Pathogens and Principles for a New Political Economy

The public health, environmental and financial dystopia that has us in its grip will not be resolved through recourse to any of the business-as-usual, conventional policy responses that Canadian and other governments have been resorting to.  We have entered uncharted territory. We are not in Kansas anymore.

The alien political construct of neoliberalism has brought atrophy, anguish and frailty to Canadian society and our political democracy.  Rising indicators of despair and isolation, divorce, drug and alcohol dependency, indebtedness, weakened labor force attachment, civic apathy, and chronic physical health impairments, especially obesity, attest to how broken our present model is.  Rather than a random event signifying bad luck, the impact of the coronavirus pandemic in North America has laid bare the myriad failures of public governance going back forty years.  It has brought into sharp relief the inequities between a low-waged precariat class which labors in the service sector, our indigenous peoples, folks living on disability payments, students, and various other marginalized groups, and the professional and managerial classes who have been able to isolate in place.

Our political and corporate elites in Canada and elsewhere fell for the smooth talk and honeyed words of those who wanted us to believe that we could have a kind of stripped down, unfettered version of capitalism which knows no boundaries – territorial, ecological or ethical – and that it could somehow co-exist alongside the norms of democracies and the public interest.  Everywhere political leaders embraced the Washington Consensus and its financially driven ratios for economic success.  Canadian political leaders were not immune.  In their ideological infatuation, they lost their capacity for critical analysis, long-term reflection and concern with the public good.  In the process, they gave predatory capitalism a hall pass to run amok in our fragile societies.   The new public management approach to government that became popular in the 1980s indicted government as wasteful, sclerotic, sluggish and hierarchical.  The new gospel held that embracing principles of competition and a focus on mission statements, outcomes and key performance metrics, would re-energize government and enhance services to citizens.  Indeed, we were no longer to view ourselves as citizens – we were now customers, shareholders or stakeholders.

In time, we went full throttle, financializing our economy, obsessing with appreciation in the value of real estate and other asset classes, indebting our citizens, and off shoring our supply chains.   Anyone reading about the two Canadian aircraft sent to China in the last month in search of critical medical equipment and returning empty because of the chaotic, piracy-like conditions of procurement and cargo processing in effect at Shanghai airport would have to question the “virtues” of globalized value chains.  Short-sighted de-industrialization that leads us to entrust the manufacture of critical medical supplies – the very bulwark of any fight against a pandemic – to entities an ocean away, begs for re-examination.  Even when we get the precious, lifesaving supplies back to Canada, they are frequently sub-par.   Our Health Minister Patty Hajdu acknowledged as much in the House of Commons:  “some of the equipment we received was not suitable for medical care workers, and we are looking at that equipment to see if it can be repurposed for other kinds of workers who do not need the same level of protection.”  This is in no way a critique of Chinese products or workmanship but simply a plain acknowledgement that the low wage, low tax, just-in-time mode of production favored by western corporate interests and their local fulfillment hubs may produce inferior goods and shoddy quality controls.  This is a disturbing, but hardly surprising, thing to find out at a time like this.  Lacking both a strategic stockpile of critical protective equipment and a domestic surge capacity, we (and numerous other western governments) have sent many of our front line health staff, long term care home personnel, first responders, and individuals involved in the transport and sale of foodstuffs into harm’s way in the fight against the novel coronavirus.  We also found out that warehousing our aged folks in Canada and then having low-waged care home staff work in multiple long-term care facilities in order to earn a livable income was a dangerous combination.

The upheaval brought about by globalization and jurisdictional arbitrage underscores the asymmetry between large multinational companies and ordinary working folks.  The mainstream media has tended to downplay the loss of blue-collar manufacturing and heavy industry jobs in southern Ontario and the Ohio River Valley and worship the rise of the new digital economy (as it has in the U.S.).  However, a workforce whose livelihoods depend on short-term gig work, low entry-level pay with few or no benefits, or long hours engaged in tele-work or sweating in distribution depots is not all it’s cracked up to be.  Disruption was a hip concept until it’s the kind unleashed by a pandemic where you don’t have a job, can’t pay your rent, or are forbidden from letting your kids play in the local park.  A tsunami of debt, environmental degradation, ill health and wasted human potential is engulfing states and peoples around the world.

Only the credulous would believe that more of the same repackaged neoclassical prescriptions for prosperity – deregulation, the alleged panacea of free trade, or a deluge of cheap credit and highly leveraged consumer spending – will make a difference now.  However well-intentioned their efforts might seem at this time, current Canadian governments’ attempts to put right these malign forces cannot succeed without undoing forty years of venal and hollow policy that has put financial and corporate interests at the heart of our politics.  The task of reformers is enormous; these ideas have infiltrated the body politic, and their very persistence is explained by the fact they have been molded into a set of normative beliefs reinforced at every turn by the major political, economic and legal institutions which condition and regulate our lives and shape our thinking about what is politically possible.  Lobbying by private for-profit interests coupled with the growing reality of agency capture by special interests further undercuts the voices of ordinary citizens.

As we confront the latest crisis, our leaders resort to the same old playbook.  Harkening back to 2008, once again our public authorities indemnify large firms and institutions and their accumulated debts, thereby rewarding speculative investments with high risk premia and infringing the principle of moral hazard.  The emergency bail-out of the distressed assets of the corporate sector and the creation of pools of cheap liquidity will make whole the speculators, the arbitrage specialists and the rentiers while doing so at the expense of average citizens who are experiencing a steady decline in income and effective demand.

A return to business-as-usual or the pre-crisis norm may be the fervent wish of the wealthy elites, but the Canadian public has ample reason to be skeptical that their welfare will be improved by such an outcome.  Confined to home, and with time to think, it is to be hoped that Canadians will begin to reflect seriously on whether our decade-long low interest rate policy, stock market & real estate fixations, or singular focus on the price of one commodity export (oil), has prepared us for the post-pandemic world that awaits us.  Technocratic elites and those pursuing wealth and personal gain by means of cost-shifting and financial engineering have brought us to the brink of disaster.  The virus was simply the pin that burst a giant debt and leverage bubble.  In what kind of parallel universe would the major losses of large carbon polluters such as energy companies and airlines get socialized?  Thankfully, there is still a way out of the mess corporations and governments have brought upon average citizens.  It requires us to repudiate a number of deeply flawed economic ‘laws’ and ways of perceiving our fellow citizens and the natural world around us.  To step back and chart a new course to a viable and sustainable future, we need to alter key individual attitudes and open ourselves up to the wisdom that flows from the direct participation and expression of preferences by all members of society.

A new approach must be informed by concepts and insights drawn from holism, complexity theory, devolved notions of citizen deliberation & governance and heterodox economic thinking.  That our present way of conducting global commerce and resource extraction has brought us to a point of near collapse in terms of extreme climate variability, indebtedness, job insecurity, income inequality and public health dysfunction is enough to disqualify financialized turbo-capitalism from any further consideration.  The option of reverting to the tamer version of regulated capitalism which existed in the post-WW2 era has also been forfeited.

If the choice for our species is between succumbing or changing, we are compelled to embark on something else now.  A new political economy, ecological sensibility, and public health ethic must be based on entirely new principles.

  1. As Karl Kapp perceptively noted fifty years ago, “human life and survival are not exchangeable commodities and their evaluation in terms of market prices is in conflict with reason and human conscience.”  The toll in human suffering and ecological destruction of the last fifty years has demonstrated beyond doubt that “original physical needs, the inviolability of the individual, and fundamental human requirements, must not be evaluated in terms of a desire for money” and, therefore, that which cannot be exchanged, has an intrinsic absolute value.


  1. The only possible way to view the world going forward is as a sustaining, life-supporting ecological system. There is a finite quantum of energy and matter from which human populations and their agricultural and industrial activities can draw.  In Kapp’s words “economic processes depend upon a continuous exchange of energy and matter between the economy and nature, and that available and accessible matter-energy is continuously and irreversibly transformed.” Bio-physical budgets for every society, region and land mass must be built which can no longer be violated; humankind’s footprint must, at worst, be neutral and preferably benign.  We have no choice but to prescribe irreducible minima – thresholds – which may not be exceeded.  The remorseless, value-free financial logic which condones returns from investing in tar sands projects has no place in the new paradigm.


  1. Economic systems are by their very nature, open. Production requires material inputs from the physical world and produces residual wastes and consequences that impact upon the environment, other species and human beings.   A person’s quality of life, working conditions, and prospects for the future are shaped, molded, dislocated and then re-shaped by external economic factors and processes.  The economic decisions of firms and corporations have direct impacts for others; it is not as though choices around production location, selection of inputs or how to transport finished products are taken in silos.  Recognizing openness though will mean a significant devolution in decision making to communities such that eco-system viability, equity and the health of residents become first order considerations.  The modern construct of the limited liability corporation with its obligation to shareholders only has outlived its useful life.


  1. Causation is not linear and predictable in ecological, economic or social domains. The fanciful models and mechanistic analogies of economists which purport to claim that we control the natural world and our environment and that we can model every outcome and hedge every risk are akin to castles made of sand. If, for instance, the models and formulae of investment banking had had any bona fide predictive power we wouldn’t have needed massive public bailouts to rescue them twice in 12 years  from their repeated financial chicanery and nor would front running, self-regulation, and insider trading have become the norms inside the financial world.  On the contrary, our societies and ecologies can only begin to be understood as a series of discrete systems characterized, as Kapp put it, by complex interactions and circular interdependencies.  The world functions in a complex manner that can best be understood as ‘circular and cumulative causation.’   Painstaking repeated observation, trial and error, a systems view, the importance of temporal processes (time), interdisciplinarity, reciprocal causation, citizen assemblies – these are the tools we need to reach for now.


  1. The motto ‘privatize the profit and socialize the costs’ has become the default convention of modern profit-seeking economic enterprise. Pushing costs off your books has been the go to mechanism of many energy companies, banks and hedge funds, food and beverage firms, and tract housing developers.    The business model in question works because someone else picks up the substantial but diffuse, hidden or delayed economic and financial costs of much production.   The narrow convention of double entry book-keeping and accounting have formally exempted business and corporate activities from the harmful impacts of many of their activities.   As Gregory Hayden has pointed out, double entry book-keeping severely limits information available to decision-makers as they routinely pursue mechanistic and destructive production processes.  The extreme simplicity and alleged elegance of double entry bookkeeping actually “limits relevance and prevents adequate decision-making for the complex and dynamic systems of the real world.”  We need a new accounting mechanism that captures and quantifies the costs of ecological and social damages so that the artificial obsession with the efficiency of capital is replaced with a more fulsome and realistic set of adjudicative criteria.

The adoption of principles such as these would herald massive, far-reaching and profound changes for the way we organize our productive activities in Canada and the U.S. and would invite important public debates about what constitutes the good life, the balance between the needs of present and future generations, the obligations we owe to other species and the natural world, and the relative importance of corporate & financial elites versus the general public.  These debates would doubtless be discomfiting for some but amount to our only chance for survival in a world in which extreme climate variability and the ubiquitous spread of lethal pathogens have recently combined to reveal so starkly the fragility of our governance structures.

Leave a Reply