English-speaking countries represented the full range of democratic responses to the crisis of the 1930s. Canada, along with Australia and the United Kingdom, responded to the Great Depression in a conservative, protectionist manner, combining industrial tariff protection, selective intervention in the domestic market, and a largely cyclical (orthodox) macroeconomic framework. New Zealand and the United States represented two variants of policy innovation, social neomercantilism and proto-Fordism, respectively. The New Zealand response included tariff and nontariff measures, import-substituting industrialization, industrial relations and social security reforms, and credit expansion. The United States fashioned arguably the most innovative response in a democracy. It experimented with demand stimulus as well as introducing a pro-labour industrial relations system, general social security, and generous support programs for agriculture.
In my research, I consider existing explanations of this variation within the Anglo-American “family of nations” and find them inadequate. These include country size, economic openness / closure, crisis experience, state organization, bureaucratic capacity, and strength / weakness of labour movement. Although each explanation has at least one supporting case out of the five, they never hold across all of the relevant cases and are always left with at least one anomalous case
My explanation of the economic policy variation (convergence and divergence) across the five cases gives primacy to ruling parties’ ideational orientation and political strategies concerning three major groups of interest – business, labour, and agrarian. Where governments privileged businesses and accommodated agrarians to the exclusion of labour, the policy outcome was invariably conservative. This was the case with Canada, Australia, and the United Kingdom. In contrast, where governments arranged a rapprochement between agrarians, organized labour, and sections of business, policy innovation followed. The New Zealand and US responses were two cases in point. In making this argument, I also recognize structural limits to what governing parties and other actors can do
In Australia and the United Kingdom, where the Labo[u]r parties were at the helm when the crisis struck, initial responses were strictly deflationary. With an unimaginative leadership who saw no option other than sticking to neoclassical orthodoxy under capitalism, both parties missed out on a historic opportunity. It thus fell upon their conservative successors to steer economic policy in a more interventionist, protectionist direction by attending to business and agrarian interests. Admittedly, the rural sectors of both countries structurally limited the scope for an agrarian–labour alignment. UK agriculture was too small in the world’s most industrialized economy, and the Australian pastoral rural sector was distinctly capitalist with little room for an independent farming class, to partner with labour. Yet this was no cause for the inactivism of both Labo[u]r parties; it was rather their failure to conceive an intermediate solution between deflation and full socialization that incapacitated them
Canadian agriculture did not pose a structural limitation on agrarian rapprochement with labour. Although the sector had regional and political divisions, it was unified in class terms by the prevalence of an independent farming class. Moreover, Canadian agrarians were on the forefront of political opposition and ideational innovation during the crisis. Similarly, despite being split along many lines, Canadian labour had a promising organizing drive. Yet neither agrarians not organized labour were politically strong enough to establish themselves at the national level. The Co-operative Commonwealth Federation, which began electoral contestation only in 1935, was no match for a national labour or agrarian party. Given the closure of a Scandinavian-style “red–green” compromise, the ruling Liberals and Conservatives were the only parties which could provide a national tent for such a compromise. Both parties, however, lacked ideological flexibility and political creativity to do that.
The United States had many things in common with Canada, including depression experience, industrial organization, agrarian and working class structure, state organization, and bureaucratic capacity. Yet the former’s economic policy response could not have been more divergent from the latter’s. The broader tent that the Canadian Liberals or Conservatives would not provide for agrarians and workers was made a reality by the US Democrats. From the early 1920s on, the Democratic Party began to expand from its conservative Southern base into the industrial Northeast, picking up progressive-liberal themes in the process. In the late 1920s and early 1930s, the party was truly transformed into a national medium and broker for cross-sectoral and cross-class compromises under the imaginative leadership of Roosevelt. The New Deal was a product of policy-specific, multiple, and shifting alignments between agrarians, labour, and sections of business – all arranged by and within the Democratic Party.
Like the US Democrats, the New Zealand Labour Party built a within-party, informal, and cross-sectoral and cross-class coalition prior to and upon taking power by mid-decade. Unencumbered by a fatalistic notion of socialism that defined its Australian and UK counterparts, the New Zealand party picked up where the Liberal Party left off in economic and social reform based on an effective coalition of agrarians and emerging labour early in the century. However, Labour was limited in its policy experimentation by an overwhelmingly pastoral economy. Instead of innovating in a proto-Fordist direction as in the cases of the United States and Sweden, it thus tried to transform the economy by import-substituting industrialization.
My research can be seen as an intervention in recent debate about “3Is” (ideas, institutions, and interests) in the comparative public policy literature. No serious scholarship can single out one “I” to the exclusion of the others. While recognizing the role of institutions and interests (however they are defined), I give primacy to ideas, particularly ruling party ideologies, programs, and strategies, in accounting for public policy outcomes. Readers can refer to the full article for a more detailed account of interaction between the “3Is” in the case of English-speaking countries’ economic policy responses to the Great Depression.
Adnan Türegün is an adjunct research professor in the Department of Sociology and Anthropology at Carleton University.
This post is based on Adnan Türegün, “Class, Politics, and Economic Policy at a Critical Juncture: Canada and the Anglo-American ‘Family of Nations’ in the Great Depression of the 1930s” Studies in Political Economy, 102(2): 182-202 (2021), DOI: 10.1080/07078552.2021.1949789.