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The Canadian
Labour Congress:
From
Continentalism to
Economic
Nationalism
MIRIAM SMITH
he English Canadian labour movement, under the
leadership of the Canadian Labour Congress (CLC),
played an important role in the anti-free trade campaign. For the Congress, the campaign was the culmination
of a fifteen-year battle against continentalism. Yet, during
an earlier series of debates on Canada's economic and political relationship with the United States - the debates of the
sixties - the CLC had taken quite a different tack; instead
of supporting the nationalist position, it had defended the
role of US capital in Canada and resisted the Waffle's attempt to link Canadian economic, political and cultural
sovereignty with socialism.
The first concern of this paper is with the nature of the
CLC's shift from defender of continentalism to defender of
economic nationalism. How did this shift come about? How
can it best be explained? I am also interested in exploring
the strategic and substantive components of the CLC's economic nationalism. How radical is the CLC's nationalism?
What kinds of strategies does it imply? While the CLC's
alliance-building strategy in opposition to the FTA may seem
to herald an important change in CLC thinking - one that
T
Studies in Political Economy 38, Summer 1992
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is welcomed by many on the left - it is important to place
this shift in its historical context; in doing so, I hope to
make clear that the CLC's economic nationalism is limited
in certain respects. In particular, the CLC's increasing emphasis on alliance-building strategies which underpinned the
nationalist opposition to free trade, does not mean that other
political strategies for labour - most importantly, consultative strategies with the state - have been surrendered.
In the first section of the paper, I describe the CLC's
strategic and policy options and dilemmas. In the second
section of the paper, the CLC's position on trade and investment - which was consistent with its broader program
and strategy - is outlined, providing the historical backdrop
necessary to understanding the magnitude of the changes
that occurred in the seventies. In the third section of the
paper, I explore the key moments in the CLC's transition
to economic nationalism - the 1968 prices and incomes negotiations, the 1975 imposition of wage controls, the CLC
program Labour's Manifesto for Canada (1976), the CLC's
consultative strategy vis-a-vis the federal government during
the early eighties, and the gradual emergence of a nationalist
program. In the final section of the paper, the CLC's stance
toward the Tory government is discussed. I argue that while
state intervention in the collective bargaining system and
the effects of the 1981-82 recession were important factors
behind the CLC's shift to economic nationalism, the ambiguities
and limits of its position must be traced to the particular
strategic dilemmas that faced the Congress throughout the
eighties.
The CLC's Strategic and Policy Options The CLC's shift
from continentalism to economic nationalism must be seen
in the context of the general economic policy options and
strategic dilemmas of the Congress. Prior to the mid-seventies, the Congress acted as a traditional interest group, lobbying government to protect union interests. While the Congress had a fairly close relationship with the Department
of Labour itself, its broader views on economic policy had
little legitimacy with government. The Congress's positions
on economic and trade policy were presented to government
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Smith/CLC and Nationalism
with no expectation that government would actually respond
to the CLC's agenda. On economic policy issues, the CLC
was an outsider in federal politics.
Programmatically, the relative underdevelopment of the
Canadian welfare state and the government's shaky commitment to Keynesianism created the political space for the
CLC's advocacy of Keynesianism and the expansion of the
welfare state. At this time, the Congress was skeptical of
radical measures to heighten Canadian control of the
economy which it feared might come at the expense of jobs.
The CLC opposed the spectre of economic nationalism
raised by the Waffle, setting the scene for conflict between
unions and the Waffle within the NDP.
Following the onset of the economic crisis of the early
seventies, however, the CLC's strategies and positions on
trade and economic policy underwent a fundamental alteration. The key to this shift was the federal government's
attempt to deal with inflationary pressures through the implementation of a wage control program in 1975. This constituted state interference with 'free' collective bargaining
- regarded as sacrosanct by Canadian unions - and thus
signalled a breakdown of the post-war settlement. Congress
affiliates! demanded action in opposition to wage and price
controls, and it was clear that the Congress could not play
by the old rules once the state had completely abrogated
the most essential of them. The federal government's intervention, thus, sent the CLC off on a fundamental reappraisal
of strategy and policy that resulted in the turn to a postKeynesian economic program and, eventually, to economic
nationalism itself.
The first step in this transformation was the CLC's willingness to consider forms of state intervention that went
beyond Keynesianism to active labour market policies and
enhanced public control of investment. Increasingly, the CLC's
economic program emphasized state-led industrial policy in
partnership with labour and business, rather than the magic
of Keynesian macro policies. A new strategy emerged that
moved the Congress beyond traditional lobbying - a strategy
which involved 'consulting' or 'negotiating' with business
and government. Given the absence of a social democratic
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ally in government and the history of labour's political exclusion from federal politics, the CLC was drawn into such
consultative exercises as part of its search for the means
to wrest policy gains for labour from the state.
The effect of the 1975 intervention was compounded by
the '81-'82 recession. The CLC's most radical program released in 1982 - was a response to this recession. During
the sixties, relatively high levels of economic growth, relatively high wage levels, and relatively low levels of unemployment had worked to ensure union acquiescence in
the structure of continentalism. By the early eighties - and
particularly in the 1981-83 recession - workers were being
laid off in foreign-owned companies. The flexibility of multinational capital and the threat of deindustrialization made
economic nationalism an attractive solution for affiliates.
In the sixties, protecting union members from job loss had
meant defending continentalism; in the eighties, job protection meant economic nationalism. The cost/benefit calculus
of unions was similar in both periods. Thus, the CLC's move
to post-Keynesianism in the late seventies was joined to its
advocacy of economic nationalism in the early eighties. PostKeynesian economic policies required enhanced Canadian control of the economy and vice versa.
Yet the CLC's nationalist position and post-Keynesian
program has not been free of ambiguity. While the CLC's
economic nationalism is often couched as a political program intended to revitalize Canadian capital in partnership
with the organized labour movement, the option of socializing capital in some significant and meaningful sense has
also lurked in CLC policies, in the form of demands for
the nationalization of credit and other forms of public ownership. Thus, the CLC's economic nationalism has come in
two analytically distinct forms that coexist with each
other in practice. One stresses measures for repatriating the
Canadian economy in partnership with capital. The other
would fundamentally challenge capital's prerogatives.
This programmatic ambiguity reflects the realities of the
Cl.C's strategic choices. Generally it has followed three routes:
traditiona11obbying~mobilization and alliance-building against
employers and the state (and the state as employer), using
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Smith/CLC and Nationalism
syndicalist methods or popular sector coalitions; and participation in consultative exercises with government and
business as a policy player. From the late seventies through
the eighties, the CLC tended to fluctuate between the latter
two, at times practising both simultaneously.
In its attempts to pursue consultative strategies, the Congress is not unique among labour organizations. Many trade
union movements in capitalist economies are drawn to
producers' alliances with capital, whether at the macro or
micro level, in a bid to maintain their organizational integrity and deliver the goods to their members. Unless the
conditions exist for a transition to an economic system in
which control over the critical levers of investment and
employment can be workably socialized, trade union organizations favour bargains with those who have control
over these all-important economic levers, namely capital.
The CLC has sought just such alliances with Canadian capital since the late seventies.
Yet labour in Canada in the post-war period has also had
to face exclusion from policy making at the federal level.
It has been effectively shut out of key decision-making processes, even when it pursued lobbying strategies that conformed to the rules of the game. The classic route of the
European labour movements - through a social democratic
party whose electoral success could guarantee some measure
of recognition for union interests - has never been open to
Canadian labour at the federal level. All of this has meant
that the Congress has had to fight hard to have its voice
heard at all in national politics, and that being 'included'
and 'consulted' can be seen as an important gain for the
CLC.
These factors have pushed the CLC in the direction of
consultation with the state and business as a means of securing policy gains from the state. Such strategies have been
most commonly used when the state and business themselves seemed to favour such consultative partnerships. However certain structural factors have tended to limit their success. First, participation and consultation have been under-
mined by features of CLC organization itself. The decentralized nature of the Canadian labour movement, and the
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CLC's lack of authority over the collective bargaining practices of its affiliates place obvious limits on the extent to
which labour can strike deals with capital. The confederation's lack of control (and, indeed, the lack of any
centralized control) prevents it (and unions, generally) from
being able to "deliver" what capital is most likely to want
from labour - labour peace and wage restratnt.s These considerations helped doom labour's efforts to negotiate over
wage and price controls with the federal government in the
late sixties and seventies.
In addition, for most of the post-war period, the commitment of both capital and the state to 'partnerships' with
labour has been uneven at best. It reached its height under
the Liberal government of the early eighties. After the demise
of the "Third National Policy," capital increasingly favoured
continentalism and free trade, which precluded industrial
strategy in partnership with labour. Furthermore, labour lacked
the means to bring political and economic pressure to bear
on capital and the state. The effect of the recession of the
early eighties and the NDP's continuing electoral failure at
the federal level meant that capital and the state could afford
to ignore labour's agenda.
These limitations have meant that the strategy of consultation has not yielded substantial gains for labour. The
CLC's strategic solution to this, which developed gradually
over the course of the eighties, has been to seek out alliances
with other popular sector groups and to mobilize against
the state and employers. The mobilization and alliance-building strategy allows the CLC to leave the table when the
game is too clearly stacked against labour, and at the same
time recoup legitimacy with affiliates skeptical of the gains
of consultation and participation. The Congress's role in
the anti-free trade coalition and its refusal to take up the
Tories' offer of participation in the lead-up to the free trade
deal, are the best examples of this strategy.
Nonetheless, the CLC's participation in popular sector
alliances does not mean that consultative strategies with
the state and business have been surrendered. In fact, in
the wake of the 1988 election, the CLC has been simultaneously pursuing both mobilization and consultation. The
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same factors that pushed the CLC in the direction of consultation during the late seventies and early eighties continue to operate. Engaged in an essentially pragmatic search
for benefits from the state and capital for its affiliates and
their members, it cannot afford the purely oppositional
stance implied by the mobilization strategy.
The Sixties: The CLC Defends Continentalism In contrast
to the CLC's later embrace of nationalism, the Congress's
economic platform of the sixties was resolutely liberal, a
liberalism that was reflected in its position on foreign investment, its general stance on economic policy and its
strategies toward government. The sixties was a period of
economic growth and increasing continentalization of the
Canadian economy under the auspices of Liberal governments.
Foreign investment and the position of multinationals in
the Canadian economy began to emerge as significant political issues; the decade ended with the Waffle's challenge to
continentalist complacency within the NDP. At this time,
however, regulation of foreign investment did not form a
part of the CLC's program. While the Congress occasionally
claimed that it was concerned about foreign investment, this
is not supported by a survey of convention documents of
the period.' Statements on foreign investment were made
in reaction to government initiatives; they were not in themselves part of the CLC program nor do they appear to have
been a major concern of affiliates. Most CLC convention
statements on multinationals were defenses of international
unionism as the best means to counter multinationals.f In
the CLC President's 1970 convention address, foreign investment did not even make the list of top issues facing
the labour movement in the 1970s.5
Nonetheless, the CLC usually reacted positively to initiatives from outside the labour movement to regulate foreign
investment. For example, in 1958, the CLC had urged the
government to implement the recommendations on regulation contained in Walter Gordon's influential report.f A decade later, the CLC approved of the Watkins Report on
foreign investment (1968) which called for foreign investment regulation rather than for a reduction in overall levels
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of foreign investment. Of the Watkins report, the CLC noted
approvingly that:
It points out that foreign investment and 'multinational' corporations are a fact of life in our economy and the emphasis
of government policy should be on ensuring that such corporations act in the best interests of Canada rather than in attempting
to in some way buy them out or to otherwise remove them.?
Ironically, of course, Watkins himself would later come to
favour just such measures for repatriating the Canadian
economy over the objections of the trade union movement.
The CLC favoured the formation of the Canada Development Fund to develop resources and industry.s Noting that
multinationals did not always act like "good corporate citizens,"
it also called for the collection of information on multinationals, and a general statement that foreign subsidiaries
should "obey Canadian laws and adhere to Canadian economic
policy,"? The CLC, however, did not attempt to define Canadian
interests or discuss the impact of foreign investment on labour. Its stance on investment during this period was a reaction to the development of the critique of foreign investment
by liberal nationalists.
On trade, the CLC was a strong supporter of freer trade
through GATT. Throughout the post-war period, Canada's
participation in GATT had brought traditional tariffs down,
opening the way for continental integration. The Congress
supported continental integration, arguing in 1964 that, "If
Canadian industry is to survive in world competition, some
degree of rationalization of structure must be undertaken.vl?
When the 1970 freer trade statement was attacked from the
convention floor on the grounds that some industries would
be undercut by Third World competition, William Dodge,
CLC Secretary-Treasurer, responded:
It is a fact that in the cases of some industries which have been
built and have to some extent thrived behind tariff protection ...it
is true that the unions which represent workers in those industries sometimes have an attitude about the tariff situation
which is identical with or very close to the attitude of the industry itself. That is understandable ...But as a Congress we have
to think in terms of the interests of the economy as a whole
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Smith!CLC and Nationalism
and the effects of restrictive trade approaches to employment
in the economy as a whole.u
In the late sixties, the Congress's benign view of Canadian
economic policy was challenged by the rise of the Waffle.
While there are a number of reasons that the CLC - and
organized labour generally - opposed the Waffle, the Waffle's
challenge to the continentalist complacency of the Canadian
labour movement was among the most important.R Within
the CLC, the opposition to the nationalist critique was
virulent. The CLC's Research Director argued that breaking
with the US would be "committing economic suicide" and
advised the executive to use the argument that workers pay
the price of economic nationalism as ammunition in the
fight against the Waffle.13 He also argued that Canada would
not have been able to develop without US capital, a conviction which the executive itself later endorsed. 14As Larry Sefton,
former director of the Steelworkers put it, "Nationalism has
never put a penny in a worker's pocket and it never will."15
In fact, Dodge, Donald MacDonald, President of the CLC,
and William Mahoney, Canadian director of the Steelworkers,
all belonged to the Canadian-American committee, an organization dedicated to continental integration.Is
Thus, during this period, the Congress categorically rejected the socialist nationalism of the Waffle. This liberal
stance is consistent both with the CLC's strategies towards
government over this period as well as with other aspects
of its position on economic policy and policy making. At
this time, the CLC's economic program was a straightforward and persistent set of demands for the expansion and
consolidation of the Keynesian welfare state in Canada. The
CLC's annual memoranda to the government were running
litanies of the government's failure to properly manage
Canadian monetary and fiscal policy)? In tandem with the
demand for fiscal intervention, the CLC strongly supported
the expansion of social programs and higher levels of social
spending. While fascinated by the European experience with
'planning', the Congress's use of the term did not involve
any understanding of how planning would be achieved in
the Canadian context, or what the goal of planning should
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be aside from job creation. In contrast to the later period,
there were no demands for nationalization, increased public
control of investment or industrial strategy. When the CLC
used the term planning, it was usually calling for more consistently reflationary monetary and fiscal policies. In this
usage, planning meant, for example, that the government
should maintain a public works program that could be used
to ease unemployment during cyclical downswings.
This Keynesian viewpoint was linked to the CLC's understanding of its own relationship to government. The notion that economic managers within the state could manipulate the monetary and fiscal levers to achieve an optimal
unemployment-inflation tradeoff was integral to this view.
Such a position did not include any questioning of the supposedly neutral character of technical expertise, nor did it
lead to an analysis of structural problems in the Canadian
economy that might require solutions other than the standard
Keynesian prescriptions. Moreover, in accepting a view of
economic policy that placed state managers in the key
decision-making position, the CLC effectively ruled out the
notion that producer groups, including labour, had a role
to play in economic policy advising.
Indeed, this stance on economic policy dovetailed with
the Congress's choices in resolving its ongoing set of strategic
dilemmas. During the sixties, the CLC preferred the lobbying strategy, even though there was very little hope that
the government would deliver the goods to labour. Neither
the state nor business were interested in consultation during
this period and broad-based mobilization strategies were inconsistent with the CLC's relatively narrow policy goals.
Thus, over the sixties, the CLC's stance toward government
replicated the adversarial relationship between employers
and workers in the labour market.
These features of CLC policy and strategy during this
period - its Keynesianism and its preference for a distanced
relationship with government - are manifest in its involvement in the Economic Council of Canada (ECC). The creation of the ECC provided the CLC with an opportunity to
participate in economic policy making in an advisory capacity.
It was understood, however, that participants views did not
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entail any commitment on the part of the organizations they
represented. IS The Council generated research and recommendations for government without pretence that its views
reflected a consensus of the views of business and labour.
This convention effectively prevented the ECC from offering advice to the government that would carry the weight
of such a consensus. This role suited the CLC which did
not want to be implicated in government decision making
on economic policy. According to the CLC, it was not the
job of producer groups to participate in economic policy
making. Such decisions "rest(ed) properly" with government.I? In addition, the Keynesian orientation of the ECC
was also attractive. The Congress could (and often did) cite
the Council as an authority when protesting the government's
stop-go economic policies of the sixties or when arguing
that incomes policies were impractical in Canada.20
The CLC's strategic and programmatic positions during
this period reflected the relatively strong labour market position of workers. The unevenly developed Canadian welfare
state, the government's tolerance of relatively high levels
of unemployment, and the generally labour-exclusionary
politics of Canadian economic policy allowed the Congress
to press for the expansion and consolidation
of the
Keynesian welfare state in Canada.U This political project
did not require a challenge to the nature of the US economic
role in Canada or even an analysis of the effects of US
involvement. On the contrary, the leadership of the Congress
was wedded to the view that radical moves to restrict foreign
investment would have potentially disastrous effects for the
unionized working class as represented by the CLC. All of
this was to change as the state moved to intervene directly
in the collective bargaining rights of workers.
Wage Controls: The CLC in Transition The CLC's traditional relationship to government and its liberal and
Keynesian program were fundamentally challenged by the
intensification of inflationary pressures in the Canadian
economy and by the government's responses to the problem.
On two separate occasions, 1968-1970 and 1974-1975, the
government sought labour's consent to wage controls. This
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placed the CLC in a strategic and programmatic quandary.
The Congress was torn between participating in talks with
the government on the one hand, and maintaining its traditional distance from government on the other. In 1968-70,
the government did not resort to wage controls; in 1975,
however, labour's hard-won right to conduct free collective
bargaining was removed. In attacking this most fundamental
and cherished right of unions, the government forced the
CLC into a strategic and programmatic crisis. The result
was a new program and a new strategy.
The first round of discussions on wage and price
guidelines occurred in 1968-70. The CLC and several of
its affiliates agreed to participate in talks with the government on voluntary guidelines and acquiesced in the establishment of a Prices and Incomes Commission which would
examine the causes of inflation and "rally a sense of public
responsibility leading to voluntary restraint."22 The Congress believed that research would show that workers were
not to blame for inflation. Beyond its charge that the
government's monetary policy was erratic, however, the CLC
had little to say about inflation - its position was defensive
rather than offensive.23
In accepting the government's analysis of the problem,
the CLC was vulnerable to the charge that it was not committed to fighting inflation and that it merely represented
a sectional interest. When it became clear that the government intended the PIC as a mechanism of moral suasion in
enforcing wage and price guidelines, the CLC could no longer
participate and withdrew. Free collective bargaining was one
of the few concessions received by Canadian labour as part
of the post-war settlement and the CLC would not enjoy
legitimacy with its affiliates if it were to countenance controls. The outcome of the price and wage negotiations in
1970 was a price and wage guideline campaign that
amounted to little more than a public relations exercise with
almost no effect on prices and wages.24
In contrast, the failure of the consensus negotiations
on wage and price guidelines in 1975 resulted in a legislated wage controls policy.25 The CLC's initial reaction
was to reiterate its traditional Keynesian position. Affiliates,
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Smlth/CLC and Nationalism
however, put pressure on the Congress to devise a more
offensive program. As affiliate pressure mounted, the Congress undertook a reappraisal of its program and strategy.
The main lesson it drew from the wage and price debacle
was that labour was politically weak and excluded from
the policy-making process on key economic policy issues.
Labour's Manifesto for Canada, passed at the 1976 CLC
convention, represented a new program and strategy, intended to address this weakness. Ironically, the muchmaligned Manifesto can be seen in retrospect as a critical
step in the CLC's evolution toward economic nationalism.w
A first shift signalled by the Manifesto was the recognition that the defense and expansion of the Keynesian welfare state was no longer a sufficient program for the Congress in the face of state intervention in collective bargaining. In the accompanying position paper, the CLC argued
for the establishment of a council for Economic and Social
Planning, a tripartite board that would be responsible for
active labour market policy and for the regulation of private
and public investment decisions through various means.s?
While economic nationalism was not an issue for the CLC
at this time, proposals for active labour market policy and
increased public control of investment would form a critical
part of the CLC's subsequent nationalist agenda. With the
Manifesto, the CLC moved toward a post-Keynesian emphasis on micro measures and industrial strategy.
A second shift concerned strategy. In the Manifesto, the
CLC faced the fact that labour was excluded from policy
making and that it did not have sufficient power to force
the government's hand. As the Congress put it, "The fact
that governments feel free to conduct their initial attack
against wages and social security programmes demonstrates
labour's real lack of political power on a national basis. "28
In order to gain power, the Manifesto argued, labour should
increase its price; "social corporatism" should be the condition of cooperation with the government in negotiations
over controls and decontrols. Social corporatism would require that labour have an institutionalized role in policy
making and that business surrender some of its control over
investment decisions. The Congress was willing to take the
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government and business up on its offer to negotiate over
wage controls, and it did so, not only in the negotiations
of 'post-controls' but also in several other consultative exercises of the early eighties. Thus, the strategy of consultation with business and the state and the idea of institutionalizing labour's role in the heart of policy making
was emphasized. With respect to both the substance of policy
and the substance of strategy, then, the Manifesto was an
important turning point for the Congress.
Despite the official disavowal of the Manifesto at the
1978 convention, this critical shift in CLC thinking was
carried over into the development of a new program that
began to emerge at the 1980 and 1982 conventions. This
program stressed industrial policy as the route to full employment. As the 1980 program stated, "the central goal of
this industrial strategy is full employment. Every single economic issue must be examined in terms of its contribution
to permanent job creation. "29
Unlike the CLC's planning of the sixties, the content of
industrial policy was spelled out. The key, according to the
economic policy committee, would be public control of investment through a number of different mechanisms: corporate disclosure legislation on financing, investment, pricing and production decisions; a strengthened FIRA, which
would review not only new but existing foreign investment,
as well as capital exports; a 15 percent tax on pre-tax corporate profits which would be targeted for direct job creation
when unemployment rose; union control of pension funds
through collective bargaining or legislation; corporate justification for layoffs and shutdowns before a public tribunal;
one year's notice of shutdowns with full pay for retraining
and relocation, as well as severance pay and community
compensation; and, finally, public ownership itself.30
This program reflected the relative political optimism
of the early eighties as the Liberal government took a
tum in the direction of economic nationalism and industrial strategy. The CLC's participation in the Tier I, Tier
II and Major Projects Task Force consultations with
the state and business seemed to indicate that capital
was searching for new partnerships with labour. A producers'
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alliance with capital seemed more likely to succeed in the
early eighties than at any other time before or after.
In its 1982 critique of the Liberals' reliance on megaprojects, the CLC provided an analysis of the structural weaknesses of the Canadian economy that placed post-Keynesian
industrial policies in the context of Canada's economic relationship with the United States. The central trade problem
was not that Canadian exporters were not competitive, but
that raw materials were exported instead of processed in
Canada, and that the manufacturing base was composed of
branch plants which were not oriented toward providing a
sound base for the economy. The balance of trade suffered
during periods of growth because branch plants could not
supply capital equipment and high technology. This reliance
on manufactured imports undermined the balance of payments. Furthermore, fiscal policy had encouraged unproductive mergers and acquisitions which had increased monopoly
and oligopoly in the economy.U The CLC emphasized that
The drop in standards of living, and the tragedies of unemployment and poverty, have not been imposed on Canada by forces
from outside the country. They have been imposed from inside
by deliberate decisions made in Canada to push Canadian spending well below the economy's capacity to supply it.32
Generally, the various levels of this critique of Liberal
government policy, multinational (branch plant) capital, and
the structure of the economy highlighted the extent to which
the state of the economy was the result of inherently political decisions and not simply the product of immutable external circumstances. This focused attention on the consequences of government decisions and implied that new
government policy could at least partially rectify the economic situation. If the critical economic decisions were indeed made in Canada by the Canadian government and
Canadian business, then those decisions could be changed,
with positive effects for workers. The effort that the CLC
devoted to the task of refuting the government line on the
1981-82 recession and to exposing the essentially political
nature of economic policy was new, and reflected not only
a concern with the deepening recession, but also a new
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interpretation of Canada's position in the international political
economy.
The 1982 program built on the recommendations in the
1980 program with respect to both economic policy and
industrial strategy. Specifically, the CLC advocated: the reduction of interest rates and the imposition of exchange
controls to guard against capital outflow; tax reform, especially, higher corporate taxes; greater Canadian content in
imported manufactured goods with import restrictions as
the ultimate sanction; the establishment of a crown corporation for the auto parts industry to coordinate investment
and purchasing policies as well as an 85 percent Canadian
content rule for cars; and the levy-grant training system for
manpower policy with unions as "full partners in all aspects
of manpower planning. "33
On foreign investment, the CLC argued that the tax system, joint ventures, public and private sector purchasing
policies, and public investment should all be used to increase the processing of raw materials and natural resources
in Canada. The manufacturing base and the service sector
should be geared to Canadian economic development requirements, using public enterprise as "a positive instrument
of industrial strategy."34 Finally, the 1982 program contained
a new demand for greater government control of credit institutions - banks and trust companies - including credit
quotas to direct investment toward certain sectors and public
accounting of investment programs. This demand stemmed
from CLC concern over the high level of bank profits.35
With this program, the CLC completed the programmatic
transformation that had been under way since the Manifesto.
The 1982 economic policy proposals stressed economic
nationalism, an understanding of the distorted character of the
Canadian economy, and a preference for strong state policies.
In addition, the Congress's emphasis on the inherently political
nature of economic decision making was in marked contrast
with its previous faith in technocratic neutrality. Thus, the
Congress had come to see that foreign investment and the
distorted character of Canadian manufacturing were weakening the labour movement by undermining employment. By
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the early eighties, post-Keynesian industrial strategies had
been joined to economic nationalism.
While the 1982 program emphasized public control of
investment and public ownership and even the nationalization of the banks, this did not mean that the CLC was willing
to throw itself into full-scale mobilization against the state.
On the contrary, this most radical CLC program coexisted
in practice with consultative strategies vis-a-vis the state
and business. In these consultations, the CLC tended to
stress what labour and capital had in common - that the
state by intervening to shore up Canadian capital would
also benefit the labour movement. If the problem was the
preponderance of multinational capital in the Canadian
economy, then part of the solution was to strengthen Canadian
capital, by increasing the export competitiveness of Canadian
industry, and by encouraging the processing of natural resources in Canada. This, in turn, would yield "good" jobs
in the manufacturing and resources sectors, both centres of
union membership.X
The CLC's retreat from demands for public control of
investment in part reflected traditional dilemmas of trade
unions under capitalism. Without significant labour market
and political pressure from labour, the state (especially
under the Liberals) was unlikely to concede CLC demands
for public investment. As Offe and Wisenthal have argued,
in the absence of public control of investment, "the collectivity of all workers must be, paradoxically, more concerned
with the well-being and the prosperity of capitalists than
the capitalists are with the well-being of the working class."37
In this sense, then, the Congress's concern with the viability
of Canadian capital reflected its affiliates' interests in keeping their members employed.
Once again, however, the particular strategic quandaries
of the CLC itself, especially in its relationship to affiliates,
also played a role in the decision to pursue consultation.
The effect of the wage control intervention had left the
Congress desperate to gain influence in federal policy making.
The CLC could no longer afford to simply stand back and
lobby government from the sidelines. State intervention had
become too costly for affiliates. The CLC needed to be able
51
Studies in Political Economy
to deliver the policy goods to affiliates and consultation
strategies offered the only hope, albeit slim, of policy concessions from the state.
Thus, the CLC participated in tripartite consultative exercises in the Tier I and Tier II committees on sectoral policy
and in the Major Projects (Blair-Carr) Task Force. Many
of the CLC's proposals in these consultations were squarely
aimed at a state-led industrial strategy which would benefit
Canadian capital in alliance with labour. On the Blair-Carr
Task Force, there was substantial agreement between business and labour on a wide range of nationalist and interventionist measures including the establishment of a Major
Projects Assessment Agency with business and labour representation to expand Canadian ownership, improve training, develop technology, support Canadian manufacturing
and service industries, and to recommend changes in policy
to maximize the industrial and regional benefits of major
projects. In addition, the report recommended that major
projects locate in less advantaged regions, using local la*bour, goods and services; that on-the-job training be increased (including a limited term levy-grant training system); that monitoring of import compliance with the terms
of GATT be strengthened; and that technological change
provisions be included in collective agreements.P
The Liberal government rejected the proposals of the
Blair-Carr report and, in the midst of recession, retreated
from their earlier interventionism. The sole fruit of the CLC's
consultation was the establishment of the Canadian Labour
Market and Productivity Centre (CLMPC). Nonetheless, the
cooperation between business and labour on the Major Projects
report demonstrates the lengths to which the CLC would
go in attempting to forge an alliance between producers
which would rescue CLC affiliates from the effects of restructuring and deindustrialization.
Opposition and Renewed Consultation: The CLC and
the Tories While the Liberals' abandonment of a nationalist
agenda in the early eighties spelled the end of hopes for a
state-led industrial strategy, the election of the Mulroney
government created a whole new set of problems for the
52
Smith!CLC and Nationalism
CLC. Under Mulroney's leadership, the Tories had become
more neoconservative, at least in rhetoric. This placed immediate limits on the extent to which the Tories could be
expected to listen to labour, let alone sympathize with any
part of the CLC's program. Indeed, in its first term, the
new government made a number of critical policy changes
in areas ranging from social programs to the labour market.
These changes cut against CLC demands and forced the
Congress into a more defensive position. Rejecting all invitations to consultation from the Tories even before the
anti-free trade campaign got under way, the CLC took steps
in the direction of building alliances with other groups opposed to the Tory government. 39 This strategy of alliancebuilding with popular sector groups, and the CLC's involvement in the Pro-Canada Network, marked a new strategic
phase for the Congress.
The contrast between the continentalism of the sixties
and the nationalism of the eighties crystallized in the CLC's
reaction to the continentalism of the Conservative government in a number of areas. In particular the Congress's
reaction to the dismantling of FIRA and to the FTA itself
demonstrates that the CLC had largely accepted the economic
analysis of the nationalists. In contrast to the CLC's 1973
position on the establishment of FIRA, the response to the
dismantling of FIRA did not mention the positive effects
of foreign investment for Canadian development. Instead,
the analysis emphasized that: US companies were more likely to layoff workers; they did less research and development
in Canada, relative to sales; they prevented exports from
their Canadian subsidiaries in favour of the parent company;
and they distorted prices through inter-company trading. The
CLC complained that the replacement of FIRA with Investment Canada would reduce the number of companies under
review and contained no measures to counteract the negative effects of foreign investment.w Moreover, the Congress
clarified the relationship between foreign investment, job
creation and industrial strategy. The goal of industrial
strategy was employment creation and it had to include new
investment in potentially competitive Canadian companies
and, generally, in Canadian research and development.
53
Studies in Political Economy
Public control of investment in some form was a means
to this end, as were managed trade rather than free trade
policies.t!
CLC opposition in the free trade debate then, was consistent with the opposition to continentalism that had been
developing within the Congress since the late seventies. By
1988, the CLC viewed continental integration and US multinational presence in Canada not as the indispensable conditions for Canadian economic development and employment for organized workers, but as obstacles to these goals.
Furthermore, continental integration was viewed as a Trojan
horse that would allow the Tories to consolidate their rollback of the state, evident in a variety of initiatives ranging
from privatization of state-run concerns to cuts in social
spending. According to the CLC, free trade would mean
"the removal of many of the traditional tools of economic
management that Canadian governments have used to improve economic welfare, and would mean the lessening of
Canadian independence and sovereignty in several key areas,"
including exchange rates and tax reform.42
In its first public reaction to the Tory announcement that
free trade negotiations with the Americans were to be undertaken, the CLC stressed the need for trade diversification.
As the Executive Council's first statement on free trade in
June 1985 put it,
We have recognized the desirability of reducing dependence on
foreign trade as a way of enhancing Canada's capacity for
economic self-management and its dependence on raw materials
exports, in particular as a way of creating jobs ...In addition,
the labour movement has clearly expressed concern about
Canada's economic domination by the United States and, in the
sphere of trade, that clearly implies the desirability of diversifying our trading partners ..43
In its brief to the Special Parliamentary Joint Committee
on the PTA, the CLC opposed free trade to the notion of
"fair trade," defined as "the logical application of national
economic management to create jobs; to ensure a fair distribution of income; to guarantee access to essential services; and to ensure regionally balanced growth."44 The
54
Smith/CLC and Nationalism
CLC suggested five means to fair trade: 1) safeguards
similar to the Autopact to ensure that a company selling
goods in Canada that can be produced in Canada must put
jobs and investment into the country; 2) government determination of domestic availability of imports and encouragement of domestic production; 3) one hundred cents on the
dollar instead of fifty-one cents on the dollar for federal
and provincial purchase of Canadian manufactured products;
4) procurement standards for large resource projects; and
5) more industrial research and development. Unemployment was the first priority. Industrial strategy was needed
to correct it:
it requires governments to become involved in economic planning, in cooperation with business and the labour movement.
It requires tax policies and regional development policies keyed
to our specific needs and designed to maximize employment
and incomes.4S
Thus, even at the height of the anti-free trade campaign,
the CLC stressed the soft version of its nationalist position,
downplaying public control of investment and stressing
business-labour cooperation. This dilution of class claims
was not simply a result of the 'cross-class' alliance with
social movements.fs Rather, it was consistent with the entire
development of the CLC's program and strategy from the
late seventies, which had left the door open to a producers'
alliance with capital.
Finally, it is important to note that the CLC's commitment
to the strategy of alliance-building and mobilization does
not preclude the simultaneous pursuit of consultative strategies. In the aftermath of the 1988 election, the labour
moment is already back at the bargaining table. As part of
the Tories' Labour Force Development Strategy, labour has
been participating in a round of task force consultations
under the aegis of the CLMPC. Once again, such initiatives
demonstrate that the CLC's new interest in building alliances with popular sector groups does not mean that consultative strategies with the state will be abandoned.f?
55
Studies in Political Economy
Conclusions While economic nationalism has been the rallying cry of the Canadian left for over twenty years, labour's
position on economic nationalism has undergone a dramatic
shift over the same period. I have suggested here that the
1975 wage control intervention was the key moment in the
transformation of the CLC. Although state intervention in
collective bargaining was the critical precipitating event that
moved the Congress from Keynesianism to post-Keynesianism
in the seventies, broader issues of economic restructuring,
highlighted by the 1981-82 recession, caused the Congress
to reevaluate its traditional stand on the issue of continentalism. The particular form of the CLC's economic nationalism
- an ambiguous program that emphasized state intervention
in the service of Canadian capital in alliance with the labour
movement - must be understood as a product of the strategic
problems facing a decentralized and relatively weak confederation allied to a social democratic party with little
chance of delivering the policy goods to labour. The limits
on the CLC's strategic options in its relations with the federal
state (mobilization versus consultation) drew the Congress in
the direction of cutting a deal with Canadian capital. Unfortunately for the CLC capital was not interested in such
a deal.48
The ambiguity of the Congress's approach to economic
nationalism must be understood as a product of the traditional dilemmas facing trade unions under capitalism. Given
that the CLC's strong program - public control of investment - was unlikely to be realized while the Liberals or
Conservatives were in power, the possibility of devising an
industrial strategy in alliance with capital under the aegis
of the Liberals promised Canadian unions some relief from
the devastating effects of global restructuring. The ambiguity of the CLC position does not stem from its problematic
relationship with social movements or popular sector groups
but from its problematic relationship with capital. It is
capital's' hold over investment and employment that makes
it a valuable (if dangerous) ally for labour. This dilemma
is obviously not unique to the CLC, but is the common
conundrum of trade unions and trade union confederations
in capitalist societies.
56
Smitb!CLC and Nationalism
The ambiguity of the CLC's economic nationalism in
itself raises an important question for the Canadian left. If
Canadian labour had been willing to enter into a producers'
alliance with capital and if such an alliance had been politically possible, would the left have favoured such a deal as
the best alternative to continentalism? After all, producers'
alliances are a very different political project from that envisioned by the Waffle over twenty years ago when the path
to economic sovereignty was socialism and the path to
socialism was economic sovereignty.
Notes
I would like to thank the Canadian Labour Congress for permission to
consult the CLC deposit in the Public Archives of Canada (cited here as
PAC-CLC). Also, I would like to thank Rianne Mahon. Tim Thompson
and the SPE reviewers for their very helpful comments on previous drafts
of this paper.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
I am treating the CLC as a more or less monolithic actor for the
purposes of this article. In fact, the CLC is composed of affiliates
who have different stances on the issues covered here. Affiliate
politics per se is, however, beyond the scope of this piece.
David R. Cameron, "Social Democracy. Corporatism, Labour Quiescence, and the Representation of Economic Interests in Advanced
Capitalist Society," in John Goldthorpe (ed.), Order and Conflict in
Changing Capitalism (Oxford: Clarendon Press, 1984), pp. 143-178;
Leo Panitch, "The Tripartite Experience," in Keith Banting (research
coordinator), The State and Economic Interests (Toronto and Ottawa:
University of Toronto Press and Supply and Services Canada, 1986),
pp, 37-119.
For example, Canadian Labour Congress, Submission to the Standing
Committee on Finance. Trade and Economic Affairs on Bill C-132
Foreign Investment Review Act (June 1973), pp. 42: 415-418.
Ninth Constitutional Convention of the Canadian Labour Congress,
Proceedings, Winnipeg, May 1972, p. 3; Proceedings, 1968 p. 70.
Eighth Constitutional Convention of the Canadian Labour Congress,
Report of Proceedings, Edmonton, May 1970, P- 6.
Proceedings, 1958, p. 68.
Seventh Constitutional Convention of the Canadian Labour Congress,
Report of Proceedings, Toronto, May 6-10, 1968, P- 98.
Proceedings,1966, p.101; 1966Memorandum,pp. 39-49. TheNDP's
position was similar: NDP News Release, July 31, 1970, PAC-CLC
368.
Proceedings, 1968, p. 98.
The quote is from Proceedings, 1964, pp. 104-5. For similar statements, see also Proceedings, 1966, pp. 79-30; Canadian Labour
Congress, Memorandum to the Government of Canada, February 13,
57
Studies in Political Economy
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
1968, P- 16; and Memorandum to the Government of Canada, March
10, 1965, pp. 16-19, PAC-CLC 329
Proceedings, 1970, p. 116.
Gilbert Levine, "The Waffle and the Labour Movement," Studies in
Political Economy 33 (Autumn 1990), pp. 185-192. Levine stresses
the links between individual unionists and the Waffle. While there
were unionists who sympathized with the Waffle, the focus of this
paper is on the CLC itself, rather than on individual unionists. For
other views of the relationship between the Waffle and the unions,
see M. Cross, "The Waffle or the Unions," Canadian Forum (April
1972), pp. 2-3, 11; and Robert Hackett, "Pie in the Sky: A History
of the Ontario Waffle," Canadian Dimension XV (October-November
1980), pp. 3-72.
Memorandum from Russell Bell to W. Dodge, September 17, 1969,
PAC-CLC 387; Donald MacDonald to J. Shewchuk and Henry
Tomaschuk, February 8, 1971, PAC-CLC 387.
Memorandum from Russell Bell to W. Dodge, September 17, 1969,
PAC-CLC 387. The CLC reiterated this position in its brief on the
establishment of FIRA. See Canadian Labour Congress, Submission
to the Standing Committee on Finance, Trade and Economic Affairs
on Bill C-132 Foreign Investment Review Act (June 1973), pp. 42:
415-418.
Cited in Robert Laxer, Canada's Unions (Toronto: James Lorimer,
1976), p. 119.
John Bullen, "The Ontario Waffle and the Struggle for an Independent Socialist Canada: Conflict Within the NDP," Canadian Historical Review LXIV/2 (June 1983), p. 206.
Third Constitutional Convention of the Canadian Labour Congress,
Montreal, Quebec, Proceedings, April 25-29, 1960, p, 59. For a similar
point in a previous recession, see Canadian Labour Congress, Second
Convention, Report of Proceedings, Winnipeg, Manitoba, April 2125, 1958, pp. 1-5, 64; Fifth Constitutional Convention of the Canadian
Labour Congress, Report of Proceedings, Montreal, P.Q., April 2024, 1964, p. 103. That the Canadian government failed to put
Keynesianism into practice during the 1945-1975 period is suggested
by Robert M. Campbell, Grand Illusions: The Politics of the
Keynesian Experience in Canada, 1945·1975 (Peterborough, Ont.:
Broadview Press, 1987).
K.G. Waldie, "The Evolution of Labour-Government Consultation
on Economic Policy," in W. Craig Riddell, research coordinator,
Labour-Management Cooperation in Canada (Toronto and Ottawa:
University of Toronto Press and Supply and Services Canada, 1986),
pp, 161-162.
Canadian Labour Congress, 1963 Memorandum to the Government
of Canada, p. 14.
In particular, the Congress made use of the Council's Third Annual
Review which inveighed against incomes policies as unworkable in
Canada. Economic Council of Canada, Third Annual Review: Prices
Productivity and Employment, (November 1966), pp. 159-163.
The general contours of Canada's labour-exclusionary post-war settlement are outlined in David Wolfe, "The state and economic policy
in Canada, 1968-1975," in Leo Panitch (ed.), The Canadian State:
58
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SmithlCLC and Nationalism
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
political economy and political power (Toronto and Buffalo: University of Toronto Press, 1977), pp. 251-288.
Consumer and Corporate Affairs, Policies for Price Stability, 1968,
p.31.
Memorandum from Russell Bell to D. MacDonald, et al., January
2, 1970, PAC-CLC 368.
The best account of the 1968-70 negotiations is Shirley Anne Scharf,
"Tripartism or Controls? Changing Relations Between the CLC and
the State, 1968-1978" (Carleton University, Unpublished M.A.
Thesis, Department of Political Science, 1985), pp. 30-82.
The program nominally controlled prices. In retrospect, there is solid
evidence that the program affected wages more than prices and that
this was the government's intention. See W. Craig Riddell, Dealing
with Unemployment and Inflation (Toronto and Buffalo: University
of Toronto Press, 1986), pp. 71, 80-82; Allan M. Maslove and Eugene
Swimmer, Wage Controls in Canada 1975-1978 A Study in Public
Decision-Making (Montreal: The Institute for Research on Public
Policy, 1980), pp. 7-11; D.A.L. Auld, L.N. Christofides, R. Swidinsky
and D.A. Wilton, "The impact of the Anti-Inflation Board on
negotiated wage settlements," Canadian Journal of Economics XllI2
(May 1979), p, 209; Paul D. Staudohar, "Effects of Wage and Price
Controls in Canada: 1975-1978," Relations Industrielles 34/4 (1979),
pp. 674-690.
The origins and fate of the Manifesto are recounted in Miriam C.
Smith, "Labour Without Allies: The Canadian Labour Congress in
Politics" (Yale University, Unpublished Ph.D. Diss., 1990), pp, 80164; Anthony Giles, "The Canadian Labour Congress and Tripartism," Relations Industrielles 37/1 (1982), pp. 93-126; idem, "The
Politics of Wage Controls: The Canadian State, Organized Labour
and Corporatism, 1975-1978" (Carleton University, Unpublished
M.A. Thesis, School of Public Administration, 1980); Stephen McBride, "Public Policy as a Determinant of Interest Group Behaviour:
The Canadian Labour Congress' Tripartite Initiative," Canadian
Journal of Political Science XVI/3 (September 1983), pp. 501-517.
"Discussion Paper on Labour's Manifesto," Canadian Labour XXI/4
(December 1976), pp. 25-7. The draft version of this document made
it clear that labour would be trading wage restraint for political
gains. See The Manifesto and the Structure and Functions of Tripartism, Document for the Consideration of the Executive Committee,
July 5-6, 1976, PAC-CLC 84-293/54.
Proceedings, 1976, p. 10 (emphasis deleted).
Proceedings, 1980, p. 45.
Proceedings, 1980, p. 48.
Proceedings, 1982, pp. 55-56.
Proceedings, 1982, p. 55.
Proceedings, 1982, p. 12.
Proceedings, 1982, p. 61.
Canadian Labour Congress, Submission by the Canadian Labour Congress to the Standing Committee on Finance, Trade and Economic
Affairs Respecting the Order of Reference Relating to Bank Profits
(June I, 1982); Proceedings, 1982, pp. 12, 640.
59
Studies in Political Economy
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
For a similar characterization of the CLC's program of the early
eighties, see Rianne Mahon, "Canadian Labour in the Battle of the
Eighties," Studies in Political Economy 11 (Summer 1983). pp, 149176.
On producers' alliances in different contexts. see Peter Gourevitch,
Politics in Hard Times: Comparative Responses to International
Economic Crisis (Ithaca and London: Cornell University Press. 1986).
pp. 24-26, 222; Peter Swenson. Fair Shares: Unions, Pay and Politics
in Sweden and West Germany (Ithaca. N.Y.: Cornell University Press,
1989), pp. 11-11O.
Claus Offe and Helmut Wisenthal. "Two Logics of Collective Action," in Claus Offe, Disorganized Capitalism (Cambridge: MIT Press.
1985), p. 180.
Canada, Depanment of Industry, Trade and Commerce. Major
Canadian Projects, Major Canadian Opportunities: A Report by the
Major Projects Task Force on Major Capital Projects in Canada to
the Year 2000 (Ottawa, June 1981).
In fact. the CLC had attempted this previously in the Coalition Against
High Interest Rates of 1981-82. See Canadian Labour XXVI/3 (March
1982), pp. 9-11; Canadian Labour XXVIII4 (April 1982). p, 3. On
examples from early in the Tory reign. see Canadian Labour XXX/9
(October 1985). p. 4; Calgary Herald 10 August 1985, pp. AI-A2;
Globe and Mail 16 August 1985, p. 9. See also. Smith, "Labour
Without Allies ..••" pp. 208-212, 274-276. and on the CLC's battles
with the Tories generally. pp. 269-290.
Canadian Labour XXXI3 (March 1985), p. 9.
House of Commons. Standing Committee on Regional Development.
Minutes of Proceedings and Evidence Respecting: Bill C-15. An Act
respecting Investment in Canada. First Session of the Thirty-third
Parliament 1984-85. Issue No 7. pp. 6-20.
CLC. Submission to the Hearing 11-13. See also. House of Commons.
Joint Committee on Canada's International Relations. Minutes of
Proceedings and Evidence. First Session of the Thiny-third Parliament. 1984-1986. Issue No.5. pp. 6-20.
Canadian Labour XXX/6 (June 1985). p. 3.
Canadian Labour XXX/8 (September 1985). p, 9.
Canadian Labour. XXX/8 (September 1985), p. 9. See also Canadian
Labour Congress, Submission to the Hearing of the Economic
Stabilization Sub-Committe« of the House Banking Committee on
the Costs and Benefits of the Free Trade Arrangement by the
Canadian Labour Congress, Washington. D.C •• July 31, 1986.
George Warskett, "Capital's Strength and Labour's Weakness under
Free Trade." Studies in Political Economy 33 (Autumn 1990), pp.
115-118.
Rianne Mahon. "Adjusting to Win? The New Tory Training Initiative." in Katherine A. Graham (ed.), How Ottawa Spends 1990-91:
Tracking the Second Agenda (Ottawa: Carleton University Press. 1990).
pp. 73-111.
David Langille, "The Business Council on National Issues and the
Canadian State," Studies in Political Economy 24 (Autumn 1987).
pp.41-86.
60
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