Mel Watkins' report set federal policy for decades.
By Linda McQuaig
Monday, December 13, 2010
Given the cataclysm of the recent financial meltdown and ensuing economic despair, the need to get beyond the narrow confines of the "science" of economics seems palpable. But instead of the media turning to the likes of a brilliant and insightful economist like Mel Watkins, our airwaves are clogged with hack neoconservative bank economists — and Tom Flanagan, who taught Stephen Harper economics and of course most recently called for the assassination of Julian Assange.
The 1968 Watkins Report led to the establishment of the Foreign Investment Review Agency, which was of course later gutted.
Watkins would be particularly useful in the public debate now, because he is so adept at deconstructing mainstream economic dogma, exposing (among other things) its close relationship to power. As Watkins noted earlier this year:
"... But we all know, if we bother to think about it, that most economics comes from a very small number of countries who happen to run the world. The great economists of the 19th century into the mid-20th were British. Since then they have been American...
"Look at how most Nobelists in economics — more so than in science or medicine and certainly than in literature — are Americans. Is it because they have all the good ideas or because they get to define what is a good idea? And if you're not lucky enough to have been born there, then move there; Robert Mundell was born in Canada but won his Nobel by rarely being here.
"There is manifestly a deep symbiosis between economic thought and power, and power lies not with nations in general but with imperial powers in particular. Does this explain why economics today, in contrast to political economy, is so insistently apolitical because we would sooner not face up to who we emulate and serve?..."
Or, in another recent piece:
"... It is no accident that economics is the dominant discourse of business schools, that without it they would be without clothes to hide their intellectual nakedness. Deny power the language and power is humbled..."
Watkins was trained in mainstream economics at MIT in the 1950s. In his early days, he was actually an exponent of Harry Johnson's general equilibrium theory (the notion that markets, left alone, work their perfect magic), and even penned an academic article in that vein that was well-regarded in the mainstream.
Maybe it was the 1960s that got to him. Appointed by the Pearson government to head a task force on foreign ownership, Watkins ended up recommending strict regulations of foreign investment and ownership. (This was in the days when some in the Canadian elite actually still liked the idea of national sovereignty, and the recommendations of the 1968 Watkins Report led to the establishment of the Foreign Investment Review Agency, which was of course later gutted.)
Having shaken off the shackles of neoclassical economics, Watkins went on to try to nudge the NDP leftward as a co-founder of the "Waffle" (so called because, if forced to choose whether to waffle right or left, they unabashedly waffled left.) That was too much for the party establishment, which banished them from the party. (Watkins later quietly returned to the fold, running unsuccessfully for the NDP federally in the Beaches.)
By the 1970s, Watkins was fully out of the economics closet, as a key figure in the "new political economy" movement, which aimed to combine the economic development theories of Harold Innis with Marxian notions of class. Some observers recall Watkins calling himself a Marxist. And let's not forget the real name of the Waffle — the Movement for an Independent Socialist Canada.
Those were clearly heady days when the notion of a pluralistic society included even the possibility of not being a capitalist.
Despite this clear leftward drift, Watkins managed to survive for many years within the University of Toronto economics department, even after it abandoned its broader focus as a department of political economy and became a rigid bastion of conservative economic orthodoxy.
Toronto Star columnist Tom Walkom, a former student of Watkins', attributes Watkins' survival at U of T to the fact that he "scared the economists because he was so smart. And when he could be bothered, he was an adept player of cut-throat academic politics..."
Recalls Walkom, "As a teacher, Mel was as he is in conversation: laid-back, laconic, funny, shrewd."
I would add that Watkins is never the least bit pretentious, nor anything other than a great person to have lunch with, to spend time mulling over the grim goings-on in the world. His wry, self-deprecating humour makes it possible to forget that he is easily one of the most formidable minds in the country.
Watkins' wonderful writings are of course available through Straightgoods.ca and the Progressive Economics Forum. But I can't help but feel that, if we weren't living in this dark neoconservative age, his claim to fame might have been shaping the Canadian economy, rather than (according to his own observation) that he baby-sat Bobby Orr.
Journalist and best-selling author Linda McQuaig has developed a reputation for challenging the establishment. As a reporter for The Globe and Mail, she won a National Newspaper Award in 1989 for writing a series of articles, which sparked a public inquiry into the activities of Ontario political lobbyist Patti Starr, and eventually led to Starr's imprisonment. In 1991, she was awarded an Atkinson Fellowship for Journalism in Public Policy to study the social welfare systems in Europe and North America.
Since 2002, McQuaig has written an op-ed column for the Toronto Star. This article, which appears here with permission, previously appeared in The Star.