1010 Class 1: POLITICAL AND ECONOMIC

IDEOLOGIES: The Nature of the State

Section 1: Introduction to Business in
the Canadian Context
How do we perceive our
Economy?
► News Items
► Housing Starts
► Trade Figures
► Employment Rate
► GDP
► Balance of Trade
What issues do we experience in
Canada?
► Canadian Issues
► The adoption of a
common North
American currency.
► Develop a common
North American border.
► Threats to Canadian
culture and the social
safety.
► Canada's dependency
on its natural resource
sector.
What problems do businesses
experiences most?

► Harassment
► Intervention
► Red tape
► Regulation
► Bureaucracy
► Inefficiency
► Taxation
What are the questions concerning
governments role in business?

►Does government over-step moral or

ethical boundaries to accommodate
business?
►Are there sacred rights and freedoms
of business that transcend ethical
considerations?
►Does government reserve the right to
protect citizens and consumers against
the natural activities of business?
What does business want from
government?

A stable and predictable environment in

today's global world ensures
business...
1. Continuity
2. Stability
3. Competition
4. Rule of law
5. Free Trade
6. Worth
 What is governments role in the
economy?
► Regulator
► Law Maker
► Trade Negotiator
► Benefactor
► Protector
► Deal Maker
What is Canada’s Global Position?
► WTO
► NAFTA
► United Nations
► NATO
► G-8
► Commonwealth
► Francophone
Section 2: Political and Economic
Ideologies
► What is an ideology?
► How do they emerge?
 What is an Ideology?
► It refers to a set of shared values, beliefs and
ideas, and perceptions through which persons
interpret events of the past, present and future.
► It also refers to an explicit doctrinal structure
providing a particular diagnosis of the ills of
society.
► It will include an accompanying action program for
implementing the prescribed solution.
 Example 1: Communism
► Communism as an ideology states that the
workers must control the means of
production in order to achieve a better
society.
► Action: Workers should overthrow the
current governmental structure by means of
revolution.
 Example 2: Capitalism
► Capitalism as an ideology states that the
free market is the most efficient and
productive way to manage an economy.
► Action: Nations should endeavor to limit the
interference or regulation of commerce by
governments or other bodies.
What is the function of an ideology?

1. To present a simplified cause and effect

interpretation of a complex world.
2. Integrate a theory of human nature with life's
basic economic, social and political values.
3. Appear normative and moral in tone and
content and aspire to perfect behavior.

4. Draw their philosophical premises from

constitutions, declarations, manifestos and
writings.
What is the function of an ideology?

5. Constitute a broad belief system and advocate

reforms in the basic fabric and structures of
society.

6. Address fundamental questions about

leadership, recruitment, succession and
behavior.

7. Persuade and propagandize people who learn

not to be influenced by opposing views.
 Ideological Compatibility and
Incompatibility

► INCOMPATIBLE ► COMPATIBLE
► Conservatism versus ► Liberalism and Capitalism
Liberalism ► Democratic Socialism and
► Conservatism versus a Mixed Economy
Democratic Socialism ► Liberalism and
► Democratic Socialism Internationalism
versus Capitalism
► Nationalism versus
Internationalism
What is a Dominant Ideology?

► Prescribes and supports

existing social, political
and economic
arrangements.
► Embodies the prevailing
mindset in the social,
economic and governing
system.
 It is dominant because...
► When most people
accept it.
Or
► When the most powerful
people or institution
accept and practice it.
(May not require
consensus of the
majority of population.)

► Example would be
Communism in Poland in
the 1980’s.
 What is a Counter Ideology?
►Advances reforms and
radical changes in
society.
►Rallies forces of change
in society.
►Responds to perceived
inequality.

►Example Russia 1917.

In a society, what are the conditions for
developing a counter ideology?

1. The leaders of society seek to change society.

(Democratic)
2. There is an underground movement to bring about change
in a society. (Revolutionary)
Reasons for Change in Society

► Interactionsamong competing groups with

dominant or counter ideology result in
changes in society.
► Poor versus Rich (French Revolution)
► Rich versus Rich (American Revolution)
► Poor versus Poor (Peru 1980’s)
Section 3: Major Political and
Social Ideologies
 Business and Government
Perspective of Relationships

► From government's
► From business's
perspective, there is perspective, there is
an exponential growth the growth of
in the size and power bureaucracy because
of corporations. of continuing business
activities.
Types of Ideologies
1. Collectivist Ideologies
2. Individualist Ideologies
Collectivist Ideologies
► The Left: Holds that economic
society is best arranged through
the direct involvement of the
workers from the bottom up.

► The Right: Holds that the

owners of the means of
production arrange economic
society from the top-down.
Socialism / Communism
► Ideology based on the
ownership of the
means of production
by the workers.
► Calls for overthrow of
capitalist system
► Holds that capitalism is
fundamentally
undemocratic
 Democratic Socialism

► Does not see capitalism as an evil that

needs to be overthrown through
revolutionary means.
► Instead, tends to accept elements of
capitalism, however, desires that
government play an interventionist role
in the management of the economy
and markets.
► Examples?
 Examples
► What is an example of a modern Socialist /
Communist State?
► What is an example of a modern Capitalist
State?
► What is an example of a modern Social
Democratic State?
Classical Conservatism
► Man is rational but
passionate. Passion needs
to be restrained.
► Only the state has the
power to restrain man’s
passion.
► The state exists not to
protect the individual, but,
the past, present and
future.
► Edmund Burke 1729-1797
 Fringe Socialist Ideologies
► Utopian Socialism ► Anarchism – The
Market economy State is the root of all
unjust. Universal evil. New social order
brotherly love. based on self
Cooperatives. governing groups. No
► Christian Socialism private property. Trade
The Bible is the takes place between
inspiration for the co-operatives.
body politic.
Neo-Conservatism
► Minimal but strong
centralized
government
► Free but regulated
markets.
► Liberal, but tough on
crime.
► Free traders.
Corporatism
► Traditional liberal ideas
of capitalism are
impractical.
► Government must
guarantee the flow of
goods and services.
► Example: Industrial
bailouts.
 Individualist Ideologies

► Utilitarianism
► Liberalism
► Libertarianism
 Utilitarianism
► Utilitarianism advocates
those actions which bring
about the most good
overall.
► State must increase
pleasure and reduce pain.
► Lead to criminal law
reform.
► Proponents include Jeremy
Bentham
 Liberalism
► Value of a society is
measured in terms of the
satisfaction of the
individual.
► Personal freedom and
social progress.
► Laissez-faire and
individualism
► Proponents include
Thomas Hobbs
► Leviathan
 Progressive Individualism
► Men are equal and have
the right to do as they
choose.
► Individuals have rights
over their government but
the reverse is not true.
► Society is formed by the
consent of individuals.
► John Locke
 Neo-Liberalism
► It has as its basic concern
the development of the
free-market.
► Globalization and Neo
Liberalism are often
interchanged
► Has many enemies in the
political left.
► Eg. Noam Chomsky
 Economic Liberalism
► Laissez-Faire Capitalism.
► Adam Smith, The Wealth
of Nations
► If man is left to pursue his
own interests, he will
contribute to the common
good.
► “Government is best which
governs least”
Libertarianism
► Libertarians are deeply
distrustful of anything
that limits their own
personal initiative,
movement, or talents.
Natural Rights Libertarianism
► Believe strongly in the
natural rights of the
individual.
► Focus on right to
property, right of free
speech and right to
life.
► These are viewed as
almost sacred rights.
The Concept of Capitalism
► Refers to an economic
system where the
means of production,
or capital, is owned
primarily by
individuals.
► Economic decisions are
made by market
forces.
 Differing Models of Capitalism
1. Pure Capitalism
► Defined by lack of
government regulation
2. Mixed Economy
► Mostly privately owned,
however, some degree of
government intervention
 Theorists of Capitalism

► Adam Smith ► John Kenneth

► Alfred Marshall Galbraith
► Joseph Schumpeter ► Frederic Hayek

► John Maynard Keynes ► Milton Freidman

Adam Smith
► The pursuit of profit will
serve the best interests of
society
► Market will self regulate.
► Government should not
intervene in the
marketplace.
► The ‘invisible hand’ of the
marketplace.
Alfred Marshall
► Neo-Classical liberal.
► He begins by isolating the primary
relations of supply, demand, and
price in regard to a particular
commodity
► Studied why humans make the
choices we do.
► He postulated that the central idea
of economics must be that of a
living force and movement, and its
main concern must be with human
beings who are impelled, for better
or worse, to change and progress.
► Distilled concept of marginal utility.
Joseph Schumpeter
► Capitalism is unable to elicit peoples
moral allegiance
► Capitalism in order to operate
efficiently must exist in a social
environment that allows for
freedom on action.
► His major contributions to
economics were the theory of the
entrepreneur as the dynamic factor
in fostering the business cycle and
the theory of economic
development of capitalism
John Maynard Keynes

► His ideas emerged out of the

disaster of the great
depression.
► Government is obliged to
bring full employment.
► His contributions were well
read in the US and Britain in
the 1930’s and contributed to
Roosevelt's ‘New Deal’.
► Keynes was a major
contributor to the concept of
the mixed economy.
► What is a mixed economy?
John Maynard Keynes

► "There is no subtler, no surer

means of overturning the
existing basis of society than
to debauch the currency. The
process engages all the
hidden forces of economic
law on the side of
destruction, and does it in a
manner which not one man
in a million is able to
diagnose."
John Maynard Keynes - The
Economic Consequences of
the Peace (1919)
John Kenneth Galbraith
► In The Affluent Society Galbraith
argued that the expanding United
States economy needed more
public services such as highways
and educational institutions.
► The economy, according to
Galbraith, had finally reached a
point at which less time and energy
had to be spent on consumer
goods.
► Corporations often sought power
through market share over the
profit imperative.
Ludwig Von Mises
► “All people, however
fanatical they may be
in their zeal to
disparage and to fight
capitalism, implicitly
pay homage to it by
passionately clamoring
for the products it
turns out.”
Ludwig Von Mises
► "Government is the
only agency that can
take a valuable
commodity like paper,
slap some ink on it, and
make it totally
worthless"
German 50 Mark Note 1920
German 20 Trillion Mark Note
1923
Frederick A. Hayek
► Felt that any government
intervention in the marketplace was
the first step towards
totalitarianism.
► Limits on the the free market will
ultimately results in limits on
individual freedom.
► Defended individual liberty and the
free-market in an academic
environment where collectivism had
been more fashionable
► Wrote The Road to Serfdom in the
waning years of World War II.
Milton Freidman
► Founded the so called Chicago
School of Economics. A great
follower and student of F. Hayek.
► Argued for the elimination of social
security and other elements of the
welfare state.
► Friedman argued that the
concentration of political power
inherent in socialist countries was
detrimental both to economic
prosperity and individual liberty.
► Proponent of negative tax schemes.
Milton Freidman
► “Underlying most
arguments against
the free market is a
lack of belief in
freedom itself.”
Milton Freidman
Winston Churchill
► “Democracy is the
worst form of
government except
for all those others
that have been tried
from time to time.”
Winston Churchill
 Negative Income Taxation
► Instead of tax liabilities varying positively with income according to a
tax rate schedule, benefits would vary inversely with income according
to a negative tax rate (or benefit-reduction) schedule.
► If, for example, the threshold for positive tax liability for a family of
four was, say, $10,000, a family with only $8,000 of annual income
would, given a negative tax rate of 25 percent, receive a check from
the Treasury worth $500 (25 percent of the $2,000 difference between
its $8,000 income and the $10,000 threshold)

► A family with zero income would receive $2,500.

Section 4: The Ideological Framework of
Canada
 Settlers to Canada brought with
them the ideologies of Old Europe

Conservatism Liberalism
► Aristocracy ► The rising commercial
► The Church class.
► The status quo ► Change agents
► Traders
 The Dominant Ideologies of
Canada
Political Economic
► Conservatism ► Capitalism within the
► Liberalism context of a mixed
► Social Democracy
economy.
 What is a Mixed Economy?
► Government regulated Competition
► Government protect indigenous industries.
(In Canada, timber, fish, mining,
manufacturing.)
► Government protects and develops social
programs.
Is Canada’s Economy Changing?

► In the 1960’s and 1970’s Keynesian economics

with increasing government intervention in the
economy was popular.
► Governments owned and operated airlines (Air
Canada), oil companies (Petro-Canada), and
steel companies (Sydney Steel).
► Government was interventionist in its
approach to the economy.
Is Canada’s Economy Changing?

► In the 1980’s and 1990’s Neo-Conservative

ideas began to emerge in Canada and
governments felt they no longer needed to
protect domestic industries.
► NAFTA, Canada-US Free Trade, Privatization,
and the dismantling of the social welfare state
became normalized.
► J.M. Keynes Out
► Milton Freidman In
Where is Canada going in the
Future?

► Further evolution
towards free markets?
Or
► A return to the Canada
of the 1960’s and 70’s?