Nations and the Multilateral Future (Ottawa: United Nations Association in Canada, 1999). See also Jeffrey M. Ayres, Defying Conventional Wisdom: Political Movements and Popular Contention against North American Free Trade (Toronto: University of Toronto Press, 1998); and Maude Barlow and Tony Clarke, Global Showdown: 177

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2

3 4 5 6

7 8

9

How the New Activists Are Fighting Global Corporate Rule (Toronto: Stoddart, 2002). See Boaventura de Sousa Santos, “La globalisation contrehégémonique et la réinvention de l’émancipation sociale,” in Une société-monde? Les dynamiques sociales de la mondialisation, ed. Daniel Mercure (Sainte-Foy, QC: Presses de l’Université Laval and De Boek Université, 2001), 45-64. See also Antonio Negri and Michael Hardt, Multitude, War and Democracy in the Age of Empire (New York, Penguin Press, 2004). Ibid., 48. Ibid., 57. Ibid., 45. The International Financial Institutions Advisory Commission was established by Congress with Allan H. Meltzer as chair in November 1998. The commission was to consider the future roles of seven international financial institutions: the International Monetary Fund, World Bank Group, InterAmerican Development Bank, Asian Development Bank, African Development Bank, World Trade Organization, and Bank for International Settlements. Its report was tabled in March 2000 and can be found in full at: http://www.house. gov/jec/imf/meltzer.htm. In a 1998 speech to the Brookings Institution, Allan Meltzer suggested the outright abolition of the IMF. The other minority report was written by economist C. Fred Bergsten, who recommended sticking to the status quo. By way of comparison, WSF ii rallied fifty-one thousand people and organized eight hundred workshops, while WSF i had attracted ten thousand people and organized close to a hundred workshops. We foreigners are not likely to forget this little quatrain chanted by the demonstrators dancing in the streets: “Ô Ô Ô

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Lula! Luuuula!/Eu quero ver/o plebicito contra ALCA/ acontecer!” or “Oh, Lula! I want to see the plebiscite against the FTAA!” 10 In truth, as was seen at the first and second Peoples’ Summits of the Americas, we can increase participant and workshop numbers, but this does not alter the fact that all these issues are easily boiled down to ten or twelve that can be characterized as “sectoral,” although they are neither independent nor impervious – far from it – plus some “cross-cutting” issues in the sense that they cut across the first group. The twelve big sectoral issues are human rights, Aboriginal matters, health, education, the environment, the role of the state and the democratic deficit (which covers a whole series of issues involving executive and legislative authority and judicial power), labour and unions, grassroots movements and opposition to extreme liberalization, sustainable development, and other economic issues like investment, agriculture, intellectual property, and cultural diversity. The two big cross-cutting issues, women and substitutes for global liberalization, should integrate the so-called sectoral issues in a general process. However, we must not underrate the extent of the debate still to take place around this nomenclature, as many believe and maintain that the cross-cutting issues are the most numerous and sectoral issues the exceptions. Finally, it must be added that, given the conjuncture, this time the matter of the war in Iraq seemed unavoidable. 11 The International Council is one of the three WSF bodies: it is made up of over a hundred organizations from all over the world. The other two WSF agencies are the Organizing Committee (OC) and the Brazilian Council (BC). The first is made up of eight Brazilian entities representing various sectors of civil society while the council assumes responsibility for the WSF secretariat and includes the same groups as the

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OC. In addition to building the WSF at the national level, its job is to stimulate the creation of local mobilization committees, organize events leading up to the forum itself, and support the organization of other world gatherings. 12 See François Houtart, “La mundialización de las resistencias y de las luchas contra el neoliberalismo,” in Resistencias mundiales: De Seattle a Portô Alegre, ed. José Seoane and Emilio Taddei (Buenos Aires: CLACSO, 2001), 63-69.

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188

Index

Auto Pact (Canada-US Automotive Agreement), 97

accords: international, 26-28; regional, 56-57. See also specific accords; free-trade agreements activism, 151-55 Africa, 26 Alberta, 97 allowances (social), 40, 41 Andean Pact (1969), 68 Annan, Kofi, 128 anti-communism, 52, 166n2 anti-interventionists, 19, 135. See also interventionism Argentina, 71 Asunción, Treaty of (1991), 70-71, 72 authoritarianism, 11

baby boom, 37-38, 42 Bakunin, Mikhail, 61 balance of power, 55, 124 Bandung Conference (1955), 54, 123 Benelux, 62, 71 Bergsten, C. Fred, 178n7 Beveridge, William, 22, 36, 159n11; welfare state vision, 38-42, 49-50 birth rate, 41, 42 Blaine, James, 66 Blum, Léon, 22 Bogota Conference (1948), 67

189

Index

Canada-US Automotive Agreement (Auto Pact), 97 Canada-US Free Trade Agreement (CUFTA), 71-72, 102, 104-5, 107 Canadian Charter of Rights and Freedoms, 89-91, 93 capital, 49, 133, 134, 137; labour vs, 49, 138 capitalism, 12-13, 136 Caracas Conference (1969), 69 Caribbean Free Trade Association (CARIFTA), 68 Carr, Edward, 22 Carrasco, Diego, 142-43 Castro, Fidel, 123 Central American Common Market (MERCOMUN), 68-69 Centre international pour la rénovation du libéralisme, 159n12 Chapultepec, Act of (1945), 27, 55-56 Chile, 99 Churchill, Winston, 52, 59 La cité libre. See The Good Society (Lippmann) citizens, 15-17, 130, 147-48 civil society, 117-20, 139-40, 150; civil practices in, 147-48,

Bolívar, Simon, 64, 66 Bourassa, Robert, 99 bourgeoisie, 93-94 Brazil, 71, 151 Bretton Woods Conference (1944), 28-29, 73 Britain. See Great Britain British Commonwealth, 55 British North America Act (1867), 81, 82, 83 Buenos Aires, Act of (1994), 71 business, 143. See also corporations; tripartism Cabinet. See executive powers Canada, 99, 125, 166n2; Constitution, 89-91, 93 (see also British North America Act [1867]); economy, 77, 80-84, 88-95; federal-provincial relations, 80-84; internal trade, 108-10; and international trade, 84-86, 95-96, 98, 104, 110; and Latin America, 64-65, 169n19; provincial role, 8183, 88, 108; socioeconomic issues, 77, 79-80; tripartism in, 136-37; and United States, 77, 84-86, 95-96, 104, 110; as welfare state, 83-84. See also specific provinces; free trade; royal commissions

190

Index

consultation, 131, 138-39; with civil society organizations, 139-44, 146-47 consumers, 37-38 contestation. See dissent continentalization: liberalization and, 89-91; and mixed economy, 84-88, 89-91 corporations, 16-17, 91, 142. See also business corporatism, 132-34 Council of Europe, 60 Council of Industrial Federations of Europe (CIFE), 60 Courtin, René, 59 The Crisis of Democracy (Trilateral Commission), 123

149; organizations of, 139-44, 146-47, 151-54. See also nongovernmental organizations (NGOs) class conflict, 20, 131, 135 Clinton, William Jefferson (Bill), 102 Cold War, 53, 62 collective good. See public interest colonialism, 49, 55 Commercial Bureau of the American Republics, 66 Committee of Ministers on Internal Trade (CMIT), 108-9 commodity market, 24, 33, 36 common markets. See specific associations communism, 52, 93-94, 166n2 The Communist Party Manifesto (Marx and Engels), 93-94 comparative costs theorem, 85-86, 87 Conseil national du patronat français (CNPF), 60 constituent thinking, 8-9, 21, 129, 133-34; royal commissions and, 80, 83 constitutions, 131. See also Canada, Constitution

debt, public, 75, 113 Déclaration des droits sociaux (Gurvitch), 44, 45-46 Delors Report, 63 democracy, 46, 123-26, 142, 150 Depression, 82 deregulation, 99-100 Dewhurst, Frederic, 85 differentiation, 30-33 dissent, 103, 118, 123-24, 140-44 Dominion-Provincial Conference (Canada, 1941), 80-82, 83-84

191

Index

European Economic Community (EEC), 58, 62, 71, 136; as model, 72-73, 74 European Economic Space (EES), 63 European Federalists Union, 59 European Free Trade Association (EFTA), 62 European League for Economic Co-operation, 59 European Movement, 60 European Parliamentary Union, 59 European Recovery Program (Marshall Plan), 51-52, 58, 61 European Union (EU), 76 exclusion, social, 137-38, 149 executive powers, 109-10; increase in, 119-20, 142; vs legislative powers, 94-95, 109 Expo ’67, 88 exports, 75, 103-4

Dumbarton Oaks Conference (1944), 161n20 Duplessis, Maurice, 79 economy, 15, 32-33; continentalization and, 84-88, 89-91; integration of, 48-49, 53-55, 58-64, 66-70, 97; international, 36, 48, 120; mixed, 35-36, 49-50, 112-15; neoliberal approach, 12-13, 17, 24, 94; political, 18, 42, 83-84, 93-95, 100; reform attempts, 75-76; regional approach, 54, 56-57, 74-75; tripartism and, 133-35. See also Keynesianism education, 41-42 employment: fitness for, 38, 39, 41; jurisdiction over, 8283; as objective, 25, 100, 113. See also unemployment Engels, Friedrich, 93-94 equality, 20, 21, 30, 138 Europe, 58-64. See also specific nations European Christian Workers’ Movement, 60-61 European Community (EC), 62-64 European Confederation of Agriculture, 60 European Congress (The Hague, 1948), 59-60

fascism, 133-34, 149 family, 37-38, 41-42 Federalist Papers (Hamilton et al.), 9 France, 14 free trade, 56-58, 85-86; approaches to, 106-7; CanadaUS, 95-96, 97, 101-7; and internal trade, 108-10; in

192

Index

globalization, 2, 62-63, 120, 12123; opposition to, 140-44, 15155; relays of, 139, 142 The Good Society (Lippmann), 11-13, 16-17 governance, 110, 142 government, 31, 103, 131, 137, 138; and civil society organizations, 140, 153-54; in global order, 111-12, 121-23, 142; intervention by, 15-16, 18-19; and neoliberalism, 99-100, 153; responsibilities, 115-17; and rights, 32-33; role, 17-18, 45, 121, 122, 153-54. See also executive powers; legislative powers; nation-state; politics; tripartism Great Britain, 56, 99 The Great Decision (Shotwell), 22-24 Great Lakes, 86, 87 Gurvitch, Georges, 22, 44, 45-46

Latin America, 67-70; nontariff barriers (NTBs) in, 103-4; regional, 98. See also free-trade agreements; liberalism, economic free-trade agreements, 98, 102, 109, 114; United States and, 5-6, 104, 150. See also specific agreements Free Trade Area of the Americas (FTAA), 76, 102 French Council of Europe, 59 Friedman, Milton and Rose, 99 Friedman, Thomas, 6-7 Full Employment in a Free Society (Beveridge), 22, 38-39 G-6/G-7/G-8, 125, 128 General Agreement on Tariffs and Trade (GATT), 25, 27, 57-58, 68, 107; clauses, 29-30; influence, 72-73 General Agreement on Trade in Services (GATS), 107 General Theory of Employment, Interest and Money (Keynes), 13, 18, 82, 133-34 Germany, 52, 134 Ghent, Treaty of (1814), 64-65 Gilpin, Robert, 74 Giscard d’Estaing, Valéry, 125

Haberler Report (1958), 68 Hansen, Alvin, 22 Havana Charter (1948), 56-57 Havana Conference (1947), 73 Havana Tricontinental Conference (1966), 123 Hayek, Friedrich von, 18, 19, 22, 135

193

Index

International Covenant on Economic, Social and Cultural Rights (ICESCR), 27 International Financial Institutions Advisory Commission (US), 149-50 International Labour Organization (ILO), 25, 73, 132 International Monetary Fund (IMF), 28, 32, 53, 128, 149-50 International Office of the American Republics, 169n19 International Trade Organization (ITO), 25, 56-57 internationalization, 55-58, 74, 125; of production, 47, 48; of social movements, 139-44 interventionism, 19, 58, 133-34, 135, 147 Israel, 102

Hepburn, Mitchell, 83 Hoover, Herbert, 22 Houtart, François, 155 Hugo, Victor, 61 Hull, Cordell, 67 import substitution, 68, 69, 75 income redistribution, 39-41 individualism, 90-91, 115-17 industry, 84, 87-88 integration, 38, 74; economic, 48-49, 53-55, 58-64, 66-70, 97 Inter-American Conference on Problems of War and Peace (1945), 55-56, 67 Internal Trade Agreement (Canada), 108-9 International Bank for Reconstruction and Development (IBRD), 28. See also World Bank International Chamber of Commerce (ICC), 60 International Commission of Agriculture, 60 International Confederation of Free Trade Unions (ICFTU), 60-61 International Covenant on Civil and Political Rights (ICCPR), 27

Japan, 124 judiciary, 109, 119 justice, 23-24 Kant, Immanuel, 15 Kelsen, Hans, 44-45 Keynes, John Maynard, 13, 18, 28, 49, 94, 133-35; on employment, 82, 113, 134. See also Keynesianism Keynesianism, 18, 74, 112-15, 133-35; in Canada, 80-84, 88,

194

Index

for reform, 150-51; and social good, 119-20, 153-54. See also Parliament Levinson, Jerome I., 150 liberalism, 16-18, 20; behind international organizations, 25-27, 153; and continentalization, 89-91; decline (prewar), 11-15; defence of, 11-13, 141-42; economic, 12-13, 17, 24, 94; Keynes on, 134-35; and social rights, 42-43, 44, 46; and universalism, 25-26. See also neoliberalism liberalities, 44 liberals, 14-19. See also liberalism; neoliberalism Lippmann, Walter, 11-13, 16-17 Lippmann Symposium, 14-19 Lula da Silva, Luis Ignacio, 151

89-91, 92, 93; variables in, 113, 134-35. See also economy, mixed King, William Lyon Mackenzie, 80-82 Korean War, 86 labour, 38, 114, 133, 135, 136, 137-38; vs capital, 49, 138; mobility of, 42, 47, 109; nation-state and, 47, 137. See also labour market; tripartism labour market, 33, 36, 42, 115-16 Lachine Canal, 87 Laissez-faire and Communism (Keynes), 134-35 Latin America, 26, 29, 62, 6473, 151; Canada and, 64-65, 169n19; and free trade, 67-70; regionalism in, 58, 64-73, 74; United States and, 64-65, 66-68 Latin American Free Trade Association (LAFTA), 68-69 Latin American Integration Association (LAIA), 69-70 law, 15-16, 17, 19, 89-90 League of Nations, 24-25, 163n28 legislative powers: decline in, 119-20, 125, 126, 142; vs executive powers, 94-95, 109; need

Maastricht Treaty (1992), 63, 76 Macdonald Commission (1982-85), 79-80, 88, 91-96, 115 manifest destiny, 65-66 Maritimes, 84, 87 markets, 76, 101, 103, 114; commodity, 24, 33, 36. See also globalization; labour market Marquez, Javier, 160n15

195

Index

Multilateral Agreement on Investment (MAI), 103 mutual societies, 43

Marshall, George C., 51-52 Marshall Plan. See European Recovery Program (Marshall Plan) Marx, Karl, 93-94 Materials Policy Commission (US, 1951). See Paley Commission Maurois, André, 12 McLarty, Norman, 83 Meltzer, Allan, 149-50 Meltzer Report, 149-50 MERCOMUN (Central American Common Market), 68-69 MERCOSUR (Common Market of the South), 70-73, 75, 136 Mexico, 98, 110 Mill, John Stuart, 100 Mises, Ludwig von, 19 Molotov Plan, 53, 58 monetary policy, 28. See also specific institutions Monroe, James, 65 Monroe Doctrine (1823), 64, 65 Mont Pelerin Society, 19, 98-99 Montevideo, Treaty of (1960), 68, 70 Montevideo, Treaty of (1980), 69, 70 Mulroney, Brian, 99, 136

nation-state, 49, 114, 116; and individuals, 115-17; and international organizations, 128, 149-50; and labour, 47, 137; and public interest, 153-54, 155; and rights, 43-44, 47, 122; role, 112, 115-17, 121, 130, 135; world order and, 146-47, 150. See also government; nationalism nationalism, 74, 116; economic, 29, 37-38, 47-48, 88, 124; social, 38-39, 47-48; welfare state and, 38-40, 42-43 natural resources, 85-87 neoliberalism, 18, 98-100; challenges to, 141, 151-55; economic policies, 75-76, 101; and government, 99-100, 153; power shifts under, 109-10 New Economic Policy (US), 124 New International Teams, 59 Nixon, Richard, 124 non-governmental organizations (NGOs), 139-40. See also civil society organizations

196

Index

Paley, William, 85 Paley Commission (1951), 85, 86 Pan-American Union, 67 pan-Americanism, 66-67 Parliament, 89-90, 109. See also legislative powers; parliamentarianism parliamentarianism, 89-90, 94-95 pensions, 39, 40, 41 Peoples’ Summit of the Americas, 179n10 Philadelphia Declaration (1944), 25 Pinochet, Augusto, 99 Plumptre, A.F.W., 82 pluralism: political, 17, 19, 25, 31; sociological, 45-46 Polanyi, Michael, 22 political parties, 118-19, 150-51 politics, 6, 15-16, 117-20, 147, 152-53. See also government Popper, Karl, 22 power, 55, 124, 128, 129-30, 138; constituent, 130-31, 147; constituted, 131, 147; neoliberalism and, 109-10; in world order, 109-10, 119-20. See also executive powers; legislative powers Prebisch, Raúl, 69

non-tariff barriers (NTBs), 103-4 North American Free Trade Agreement (NAFTA), 71, 97, 102, 105-7, 126; as model, 98, 109; provisions, 103-4, 108 Ontario, 88, 97 optimism, tragic, 148-49 Organisation for Economic Co-operation and Development (OECD), 61, 62, 103, 128, 132 Organisation for European Economic Co-operation (OEEC), 60, 61-62 Organization of American States (OAS), 67 Organization of Solidarity with the Peoples of Asia, Africa and Latin America (OSPAALA), 123 organizations, international, 21, 125-26, 127-28, 140, 146; financial, 28, 36; liberalism behind, 25-27, 153; nationstate and, 128, 149-50; regionspecific, 54, 56. See also specific organizations organizations, regional, 61-63 O’Sullivan, John, 65-66 Ouro Preto Protocol (1994), 72

197

Index

approach to, 42-43, 44, 117; sociological approach to, 44, 45-46 Rockefeller, David, 124 Rome, Treaty of (1957), 62, 70 Rome Social Conference (1950), 60 Roosevelt, Franklin D., 26 Röpke, Wilhelm, 18 Rougemont, Denis de, 22 Rowell-Sirois Commission (1940), 79, 80-84 Royal Commission on Aboriginal Peoples (1996), 79 Royal Commission on Dominion-Provincial Relations. See Rowell-Sirois Commission (1940) Royal Commission on the Economic Union and Development Prospects for Canada. See Macdonald Commission (1982-85) royal commissions, 77, 7880, 131. See also specific commissions Rueff, Jacques, 18-19 Russia, 125

private space, 121-22 privatization, 99-100 production, 38, 47, 48 protest. See dissent Proudhon, Pierre Joseph, 45 public interest, 42-43, 118-20; nation-state and, 153-54, 155. See also rights, social; welfare public space, 100, 121-22 Quebec, 84, 87-88, 89, 99 Rapp-Coudert Committee, 52 Reagan, Ronald, 99, 113 regionalism, 55-58; economic, 54, 56-57, 74-75; in Europe, 58-64; in Latin America, 58, 64-73 Report on Social Insurance and Allied Services (Beveridge), 22, 38-39, 40-41 Ricardo, David, 85-86 rights, 122-23; civil/political, 46-47, 89-91, 100; nationstate and, 43-44, 47, 122 rights, social, 19, 20-21, 43-47, 100, 114; governments and, 32-33, 43-44; group vs individual, 43, 45, 117; interpretations of, 44-46; legal approach to, 42-43, 44-45, 46; liberal

St. Lawrence Seaway, 86, 87-88

198

Index

Stockholm, Treaty of (1960), 62 Streit, Clarence K., 22 Suarez, Eduardo, 29 Summit of the Americas, 102

San Francisco Conference (1945), 73 Sauvy, Alfred, 53 Schacht, Hjalmar, 134 Second World War, 133 security, 23-24, 30, 86-87 service sector, 107, 114 Shotwell, James T., 22-24 Single European Act (1986), 63 Smith, Adam, 15, 16 social assistance, 39-40, 41 social dualism, 35-36 social exclusion, 137-38, 149 social forums, 151-55 social insurance, 39, 40, 41, 43 Social Movement for the United States of Europe, 59 social movements, 139-44, 148. See also civil society, organizations of; social forums sociality, 47-48, 49 Sousa Santos, Boaventura de, 148-49 Spaak, Paul-Henri, 60 stakeholders, 125, 139, 144. See also consultation Stalin, Joseph, 52 states, 127, 130; as equal, 20, 21; increase in numbers, 48-49; as unequal, 33, 48, 125-26. See also nation-state statism, 31-32

tariff barriers (TBs), 103 taxation, 41, 82 Thatcher, Margaret, 99 thinking, constituent. See constituent thinking Third World, 26, 28-29, 49, 68, 74, 123; and balance of power, 55, 124; as concept, 53-54 trade, 68, 98, 107; internal, 108-10; liberalization of, 2930, 106-10. See also free trade tragic optimism, 148-49 Tremblay Commission on Constitutional Problems (Quebec, 1954), 79 Trilateral Commission (1973), 123, 124 tripartism, 131-39; end of, 136-39; in mixed economy, 133-35 Trudeau, Pierre Elliott, 89, 157n1 Truman, Harry S., 85 unemployment, 18, 81-83. See also employment

199

Index

Wallace, Henry A., 22 welfare, 112; and economy, 32-33, 49-50; in international agenda, 21-30. See also welfare state welfare state, 35-36, 42-43, 90, 112; and baby boom, 37-38; Beveridge’s vision, 38-42; in Canada, 83-84; expansion of, 126-27; and national solidarity, 38-40, 42-43; transnational, 74, 76 Welles, Sumner, 22 Westminster Economic Conference (1949), 60 White, Harry Dexter, 28 Wilkie, Wendell, 22 women, 37, 38, 42 work. See employment; workers workers, 37, 38, 42, 43. See also labour World Bank, 29, 32, 53, 75, 128, 149-50. See also International Bank for Reconstruction and Development (IBRD) World Economic Forum (WEF), 126, 139 World Forum of Parliamentarians, 154 world order (post–Second World War), 3, 4-5, 128; importance, 9-10; and nation-

unemployment insurance, 41 United Europe Movement, 59 United Nations, 30-32, 132, 153; Charter, 23-24, 25, 27, 56; decline of, 123, 128; Economic and Social Council (ECOSOC), 23-24, 54, 56-57, 132, 146; Economic Commission for Latin America (ECLA), 54, 68, 69; General Assembly, 30, 46-47, 124; and regionalism, 54, 56; and security, 23-24, 31 United States, 52, 62; Canada and, 77, 84-86, 95-96, 104, 110; Congress, 25, 110, 149-50; and IMF/World Bank, 149-50, 161n21; and Latin America, 64-65, 66-68; and trade, 5657, 98, 102, 104, 150. See also continentalization Universal Declaration of Human Rights (1948), 25, 26-27, 46-47 universalism, 28-29, 90-91, 146; and liberalism, 25-26; in postwar order, 30-33, 47, 7374; and regionalism, 26, 27 USSR, 26, 52 van Zeeland, Paul, 59

200

Index

state, 146-47, 150; power shifts in, 109-10, 119-20; state roles in, 28-29, 31-32, 33; universalism in, 30-33, 47, 73-74 World Social Forum (WSF), 151, 154

World Trade Organization (WTO), 107, 126, 128 Yalta Conference (1945), 49-50

201

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Printed and bound in Canada by Friesens Set in Electra by Artegraphica Design Co. Ltd. Proofreader and indexer: Gillian Watts