Taylor and Baskerville on the Canadian Leviathan

I’d like to share an excerpt from A Concise History of Business in Canada by Graham D. Taylor and Peter A. Baskerville. This passage appears at the beginning of Chapter 17, titled, “The Incomplete Leviathan”. That chapter in turn, begins the fifth part of the book, called, “The Age of the Activist State.” The passage below very much justifies those titles. It deserves to be read and then reread.

As earlier chapters have made clear, government intervention in the market economy was hardly a twentieth-century novelty in Canada or in other industrializing countries. Long before Confederation, governments were involved in schemes to encourage the development of canals and railways, promote industry, and attract foreign investment through direct subsidies, public loans, tariff duties and drawbacks, and patent laws. Governments at all levels have continued to play this promotional role through the present. Regulatory measures – to restrict exploitation of child labour, prevent adulteration of food products and other commodities, and establish safety requirements in mines and factories – were also in place by the late nineteenth century, although the means of enforcement often left something to be desired. There were even ventures into public enterprise, usually the result of failures on the part of private companies to complete projects deemed to be essential to the economy: most of the canals wound up in in government hands and the Intercolonial Railway linking the Maritimes to central Canada was undertaken by the federal government in the 1870s.

At the turn of the century, several new factors generated pressures for governments’ more systematically activist role in the economy. The emergence of large-scale enterprises and the integration of local and regional markets into a national system presented novel and unanticipated problems for public authorities. Farmers, owners of small businesses, industrial workers, and urban consumers clamoured for measures to protect their interests against the perceived economic power of big business. In times of economic hardship, governments were pressed to assume greater responsibilities for alleviating distress. The demands of modern warfare, peaking around the middle of the century, required an unprecedented degree of economic co-ordination of the nation’s resources. As the role of government expanded, public officials acquired increasing confidence in their ability to control the course of events, stimulating new interventionist initiatives. While business leaders continued to employ the rhetoric of laissez-faire liberalism, their enterprises were increasingly enmeshed in a web of governmental relationships, embracing public contracts, subsidy arrangements, regulatory agencies, and joint public/private undertakings.

He welcomes all comments, criticisms, and questions.

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4 Responses to “Taylor and Baskerville on the Canadian Leviathan”

  1. Ohhh Henry says:

    I happened to thumb through the book very quickly the other day in a bookstore and came across a howler about the Great Depression. I can't remember what it said exactly, but it was the usual baloney taught in public schools about how the government struggled mightily to fight the unique and unprecedented problems of the dirty thirties, until thankfully WW2 came along and the Canadian economy was saved from the depression through massive government spending.

    I don't know if the book goes back that far, but government boondoggles in Canada go back at least as far as the days of New France. Remember how Radisson and Groseillers were rewarded for opening up a vast new region of fur trade? By being thrown in jail and having all their furs confiscated, because they had violated the official government trading monopoly. Remember the trading-card money fiasco? And so on.

    The Rideau Canal is an example of a government boondoggle that just keeps sucking money out of taxpayers pockets, for nigh on 200 years with no end in sight. Apparently when a boondoggle gets so old that nobody can remember its purpose any more, it gets promoted to "World Heritage Site" and then continues on as before.

    "The Canadian Dream", the CPR, which supposedly helped to create the country, was also the very first and possibly still the most notorious corruption scandal in the history of confederation. Not the most notorious because it was the worst corruption ever to take place, but because governments since then have become much, much more vigilant at covering up corruption, by taking the simple precaution of ensuring that a significant number of the chief opposition party's insiders are able to benefit from the corrupt boondoggles and thus will be motivated to take no really strong action to expose and terminate them.

    This is not to say that Canadian businesspersons are in any way defective and lacking in ability or drive. It's just that if you start out with the premise that freedom and respect for private property can't quite cut it as the foundation of a peaceful and prosperous society, possibly due to "unique" geographical factors (snow), then you're going to have an awfully easy time filling a university-level textbook with baloney about how nobody could have ever dug a ditch or borrowed money to construct a dam if far-sighted (and as it happens thoroughly self-interested) politicians had not been on the spot to provide them with money collected from the alleged entrepreneurs' friends and neighbors at gunpoint.

    It would be nice to have a Rothbardian history written about Canada, but lacking that it's still pretty easy to read through the "official" (regimist) histories and construct your own history. Simply read each paragraph and chapter and ask yourself, "Whose property rights were violated?", and "What excuse is offered for the special and unique circumstances which necessitated this violation?" and finally, "If no such excuse is made for the original violation of property, how are the criminals pardoned retrospectively by claiming that everything turned out for the best in the long run after all?" I think that summarizes just about every history of Canada that you've ever read.

    • mstob says:

      Ohhh Henry,

      The authors certainly aren't libertarians or Austrians, but they do a pretty detailed job of pointing out various government boondoggles and mercantilist policies going back all the way to New France. As long as you keep certain things in mind when reading it, the book is worth picking up.

      They do spend a lot of time covering the corruption of railways – CPR, Grand Trunk, Great Northern – and aren't very apologetic about it. Nor do they suffer from a "patriotic" version of Canadian history story telling. I would say it is quite readable. Then again, maybe I would just scan paragraphs at a time when I did come across any material that I thought was nonsense, so for that reason I can't remember reading it!

  2. Good find Mark!

    Much like 19th century America, it looks like Canada wasn't the "cut throat environment of heartless competition and capitalism" so often portrayed in public school textbooks.

    • mstob says:

      Right, that certainly seems to be true.

      I recommend the book in general. It can probably be found in a used bookstore for 20 or so. Although Amazon is selling it for $3 or so, I imagine it will come to more with shipping and such. Plus, I don't know about you, but I like to have a book when I see it on a shelf, not a week after ordering it.

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