James Laxer: The Fight for Canadian Sovereignty

Raymond Chase r_chase at sympatico.ca
Tue Sep 23 20:43:04 MDT 2003

September 23 2003
The Fight for Sovereignty (James Laxer's reply to Paul Kellogg)
by James Laxer

(James Laxer's latest book is: The Border: Canada,the U.S. and Dispatches
from the 49th Parallel.)

Recently, this website  [www.vivelecanada.ca] has hosted a debate about
whether Canadians should abandon the quest for Canadian sovereignty.
Featured in the debate was a paper [by Paul Kellogg] which argued that the
nationalist position was flawed and that the time has come for progressive
Canadians to move on to better things.
Sadly, in a world where exciting new ideas are to be welcomed, this paper
did not deliver any. What it provided was an oft-repeated critique of the
nationalist position that can be summarized as follows. Canada is an
imperialist country, with a robust bourgeoisie. While Canada is not as
powerful as the United States, it is not a victim of American imperialism.
There is no evidence that American investment in Canada harms the
performance of the Canadian economy and undermines its productive sectors.
The Canadian working class has no interest in countering the power of
transnational corporations in Canada. The same case was made during the
1980s when a few people on the left made the argument that the working class
had no interest in resisting the Canada-U.S. Free Trade Agreement and later
NAFTA. Because Canada is an imperialist country, the argument goes, to
defend the sovereignty of Canada is to defend our imperialist bourgeoisie.
In 1940, this argument was used in France to try to convince French workers
that they had no interest in resisting the Nazi takeover of their country.

The paper [by Paul Kellog], making the case on this website, was at least
thirty years out of date in its critique of nationalist political economy.
As early as 1971, nationalists pointed out that the level of U.S. investment
in Canada was flattening and later declining as a proportion of total
investment in Canada. While continuing to control both the resource and
manufacturing sectors in Canada, with highly disadvantageous effects on
Canadian jobs, U.S. investors were shifting their investments elsewhere.
Moreover, left nationalists have never argued that Canada is a third world
Lets move beyond the caricature of the nationalist position to face some
hard realities. A new debate is underway in this country and as with the
free trade debate of the 1980s, it has been launched from the continentalist
Taking the initiative are the ideological voices of the multinationals and
their Canadian capitalist allies who are resolved to drain Canadian
nationhood of its meaning. The same forces that brought us free trade in
the1980s have set out to finish the job. The C.D. Howe and Fraser
Institutes, the BCNI, the Canadian Alliance, and much of the federal Liberal
Party, including large portions of Paul Martin's cortex, are determined to
make a Grand Bargain to achieve Deep Integration with the United States. The
Deep Integrationists want to convert the free trade area into a customs
union. They want a single North American currency----let's call it the U.S.
dollar. To gain unfettered access to the American market for Canadian
exports, they would redefine Canadian resources, including water, as
continental resources, making them ripe for the plucking by U.S.
multinationals. To get inside Fortress America, they would abandon Canada's
right to its own immigration and refugee policies and they would sign on to
George W. Bush's missile defence and his future wars.
To put this debate in perspective, let's look at what happened to the
Canadian economy and Canadian workers during the 1990s in the aftermath of
the first round of free trade. Following the onset of the FTA and NAFTA,
fresh inflows of U.S investments into Canada slowed to a trickle. On the
other hand, Canadian investments in the United States increased by leaps and
Before considering this money trail in greater detail, we need to be clearer
about our focus when we contrast the Canadian and American economies.
Comparisons of the economic performances of Canada and the United States
usually contrast Canada with the United States as a whole. A more meaningful
look at Canada and its neighbour comes into view when we measure Canada
against the U.S. states that border on Canada, the states that are most
similar to Canada, in climate, terrain and economic activity.
Thirteen U.S. States have borders with Canada. Let's call them the Border
States of America (BSA). (I am defining a border state as any state that has
a land or water frontier with Canada.) From east to west, the border states
are: Maine, New Hampshire, Vermont, New York, Pennsylvania, Ohio, Michigan,
Minnesota, North Dakota, Montana, Idaho, Washington and Alaska.
In 1999, the BSA had a population of just over 68 million people, making it
a little more than twice as populous as Canada, which had a population of
just over 31 million in 2000. During the nineties, the Canadian population
appreciated by 12.5 per cent, while the population of the BSA grew by 5.2
per cent. The population of the United States as a whole increased by 9.4
per cent over the course of the decade, totaling 271.6 million in 1999. The
trend of more rapid population growth in Canada than in the United States
and much more rapid growth than in the border states has been underway for
decades. The BSA has been a slow growth region of the United States. The
population centre of the United States has been moving south and west for a
considerable period of time.
Prior to the 1990s, Canada substantially outpaced the BSA not only in
population growth but in economic growth as well. During the 1990s, however,
Canada's rate of economic growth slowed markedly in comparison with overall
U.S. economic growth, and in comparison with economic growth in the border
states as well. Measuring the growth in Gross National Product, in the BSA,
the U.S. and Canada in billions of current U.S. dollars, the results were as
follows in the 1980s. Growth in the BSA from 1980 to 1989 was 88 per cent,
in the U.S.A., it was 90 per cent, and in Canada from 1980 to 1990, it was
96.5 per cent. During the 1990s, the results were as follows. In the BSA,
growth was 48 per cent, in the U.S.A. 51 per cent and in Canada a mere 9.6
per cent. (When Purchasing Power Parities are used to make the comparison
with Canada in the 1990s---correcting for the falling value of the Canadian
dollar---the rate of growth is 43 per cent, still below both rates in the
BSA and the U.S.A. Considering what happened to Canadian growth in 1990s as
compared with those south of the border, both the 9.6 per cent and the 43
per cent results need to be considered.)
As it turned out, the bounties of free trade so confidently forecast by the
pro-free trade forces did not materialize. Indeed, in the way the conditions
faced by the average Canadian deteriorated, the 1990s was the second worst
decade of the twentieth century, exceeded only by the 1930s. Until late in
the decade, the real incomes of the average man and woman in the work force
fell. When real incomes began to climb near decade's end, they made it back
only to where they had been at the beginning of the nineties.
An underlying reason for the poor performance of the Canadian economy was
the major shift in capital flows that occurred in the decade following the
onset of free trade. With free trade, Canadian investment flowed south to
the United States at a record rate, while U.S. investment in Canada grew
much more slowly. During the first decade of free trade, Canadian investment
in the manufacturing sector in the United States nearly trebled from
U.S.$9.8 billion in 1989 to U.S.$26.3 billion in 1999. Direct Canadian
investment in the United States in total shot up by more than 250 per cent
from U.S.$30.4 billion in 1989 to U.S.$79.7 billion in 1999. Over the
decade, U.S. direct investment in Canada did not quite double, rising from
U.S.$63.9 billion in 1989 to U.S.$111.7 billion in 1999.
With free trade, Canadian investors were in a position to shift investments
and productive operations south to the United States while remaining fully
able to retain their markets in Canada. For U.S. investors, it was a similar
story. Access to the Canadian market was no longer tied to investments in
Canada as had been the case since protective tariffs were mounted in the
late 19th century. In 1989 Canadian direct investments in the United States
were 47 per cent as large as American direct investments in Canada. By 1999,
after a decade of free trade, Canadian direct investments in the United
States were 71 per cent as large as American direct investments in Canada.
For many decades, on a per capita basis, Canadian investments south of the
border had been much larger than American investments north of the border.
By the end of the 1990s, the absolute level of Canadian investment in the
U.S. was rising very rapidly in relation to the absolute level of American
investment in Canada. The real effect of free trade had not been to lessen
the dependence of Canadians on American multinationals for their jobs. What
it had done, however, was to allow Canadian investors to run away from their
own economy.
In comparison with the U.S. and even its slow growth border states, Canada's
economy was hit over the head by a two by four during the 1990s.
The ground on which the present debate about Deep Integration is taking
place is crucially different from that on which the free trade debate was
waged. That is because loyalty to Canada among the nation's elites can no
longer be taken for granted. Unlike those who were sympathetic to the United
States or were pro-American in past historical periods, the continentalists
of today accept Canada's existence only as an established fact, not as a
matter of conviction. Contrasting the outlook of Canadian with American
capitalists makes the point. However wedded to the market they are, American
capitalists are American to the core. So American are they that they cannot
conceive of any other political loyalty apart from that which they gladly
bestow on the United States of America. Any perceived or real threat against
the United States calls forth a rapturous and unforced patriotism from
American capitalists.
Canadian capitalists could not be more different. During the free trade
debate, the large majority of the proprietors of small, medium and large
businesses were solidly on the side of the Mulroney government and the FTA.
The Business Council on National Issues (BCNI), the most influential
business lobby organization in the country, was a major player in the drive
for free trade. The BCNI, with its blue chip membership of CEO's of top
corporations in the financial, manufacturing and resource sectors, both
Canadian and U.S. owned, was the authoritative voice of the major
capitalists in the country.
Since free trade went into effect, business in Canada has gone over, almost
entirely, to an agenda that favours ever closer integration with the United
States. It is no exaggeration to say that business wants Canada to become a
northern extension of the U.S. That does not mean that most business leaders
would come out and proselytize on behalf of the annexation of Canada by the
United States. Far from it. Business has no interest in provoking the
upheaval that would come from an outright annexationist agenda.
In the mid 1960s in his classic, Lament for a Nation, George Grant depicted
the Canadian predicament perfectly. "No small country can depend for its
existence on the loyalty of its capitalists," he wrote. "International
interests may require the sacrifice of the lesser loyalty of patriotism.
Only in dominant nations is the loyalty of capitalists ensured. In such
situations, their interests are tied to the strength and vigour of their
Many who fought against Brian Mulroney's free trade initiative in the 1980s
believed that the deal with Washington would vastly diminish Canada's
ability to make its own economic policies and would lead to the
Americanization of Canada, socially and culturally. While their forecast
about economic policy making was bang on, their prediction about the rapid
social and cultural Americanization of Canada was spectacularly wrong. The
cultural and social division between Canada and its superpower neighbour is
wider than at any time in the decades since the Second World War.
While the United States aligns itself with the most retrograde of states on
the issues of capital punishment, gun control, and arms control, Canada has
consolidated its positions in opposition to executions, the uncontrolled
spread of firearms and the deployment of land mines. While Americans wander
in the desert of private health care systems that leave millions with
inadequate care, Canadians have shown that even health care cutbacks by
right wing governments cannot drive them from their conviction that a public
health care system is best. While most Americans (with honourable
exceptions) have followed their jingoistic president down the road to the
new imperialism, Canadians fought and won their battle to stay out of the
Iraq War. While a reactionary, patriarchal administration in Washington
assaults the rights of women and gays, Canadians are winning the battle for
reproductive rights and for same sex marriage. While American jails are
overcrowded with people jailed for drug possession, Canada is moving to
decriminalize possession of small amounts of marijuana. While the American
trade union movement is weak and full of those who collaborate with capital,
the Canadian trade union movement has kept up its numbers and has clung to
its progressive ground.
This is no time to contemplate abandoning Canada, a country now flowering
with humane impulses that are dramatically absent in the America of George
W. Bush and John Ashcroft. While the gains of Canadians I have listed are
real enough, they are also fragile and subject to reversal. A great struggle
has taken shape in this country and the left will be measured by whether it
enters the struggle or stands to one side. The struggle is for the survival
of the country. At stake is whether Canadians will create a more vital
democracy as they fight to govern themselves or whether they will end up in
fractured sub nations living on the northern edge of manifest destiny.
Among the nations of the advanced world, Canada's situation is unique.
Canadian capitalists, large and small, have gone over almost completely to
the Deep Integration agenda. That leaves wage and salary earners, the vast
majority of Canadians, as the bulwark on which Canadian nationhood rests.
The consequence of this is that the battle for Canadian sovereignty, for
Canadian democracy, is of necessity a social battle as well. It necessarily
takes on the character of a struggle to advance the interests of wage and
salary earners. Whether a country whose capitalists have opted for national
self immolation can survive is something we will discover in the years to
come. No one has traveled this terrain before. In this period of open
history in Canada, the possible outcomes vary tremendously. We need to take
as our starting point the plain fact that Canadians are in no mood to
abandon their nation.
Empires since the dawn of history, and this is no less true of the American
Empire today, are affairs of blood first, last and always. They are about
conquest and domination and the use of force to extinguish the rights of
others. Canadians were the first people in the world to come up against an
expansionist America, the first to resist it. This is not the time to close
the page on this chapter in our history.
For more by James Laxer, see: James Laxer's Political Economy of Canada
[jameslaxer.com] website

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