Ch 1 (Hale) - Business & Government: The Politics of Mutual Dependence
Businesses depend on governments for more or less stable sets of rules that are necessary for them to carry on successfully.
Look to them for protections against threats, seek changes to or compensation for the effects of government policies that may hinder economic activity.
Governments depend on business investment for the economic activity and growth that is vital to the prosperity and employment of their citizens, the generation of tax revenues to pay for public services, and enough public satisfaction to win them periodic re-election.
Also look to them for financial support.
Governments also have their own interests that can result in conflicts with business.
The reality of our political and economic systems, and of the relationship between business and governments, is mutual interdependence.
Public expectations of governments’ role in the economy may be shaped by normative factors: societal concepts of the public good to be fostered or social evils to be corrected.
The political process functions as a parallel marketplace in which different interests inside and outside government collaborate and compete to influence and control policy decisions affecting their vital interests.
Citizens also look to government to protect their interests from what economists call the negative externalities of economic decision-making: the direct or indirect effects of economic activities that harm other people.
In a liberal capitalist democracy such as Canada or the United States, there are two basic approaches to the distribution of social and economic opportunities among citizens.
The first allocates opportunities and resources through the political system at the discretion of elected politicians, bureaucrats, or quasi-autonomous regulatory structures.
The second is a more or less competitive market economy functioning on the basis of known rules that are generally applicable to all participants as producers, workers, or consumers.
The relative openness of Canada’s market economy and its interdependence with those of other countries both influences policy choices in Canada and imposes practical constraints on its political processes.
Government involvement in the economy has always expressed some concept of national interest or public good. The national interest may be conceived in the relatively narrow terms of raison d’etat: the preoccupation of governing elites with the protection and expansion of their power to serve the interests of the state.
Mercantilism was used in the past as part of a broader system of policies intended to make royal governments more economically self-sufficient.
It has left a political and intellectual legacy of economic nationalism and dependence on government action or sponsorship to promote economic development.
Rooted in classic liberal or contemporary neo-conservative political economy, market liberalism stresses the importance of individual liberty, the private ownership of property, the rule of law, and the diffusion of both political and economic power to maximize the social and economic well-being of individuals and the collective well-being of the community.
Seeks to achieve the maximum freedom of economic activity from political control, along with the preservations of competition, the maintenance of social order (or social cohesion), and the promotion of economic opportunity and well-being.
Recognizes the role of the government in providing a stable and transparent legal framework to promote the common good.
Many businesses tend to voice support for the ideology of the marketplace to the extent that it serves their interests, while seeking protection or support from governments to “level the playing field” when it works to their disadvantage.
The dominant political ideas that have shaped Canadian government policies towards business and the economy have adapted elements of