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Intro to the Study of
Political Economy
(continued)
October 1
The Politics of Economics

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Mercantilists
Physiocrats
Classical Economics (Political Economists)
Marxism
Neoclassical Economics
Keynesianism
Neoliberalism
Marx and Engels
The Communist Manifesto, 1848; Capital: A
Critique of Political Economy, Vol. 1, 1867.
 Capital “comes [into the world] dripping from
head to foot, from every pore, with blood and
dirt.”
 “The history of all hitherto existing society is the
history of class struggles.”
 “The proletarians have nothing to lose but their
chains. They have a world to win. Workers of all
countries, unite.”
Marx and Engels


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“The bourgeoisie, historically, has played a most
revolutionary part.”
“The bourgeoisie cannot exist without constantly
revolutionising the instruments of production,
and thereby the relations of production, and with
them the whole relations of society.”
“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.”
Neoclassical Economics

A return to classic (free market) economic
thought

A move toward abstract theory and models
and away from historical analysis.

The foundation of modern economics as an
academic discipline.
John Maynard Keynes
The General Theory of Employment, Interest
and Money, 1936

Amid the great Depression, Keynes argues
that the state had to play a greater role in
ensuring sufficient demand and directing
investment.
John Maynard Keynes

Keynes was a reformer, but he was not anticapitalist, he was not a socialist.

“Ought I to join the Labour Party?...To begin
with, it is a class party, and the class is not
my class…the Class War will find me on the
side of the educated bourgeoisie.”
Neoliberalism
Friedrich von Hayek, The Road to Serfdom,
1944
Milton Friedman, Capitalism and Freedom,
1962
Neoliberals advocate free market economics
and minimal state intervention in the
economy (at least in terms of social policy
and activist industrial policy).
Production,
Profits, Classes
Oct. 1
Overview
The relevance of class in Canada.
 Class divisions or categories.
 Class politics in Canada.
 The rise and decline of the welfare state in
Canada.

Economic and Social Class
in Canada?

There is a common (mis)perception that
there are no class divisions in Canadian
society.

Class issues have often been
overshadowed by religious, ethnic,
language and regional politics in Canada.
Class divisions in Canada

Even if they haven’t always been the focus of political debate, there
are huge disparities in income and wealth among Canadians.

Poverty generally tends to result in social stigmatization, lower
levels of education, greater health problems and an earlier death
compared to higher income Canadians.

The wealthy are able to provide advantages for their children that
others lack, and the absence of inheritance or estate taxes in
Canada facilitates the passing on of family wealth and advantage to
subsequent generations.
Class Categories
Class categories are usually described in one of
two ways.
1) Class positions are gradients along the scales
of income, wealth, occupation and education.
2) Class positions are positions in the economic
system, related to ownership of productive
property, control over conditions of work and
control over labour.
Relations to productive property



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The owners and managers of productive
property, or the means of production. The
bourgeoisie.
Small business owners, farmers, selfemployed professionals. The petite bourgeoisie.
Salaried professionals, especially those in the
public sector, such as civil servants, teachers,
nurses. The new middle class.
The workers or labourers, who sell their labour
power for a wage or salary. The proletariat.
Class Analysis


Business owners and their employees have, at a
basic level, conflicting interests over levels of
pay and benefits, conditions and pace of work,
and control over the workplace.
At the level of the wider society, business
owners and workers have different interests
when it comes to labour legislation, taxation
levels and policies, and social programs among
other issues.
Class Politics in Canada



Historically, working class movements in Canada have
fought for the right to form unions and bargain
collectively over wages, benefits, conditions of work and
the length of the workday and workweek.
They have pushed for various social programs, including
social assistance, public pensions, unemployment
insurance, public health care and child care programs.
They have increasingly pushed for policies dealing with
pay equity and sexual and racial harassment.
Keynesianism and
social programs in Canada

The collapse of the Canadian economy during
the Great Depression of the 1930s, the protests
in that decade, the labour militancy of the 1940s,
the rise of the Co-operative Commonwealth
Federation (CCF), and an international shift to
Keynesian economic policies led to the
development of social programs in Canada in
the post-war period.
The Rise of Social Programs
Old Age Pensions (1927)
Blind Persons’ Allowance (1937)
Unemployment Insurance (1941)
Family Allowances (1944)
Old Age Security (1951)
Hospital Insurance (1957)
Canada Pension Plan (1966)
Canada Assistance Plan (1966)
Guaranteed Income Supplement
(1966)
Medical Insurance (1968)
U.I. amended (1971)
Spouse’s Allowances (1975)
Canada Child Tax Credit (1993)
National Child Benefit (1997)
Corporate militancy

The period from the mid-1970s onward
has been described by some as class
struggle (or even class war) from above,
as the business sector has aggressively
mobilized to defend their interests in
Canada and elsewhere.
Corporate demands on the state
Business in Canada mobilized to push for
the Canada-US Free Trade Agreement
and subsequent forms of continental
integration and globalization.
 Business has pushed governments at all
levels to lower taxes.
 Business continues to fight environmental
regulations, including the Kyoto Accord.

Social programs in retreat
Corporate interests have mobilized to advocate neo-liberal
policies including:
 free trade agreements,
 the deregulation of foreign investment in Canada,
 tax cuts,
 the privatization of public services, and
 reductions in social spending.
Successive federal governments have responded by
restraining social spending and attempting to reduce the
role of the state in the economy.
Canada in comparison
Canadians tend to compare ourselves with the US
and point to stronger social programs and public
health care, but compared to other rich
developed countries, Canada spends relatively
little on social programs and has a relatively high
degree of social inequality.
In 2007, UNICEF ranked Canada 12th among 21
‘rich countries’ in child well-being.
http://www.unicef.org/media/files/ChildPovertyReport.pdf
Total Public Social Expenditure
as a Percentage of GDP, 2001
Denmark
Sweden
France
Germany
Belgium
Switzerland
Austria
Finland
Italy
Greece
Norway
Poland
Netherlands
United Kingdom
29.2
28.9
28.5
27.4
27.2
26.4
26.0
24.8
24.4
24.3
23.9
23.0
21.8
21.8
Portugal
Luxembourg
Czech Republic
Iceland
Spain
New Zealand
Australia
Slovak Republic
CANADA
Japan
United States
Ireland
Mexico
South Korea
21.1
20.8
20.1
19.8
19.6
18.5
18.0
17.9
17.8
16.9
14.8
13.8
11.8
6.1
Conclusion:

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Canadians tend to consider their society to be a
kinder, gentler, more egalitarian version of the
United States.
However, the more generous welfare state in
Canada only emerged in the 1960s. And by
international standards, Canada looks more like
the US than different.
By the 1980s, many of these programs were
beginning to be whittled away. In the mid-1990s,
Canadian governments made a serious shift to
fiscal restraint.