Banting, K. G. (1997). The internationalization of the social contract. In T. J . Courchene, (Ed.), The nation
state in a global/information era: Policy challenges (pp. 255–285). John Deutsch Institute for the Study of
Economic Policy, Queens University.
The Internationalization of the
Social Contract
Keith G. Banting
Introduction
One of the central realities of the late twentieth century is the tension between
the emerging international economic order and the social contract established
1
in Western nations earlier in the centwy.
This tension has spawned critical
questions for social policy advocates throughout the Western world. Is it
possible to engage fully in the global economy, and still preserve distinctive
national approaches to the social contract? Or are competitive economic
pressures narrowing the degrees of freedom enjoyed by the nation state, and
driving advanced democracies inexorably towards a harmonized model of
social policy?
The debate over these questions has been passionate. As always, however,
reality is more complex than the polarities of political rhetoric. This paper
argues that globalization and technological change have placed the postwar
social contract under enormous strain, and that a new social contract is slowly
emerging. The contours of this new social contract, however, are not those
anticipated
in
more
alarmist
predictions.
'This paper builds on Banting (1995;
Social
1996; and
programs
continue
to
1997). 1 would like to thank
Kate Brown and Shelley Pilon for excellent research assistance.
255
command a significant portion of the national resources of OECD nations, and
there is little evidence that pressures for harmonization are pushing Western
nations towards a standardized, transnational model. Governments cannot
insulate their societies from international pressures, but global pressures do
not dictate the ways in which governments respond. Differences in domestic
politics, cultures and policy legacies shape the ways in which countries are ad­
justing to the global economy, and the burden of adjustment is being allocated
in different ways around the globe. Politics within nation states continue to
matter.
Understanding the nature of the emerging
social
contract therefore
requires greater nuance in analysis. More specifically, it requires closer atten­
tion to the changing balance among the basic goals of social policy, and to
changes in the design of social programs. This paper pursues this strategy for
the particular case of Canada. As in other OECD nations, social expenditures
continue to represent a growing share of the nation's resources, and Canada
continues to chart a distinctive course from that of the United States. Within
these parameters, however, the balance among the goals that defined the
postwar social contract- security, redistribution and social integration - ar e
changing
in powerful ways.
The
transition to
a new
social
contract
is
incomplete, and many of our social programs reflect an uneasy compromise
between old and new. But the outlines of the future can be discerned. At the
heart of the transition is a changing definition of the concept of "security, and
of the ways in which security can be enhanced in a world defined by pervasive
change.
In developing this interpretation, the paper proceeds through international
and Canadian perspectives. The first section explores the international context
and its implications for the development of social programs in OECD nations
during both the postwar era and in the contemporary period. The second
section then nuns to Canadian experience in more detail, examining the nature
of the social contract established during the decades after the Second World
War, and tracing the contours of the new social contract that is emerging in the
context of a global economy. The final section summarizes the argument, and
reflects on the major challenges that will define the Canadian social contract
in the early years of the next century.
256
Keith G. Banting
The International Order and the Social Contract
Since the dawn of the state system in Europe in the seventeenth and eighteenth
centuries, each state has existed at the intersection between the international
order and its own domestic society. In the words of Theda Skocpol, the state
"is
fundamentally
Janus-faced,
with
an
intrinsically
dual
anchorage
in
domestic society and tlie international system" (1979, p. 32). Inevitably, the
state must mediate and balance pressures emerging from these two domains.
In part, each state seeks to protect domestic interests from external pressures,
seeking
to nudge
as best
it can
the rules
and
practices governing
the
international system in directions congenial to the interests of its own society.
But, in part, the state also conveys pressures emanating from the wider global
context to domestic society, adapting public policy to international conditions
that it cannot alter and helping domestic interests to adjust to the world beyond
its borders. The evolution of the social contract has long been shaped by this
Janus-faced character of the state, as a comparison of the postwar era and the
contemporary period reveals.
During the postwar period, the massive growth of international trade and
the expansion of social programs were mutually reinforcing (Keohane, 1984;
Ruggie, 1983). On the one hand, the GATT was critically important in under­
writing one of the most remarkable periods of economic growth in human
history, which in tum swelled public coffers and helped to finance expensive
new social commitments. On the other hand, the expansion of the social con­
tract helped
open economic borders by reducing potential domestic opposition
to trade agreements; in Ruggie's words, "governments asked their publics to
embrace the change and dislocation that comes with liberalization in return for
the promise of help in containing and socializing the adjustment costs"
(Ruggie,
1994,
pp.
4-5).
This
international
impulse was
reinforced
by
powerful domestic political constituencies dedicated to the expansion of social
programs.
Given this coincidence of international and domestic pressures, social
spending rose rapidly throughout the OECD, from an average of 1 0 . 1 % of
GDP in 1960 to 19.6% in 1980, as Table 1 indicates. The table also confirms
that the expansion was broadly spread throughout OECD countries, producing
considerable convergence in spending on social programs in this period; the
coefficient of variation in social expenditures in OECD countries as a whole
fell throughout this period, as did the ratio of the highest to the lowest
expenditure levels. Clearly, convergence is not simply a recent phenomenon.
The Internationalization of the Social Contract
257
Table 1 :
Convergence in Social Expenditures among OECD Countries,
1960-1980
Public Expenditure on Social Programs as Percentage of GDP
1960
1964
1968
1972
1974
1980
Average
10.1
1 1. 9
13 . 1
15.1
18.6
19.6
Coefficient
0.36
0.34
0.35
0.34
0.31
0.30
4.47
3.51
3.70
3.76
3.28
2.75
of variation
Ratio
H/L
Source: Calculated from data provided in OECD (1994b, Table la).
In terms of social spending at least, the advanced industrial nations were more
similar at the end of the period of rapid social policy expansion than at the
beginning.
Nevertheless, individual states clearly enjoyed considerable degrees of
: freedom to design their social contracts in light of national cultures and
idomestic political interests. This was especially the case in larger countries
that did not depend heavily on international trade. Smaller countries with
comparatively open economies were inevitably more sensitive to global
pressures even then, and many of them adopted more expansive social
programs in part as a means of cushioning workers and their economies more
generally from economic shocks originating outside their borders (Cameron,
1978; Katzenstein, 1984; 1985). Overall, however, this period clearly gave
national policymakers considerable scope to design their social programs. The
result was a rich diversity in national approaches to the social needs of a
modem society, and analysts seeking to understand the social contract of that
era tended to focus exclusively on the domestic political coalitions that gave
rise to more or less expansive systems of social policy (Esping-Andersen,
1990).
The 1980s and 1990s have reminded us with a jolt of the dual anchorage
of the social contract It is commonplace to observe that we are living through
a period of dramatic international change. The globalization of markets for
258
Keith G. Banting
goods, services and finance is shifting the nature of the international economy
"from exchanges among a set of inter-linked national economies to exchanges
within an integrated global economy" (Hart, 1996, p. 2). The sources of this
transition have been well discussed elsewhere: the opening of economic
borders by the GATT, the WTO and regional trading blocs; advances in
communications and transportation that have reduced historic barriers of time
and space; the emergence of Third World nations as highly competitive
sources of sophisticated products; and the increasingly international produc­
tion strategies of multinational enterprises. The impact of globalization has
been reinforced by wider technological innovations, which have triggered
sweeping changes in the production and distribution of goods and services.
The combined effect of globalization and technological innovation has been
a painful restructuring of the economies of Western nations.
Globalization and technological change have broken the comfortable
symbiosis between the international economy and the welfare state that pre­
vailed during the postwar era. Governments in Western nations face powerful
but contradictory pressures. On one side, they confront pressures for higher
spending, much of which flows directly from economic restructuring. Higher
unemployment, especially long-term unemployment, drives up the cost of
unemployment and related benefits; and individual citizens, industries and
regions seek new forms of protection from global competition or help in
adapting to it. On the other side, globalization and technological change
simultaneously weaken the capacity of policymakers to respond. Governments
are under pressure to redesign social programs in ways that remove rigidities
in the labour market, enhance flexibility in the domestic economy, and reduce
the :fiscal burdens on the public treasury. In addition, many countries have felt
a need to lower the tax and regulatory burden on production in order to remain
competitive with other trading nations. Economic theory may suggest that
flexibility in exchange rates can compensate for differentials in production
costs, thereby preserving scope for distinctive national policy choices. But in
the hard world of politics, domestic business interests complain bitterly if they
believe their taxes and regulatory costs are higher than those of their inter­
national competitors.
Considerable analytical effort has been devoted to distinguishing between
the separate effects of trade liberalization on one hand and technological change on the
other. However, for current purposes, they are seen as interwoven causes of economic
restructuring.
The Internationalization of the Social Contract
259
In principle, the tension between the international economy and the social
contract inherited from the postwar generation might be eased in one of two
ways. The first strategy is to alter the rules governing international trade to
ensure that it operates on terms more compatible with the social aspirations of
the postwar social contract. The second strategy is to adapt the postwar social
contract to the dynamics of an integrated global economy.
The problem confronting the first strategy is to find a means of reasserting
democratic control over the market in a manner appropriate to a global
economy (Hart, 1996, p. 6). Although there has been considerable debate over
how this might be done, practical efforts have been relatively weak so far.
Some international trading agreements have incorporated elements relevant to
labour relations and environmental policy. In Europe, the Maastricht proposals
for a single market prompted the adoption of a social charter, establishing
standards for labour relations across the countries of the Community; and the
debate over NAFTA in the United States led to side deals on labour standards
and
environmental
regulation.
In one
sense,
the NAFTA
side
deals
in
particular can be seen as placing developing nations on notice that in the future
the price for more complete access to the markets of the first world will be
protection for the social dimensions of state activity. This message was further
underscored at the last moment of the Uruguay Round when the United States
and France pushed for the addition of a "social dumping" clause to the GATT.
However, the reality is that, so far, these elements of trade agreements have
been relatively minor, and have not focused on social programs as such.
As a result, the primary response of Western industrial nations has been
to adapt the social contracts that they established in the postwar period to the
pressures emanating from the global economy. Virtually every government has
had to struggle with powerful pressures on social expenditures resulting from
global economic restructuring, as well as aging populations, exploding health
costs and growing public deficits. Virtually every government has made
painful changes in its benefit and tax regimes. It is worth noting, however, that
the historic upward trend in social spending continued into the 1990s. Average
social expenditures as a proportion of GDP in OECD countries stabilized at
about 20% in the mid-1980s, but had moved to 24.6% by 1993 (OECD,
1996a). Undoubtedly, the period of rapid growth in social expenditures is
over; and even stable expenditures in the face of higher levels of unemploy­
ment in most countries
and aging populations everywhere suggests an erosion
of the generosity and strength of social protection systems. Moreover, a
number of OECD countries have made more substantial reductions in social
spending during the mid-1990s that are not yet captured by the comparative
260
Keith G. Banting
data Nevertheless, the social contract still represents a substantial portion of
the resources of Western nations.
The broad pattern of convergence in the social expenditures of OECD
nations established in the postwar era has also continued. As Table 2 indicates,
the coefficient variation and the ratio of the highest to the lowest expenditure
levels continued to fall over the decade. It is important, however, not to
overestimate the pervasiveness of hannonization.
Convergence in social
expenditures is strongest within the European Community, where additional
political factors are at work. The detennination to build an ever closer union
generates imperatives that go beyond those implicit in the global economy
alone. The advent of the single market in 1992 led not only to the social
charter, but also to the adoption by member states of a resolution in favour of
a voluntary strategy of convergence in social protection policies (Commission
of the European Communities, 1992). More recently, the pressures have been
reinforced by the fiscal criteria for member states wishing to join the economic
and monetary union (EMU) in 1999. Given the political support for an ever
Table 2:
Convergence in Social Expenditures among OECD Countries,
1980-1993
Public Expenditure on Social Programs as Percentage of GDP
1980
1983'
1986'
1989'
1991
19933
Average
19.52
21.29
21.48
21.42
23.11
25.74
Coefficient
0.32
0.30
0.27
0.28
0.26
0.26
2.80
2.67
2.57
2.57
2.84
2.43
of variation
Ratio
H/L
Notes:
1
2
Excludes Austria.
1980-1989 data for West Germany; 1991 and 1993 data for united
Germany.
3
Excludes Australia, Belgium, Japan and New Zealand.
AII data excludes Switzerland, Mexico and Turkey.
Source: OECD (1996a).
The Internationalization of the Social Contract
261
closer union in much of Europe, it is perhaps not surprising that convergence
in social expenditures is strongest here.
Even within the European Union, a closer look allays some fears about the
withering effects of wider economic integration. First, the convergence of
expenditures among the countries of the Union has been due more to the
considerable increases in the spending of southern countries such as Greece,
Spain and Portugal than to a slowing of spending in northern Europe. As
Tables 3A and 3B reveal, ihe pattern of convergence in expenditure levels
slows considerably when the three southern countries are removed from the
set. Second, underneath slow convergence in expenditure levels lies continuing
diversity in the design of social programs, which is clearly rooted in the history
and political cultures of the member states. From the outset the Commission
accepted that "it would be unrealistic to think of blending them into a single
Community system" (ibid., p. 7); and a subsequent study by the European
Commission could find no consistent pattern of convergence implicit in the
program adjustments of the 1980s. "There has certainly been convergence of
the problems to be solved, ... [but] there is no clear evidence of convergence
of social protection systems in the Community in the 1980's (Commission
of the European Communities, 1994, p. 9).
A wider perspective also suggests that different nations are adjusting to
the global economy differently, and the costs of change have been allocated
differently. The often noted contrast between Europe and the United States is
striking. Much of Europe retains a
strong social contract, built on widespread
unionization, extensive regulation of labour markets, and generous social
security. These systems have tended to protect people already in work, and
polarization of earnings is much Jess marked in continental Europe. But these
countries have also experienced slow rates of job creation and very high
unemployment rates. Young people and other first-time job seekers are facing
immense difficulty breaking into the Jabour market; and older, displaced
workers find it very difficult to reenter employment. In the United States,
however, lower levels of unionization, flexible labour markets and weak social
protection have contributed to a different pattern of adjustment. Employment
growth has been strong, including in the low-wage sector, and the unemploy­
ment rate is low by European standards. However, the U.S. pattern has been
marked by a widening polarization of wages, with low-skilled workers
On the contrast between the patterns of adjustment in Europe and the United
States, see Commission of the European Communities (1993); OECD (1994a); and
Blank (1994).
262
Keith G. Banting
Table 3A: Convergence in Social Expenditures among European
Union Countries, 1980-1993
Public Expenditure on Social Programs as Percentage of GDP
1980
1983
1986
1989
1991
199323
Average
21.06
23.20
22.95
22.49
23.67
24.88
Coefficient
0.29
0.26
0.22
0.22
0.20
0.22
2.64
2.62
2.24
2 .1 9
1.96
1.89
of variation
Ratio
H/L
Notes:
1980-89 data for West Germany;
1991 and 1993 data for united
Germany.
Excludes Belgium.
Source: OECD (1996a).
Table 3B: Convergence in Social Expenditures among Selected
European Union Countries, 1980-1993
Public Expenditure on Social Programs as Percentage of GDP
1980
1983
1986
1989
1991
19933
Average
23.74
25.90
25.26
24.50
25.70
27.20
Coefficient
0.17
0.15
0 .1 1
0.15
0. 1 3
0.15
1.57
1.50
1.35
1. 5 1
1.44
1.54
of variation
Ratio
H/L
Notes:
• Excludes Portugal, Spain and Greece.
'1980-89 data for West Germany;
1991 and 1993 data for united
Germany.
2
Excludes Belgium.
Source: OECD (1996a).
The Internationalization of the Social Contract
263
experiencing a significant fall in real wages during the 1980s and 1990s. This
has fed into a wider pattern of growing income inequality, which is now more
marked than in any other OECD nation. Neither of these pathways is without
problems, and both generate strains on the fabric of society. From the per­
spective of a low-skilled worker, the choice between unemployment in Europe
and poverty wages in the United States may not seem particularly appealing.
Nevertheless, there are obviously different pathways in adjusting to the new
economic order.
Two conclusions stand out from this discussion. First, the experience
within the European Union and the contrast between Europe and the United
States stand as cautions against the assumption that economic integration
necessitates policy harmonization. Each country must adjust to international
pressures, but the global economy does not dictate the ways in which each
country responds. Policy is also shaped by domestic politics, and different
countries are responding to a changing world according to the rhythms of their
domestic politics and cultures. The process is painful, and the quality of social
protection established in the postwar period is declining. But the result is
unlikely to be a harmonized international model of social policy. Second, the
impact of globaliza 'on on the social contract and the allocation of the costs of
change cannot be understood by focusing exclusively on aggregate patterns of
social expenditures or the extent of convergence among industrial nations. To
concentrate here alone is to miss most of the action. The full impact of
globalization and technological change can only be understood by a closer
analysis
of substantive
changes
in social
programs
and
the underlying
objectives that breathe life into them. The following section therefore turns to
more detailed examination of the evolution of the Canadian social contract.
The Evolving Canadian Social Contract
A full understanding of the implications of globalization and technological
change for the Canadian social contract requires an initial examination of the
objectives that underpinned the social programs established the postwar era,
and an analysis of the ways in which they are evolving in the context of a
global economy.
264
Keith G. Banting
The Postwar Social Contract
Canadian experience parallels
the broad
international trends reasonably
closely. Social spending as a proportion of GDP rose from 9 . 1 % in 1960 to
15.0% in 1980 (OECD, 1994b). Although the Canadian orientation towards
social policy was influenced by ideas and experience elsewhere, the country
developed its own version of the welfare state, and certainly established a
distinctive approach from that which prevailed south of the border. The nature
of the Canadian social contract can be best understood by examining the
balance among three distinct goals that underpinned the design of social
programs throughout that period: security, redistribution and social integra­
tion.
Security. The primary goal of the postwar social contract was security.
Indeed, the development of the welfare state was fundamentally rooted in a
quest for security in an insecure world. The touchstone for the builders of the
postwar welfare state was their fonnative experience during the depression of
the
1930s, with its mass dislocation and widespread economic and social
insecurity for entire populations. The basic aim of the social contract was to
develop a system that would provide protection against the risks inherent in
modem life - unemployment, disability, illness and poverty in old age. This
quest
for
greater
security
pervaded the
Marsh
Report,
which
laid
the
intellectual foundations for the postwar social agenda. Marsh summed up the
case for the welfare state as follows: "The general sense of security which
would result from such programs would provide a better life for the great mass
of people and a potent antidote to the fears and worries and uncertainties of the
times. The post-war world would not have to be anticipated with fear and
trepidation" (Marsh, 1943, p. 17).
The risks, it is important to note, were considered to confront virtually all
Canadians, not just a specific group labelled the "poor", and the most basic
purpose of the social contract was to enhance the security of the population as
a whole. As a result, the concept of security came to be associated with the
idea of universality. The need was for predictability and a right to protection,
which were seen as inconsistent with the conditionality and discretionary
judgements of the relief programs of the interwar period. Social insurance and
demogrants quickly emerged as the primary mechanisms of social security.
Social insurance was thought to convey a right to support, in light of the
contributions paid by citizens; recipients did not have to feel guilty, and
governments would feel politically constrained not to tamper with the benefits.
Demogrants were also thought to imply a similar political guarantee, as they
would be protected by the interests of middle-income voters as well as the
The Internationalization of the Social Contract
265
poor. The actual choice between social insurance and demogrants generated
great debate in the middle decades of this century, including on the political
left, but both were seen as instruments of security in an uncertain world.
Redistribution.
In contrast, vertical redistribution through programs
targeted specifically on the poor became a secondary goal of the postwar social
contract. Much confusion surrounds this issue. In recent debates, there has
been a widespread assumption that the primary role of the social programs
established in the postwar period was to narrow the gap between rich and
poor, and universal programs have often been criticized as inefficient instru­
ments for achieving that goal. In fact, the postwar social contract represented
a shift away from vertical redistribution as the primary goal of social policy.
Whatever else one might say about the social programs of the interwar period,
such as Mothers' Allowances, the 1927 Old Age Pension Act and local relief,
they were clearly redistributive. They provided means-tested benefits that were
financed
from
general
revenues.
In
contrast,
the
universal
programs
established in the 1940s, 1950s and 1960s, shifted redistribution into a hori­
zontal direction: from the employed to the unemployed, from the healthy to the
sick, from the non-aged to the aged, from the childless to families with
children, and so on. As a secondary feature, universal programs financed
through progressive taxes did have a mildly redistributive impact between rich
and poor. However, that was not the primary aim.
Admittedly,
a minor
theme
in the
postwar
social
agenda
was
the
modernization of selectivity. The traditional forms of relief characteristic of
the interwar period were slowly replaced by modem programs. The establish­
ment of the needs test and the professionalization of the administration of
.social assistance, which followed the adoption of the Canada Assistance Plan
in 1965, represented important advances. In a similar vein, the introduction of
the Guaranteed Income Supplement (GIS) for the elderly established the
political legitimacy of a selective benefit that is income-tested but ignores
assets, establishing a precedent that has become much more important in
recent years. During the postwar period, however, such selective programs
were seen as distinctly secondary instruments. When the GIS was introduced
in
1965, it was presented as a temporary program that would fade away
naturally as the Canada and Quebec Pension Plans matured. Similarly, social
assistance was seen as playing a limited role. In the words of the March
Report, social assistance "does not give security ... ; it might almost be said to
sustain insecurity" (Marsh, 1943, p. 60). The entire point of universal social
security programs was to protect as many Canadians as possible from having
to turn to
social assistance. Thus, the postwar social contract can be character­
ized as a flight from selectivity.
266
Keith G. Banting
Social integration. Finally, the postwar social contract increasingly came
to be seen as an important instrument of social integration. Ever since the
introduction of social insurance by Bismarck in the late nineteenth century, the
welfare state has been a means of mediating conflicts and preserving stability
in divided societies. Bismarck's social programs were part of a larger strategy
to incorporate the emerging working class more firmly into the existing social
order. In the middle of the twentieth century, the British welfare state was
advanced
not simply in the name of social justice, but also in the name of "one
nation'; universal social programs would erode the distinctions of class and
status that otherwise pervaded British society, and entrench the sense of social
cohesion that had emerged during the Second World War.
Canadian experience reflects Canadian realities. Social programs have
been seen, less as a means of moderating class divisions, and more as instru­
ments
of linguistic and regional integration. The postwar builders of the
welfare state may not have thought of their handiwork particularly in this light.
However, as linguistic and regional tensions divided Canadians more deeply
in the 1970s and 1980s, the structure of national social programs increasingly
came to be seen as the embodiment of a pan-Canadianism that moderated the
centrifugal forces straining the federation.
The integrative role of the postwar social contract rested on three pillars.
The first pillar consisted of federal programs that delivered benefits directly
to citizens, such as Family Allowances, Unemployment Insurance, Old Age
Security, the Guaranteed Income Supplement, and the Canada Pension Plan.
The second pillar was composed of shared-cost programs, which provided
federal grants
secondary
to
provincial
education
and
governments
social
assistance,
to
support health
and
care,
which sustained
post­
a pan­
Canadian approach through a number of conditions attached to the transfers.
The third pillar was the system of equalization grants provided by the federal
government to poor provinces to enable them to establish public services of
average quality without having to resort to above average levels of taxation.
In combination these pillars sustained a national social contract which created
spheres of shared experience for Canadians, important elements of their lives
that they held in common, irrespective of their language or region. Moreover,
the explicit and implicit interregional transfers that underpinned this structure
represented an affirmation that, among the diverse communities that define us,
there is a pan-Canadian community, built on a common social citizenship and
a set of rights and obligations that span the continent.
Canada thus took advantage of the favourable conjuncture of international
and domestic forces in the postwar years to develop its own social contract,
which represented a distinctive blend of security, redistribution and social
The Internationalization of the Social Contract
267
integration. The version that emerged undoubtedly owed much to the ideas that
dominated international debates about social policy during those years. The
Beveridge Report, for example, had a major impact on Canadian thinking and
on the Marsh Report which followed. Nevertheless, Canada built a welfare
state that was rooted fundamentally in Canadian society and its politics, and
that differed in significant ways from the system that emerged to the south.
The Internationalization of Canada's Social Contract
As in other Western countries, the social contract in Canada has undergone a
continuing series of adjustments in response to global economic pressures, as
well as domestic social changes and the weakness of public revenues. As with
OECD nations more generally, the essential changes do not reveal themselves
in
the
broad parameters
of the welfare state.
Despite recurring benefit
reductions, social expenditures continue to represent a major portion of GDP,
as Figure I attests. The figure also suggests that, although there has been
convergence between some specific Canadian and U.S. programs, in general
Canada
has
generally
managed
fashion
to
its
own
social
response
to
globalization.
Within
these broad parameters, however, the postwar social
slowly being redefined.
There
has been no
social contract, no equivalent of the
vision of the
ways
contemporary era
in
such
long
series
as
Marsh Report
economic
should be reconciled.
have been articulated,
tions
which the
and
Indeed,
contract
is
blueprint of a new
to provide an integrated
social
imperatives of the
to the extent that such visions
they have tended to come from international organiza­
the OECD rather
of incremental
critical goals of the
comprehensive
than
national advisory
changes are
postwar
social
bodies. Nevertheless,
a
slowly altering the balance among the
contract: security,
redistribution and social
integration.
Security in a global economy. As
of the postwar social
in
contract
an uncertain world. These risks
the welfare state was
all
Canadians.
pressure
in a
global
have seen, the fundamental purpose
were seen
accordingly seen
This
we
was to provide security against the risks inherent
conception
economy.
as
an
of the
as facing virtually
everyone, and
integral component of the lives of
social
Admittedly,
the
contract
is
under
enormous
postwar approach has
not
For a detailed discussion the extent of convergence and divergence in the
Canadian and U.S. welfare states, see Banting (1997).
268
Keith G. Banting
Figure 1 :
Public Expenditure on Social Programs in Canada and the
United States: As a Proportion of GDP, 1960-1993
25
o.__
1960
_
1965
1970
1975
1980
1985
1990
1993
Source: OECD (1996a).
disappeared completely. Medicare remains the basic instrument of health care
in Canada. The system is under intense fiscal strain, and private expenditures
have risen somewhat as a proportion of total health spending; but Canadians
clearly remain passionately attached to Medicare as a system of health care for
the public as a whole. The postwar conception also remains important in the
field of retirement income, although with greater qualifications. From the
beginning, public pensions such as the Canada and Quebec Pension Plans were
seen as providing a universal base of retirement income, on which middle- and
upper-income Canadians could build with occupational pensions and private
savings. Although the balance between public and private provision is shifting
with the expansion of RRSPs and other retirement income vehicles, public
pensions remain the primary source of retirement income for the great majority
of Canadians. The current debate over the Canada and Quebec Pension Plans
reveals the tenacity of these assumptions.
Despite suggestions from the
Reform Party and some private analysts that public contributory programs
should be replaced by a universal system of RRSPs, the current round of
The Internationalization of the Social Contract
269
negotiations among the federal and provincial governments has proceeded on
the assumption that the Canada and Quebec Pension Plans will remain a basic
retirement income vehicle for all Canadians (Federal, Provincial and Territorial
Governments of Canada, 1996).
Elsewhere, however, the conception of the social contract as a means of
protecting Canadians from the insecurities inherent in the modem world has
faded. This is particularly the case for labour market programs, such as
unemployment insurance, social assistance, training, employment programs,
and minimum wage policy. Economic restructuring and downsizing have
increased Canadians' general sense of economic insecurity and anxiety about
the future. Nevertheless, policy elites are increasingly convinced that the state
can protect Canadians from the uncertainties of a changing economic order.
The modem emphasis is on flexibility, adjustment, and what the OECD has
described as an "active society", in which social policy does not attempt to
shield people from economic disruptions in their lives. Increasingly, social
policy is seen as an instrument of change, a hand-maiden of economic trans­
formation. This broad conception pervades contemporary planning documents
that emerge from governments and advisory agencies. For example, the Green
Paper that launched the federal social security review in 1994 explained the
need
for a new model for social security in the following terms:
"The
tumultuous social and economic changes of the past decade and a half have left
us with a system that is out of date and in need of reform. The system is geared
to help people where change was the exception, not the rule, so it does too
little to help people adjust to change" (Canada. Human Resources Develop­
ment, 1994, p. 2 1 ) .
Another way of expressing this point is that the conception of security is
evolving. In policy circles, security no longer means protection from change.
Such security as is available in the contemporary world comes from the
capacity to adapt; hence the emphasis on human capital as the surest form of
security in the modem world, and the centrality of debates over education and
training. The transition at the heart of the internationalization of the social
contract can thus be expressed as a transition between two conceptions of
security: from security as protection from change, to security as the capacity
to change.
Although the emerging conception of security pervades policy documents,
it is also politically contested. The philosophy of the active society profoundly
challenges the conception of security embedded in the postwar social contract,
and reform efforts spark pitched political battles. Many politicians remain
sceptical of the effectiveness of training programs, and politicians from poorer
regions of the country are particularly opposed. As a result, current programs
270
Keith G. Banting
reflect an uneasy amalgam of two approaches. This ambivalence can be seen
in
overall
expenditure
trends,
which
are
tracked
in
Table
4.
Clearly,
enthusiasm for active programs has been constrained by overall reductions in
social spending and by the surge in unemployment in the early 1990s. Total
labour market expenditures have fallen as a proportion of GDP since the mid1980s, and the role of passive income support expanded during the recession
of the early 1990s. By the mid-1990s, however, an underlying trend towards
active measures was asserting itself.
Table 4:
Expenditures on Active and Passive Labour Market
Programs, Canada, 1985-86 to 1995-96
Year
Proportion o
f GDP
Proportion o
f Total Labour
%
Market Spending
%
Active
Passive
Measures
Measures
2.50
25.2
74.8
1.86
2.48
25.0
75.0
0.5S
1.64
2.19
25.1
74.9
1988-89
0.50
1.57
2.08
24.0
75.5
1989-90
0.51
1.57
2.08
24.S
75.5
1990-91
0.53
1.91
2.45
21.6
78.0
1991-92
0.61
2.28
2.89
21.1
78.9
1992-93
0.64
2.24
2.88
22.2
77.8
1993-94
0.64
1.98
2.62
24.4
75.6
1994-95
0.60
1.54
2.14
28.0
72.0
1995-96
0.56
1.32
1.88
29.8
70.2
Active
Passive
Measures
Measures
1985-86
0.63
1.87
1986-87
0.62
1987-88
Total
Sources: Data for 1985-86 to 1989-90 from OECD (1991); data for 1990-91
from OECD (1994c); and data for 1991-92 to 1995-96 from OECD (1996b).
The Internationalization of the Social Contract
271
The battles between advocates of different conceptions of security can be
seen vividly in the case of unemployment insurance. The 1994 discussion
paper on social security reform identified unemployment insurance as a classic
case of passive income support that did too little to promote adjustment:
"Today, almost 40 per cent of regular UI claimants have used the program at
least three times in the last five years. Many are on a treadmill. They need help
getting off' (Canada. Human Resources Development,
government identified two
options
for refonn.
1994, p. 2 1 ) . The
The first - and clearly
preferred - option would distinguish between "occasional" claimants who
would continue to receive existing benefits, and "frequent" claimants who
would receive lower benefits and more active adjustment assistance to move
them
towards
more
stable
employment.
The
second
option
would
not
distinguish between these two types of recipients, and would simply cut the
program in traditional ways for everyone.
The political
reaction to
the
preferred option was intense, especially in Canada east of the Ottawa River.
The proposal would have had a major impact on seasonal workers who draw
on unemployment benefits virtually every year, and determined resistance
came from the Atlantic and Quebec members of the Liberal caucus as well as
all of the premiers from Atlantic Canada, including New Brunswick's Frank
McKenna who is sometimes seen as a reformist on these issues. The result was
a classic Canadian compromise. The legislation finally adopted placed active
and passive support on the same symbolic basis, and a new "intensity rule" in
the
benefit
provisions
did
distinguish
between
occasional
and
frequent
claimants. However, the size of the penalty for repeat use was small and
phased in over a long period of time; and the legislation did rely on yet another
reduction in the maximum period of benefits for everyone. The tensions
between different conceptions of security are now more deeply embedded in
the law of the land.
The Atlantic Groundfish Strategy (TAGS) reveals even stronger resist­
ance. The collapse of the groundfish stocks in Atlantic Canada was, in the
words of an early task force, "a famine of biblical scale" which threatens not
just thousands of workers but the very existence of whole communities
(Canada. DepartmentofFisheries and Oceans, 1993, p. vii). From the time of
the initial moratorium on the northern cod fishery in
government
has
accepted
an obligation
to help
the
1992, the federal
workers
and
their
communities. However, by the time of the announcement of the five-year
TAGS program in 1994, there was general agreement that capacity in the
Atlantic fishery should be reduced by 50%, leaving a smaller and more
272
Keith G. Banting
professional fishery in place when the fish return.
As a result, TAGS was to
be an active adjustment program designed to move fully half of the workforce
out
of the
industry.
All
clients
would
be
engaged
in career
planning,
employment counselling and training for at least 75% of their time; and a
refusal to accept a reasonable offer to participate in active programming could
lead to the loss of income support for
12 weeks. Lloyd Axworthy, then
minister of human resources development, saw TAGS as a pilot project for a
much wider reform of the social security system.
The program was in trouble from the beginning. Part of the problem was
financial, as far more people registered for the program than anticipated,
generating an immediate budget squeeze. More telling, however, was the
resistance to adjustment. Most of the workers supported by TAGS have low
levels of education, see their future in the fishery, and wish to remain in their
communities. Income-support provided by TAGS and other federal programs
tends to be seen as compensation for federal mismanagement of the fishery
itself, and training initiatives evoke considerable scepticism. In addition,
fishery unions have tended to discourage training for careers outside the
fishery, and have argued that budgetary problems should be managed by
cutting the training rather than income support (Bailey, 1994). In the end,
these views prevailed. Only a small percentage of clients have been engaged
in adjustment programs; income support payments have been protected and
adjustment initiatives have been cut; few workers are leaving the industry
under TAGS;
and federal planners assume that a significant number of
workers will remain dependent on income support at the end of the program
in 1999. In the words of one assessment, "TAGS has a commitment to
facilitate the adjustment process, but as yet little adjustment has taken place"
(May and Hollett, 1995, p. 87).
Obviously, Canada lacks a social consensus on the meaning of security in
a global era. Nevertheless, the direction of incremental change is clear. Despite
political resistance, security as defined in the postwar social contract is fading
as an objective in important elements of the emerging social contract.
Redistribution in a global economy. If security is receding as a central
goal of the social contract, vertical redistribution has become more prominent.
The welfare state is less and less about protecting Canadians as a whole from
the inevitable risks inherent in modem life. The operating assumption is
increasingly that the primary purpose of social policy should be to target
scarce resources on the poor. The logical extreme of this conception of social
'This section draws on Hallman (1996).
The Internationalization of the Social Contract
273
policy would be a comprehensive Guaranteed Annual Income (GAI), first
popularized by Milton Friedman in Capitalism and Freedom (1962). This
approach would eliminate all other social programs, and redirect the resources
into one income-tested benefit that is targeted on the poor and delivered
through the tax system. In its most comprehensive versions, a GAi would not
simply be a technical reordering of the instruments through which policy was
pursued. Rather, the idea reflected a radically different conception of the
purposes of social policy. Whereas the postwar social contract was about
providing security for the population as a whole, the GAi proclaims that the
state has no role in meeting the social needs of average citizens, and that the
only legitimate goal of social policy is support to the poor.
Canada has flirted with - but not fully embraced - this conception of
the social contract. There has been a shift in the balance between universal and
selective programs in the income security system in Canada. In part, this flows
from program restructuring. Two universal programs, Old Age Security and
Family Allowances have been transfonned into income-tested benefits that
bear a strong family resemblance to the basic idea of a GAi. Given their
political sensitivity, these changes were carried out in a long series of incre­
mental moves too tortuous to describe in detail (Battle and Torjman, 1993).
Moreover, the process is still in evolution. For example, the full shift to the
income-tested Seniors Benefit will not be completed until the year 2001.
Although the lengthy transition from Family Allowances to the income-tested
Child Benefit was completed in 1993, the 1997 federal budget enriched the
program as part of a coordinated federal-provincial initiative designed to lift
children from welfare.
The shift towards selective programs has been reinforced by a growing
reliance on social assistance to respond to a wider range of social needs. In
part, the expansion of social assistance flows from reductions in social
insurance programs, especially unemployment insurance. In addition, however,
the expansion reflects changes in the wider society for which other programs
are not well adapted or have not been developed. For example, caseloads have
been increased by changes in family structures, including the growing number
of single-parent families, and by the lack of comprehensive mechanisms to
enforce child-support orders in most provinces. Similarly, public support for
child care has tended to flow through social assistance vehicles. As we have
seen, the primary purpose of the postwar social contract was to build universal
programs that would ensure that Canadians did not have to turn to social
assistance, the program of last resort. The willingness to build universal
programs for new social needs has faded, however, and the last resort is
increasingly the only resort for many Canadians.
274
Keith G. Banting
A final sign of the primacy of vertical redistribution has been the extent
to which income-testing has crept into unemployment insurance, which was
traditionally based on social insurance principles. Admittedly, the most recent
package of changes embodied in the new Employment Insurance legislation
shifted the balance in several different directions at once. A reduction in the
maximum insurable earnings did reduce cross-subsidization and tighten the
relationship between contributions and benefits. However, this was offset by
a strengthened Family Supplement for low-income beneficiaries with family
responsibilities, and by a tougher clawback of benefits from upper-income
recipients
at
the end of the year through the tax system. This complex package
of political compromises was not based on any clear philosophy, and the
program increasingly lacks conceptual clarity.
The extent of the shift between universal and selective programs in the
income-security sector is highlighted in Figure 2, which also contrasts the
Canadian experience with that of the United States.
Figure 2:
The results here often
Expenditures on Universal Income-Security as a Proportion
of Total Income Security: Canada and the United States,
1960-1992 (in percent)
90
0
L
70
60
%
e
1
C:
2
50
0
,....__
1960
_
1965
1970
1975
1980
1985
1990
1992
Source: Banting (1997, Table 7.4).
The Internationalization of the Social Contract
275
come as a surprise to those used to thinking of Canada as being more
dedicated to the universal approach. Canada and the United States started in
almost identical positions in the early 1960s. Since then, the proportion of
U.S. income-security dollars that have flowed through the universal compo­
nents
of the Social Security system has remained relatively stable, with a slight
increase in recent years as selective programs for the poor bore the heaviest
cuts in that country. In contrast, a growing proportion of Canadian income­
security dollars have flowed through selective programs. Moreover, the figure
probably understates the trend, since it treats unemployment benefits as a
universal program, despite the extent of income-testing in the allocation of its
benefits. Clearly, the two countries have been traveling different pathways for
decades.
This trend towards a more strongly redistributive welfare state has played
an important role in an era of greater inequality in market incomes. As in many
dimensions of our collective life, Canada is situated somewhere between the
experience of Europe and the United States. On one hand, our unemployment
rates are significantly above those of the United States, but below those of
much of continental Europe. On the other hand, the polarization in earnings is
somewhat less than in the United States, but greater than in Europe. There are
other differences from the American experience, to be sure. In the United
States, polarization in earnings has been associated with a growing gap
between workers with a college education and those with only high school or
less.
This educational differential
is,
as yet,
less
discernible in Canada
(Riddell, 1995). Here the burden of economic adjustment has fallen most
heavily on young workers and new entrants to the labour market. In addition,
the distribution of working time has been important, as firms increasingly
prefer to have existing employees work longer rather than take on new
employees (Morrisette, Myles and Picot, 1995). Nevertheless, when all the
subtle differences in the experience of Canada and the United States are noted,
the common reality has been one of growing inequality in the income that
families and individuals derive from their involvement in the economy.
The real difference between Canada and the United States is in the extent
to which each sought to offset market pressures through political choice. In the
United States, the redistributive impulse has waned in recent decades, and
government taxes and transfers have not offset the growing inequality inherent
in a global economy and economic restructuring. In Canada, the redistributive
role of government, which has been reinforced by the direction of change in the
design of social programs, has continued to stabilize the level of income
inequality. Figure 3, which contrasts Canada and the United States, stands as
a testament to the centrality of redistribution in the emerging social contract,
276
Keith G. Banting
Figure 3:
Changes in Income Inequality among Families, Canada and
the United States, 1971-1995
A0
A0o
.395
.390
.385
z
.4
£
.380
.3s5
8
e
.370
5
.365
.360
.3s5
.30
.345
.340
.335
.330
.325
.320
171
Note:
1975
19$79
1983
1987
1991
19$5
Data refer to total money income, including government transfer
payments.
Source: Statistics Canada (1997); Karoly (1993, figure 2.1), updated from
data provided by United States. Bureau of the Census (1995).
and to the scope for domestic political choice even in a global era. Moreover,
Table 5, which captures the impact of taxes as well as transfers, shows even
greater stability in the level of inequality in Canada.
Social integration in a global economy. The globalization of economic
activity and the increasing ease with which information, ideas and individuals
move across international borders has posed particular challenges to countries
such as Canada, in which regional tensions threaten the continued existence of
a single political community. In this context, it is hardly surprising that
Canadians increasingly look for elements that sustain pan-Canadian linkages
and nurture a sense of common citizenship from coast to coast to coast.
Unfortunately, the emerging social contract of the global era is less well
designed to act as an instrument of social integration. The cumulative impact
The Internationalization of the Social Contract
277
Table 5:
Inequality in Family Income in Canada: Before and
After Taxes and Transfers, 1980-1995
Income after Taxes
Income before Taxes
Year
and Transfers
and Transfers
(gini)
(gini)
1980
0.374
0.294
1982
0.393
0.296
1984
0.408
0.303
1986
0.403
0.300
1988
0.401
0.293
1990
0.404
0.292
1992
0.427
0.297
1994
0.425
0.293
1995
0.428
0.298
Source: Statistics Canada (1997, Table VI).
of intensified regional and linguistic conflict, economic restructuring and fiscal
weakness of the federal government has been the erosion of the capacity of
national social programs to enhance a sense of pan-Canadianism.
As we have seen, the integrative role of the postwar welfare state was built
on three pillars: federal programs that provide direct benefits to Canadians;
conditional
federal
transfers
to
provinces
to
support
important
social
programs; and unconditional equalization grants to provinces. Several of these
pillars, however, have been significantly weakened. Direct federal transfers to
Canadians no longer have the same integrative capacity. The fundamental
focus of the postwar social contract was on the provision of security through
universal programs that treate
all Canadians the same; the redistributive
social contract, to which we are moving, treats Canadians differently, and by its very nature - is
278
less capable of sustaining a sense of common
Keith G. Banting
citizenship. In addition, the regionalization of some federal programs also
undermines their integrative capacity. This is especially the case with un­
employment insurance, in which regional differentials in generosity have
become pronounced. An unemployed worker is half as likely to be receiving
benefit from his or her national government in Ontario as in Atlantic Canada
(Sargent, 1995). It is hardly surprising, therefore, that the unemployment
insurance program has become a source of conflict rather than cohesion in the
federation.
Federal grants to provincial governments in support of health care, post­
secondary education and social assistance also play a less integrative role. The
shift to the block fund approach, the reduction in the total federal dollars
flowing to provinces, and lingering discrimination in the allocation of funds
among provinces have combined to weaken the capacity of the federal govern­
ment to insist on common approaches to critical social needs. In part, the
erosion of federal presence is technical. There are, for example, fewer con­
ditions attached to the federal transfer associated with social assistance than
in the past. However, the erosion is also political. Considerable damage to the
political legitimacy of federal standards has already been done; provincial
governments are increasingly willing to challenge federal conditions on the
grounds that Ottawa's financial contribution has shrunk so much that the
federal authorities no longer have a right to set program conditions.
The only federal pillar of a pan-Canadian approach to social policy which
has remained unscathed is the equalization program. In contrast to the deep
cuts in other transfers to citizens and provinces, equalization grants to have­
not provinces continue to grow. Here is one more reminder
if one was
needed - that our federal institutions are more responsive to regional needs
that broadly defined social needs. The issue, however, is the long-term political
stability of this pattern. During the 1997 election campaign, the platform of
the Refonn Party included a proposal to reduce the equalization program and
to
increase spending on health care. Will the willingness to support the
equalization system remain strong in a Canada where other elements of a pan­
Canadian social policy fade?
The weakening of the integrative potential of the social contract is high­
lighted by the contrast between the two referendums on Quebec secession.
During the
1980 campaign, federal ministers charged into the province
insisting that independence would threaten social programs Quebecers enjoyed
as citizens of Canada; pensions, Monique Begin argued, would be especially
vulnerable. During the 1995 campaign, the shoe was on the other foot. The
Parti Quebecois warned that the federal government was abandoning its social
commitments, and that only sovereignty could save the pensions and other
The Internationalization of the Social Contract
279
social benefits of Quebecers. Obviously, the shift from a decisive federalist
win in 1980 to a near loss in 1995 cannot be attributed solely or even primarily
to
the weakening of the federal role in social policy. At a minimum, however,
the two battles highlighted the strategic importance of social policy in battles
over the life and death of states.
Concern about the integrative capacity of the social contract has triggered
an anxious search for mechanisms other than federal legislation to sustain a
pan-Canadian approach to social programs. During the Charlottetown round
of constitutional negotiations, attention focused on the idea of a social charter,
which would entrench a commitment to the existing framework of social
programs in the constitution of the country. This idea disappeared with the ill­
fated Accord. More recently, attention has shifted to proposals fo
federal­
provincial or purely interprovincial accords, sustained by intergovernmental
bodies and monitoring systems (Ministerial Council,
1995; Biggs,
1996;
Courchene, 1996; Institute of Intergovernmental Relations, 1997). Whether
such proposals would be effective goes beyond the scope of this paper. How­
ever, the attention that they are receiving is a symptom of a deepening concern
about the fading of a pan-Canadian social contract, and the implications for
the wider integration of the Canadian political community.
Conclusions
As with the state itself, the social contract between governments and their
publics has always had a dual anchorage in the international and domestic
worlds. During the postwar era, international and domestic forces combined
to sustain
a powerful expansion of social programs throughout the OECD. In
the contemporary global economy, this symbiosis between the international
and the domestic has broken down, and the welfare state is under powerful
pressure. However, the global economy does not dictate the ways in which
governments respond, and different countries are responding in distinctive
ways that reflect their domestic politics and cultures. Multiple pathways to
adjustment are emerging, each with a distinctive allocation of the opportunities
and burdens generated by change.
Canadian experience parallels this wider pattern, and Canada continues to
chart a different course from the United States. Within these parameters,
however, the broad outlines of a new social contract are coming into focus.
280
Keith G. Banting
The
transition involves a shift in the balance of the three fundamental
objectives
that
came
to
define
the
postwar
social
contract:
security,
redistribution and social integration. At the heart of the restructuring is a
decline in the commitment to security as it was understood in the postwar
years, and the emergence of a new understanding of the nature and sources of
personal security in an insecure international economy. Security as protection
from change is giving way to security as the ability to change. This transition
remains politically contested, and our current program structure represents an
uneasy amalgam of these distinctive views of the relationship between the
individual and society in a global economy. Nevertheless, the direction of
change is clear.
With security as traditionally understood a fading objective of the new
social
contract, redistributive goals
are becoming more prominent.
The
restructuring of established programs and the response to new social needs
increasingly reflects the assumption that the primary purpose of social action
should be support for the poor rather than the population as a whole. This
transition has been important in a period when global economic restructuring
and technological change are producing greater inequality in the marketplace.
Unlike the U.S. pattern, the tax and transfer system in Canada has continued
to stabilize the distribution and income and prevent the gap between rich and
poor widening dramatically. Expressed in another way, Canada has exper­
ienced a greater shift in the distribution of security than in the distribution of
income.
Unfortunately, the emerging social contract is less well equipped to serve
as an instrument of social integration. In contrast to the universal programs
that characterized the postwar social contract, targeted social programs - b y
their very nature treat Canadians differently, and are less well placed to
build social cohesion.
The ongoing decentralization of responsibility for
central components of the welfare state accentuates this trend. A series of
regional social contracts may well reflect local needs and aspirations more
closely, but they cannot bridge the linguistic and territorial divisions that pull
at the Canadian federation.
Although the broad outlines of the emerging social contract are coming
into focus, critical issues remain to be resolved. Three questions stand out.
First, can we develop a wider social consensus on the meaning of security in
a global economy? We have not yet come to grips with the full implications of
the conception of security as the capacity to change. The postwar generation
was committed to a universal conception of security as they understood it;
their social contract sought to establish a right to protection from the risks of
modern society. Will our generation develop a similarly universal commitment
The Internationalization of the Social Contract
281
to security as we are coming to understand in our time? Will we establish a
universal right to have access to the advanced education and training that are
the well-springs of security in a global economy? At the moment, our policies
concerning postsecondary education and training do not seem to be moving in
that direction.
Second, will Canadians sustain their commitment to redistribution? Recent
decisions on social a sistance in some provinces raise important questions
about the durability of the commitment to protect the poor. The central
question before us is whether we can find a third option between the extremes
presented by Europe and the United States. Is it possible to marry greater
flexibility in labour markets with a redistributive ethos sufficiently strong to
prevent
the
impoverishment
and
stark
inequalities
6
processes of adjustment in the United States.
associated
with
the
This question is central to the
ability of Canadians to chart a distinctive social policy course in a North
American context, and the current direction of change in child benefits and
other redistributive instruments will be signals of the path Canadians choose
to tread.
Finally, can Canadians find mechanisms to preserve a pan-Canadian
dimension to their social contract? Considerable rhetoric has swirled around
this issue, and proposals abound. But few concrete steps have been taken. The
answer to this question will determine whether the social contract remains an
instrument
of wider
social
integration
and
social
cohesion,
or
whether
Canadians will have to look for other instruments to bind themselves together
across the northern half of this vast continent.
References
Bailey, I. (1994), "Cut Training Programs, Not Benefits - Union Head", Halifax
Chronicle-Herald, December 15, C8.
Banting, K. (1995),"The Welfare State as Statecraft: Territorial Politics and Canadian
Social Policy", in S. Liebfried and P. Pierson (eds.), European Social Policy:
Between Fragmentation and Integration (Washington, DC:
The Brookings
Institution).
"For an interesting discussion of Canadian experience in these terms, see
Esping-Andersen (1996).
282
Keith G. Banting
(1996)," Social Policy",
Border
Crossings:
The
in G.B. Doer, L.A. Pal and B. Tomlin (eds.),
Internationalization
o
f Canadian
Social
Policy
(Toronto: Oxford University Press).
(1997), "The Social Policy Divide: The Welfare State in Canada and the
United States", in K.G. Banting. G. Hoberg and R. Simeon (eds.), Degrees o
f
Freedom: Canada and the
United States in a Changing World (Montreal:
McGill-Queen's University Press).
Battle, K. and S. Torjman (1993), Federal Social Programs: Setting the Record
Straight (Ottawa: Caledon Institute for Social Policy).
Biggs, M (1996), "Building Blocks for Canada's New Social Union", Working Paper
No. F02, Canadian Policy Research Networks Inc.
Blank. R., ed. (1994), Social Protection Versus Economic Flexibility: Is There a
Trade-Off (Chicago: University of Chicago Press).
Canada. Department of Fisheries and Oceans (1993), Task Force on Incomes and
Adjustment in the Atlantic Fishery, Charting a New Course: Toward the Fisherv
of the Future (Ottawa: Supply and Services Canada).
Canada. Human Resources Development (1994), Improving Social Security In
Canada: A Discussion Paper (Ottawa: Supply and
Cameron,
Services
Canada).
D.R. (1978), "The Expansion of the Public Economy: A Comparative
Analysis",
Commission
American Political Science Review
European
of the
Communities
of Social Protection Objectives and Policies,
General for Employment,
Office f
or the
Official
Industrial
Publications
72,
1243-1261.
(1992), Social Europe: The Convergence
Relations
of the
Supplement 5/92, Directorate­
and
Social Affairs (Luxembourg:
European
Communities).
(1993), Growth, Competitiveness, Employment: The Challenges and
Ways Forward Into the 2I" Century: White Paper
Official
Publications
of the
European
Luxembourg: Office for the
Communities).
- ( 1 9 9 4 ) , Social Protection in Europe: 1993,
Employment,
Official
Industrial Relations and
Publications
Courchene, T.
(1996),
So
ci
al Systems",
Affairs,
of the
European
"ACCESS:
A
Directorate-General for
Social Affairs (Luxembourg:
Office
for the
Communities).
Convention on the Canadian Economic
and
Working Paper prepared for the Ministry of Intergovernmental
Government of Ontario.
Esping-Andersen, G.
(1990), The Three Worlds o
f Welfare Capitalism
(Princeton,
NY: Princeton University Press).
____ (1996),
"After
the Golden Age: Welfare State Dilemmas in a Global
Economy", in G. Esping-Andersen (ed.), Welfare States in Transition London:
Sage Publications).
Federal, Provincial and Territorial Governments of Canada (1996), An Information
Paperfor Consultations on the Canada Pension Plan (Ottawa: Department of
Finance).
Friedman, M. (1962), Capitalism and Freedom (Chicago: University of Chicago
Press).
The Internationalization ofthe Social Contract
283
Hallman, D. (1996), "The Atlantic Groundfish Crisis", MPA Project, School of Policy
Studies, Queen's University.
Hart,
M.
(1996),
"What's
Next:
Negotiating
Rules
for
a
Global
Economy",
Occasional Papers in International Trade Law and Policy, No. 36 (Ottawa: Centre
for Trade Policy and Law, Carleton University and University of Ottawa).
Institute of Intergovernmental Relations (1997), Assessing ACCESS: Towards a New
Social
Union
(Kingston:
Institute
of Intergovernmental
Relations,
Queen's
University).
Karoly, L.A.
(1993), "The Trend in Inequality Among Families, Individuals and
Workers in the United States: A Twenty-Five- Year Perspective", in S. Danziger
and P. Gottschalk (eds.), Uneven Tides: Rising Inequality in America New
York: Russell Sage Foundation).
Katzenstein, P. (1984), "The Small European States in the International Economy:
Economic Dependence and Corporatist Politics", in J. Ruggie (ed.), The Anti­
monies o
fInterdependence: National Welfare and the International Division of
Labour (New York: Columbia University Press).
(1985), Small States in World Markets: Industrial Policy in Europe
(Ithaca, NY: Cornell University Press).
Keohane, R (1984), "The World Economy and the Crisis of Embedded Liberalism",
Goldthorpe (ed.), Order and Conflict in Contemporary Capitalism
in J.H.
(Oxford: Oxford University Press).
Marsh, L. (1943), Report on Social Security for Canada (Toronto: University of
Toronto Press), reprinted 1975.
May, D. and A. Hollett (1995), The Rock in a Hard Place: Atlantic Canada and the
UJ Trap (Toronto: CD. Howe Institute).
Ministerial
Council
On
Social
Policy
Reform
and Renewal
(1995), Report
to
Premiers, unpublished.
Morrisette, R., J. Myles and G. Picot (1995), "Earnings Polarization in Canada, 1969­
1 9 9 1 , in K.G. Banting and C. Beach (eds.), Labour Market Polarization and
Social Policy Reform (Kingston: School of Policy Studies, Queen's University).
Organization for Economic Cooperation and Development ( 1 99 1 ) , Employment
Outlook (Paris: OECD).
(1994a), The OECD Jobs Study: Facts, Analysis, Strategies (Paris:
OECD).
(1994b), New Orientations for Social Policy, Social Policy Studies, No.
1 2 (Paris: OECD).
(1994c), Employment Outlook (Paris: OECD).
____ (1996a), "Social Expenditure Statistics of OECD Member Countries:
Provisional Version", Labour Market and Social Policy Occasional Papers, No.
1 7 (Paris: OECD).
____ ( 1996b ), Employment Outlook Paris: OECD).
284
Keith G. Banting
Riddell, C. (1995), "Human Capital Formation in Canada: Recent Developments", in
K.G. Banting and C. Beach (eds.), Labour Market Polarization and Social
Policy Reform (Kingston: School of Policy Studies. Queen's University).
Ruggie, J.G. (1983), "International Regimes, Transactions and Change: Embedded
Liberalism in the Postwar Or der" , in S. Krasner (ed.), International Regimes
(Ithaca. NY: Cornell University Press).
____ (1994), "Trade Protection and the Future of Welfare Capitalism",
Journal o
fInternational Affairs 48, 1 - 1 2 .
Sargent, T. (1995), "An Index of Unemployment Insurance Disincentives", Working
Paper No. 95-10 (Ottawa: Department of Finance. Fiscal and Economic Analysis
Branch).
Skocpol,
T.
(1979),
States
and Social
Revolutions
(Cambridge:
Cambridge
University Press).
Statistics Canada (1997), Income after Tax, Distributions by Size in Canada: 1995
(Ottawa: Supply and Services Canada).
United States. Bureau of the Census (1995), Current Population Survey (Washington,
DC: Government Printing Office).
United States. Committee on Ways and Means. House of Representatives (1994),
Overview o
f Entitlement Programs:
1995
Green Book (Washington,
DC:
Government Printing Office).
The Internationalization of the Social Contract
285