Sunday, November 4, 2012

Thinking about Prairie Capitalism: Interview with Larry Pratt

Interview by Jeremy Mouat

Aurora: Recently I was reading Prairie Capitalism, a book that you wrote in 1979 with John Richards, and I found myself wondering what you might think now. The book came out of a particular debate and a particular context, notably, the debate around the NDP Waffle and left nationalism. Yet the book also attempted something that hadn't been done before in Western Canadian historiography, it seemed to me. Before Prairie Capitalism, the literature had been almost exclusively narrative. Did you have this sense at the time, that you were writing a different account of Western history?

Larry Pratt: When John came to see me around 1975 – he was a Saskatchewan MLA about to lose his seat - we compared notes and we were struck by the similarities between the Blakeney NDP in Saskatchewan and the Lougheed Conservatives in Alberta. That was the first thing. The second was that we were both disenchanted nationalists. We came to feel that Lougheed couldn't be simply written off as an instrument of the working people, which is what a lot of people in the East were saying. I wrote a piece for Leo Panitch’s book, The Canadian State and in it I described a development strategy that was emerging in Alberta around petrochemicals.[1] It seemed to me that if a province was simply content to take the money and run, that that province wouldn't go through these tremendous difficulties trying to build a world class petrochemical industry. And there were a lot of other things - the Blakeney government in Saskatchewan was nationalizing potash. John and I thought that we would try to do something different. We would take the history of the two provinces right from their conception, through the populist period, to the first development period, then up to the present. John would write about Saskatchewan and I would write about Alberta, and then I would go over his work and he would go over mine. But John was a better economist than I was, and so he wrote the book’s last chapter, which I think is a really great chapter, on rent. The book probably arose out of the tremendous period of change that occurred after the price of oil went up so high in 1973-74. We had to account for the fact that these two provinces were behaving in very entrepreneurial sorts of ways. And some private factors were following.

Aurora: I come from the third province, from British Columbia, and during this same period, Dave Barrett comes to power, in August 1972. It seemed in all three provinces, particularly in Alberta and BC, that the provincial civil service becomes much more professional by the end of the '60s and the early '70s.

Larry Pratt: And the civil service changes. For example, in Alberta, Peter Meekison set up an office of inter-governmental affairs, which was very professional. It was almost like a little Foreign Office. He had contacts all over the country. That was Lougheed’s initiative, to have that office, that intelligence. Peter Meekison was also the person largely responsible for the notwithstanding clause.

Aurora: One of the things I find intriguing is the difference between Peter Lougheed and the things that you're describing, compared to the present situation here in Alberta. One doesn't get the sense that the Klein government would be particularly interested in working with an intellectual coming out of the university – someone like Peter Meekison - to think about future strategies.

Larry Pratt: I think everything changed with the downturn in energy prices in the 1980s, but more particularly with the coming of de-regulation and free trade. De-regulation and free trade meant that the government's entrepreneurial activities, or its interventions, were going to be virtually impossible. It meant giving up a lot of political power, for example, to attach conditions to the use of the province’s resources. The government clearly saw the need for expansion into the United States, and in return for that, it would give up a lot of the powers that it had been exercising. I think a lot of people reached that conclusion for themselves, but Don Getty certainly wasn't up to Lougheed's standards and Klein's not interested in playing that game. To give you one example, petrochemicals. When the big Alliance pipeline was built in 1997 to the year 2000, there was big debate about whether Alberta would be permitted to strip ethane off the natural gas going through its territory for its petrochemical plants. The ethane is used to make ethylene. The answer was no, Alberta did not have the power, it did not have the right, to take the ethane out because the pipeline crosses international boundaries. That meant that it's under federal jurisdiction. And so you have this quandary, which I don’t know that Lougheed understood when he backed free trade, that with free trade and the NAFTA agreement, Alberta would be giving up a lot of its capacity to engage in what in our book we call province-building. Now you could argue that Klein is certainly interested in the oil sands and in facilitating the building of new plants up there. But I don't think he's got the kind of vision that Lougheed had.

Aurora: The thing I always wonder about, with Premier Klein, is the extent to which his lack of vision arises simply out of a lack of vision, or whether it's an unwillingness to push an agenda different than simply facilitating development.

Larry Pratt: It’s probably a bit of both. You're right; ideologically he's not very serious. That's the public sector, but if you look at the private sector, there’s a lot of stuff that’s been happening that we predicted in Prairie Capitalism. In other words, there are big world-scale Alberta companies out there, not just operating in Alberta, but internationally. Those are not foreign-owned, they are Canadian-owned. We have enough overseas investment that we're just about able to produce a million barrels a day offshore. That would be companies like EnCana and Petro-Canada. If you add them up, there's maybe 15 to 20 companies that are big enough to operate outside the country, and which also have significant operations inside the United States. In a sense that is what we were getting at in Prairie Capitalism: the growth of an indigenous bourgeoisie, in Marxist terms, or an indigenous capitalist class. I don't say they're all as dominant as the American companies that are here. But they do have their fingers in a lot of pies. A lot of it came about because in 1986 the price of oil collapsed to nothing; it fell to $9. Ten thousand scientists, geo-scientists, engineers, you name it, were fired in Calgary. Instead of looking for other jobs, a lot of them pooled their resources and set up companies, and from those companies come these big ones. It's kind of a Schumpeterian creative destruction. Allan Markin, for example, chair of Canadian Natural Resources Ltd., he’s one of those guys. He set up three companies, got them on their feet, got them going. And these companies are not to be sneezed at. Some of them are big and I don't know how far they'll go.

Aurora: Then there's the ATCOs, from an earlier generation.

Larry Pratt: They're still there.

Aurora: But they're not coming out of the mid-'80s collapse that you're talking about.

Larry Pratt: I call them the generation of '86. They sort of came out of nowhere. By about 1989, 1990, one began to notice these companies. Allan Markin says that the majors picked all the low hanging apples, but there were still a lot of good apples higher up the tree that we're going to get. In the meanwhile, the majors, for the most part, concluded that Alberta was too small and too mature to consider; they packed their bags and off they went. Mostly they moved out, except out of the tar sands. They went to the Caspian Sea, to Russia, Europe, etc., etc. The big plays had been natural gas, of which there’s an enormous amount still left, and to some extent the oil sands.

Aurora: The oil sands is an odd story, which seemed to get going through successful government R&D in the very early stages, and then passing to private hands. I'm always struck by the rhetoric of private entrepreneurship and the reality of state-sponsored R&D.

Larry Pratt: You can argue that there's a case for government control or ownership or subsidization of a hard staple like the oil sands, especially in the early stages. I still see the oil sands as being kind of iffy. The operating costs are increasing and I'm not sure that that price of $38 a barrel represents anything like the true value. I think there's a lot of slack still in the world oil economy, and there is a risk that the price will come down and the costs will go up. Who knows. They're investing enormous resources.

Aurora: One of the things I'm interested in is the extent to which the private sector has or has not created a public face. I’m thinking of people like Eric Newell. But there don't seem to be very many people like him. One gets the sense with the oil sands development or other things like petrochemicals, that there are these faceless companies doing things. There are very few prominent individuals.

Larry Pratt: Some of those guys did exist, up until a few years ago. There was Jack Gallagher, of course, and Jim Gray went under. Glen Hunter was bought out by Burlington. J.C. Anderson, who's a hell of a good oil man, was bought out by Devon Energy Corp. Those are some of the biggest people. That generation is pretty well gone. I don't know who the others are there. Eric Newell is a pretty unique individual, and Allan Markin, that guy at Canadian Natural Resources Ltd.: they’re both interested in the broader picture. Markin set up the Writer in Residence program at the University of Calgary. His wife, Jackie Flanagan, runs Alberta Views. They're rich. And there are a lot of rich people down there.

Aurora: I'm a subscriber to Alberta Views and really enjoy the magazine. It’s a reminder of how many thoughtful people there are in this province. I don’t think many people outside Alberta really appreciate the reality of life in Edmonton or Calgary, where after all 80% or 70% of the population actually lives and works. It seems a tolerant, multi-racial, generic Canadian society.

Larry Pratt: When I first came here - I came from the London School of Economics, where I did my PhD - I was really astonished at the energy, the culture. There's a tremendous writing community here, there's a theatre community, there’s great music. Maybe it’s because we're a long ways from the mountains, a long ways to Calgary; we are isolated and forced in on ourselves.

Aurora: Was Prairie Capitalism the beginning of an interest in the political economy of Alberta?

Larry Pratt: When I first got here in the early '70s, I was teaching international politics and Mel Hurtig got me to write a book called The Tar Sands.[2]That book was my first baptism and there was a lot of controversy about it. In the midst of that, I met John [Richards], and he said, as I recall, “that's a nice first effort, but I think there's more going on here than that, and in Saskatchewan.” So we just spent days together, comparing notes, and we decided to work together. We worked on the book for five years, from 1975 to 1979. And it was kind of amazing. Prairie Capitalism came out in the middle of 1979 and I remember that I was on a speaking trip to Queens University in Kingston. In the afternoon that I was there, I went into the bookstore, and there was Prairie Capitalism in the History aisle, in Political Science, in Economics, and in Sociology. All of them had adopted it as a text. And I knew, that was all the evidence I needed, I knew that it was going to do well.

Aurora: I’m trying to place the book in a trajectory of your own writings. I know that you wroteThe Last Great Forest with Ian Urquhart. . .[3]

Larry Pratt: I wrote some critical pieces on the national energy program. Then Ian Urquhart and I, later on, did that book on the forests. Again, that was about a four year project. But in the meantime, I came down sick. I had a bout of depression and it lasted for a long time. When I came out of that, I wasn't interested in working in political economy anymore. I went back to international politics. I started writing about Thucydides and Machiavelli and Clausewitz and other classical writers on war. I wrote a fair bit about that stuff. But when the big Japanese mills came in, it was too big. Somebody had to write about it. So we did and we got sued, a $200,000 suit by the former deputy minister.

Aurora: I didn't know that.

Larry Pratt: Being sued is not a lot of fun. It takes up all your time. We settled the suit for $10,000 and no apologies. So we won. We thought it was a joke to try to force other people to give up their criticisms of those mills.

Aurora: Did the University of Alberta offer support?

Larry Pratt: Yes; their insurance company did. Ian and I just couldn't have waged a $200,000 suit; we couldn't have afforded the lawyers. I have no idea what the lawsuit cost, but I'm sure it was over $100,000 just for lawyers.

Aurora: You first wrote on Suez, didn't you?

Larry Pratt: Yes, that was my PhD, which was in history, not in political science. It's on appeasement, on the Mediterranean’s strategic position and appeasement.[4]

Aurora: You did that at the London School of Economics?

Larry Pratt: Yeah, and then I was recruited to come here, to teach international relations [at the University of Alberta].

Aurora: That was in '71? Your whole career was at the University of Alberta?

Larry Pratt: Yes. I had an offer to go to Queen’s at one point. But I like the West, I like Edmonton.

Aurora: I think you were saying this earlier - and I know it's in the introduction to the book - the sense in which you and Richards felt that left nationalism wasn't addressing the regional nuances or realities of Alberta. Did that hit you right away, when you arrived here?

Larry Pratt: No. Perhaps by the mid-'70s. John [Richards] had been in the NDP, he ran for the Waffle, as an independent, and lost. And then he moved to Alberta, partly to work with me. We both saw this enormous regionalism, economic regionalism, developing in the west. Left nationalism couldn’t account for that. Left nationalism was just a residue of foreign investment, that's all it is. It’s not interesting in its own right.

Aurora: Which begs the question, whether or not left nationalism is in fact Ontario. . .

Larry Pratt: We got called down to a meeting at York University. Mel Watkins was there and Jim Laxer was there and Danny Drache was there, Phil Resnick; all the big pooh-bahs of left nationalism. The book had just come out, about a month before, and they laid it on the line: it was a fundamentally flawed book, a dangerous book. We had transgressed the party line. I didn't know whether to laugh or cry.

Aurora: I'm imagining that it's a relatively small community of scholars. Did it affect your ability to work and function in that community?

Larry Pratt: No; in fact, the more conventional western historians, the more conventional political scientists, said the new orthodoxy is Richards and Pratt. But it didn't last that long.

Aurora: One of the things I found so interesting about Prairie Capitalism was how it differed from other work. Other academic inquiries in western Canada seem mostly either theoretically about populism or specifically about Social Credit. C.B. Macpherson, John Irving, my colleague Alvin Finkel, Bob Hesketh, there’s this industry.

Larry Pratt: But we were past that in temporal terms. Social Credit died the first month I arrived in Alberta. Not that I had any idea then what was going on here. But it seemed to me that you had to go beyond those debates about what the nature of Social Credit was. We looked at a class analysis of the New West: the new generation, a new group of businessmen and lawyers, they are far more business oriented than Social Credit was. On the other side of the line, in Saskatchewan, Blakeney's idea of a very well trained civil service that could run things, like the potash industry, was also emerging. These guys were in their 40s, and they had gone beyond Social Credit.

Aurora: I meant more at the level of academic literature than in terms of objects of intellectual inquiry. What's striking about Prairie Capitalism is its take on this broader context, looking at Social Credit as part of a story about province building that didn't continue. The other thing that I’ve always found striking, is that there doesn't seem to have been much work of similar importance, other than maybe Gerry Friesen's overview history, The Canadian Prairies. Which is odd.

Larry Pratt: There's so much going on here. I've never found it necessary to go out of Alberta to find interesting things to write about or talk about. I sure taught a lot of students, but none of them seemed to want to go on and write about this stuff. But the book that I would like to redo, if I was going to redo a book, would be The Tar Sands. It seems to me that I didn't get it right the first time. But beyond that, I'm attracted by Harold Innis, and ideas about the nature of the state. Then from that, what kind of development is possible, what kind of economic rents can we generate? There was that long negotiation between Ann McLelland and Eric Newell and the others, a package for the oil sands. Basically they gave it all away. But also to look at the technologies, the changing technologies. I mean, it's a huge issue.

[1] Larry Pratt, “The state and province-building: Alberta’s development strategy,” in Leo Panitch, ed., The Canadian State: Political Economy and Political Power, Toronto: University of Toronto Press, 1977, pp. 133-62.

[2] Larry Pratt, The Tar Sands: Syncrude and the Politics of Oil, Edmonton: Hurtig, 1976. Athabasca University Library, call number HD 9574 .C3 P7.

[3] Larry Pratt and Ian Urquhart, The Last Great Forest: Japanese Multinationals and Alberta's Northern Forests, Edmonton: NeWest Publishers Ltd., 1994. Athabasca University Library, call number SD 146 .A4 P915 1994.

[4] Larry Pratt, East of Malta, West of Suez: Britain’s Mediterranean crisis, 1936-1939, Cambridge, England: Cambridge University Press, 1975.

Article published April 2005.
Interview conducted March 19, 2004, Edmonton, Alberta.

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