Austerity and Societal Response: The Double Movement in Post-Crisis Canada by Damira Grigorieva A thesis submitted to the Faculty of Graduate and Postdoctoral Affairs in partial fulfillment of the requirements for the degree of Master of Arts in Political Economy Carleton University Ottawa, Ontario ©2014, Damira Grigorieva Abstract Through the application of Karl Polanyi's theory of the Double Movement and his concepts of embedded and disembedded economies, the thesis evaluates the contemporary situation in Canada post global financial crisis of 2008. Post-crisis policies and actions of the federal government in the form of financial support to financial institutions, stimulus packages and the ensuing austerity measures are evaluated alongside the societal response to these actions, which is observed through anti-austerity discourse, with special reference to the Occupy Movement across Canada and the Quebec Student Movement. As a result of the high level of neo-liberal entrenchment in Canada a strong move towards re-embedding the economy within the sphere of social influence has not been able to materialize. However, the presence of these sites of resistance represents the evidence of the Double Movement and may be the leading edge of a potential swing of the pendulum towards more socio-democratic control over the economy in the future. 2 Acknowledgements First and foremost, I would like to express my sincere gratitude to my Master’s thesis supervisor Prof. Allan Moscovitch for the continuous support of my study and research, for his patience, motivation, and immense knowledge. His guidance and support helped me in all the time of research and writing of this thesis. My gratitude is further extended to the rest of my thesis committee: Prof. Randall Germain, Dr. Roy Culpeper and Prof. Laura MacDonald for their encouragement, insightful comments, and hard questions. I would like to thank Prof. Manfred Bienefeld, whose enthusiastic teaching inspired me to concentrate my research within the framework of Karl Polanyi’s theories. My sincere thanks also go to my managers through the four years of my Master’s degree: Vic Charest, Martine Belanger, Diane Hall and Nancy Brunet. Their willingness to support my academic efforts greatly contributed to the achievement of this accomplishment. Last but not least, I would like to thank my loved ones: family, friends, and beloved husband Ruslan Kedik. They have supported me throughout the entire process by keeping me focused, harmonious and motivated to realize my potential. 3 Table of Contents Abstract .............................................................................................................................. 2 Acknowledgements ........................................................................................................... 3 Table of Contents .............................................................................................................. 4 List of Tables ..................................................................................................................... 7 1 Chapter: Introduction and Background ................................................................... 8 1.1 Introduction .................................................................................................................... 8 1.2 Background................................................................................................................... 14 1.2.1 Creation of the Welfare State ................................................................................... 14 1.2.2 The Development of the Welfare State in Canada ................................................... 17 1.2.2.1 The Value of the Social System in Canada ..................................................... 19 1.2.3 The Rise of Neo-liberalism ...................................................................................... 21 1.2.4 The Evolution of Canada’s Neo-liberal Environment .............................................. 27 1.2.4.1 Harper’s Neo-Liberalism ................................................................................. 31 1.2.4.2 Statistical Evidence of the Rise of Neo-Liberalism ......................................... 33 1.2.4.2.1 Government Deficit and Debt ..................................................................... 34 1.2.4.2.2 Government Expenditures and Revenues and Government Social Expenditures ................................................................................................................. 36 1.2.4.2.3 Government Employment........................................................................... 39 1.2.5 The Global Economic Crisis of 2008 ....................................................................... 39 1.2.6 Conclusion ............................................................................................................... 43 2 Chapter: Karl Polanyi’s Theory of the Double Movement ................................... 44 2.1 Polanyi’s Theoretical Perspective ................................................................................ 44 2.1.1 Key Concepts in Polanyi .......................................................................................... 46 2.1.1.1 Commodification ............................................................................................. 46 4 2.1.1.2 Embeddedness ................................................................................................. 47 2.1.1.3 Economic Fallacy and Stark Utopia ................................................................ 50 2.1.1.4 Double Movement ........................................................................................... 51 2.1.1.5 Democracy and Freedom ................................................................................. 54 2.2 The Use of Polanyi’s Thought by Other Theorists ....................................................... 56 2.3 Polanyi’s Influence and Relevance ............................................................................... 61 2.4 Thesis Propositions ....................................................................................................... 62 2.4.1 #1- Disembeddedness ............................................................................................... 62 2.4.2 #2– Societal Response .............................................................................................. 63 2.4.3 Working Argument .................................................................................................. 64 3 Chapter: The Economic Crisis of the 21st Century: Disembedding the Economy from Society ..................................................................................................................... 65 3.1 Canada’s Experience of the Crisis ................................................................................ 65 3.2 Canada’s Response to the Crisis ................................................................................... 70 3.2.1 Financial Support to Financial Institutions and Stimulus Measures ........................ 70 3.2.2 Austerity Measures ................................................................................................... 73 3.3 Budgets as the Implementation of Neo-liberalism ....................................................... 76 3.3.1 Financial Support to Financial Institutions and Stimulus Measures ........................ 76 3.3.2 Austerity Measures ................................................................................................... 82 3.4 Disembeddedness: Analysis of the Response to the Crisis, 2008-2013 ....................... 89 3.4.1 Financial Support to Financial Institutions and Stimulus Measures ........................ 90 3.4.2 Austerity Measures ................................................................................................... 93 3.4.2.1 Public Expenditures ......................................................................................... 93 3.4.2.2 Employment .................................................................................................... 98 3.4.2.3 The Impact of Austerity ................................................................................... 99 3.4.2.4 The Impact of Austerity on Democracy ........................................................ 100 5 3.5 Conclusion .................................................................................................................. 102 4 Chapter: Societal Response to Austerity: an Attempt to Re-Embed the Economy within Society ................................................................................................................ 104 4.1 Social Movements’ Resistance to Austerity ............................................................... 104 4.1.1 The Occupy Movement .......................................................................................... 106 4.1.2 The Quebec Student Movement ............................................................................. 114 4.2 Facebook Content as Expression of Societal Resistance ............................................ 119 4.2.1 Occupy Movement ................................................................................................. 120 4.2.2 Quebec Student Movement .................................................................................... 124 4.3 Embeddedness: Analysis of Societal Resistance, 2011-2014 ..................................... 127 4.3.1 The Occupy Movement