A Review of Canada's Political Economy Over the Past few Decades (Essay Sample)

Canada’s Political Economy
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Canada’s Political Economy
‘Political Economy’ forms a recognized academic topic today, with an Anglo-Saxon view characterized by comprehensive research theories, programs and concepts. It has gained international relevance since the 1970’s, a time when major world economies were experiencing noteworthy developments and changes. During the time as well, there was evident emergence of competing economic powers like Germany and Japan as the United States experienced relative decline in economic prowess. As a result, extensive research has since been conducted on the agendas of international Political Economy’ fundamentals, strategies and power as well as how all these affect economic or trade relations among the world’s leading countries. A Marxist view of political economy indicates a direct link between ownership of capital and control, it establishes that the owners possess power and so determine who and what facts and ideas dominate the market scene. On the other hand, structuralists think a direct link between ownership and control of capital does not exist since it is not realistic to keep up with the market forces of supply and demand. Additionally, post-modernists and pluralists reject political economy approaches of the Marxists approach and believe that it is left to the consumers in a market system to determine its output (Netherton & Ramesh., 1999).
This era (of the 1970s) also marked the hallmark of the Breton Woods monetary accord and the memorable conciliation of the United States and the USSR, both of which were major steps towards the realization of international economic stability (Beaud,  2001). Into the bargain, the theory of ‘permanent confrontation’ with the facts has been recognized as a major contributing factor to ‘Political Economy’ as far as consideration for reality in the market environment is concerned. It forms the novelty of the overall concept wherein international economic relations are under question. However, this paper recognizes that this concept bears a range of limitation in real-life application (Drainville, 1995).
Canada, as a federal republic has established a relevant position in the world economy as an American trading nation with substantial amounts of natural resources like timber, cash crops and natural gas among others. Ever since the end of World War II, the country has experienced numerous changes in its political and socio-economic structuring as an independent country with an active global role. Canada’s economic freedom is ranked as sixth in the 2014 index with an overall score of 80.2 (0.8 points higher than last year). It is also the freest economy in North America (heritage.org, 2014).
This paper looks at the political economy environment of Canada, which bears a capitalist approach. The economic institutions of the country have an evident capitalist nature that link it to the global frontier utilizing neoliberalism policies of economics since the inception of the country’s political structure. In fact, Canada’s economy since the great depression era (1930s) to the global financial crisis (2008) has greatly relied on neoliberal policies as a platform for the creation and sustainment of its economic strategies. The immigrant country has successfully risen to the top seven economies of the world owing to a significant emphasis of trading within the NAFTA economic block. However, the country’s economic standpoint has witnessed serious challenges of absence of solid industrial policies to enhance technological capacity compared to other major economies like the United States for instance (Carroll et al. 2001).
Alternate economic strategies with an egalitarian political background have however been developed to curb rampant social inequalities in Canada that contribute to overall economic decline. Still, the country enjoys noteworthy relevance in the world market today despite increased debate regarding historical aspects of austere neoliberalism policies that have greatly influenced the country’s political economy. In today’s era of globalization however, the capacity of nations to intervene in trade has been limited substantially, especially for small open economies (SOE) like Canada, more than ever since centralization of global capital bears a great impact on domestic economic policy-making. Neoliberal policies in Canada have been viewed for a long time as a historical and integral attribute of global capital accumulation within the country. All the same, the neoliberal policies in terms of macroeconomic policy-making present a political angle for the facilitation of development of alternative strategies for purposes of enhancing levels of economic activities. All the same, the viability of Canada’s economic growth and development in terms of applied policies has been debated on many occasions especially periods of change. Norrie et al. (2002) demonstrate that the country’s political economy structure greatly relies on its rich resources, international trade and social class. They emphasize that the significance of the nation’s political institutions that determine its production capabilities and wealth distribution mechanisms.
 Neoliberilsm comes from struggles of class settings to restructure wealth and power in an economy. Canada as a country bears such historical materialism that determines the correlation of capital and the state. This has been previously portrayed in times of economic crisis, like in the 1970s for example, where stringent forms of monetarism were evident. Additionally, capital over accumulation and failures to adopt ‘Keynesian’ political domination has characterized the Canadian economy for notable periods. This saw a capitalist country with high exploitative interactions of economic factors of capital and labor from liberal and socialist backgrounds (Carroll et al. 2001).
 Alternative strategies of trade witnessed by Canada include the establishment of Canada-united states Free Trade Agreement (CUSFTA) of 1987 as well as the North American Free Trade Agreement (NAFTA) of 1992. These form a major strength factor to Canada’s political economy while enhancing globalization at the same time. In addition to CUSFTA and NAFTA, the World Trade Organization affiliation has come a long way in linking Canada’s political economy to the international political economy. It is understood that a lot of significance is place on constraints facing the Canadian political economy by increased reliance on trade ties with the United States as well as the existing resource-exporting and market-oriented internal economic structure of the country (Netherton &Ramesh, 1999). As such, Canada has for the recent past experienced serious pushes for adoption of alternate strategies for trade.
Neoliberalization in Canada traces its roots to trends in international political economy as an aspect of macroeconomic environment. This has resulted in notable liberalization of trading activities, a pursuit of austerity pressures and the retrenchment of welfare platforms within the economy. Such dominant attributes of capitalism have driven Canada to a new level of accommodating sectors in which alternative strategies are yet to be realized (Coates 2000,). As such, the country has had to adopt the predominant ‘American Model’ for purposes of neoliberalism adjustment, a kind of socio-economic rule. In fact, within Canada, the utilization of the term ‘neoliberalization’ has evolved into a description of the stated philosophical ideology in a deliberate manner. It refers to the use of policies to determine a liberal economy even though the international community is not actively advocating for adoption of this utopia on economies like Canada but rather calling for the establishment of a more flexible political structure that aims to enhance and facilitate relations with other economies from a global perspective. (Wolfe, 1977). This implies economic policies- as social rules ought to be reviewed and evaluated in accordance to their specific contributions to the structure of neoliberalism in contrast to mere adoption of alternate strategies of the free market systems.
The American model remains a clear form of neoliberalism in its quest for restructuring, similar to other major geographic and political models of major world economies. It must be noted however that neoliberal forms, despite their successful application in the Anglo-Saxon (America, Eastern Europe and the global South) world, follow a state of uneven pattern, similar to that of ‘faradism’ subsequent to World War II. (Stieglitz, 2003). This represents a complex reality of hybridism of economic systems. On the same note, analyzing the economic activities in Canada stands out as more relevant relative to the mere comparisons of the existent policies against a desired model facilitates greater gradation of the determination of specific policies for the model. For example, the shifting of international political economy from the orthodoxy of Washington consensus via discovery and renewal of institutions, state building and transparency does not call for referral of either the jettisoning of neoliberalism or that of the American model (Norrie et al. 2002). Nevertheless, it is important to view state building capacity as an aspect of economic liberalization.
The alternative strategies of policy-making in political economy have also seen a fair share of debate over the years. Some scholars have argued that debates regarding political economy policies in neoliberal countries like Canada are struggling to deal with rev...