Reconsidering the Coalition

Today there is both a parliamentary crisis and a global economic crisis, and therefore a two-front storm in Canadian politics. But while they overlap, the two crises are by no means identical.

If we were to accept the thinking of the leadership of the NDP, we might conclude that the solution to the constitutional crisis is the same solution awaiting the financial one. The NDP’s answer has been an expected Keynesian imperative to spend, by any means necessary and whatever the result. As Keynes wrote in his main work, the General Theory (1936): “it is the volume, not the direction” of spending that matters.[1]

It is not coincidental, thus, that the NDP’s Keynesian call for a coalition is preconditioned on their staying forcefully silent on Afghanistan, among other things. According to the December coalition talks, coalition reforms will be Liberal reforms, not NDP-Liberal, as is commonly depicted. The coalition agreement contains no ‘deal-breakers,’ not even regarding the impending $50 billion in Conservative tax cuts. Anything goes according to Layton, including the continued militarization of Afghanistan. Furthermore, the Liberal Party, perhaps Ignatieff himself, will select the NDP cabinet members if a coalition goes ahead.

In the wake of Harper’s “denial budget” in December – although it is better described as an attack on labour and the public party funding scheme – progressives argued for spending. But this call for spending has since then become so empty (without any actual plan for housing, for example) that it seems to be “anything is better than Harper.” NDP’s emerging message seems to be that Liberal Party economic reforms will be sufficient to avert the economic downturn. This is inevitably the founding assumption of the coalition itself, particularly now that Ignatieff has announced his ‘budget priorities.’

Neo-liberal restructuring

Under the past decade of Liberal and Conservative governments, global competition has been depicted as a beast that, unless fed large chunks of the welfare state, is prone to strike reprisals at the heart of the nation. This portrayal has helped neoliberal politicians into Parliament while sending social services into disrepair. Today, amidst economic crisis, people will need social assistance more than ever, particularly employment insurance. Unfortunately, the EI system has been drastically hollowed out under neo-liberalism’s Liberal Party phase (1993 – 2006) and more recently, its Liberal-Conservative Alliance phase (2006 – 2008), when the Liberals upheld all forms of reactionary conservatism in vote after vote.

The Liberal Party was a global leader in implementing the world-historic neoliberal transformation of the 90s and 2000s. From APEC to NAFTA, the Liberals have lobbied to secure the neoliberal economic transition, of which global financial deregulation was a main component. The Liberal Party takes with one hand what it couldn’t take with the other, because while on the one hand their name is imprinted boldly on the financial crisis itself, on the other hand, their national policies – major EI reduction, for example – will now make the crisis itself much more difficult for millions of Canadians to bear.

With this in mind, we should look again to the General Theory, where Keynes penned his liberal wisdom: “If government controls succeed in establishing [economic recovery] as nearly as is practicable, classical economic theory comes into its own from this point onwards and there becomes no more reason to socialize economic life than there was before.”[2] For Keynes, anti-capitalist measures are necessary at a time of crisis, but the system that brought about the crisis itself should be permitted to flourish once crisis retreats. The logic of the coalition is today a lesser reworking of the Keynesian wager.

Breaking with neoliberalism

In a time of crisis, Ignatieff may be able to hide his big-business allegiances beneath a Keynesian façade. On the other hand, the chance still exists for the NDP to announce an break with neoliberalism, which would undermine the currently-fragile Liberal claim to social democracy. We should have no doubt that a socialist appeal can gain popular support as the economic downturn unfolds. The shift would be helped in no small part if the NDP were to finally point clearly to the failures of neoliberalism and its objective historical instrument in the form of the Liberal Party (and to a great degree the Conservatives).

Some have argued that the coalition will give the party the opportunity to prove to Canadians that NDP Cabinet members can “govern responsibly.” Unfortunately, because the current economic crisis is of world-historic magnitude, NDP MPs may merely be demonstrating their ability to “responsibly” oversee the continued decline. They will do so while implementing Liberal policies, and while being prevented from declaring any kind of break with neoliberalism.

The experience of British ‘New Labour’ is instructive in this case, not least because it is unfortunately a model for some inside the NDP. In the UK, the Labour Party was able to win government in the late ’90s by turning rightward, abandoning socialist principles while successfully phasing out the country’s Liberal party. The result has been a disastrous new era of race-to-the-bottom neoliberalism under Blair and now Brown, extending from high rates of child poverty to tuition deregulation to the war in Iraq. While the U.S. and the UK have no third party, Canada is not yet in such a bind. Progressives in the United States and the UK only dream of a left party tied to labour and grassroots activists. While the Canadian Liberal-Conservative alliance is the mirror image of the Republican-Democratic alliance, the fundamental difference is that Canadians still have a potential way out of the corporate party trap. It would be foolish to give that up for a Cabinet photo opportunity.

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[1] “[T]here is no objection to be raised against the classical analysis of the manner in which private self-interest will determine what in particular is produced…I see no reason to suppose that the existing system seriously misemploys the factors of production which are in use.” John Maynard Keynes, The General Theory of Employment, Interest and Money (Palgrave, 2007) pp. 378 – 9

[2] Ibid.

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