The Early History of Neoliberalism in Canada during World War II

Beyond Borders will publish a series of articles on the topic of Neoliberalism and Canada, guest edited by Mack Penner and Nick Fast. Today’s article is the first of their series! Stay tuned for others!

Will Langford, University of Alberta

When a transnational group of economists, businessmen, and civil servants formed the Mont Pelerin Society in 1947, they were in it for the long haul. A neoliberal movement grew from late 1930s debates among liberals over political economy changes, especially the growth of government and the socialist alternative. Neoliberals pursued a dynamic capitalist society in the belief that individual freedom would be preserved through self-interested economic activity in competitive markets. Though disagreeing on the proper scope of government action, neoliberals felt that the state should shape the values and the legal and institutional framework needed for free markets to thrive.[1] Members of the Society refined their ideas in anticipation of influencing public policy, whether their preferences had an immediate postwar impact in West Germany, rose to prominence during the 1970s economic crisis in countries like Britain, or were imposed through structural adjustment in much of the Global South from the 1980s.

The long view suits the Canadian case. Arguably, the transition to a neoliberal political regime occurred only in the mid-1990s. But the history of neoliberalism began much earlier. And beyond the tight transnational circle of like-minded intellectuals, the diffusion of neoliberal thinking, and its initial political application, owed much to a wider network of popularizers and early adopters.

Neoliberalism first entered Canadian politics during the Second World War. Much as in the Netherlands, its origins were in a big business campaign to influence reconstruction debates between 1943 and 1945.[2] As workers unionized and took strike action in large numbers, many Canadians felt that their contributions to the war effort should be reflected in a reconstructed society. They expected full employment, union rights, social security, and a rising standard of living. From 1943, these popular demands shaped lively exchanges about the postwar future.[3]

In their contributions to reconstruction debates, Montreal and Toronto executives tried to figure out how to limit the welfare state and union strength. They joined their American counterparts in a campaign to “sell free enterprise.”[4] Executives addressed the public, cajoled employees, and placed radio and newspaper advertisements. A Royal Bank of Canada ad captured part of the tone: “What is private enterprise? It is the natural desire to make your own way as far as your ability will take you; an instinct that has brought to this continent the highest standard of life enjoyed by any people on earth. It is democracy on the march.”[5]

Executives were nonetheless divided on how far they should go in accepting reform. Philip Fisher, a Southam publishing executive, believed that “private enterprise could modify its practices and support social security measures without cost to itself.”[6] Not so, said investment banking executive and ex-Prime Minister Arthur Meighen, wagging a finger at plans in Britain: “You cannot Beveridge a country into prosperity.” Meighen counselled fiscal discipline and “the old tonic, the old discipline of self-reliance and self-help.”[7] But stern statements were increasingly out of place, as business elites realized that to prevent the erosion of their power, they needed to replace nostrums with dynamism.

Neoliberal ideas were drawn into the effort to invigorate militant individualism. Big business representatives played a prominent role in the reconstruction planning undertaken by the federal government, yet a group of Montreal manufacturing executives believed that management still needed to cultivate a clearer position. They formed the Canadian Committee on Industrial Reconstruction (CCIR). Chaired by ex-finance minister Charles Dunning, the committee favoured private discussion and funded research carried out by former University of Toronto professor Gilbert Jackson. A consulting economist, Jackson dissented from his profession’s growing acceptance of Keynesianism and economic planning. But nor did he advocate laissez faire. Jackson stood within emerging neoliberal thought by suggesting that economic freedom could not be sustained without active political management. Though CCIR kept its lobbying and think tank activities quiet, its participants favoured shaping public opinion by distributing materials championing economic freedom.[8]

Taking up the challenge of publicity, the Canadian Chamber of Commerce’s new Committee on Economic Development – seeking to distribute anti-socialist literature to workers, journalists, teachers, and clergy – ordered 10,000 copies of the condensed Readers’ Digest version of economist Friederich Hayek’s book, The Road to Serfdom (1944).[9] As the leading intellectual of the neoliberal movement, Hayek mixed up fascism and socialism to argue that all forms of economic planning led to dictatorship. He insisted that economic freedom, not politics, would ensure the achievement of individual liberty and desirable change.[10]

Gladstone Murray, a key early popularizer of neoliberal-influenced ideas in Canada, was quick to crib Hayek’s language. Murray declared that mass society’s dilemmas would be “resolved either in terms of emancipated freedom or of regimented serfdom. In Canada, we prefer the road to emancipated freedom.”[11] Murray left his job as general manager of the Canadian Broadcasting Corporation under a cloud in 1943, after questions were raised about his expense account habits. But he quickly set up shop as a public relations consultant. His firm, Responsible Enterprise, attracted the backing of at least 51 company presidents (including those managing Noranda, Imperial Oil, and Massey-Harris). Murray jokingly referred to his operation as the “paid minions of Capitalism,” and it was the most well-funded anti-socialist agency in wartime Canada.[12]

Engaging with British and American peers, Murray combined pro-market rhetoric with reform proposals. He warned that, to stave off political irrelevance, business should accommodate popular demands for collective bargaining and social security. But more pointedly, he urged Canadians to restrain their material demands on government. Citizens should embrace individual effort, contribute to the imperial advance of Christian civilization, and preserve a self-disciplined democracy. Murray’s message came with plenty of anti-socialism, not least in the course of his anti-Cooperative Commonwealth Federation involvement in the 1945 Ontario election on behalf of the Conservative Party.[13] To check “the present world-wide advance of Collectivism,” Murray insisted that: “We cannot be safe until we reach the position in which the citizen is convinced that his own well-being is bound up with the continuance of the Enterprise System.”[14]

Continue it did. Workers won collective bargaining rights, but the scope of reconstruction social policy was fairly limited.[15] An expansionary capitalism gradually emerged by 1948 and it was accompanied by the onset of a Cold War that cast an anti-communist pall on social democracy and organized labour. The newly conservative context didn’t demand the same level of big business commitment to market-minded reform. Murray, keeping his public relations work up to speed with the latest in transnational free market thought, approved of the Mont Pelerin Society, but he even preferred the libertarianism of British individualists and American organizations such as Foundation for Economic Education. Having been a small part of a big business campaign during the Second World War, neoliberalism only re-emerged in Canada as a more focused political project during the economic crisis of the mid-1970s.

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Will Langford is Grant Notley Memorial Postdoctoral Fellow in the Department of History and Classics at the University of Alberta. He is the author of The Global Politics of Poverty in Canada: Development Programs and Democracy, 1964-1979 which is recently out from McGill-Queen’s University Press. 

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Notes:

[1] Dieter Plehwe, Introduction to The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective, eds. Philip Mirowski and Dieter Plehwe (Cambridge, MA: Harvard University Press, 2009), 1-42; Ben Jackson, “At the Origins of Neo-Liberalism: The Free Economy and the Strong State, 1930-1947,” The Historical Journal 53, no. 1 (2010): 129-151.

[2] Bram Mellink, “Towards the Centre: Early Neoliberals in the Netherlands and the Rise of the Welfare State,” Contemporary European History 29, no. 1 (2020): 30-43.

[3] James Struthers, The Limits of Affluence: Welfare in Ontario, 1920-1970 (Toronto: University of Toronto Press, 1994), 117-118; Peter Stuart McInnis, Harnessing Labour Confrontation: Shaping the Postwar Settlement in Canada, 1943-1950(Toronto: University of Toronto Press, 2001), 60-85.

[4] Elizabeth A. Fones-Wolf, Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945-60 (Urbana, IL: University of Illinois Press, 1994).

[5] Quoted in Gerald L. Caplan, The Dilemma of Canadian Socialism: The CCF in Ontario (Toronto: McClelland & Stewart, 1973), 127.

[6] Minutes of the Meeting of the National Board of Directors of the Canadian Chamber of Commerce, 8 June 1942, Appendix II – “Philip S. Fisher, Montreal to R.P. Jellett, 2 June 1942,” 2, Library and Archives Canada, Canadian Chamber of Commerce fonds, MG 28-III62, Volume 6, [Board of Directors. Minutes. III. 1940-1943].

[7] “Socialism,” Address of Right Hon. Arthur Meighen, P.C., K.C., before the Kiwanis Club, Vancouver, B.C., 21 October 1943, 11-12, LAC, MG 30 E 186, William Ewart Gladstone Murray fonds, Volume 3, [Meighen, Arthur, 1943-1960].

[8] Don Nerbas, “Managing Democracy, Defending Capitalism: Gilbert E. Jackson, the Canadian Committee on Industrial Reconstruction, and the Changing Form of Elite Politics in Canada,” Histoire Sociale/Social History 46, no. 91 (2013): 173-204.

[9] Minutes of the Special Meeting of the Executive Sub-Committee on Economic Development, Montreal, 4 April 1945, 1, LAC, MG 28-III62, Volume 9, [Committee Minutes, Economic Development, 1943-1961].

[10] F.A. Hayek, The Road to Serfdom (London: G. Routledge, 1944).

[11] Gladstone Murray, “Canada a Century Hence,” Text of Address, Canadian Unity Alliance, Montreal, 12 December 1946, 6, LAC, MG 30 E 186, Volume 8, [Canadian Unity Alliance, 12 December 1946].

[12] Gladstone Murray to J.G. Diefenbaker, 27 February 1946, 1, LAC, MG 30 E 186, Volume 1, [Diefenbaker, J.G., 1944-1960].

[13] David Lewis, The Good Fight: Political Memoirs, 1909-1958 (Toronto: Macmillan of Canada, 1981), 266-287. 

[14] Gladstone Murray, “A Mobile Advance Guard For Enterprise,” Summary of Statement, Saddle of Mutton Dining Club, Toronto, 15 April 1946, 7, LAC, MG 30 E 186, Volume 7, [A Mobile Advance Guard for Enterprise, 15 April 1946].

[15] Alvin Finkel, “Paradise Postponed: A Re-Examination of the Green Book Proposals of 1945,” Journal of the Canadian Historical Association 4, no. 1 (1993): 120-142.