Business in the Canadian Context ADMS 1010
Business in the Canadian Context
ADMS 1010 – Section A
Instructor
Alex Browning
Email: browning@yorku.ca
Web Site: http://www.geocities.com/adms1010g/bus_class.html
Business in the Canadian Context ADMS 1010
Educational Background
MBA – Richard Ivey School of Business
BAS – York University
B. Ed. (Adult Education) Brock University
CMA – Certified Management Accountant
FCMA – Fellow of the Society of Management Accountants
CIM – Certified Investment Manager Inv. Dealers Ass.
CTP – Certified Treasury Professional
Canadian Securities Course – Inv. Dealers
Business in the Canadian Context ADMS 1010
Business Background
Sr. V.P. Finance & Administration & CFO – LCBO
Board Member CMA Ontario
Past Chair of CMA-Ontario Board of Governors
Advisory Panel on Public Sector Issues– FEI
Business in the Canadian Context ADMS 1010
Agenda
• Course Administration-
7:00-7:25
• Introduction -
7:25-7:40
• Political and Economic Ideologies -
7:40-8:00
• Major Political and Social Ideologies –
8:00-8:20
• Break –
8:20-8:35
• Video -
8:35-9:10
• Ideological Framework of Canada
9:10-9:30
• Q&A
9:30-10:00
Business in the Canadian Context
ADMS 1010
Class Outcomes
By the end of this class you will:
• Understand the requirements of the course
• Understand the history of the major economic and
political ideologies
• Be able to discuss the major Political and
Economic Ideologies and their application to
Canada
Mid-Term Administration

Availability
–
The Mid-Term is now available on line
Web Site:
http://www.geocities.com/adms1010g/bus_class.html
If you have any problems accessing email me at
browning@yorku.ca
Class Administration: Mid-Term
Grading Structure
•
Mid-Term Assignment 40%
•
SUBMISSION OF ASSIGNMENTS is due at the beginning
of class Monday, October 26, 2009. Late submissions
will suffer a 5 percentage point penalty and must be
submitted at the beginning of class Monday, November
2, 2009 as per Section. No assignments will be accepted
beyond the Seventh Week of the Term.
•
Academic Integrity
http://www.yorku.ca/secretariat/legislation/senate/acadhone.htm
•
Academic Integrity Tutorial
http://www.yorku.ca/tutorial/academic_integrity/
Business in the Canadian Context ADMS 1010
Course Administration – Mid-Term
10 Double-Spaced Pages
•
•
•
Good Essay Writing Skills expected
•
Spelling and Grammar Count – Proof Read Your Work
•
If in doubt contact and attend the workshops at the Writing Centre.
The Writing Centre is on the first floor of Atkinson -- telephone:
416 736-5289.
Referencing must be done: APA format or Footnotes
•
http://owl.english.purdue.edu/handouts/research/r_apa.html
•
http://www.wooster.edu/psychology/apa-crib.html
•
http://www.apastyle.org/faqs.html
Quotation marks must be used for all direct quotes
Academic Integrity
http://www.yorku.ca/secretariat/legislation/senate/acadhone.htm
Academic Integrity
Academic Integrity Tutorial:
http://www.yorku.ca/tutorial/academic_integrity/
Class Administration
Grading Structure
•
Mid-Term Assignment 40%
•
Final Exam 60% - Will be similar to Mid-term. Will focus on
current events and you will have to apply the theory to these
issues.
Class Administration
Scheduling Information
•
Mon. October 12th – No class
Business in the Canadian Context ADMS 1010
Course Requirements
If you wish to be put on a waiting list, visit the Receptionist
for the School of Administrative Studies, Room 282 Atkinson
•Any student registered or wanting to register must have
already completed ADMS 1000 or received Advanced
Standing
•If you do not have this prerequisite, you will not be granted
a satisfactory grade in this course.
•Course Outline states that all students are personally
responsible to ensure they have all prerequisites
Business in the Canadian Context ADMS 1010
Course Administration
Course Outcomes
To understand and be able to discuss
 How business and government interact
 Why governments seek to affect business
 How some businesses rely on government
 Why governments are in business
 The government and legal frameworks affecting business
 How government decisions are made
 How and why governments intervene in business
 How globalization affects business and government
Business in the Canadian Context ADMS 1010
Course Administration
Will consider:
 Frameworks within which government and business act
or are constrained
 Relationship of the public sector or bureaucracy to
various elements of society
 Forces on government and business
Business in the Canadian Context ADMS 1010
Course Administration
 Frameworks within which government and
business act or are constrained:
 Ideological
 Constitutional
 Legal
 Economic
 Global
Business in the Canadian Context ADMS 1010
Course Administration
 Forces on government and business:
 To Intervene
 To be Efficient
 To De-regulate
 To Protect
 To Globalize
Business in the Canadian Context ADMS 1010
Course Administration
 Relationship of the public sector or
bureaucracy to various elements of society:
 Government
 Interest Groups
 Private Sector
 General Public
Business in the Canadian Context ADMS 1010
Course Administration
Texts required:
1. Wesson, Tom, Canada and the New World Economic
Order 3rd Ed. 2007, North York, Captus Press
2. Jurkowski, D., Eaton, G., Between Public and Private:
Readings and Cases on Canada’s Mixed Economy. Captus
Press
Students are responsible for all readings listed on York
Course Website
Business in the Canadian Context ADMS 1010
Course Administration
Required Case Readings: Between Public and Private
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Summary of Constitutional Events
Triple E Senate
Medical Centre
Book Publishing Industry
Canada’s Industrial Strategy
Cultivating Cash
Privatization 407
Solid Waste Management
Commercialization LCBO
Soft Wood Lumber
P. 113-120
P. 176-188
P. 325-360
P. 361-378
P. 379-396
P. 397-428
P. 437-442
P. 453-470
P. 443-452
P. 482-514
Introduction
Words to the Wise
The course and the class discussion is all about applying
the theories to today’s real life situations.
Both the Mid-Term and the Final will ask you to apply the
learning the cases discuss in class and to issues out of the
daily news.
It is strongly suggested that you attend class and that you
read the papers daily to see how the major events support
the theories presented in this course.
Introduction
Section 1: Introduction to Business in
the Canadian Context
Section 1: Introduction to Business in
the Canadian Context
World
Canada
Business
How do we perceive our Economy?

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News Items
Housing Starts
Trade Figures
Employment Rate
GDP
Balance of Trade
What issues do we experience in
Canada?


The adoption of a
common North American
currency.
Develop a common North
American border.

Threats to Canadian
culture and the social
safety.

Canada's dependency on
its natural resource
sector.
What benefits do businesses
experience most from Government?

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
Financial Support
Protection – Internal and External
Risk Management
Lobbyist
What problems do businesses
experience most from Government?

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


Harassment
Intervention
Red tape
Regulation
Bureaucracy
Inefficiency
Taxation
What are the questions concerning
government’s role in business?

Does government over-step moral or
ethical boundaries to accommodate
business?

Are there sacred rights and freedoms of
business that transcend ethical
considerations?

Does government reserve the right to
protect citizens and consumers against
the natural activities of business?

Are governments too aligned with
business interests?
What does business want from
government?
A stable and predictable environment in
today's global world ensures business...
1.
Continuity
2.
Stability
3.
Competition
4.
Free Trade
5.
Efficient/Productive
6.
Unobtrusive
7.
Supportive
What is government’s role in the
economy?






Regulator
Law Maker
Trade Negotiator
/Deal Maker
Benefactor
Protector/Guardian
Deliverer of Service
$200
$60
200
What is Canada’s Global Position?

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WTO
NAFTA
United Nations
NATO
G-8
OAS
APEC
Commonwealth
La Francophonie
Section 2: Political and Economic
Ideologies


What is an ideology?
How do they
emerge?
What is an Ideology?

It refers to a set of shared values, beliefs and ideas,
and perceptions through which persons interpret
events of the past, present and future.

It also refers to an explicit doctrinal structure
providing a particular diagnosis of the ills of society.

It will include an accompanying action program for
implementing the prescribed solution.
What does an ideology tell us?
1.
2.
3.
4.
It presents a simplified cause and effect
interpretation of a complex world.
It integrates a theory of human nature with
life's basic economic, social and political
values.
It appears normative and moral in tone and
content and aspire to perfect behavior.
It draws its philosophical premises from
constitutions, declarations, manifestos and
writings. – Basis of the ideology – Right to
bear arms
What is the function of an ideology?
1.
It constitutes a broad belief system and
advocate reforms in the basic fabric and
structures of society.
2.
It addresses fundamental questions about
leadership, recruitment, succession and
behavior.
3.
It persuades and propagandizes people
who learn not to be influenced by
opposing views.
What is a Dominant Ideology?
 Prescribes
and supports existing social,
political and economic arrangements.
 Embodies
the prevailing mindset in the
social, economic and governing system.
It is dominant because...
 When
most people accept it.
Or
 When
the most powerful people or
institution accept and practice it. (May
not require consensus of the majority
of population.)
Example: Capitalism in US or China’s
one child policy
What is a Counter Ideology?

Advances reforms and radical
changes in society.

Rallies forces of change in
society.

Responds to perceived
inequality.

Challenges the Status Quo

Seeks to discredit the Dominant
Ideology
Example: Captialism vs
Communism in China
In a society, what are the conditions for
developing a counter ideology?
1. The leaders of society seek to change society.
(Democratic)
2. There is an underground movement to bring about
change in a society. (Revolutionary)
Reasons for Change in Society

Interactions among competing groups with dominant
or counter ideology result in changes in society.
–
–
–

Social Upheaval changes status quo
–
–

Poor versus Rich (French Revolution)
Rich versus Rich (American Revolution)
Poor versus Poor (Peru 1980’s)
Great Depression
War
Technological Changes impact social order
–
–
Industrial Revolution
Information Revolution
Reasons for Change in Society
Changing Social and Business Demographics
Feudal Era
Mercantile Era
Industrial Era
Technological Era
Information Era ?
Reasons for Change in Society
Changing Societal and Business Demographics
Feudal Era
• Business dominated by aristocracy and the
church
• Government and Business aligned
• Mainly agrarian
• Trades dominated by guilds – independent
craftsmen
Reasons for Change in Society
Changing Societal and Business Demographics
Mercantile Era
• Business dominated by a
merchant class government still
dominated by aristocracy
• Government and Business not
always aligned
• Still mainly agrarian by towns
become larger
• Roman Catholic Church and new
Middle Class conflict – Reformation
Reasons for Change in Society
Changing Societal and Business Demographics
Industrial Era
• Business dominated by vested
interests – Capitalism & Nationalism
• Displaced agricultural workers
• Tradesmen employees
• Governments begin to regulate
Reasons for Change in Society
Changing Societal and Business Demographics
Technological Era
• Business dominated by multinational
corporations
• Capitalism
• Commoditization
• Displaced Blue Collar workers
• Greater Demands for Free Trade
Reasons for Change in Society
Changing Business Demographics
Information Era
• Business dominated by Global
Companies
• Globalization
• Displaced White Collar workers
• Knowledge Workers
• Governments competing for business
• Greater Social Demands for
Government Intervention
Section 3: Major Political, Social
and Economic Ideologies
Business and Government
Perspective of Relationships

From business's
perspective, there is an
exponential growth in the
size and power of
corporations.

From government's
perspective, there is the
growth of bureaucracy
because of continuing
business activities.
The result is a symbiotic relationship between
business and government
Types of Social Ideologies
1. Collectivist Ideologies
2. Individualist Ideologies
Types of Ideologies
Collectivist ideologies: Rather than leaving
the individual to pursue his or her own ends,
the state ensures that the individual serves
the interests of society when taken as a
whole.
Collectivists focus on community and society,
and seek to give priority to group goals over
individual goals
Collectivist Ideologies

The Left: Holds that economic society is best
arranged through the direct involvement of the
workers from the bottom up.

The Right: Holds that the owners of the means of
production arrange economic society from the top
down.
Collectivist Ideologies

Collectivism has found varying
degrees of expression in the 20th
century in such movements as
socialism, communism, conservatism
and fascism. The least collectivist of
these is social democracy,
Communism



Calls for violent overthrow of
capitalist system because
capitalist class will not share
power
Workers will have direct
input into economic
management
Everyone will contribute
based on ability and receive
based upon need
Democratic Socialism


Does not see capitalism as an evil that
needs to be overthrown through
revolutionary means.
Instead, tends to accept elements of
capitalism, however, desires that
government play an interventionist role in the
management of the economy and markets.
Classical Conservatism

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

Edmund
Burke 1729-1797


Stemmed from reaction to French
Revolution
Man is rational but passionate. Passion
needs to be restrained.
Only the state has the power to restrain
man’s passion. Other traditional
institutions must exist to do this. Church,
Family
The state exists not to protect the
individual, but, the past, present and
future.
It is dangerous for government to
interfere in economies
Change should be gradual
Belief in Class
Neo-Conservatism

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More individualistic than conservatism
Challenge the very principle of the welfare state
Do not believe government has a responsibility to
maintain a standard of living
Programs such as education, welfare and health which
cost the most should be reduced
Business should be less regulated, markets should be
free. Including privatization of State owned enterprises
(SOE).
Less taxation and less government spending
Minimal but strong centralized government
Believe in preserving traditional values and institutions
Believe Government should be tough on crime.
Individualist Ideologies

The individualist theory
of government holds
that the state should
take a merely defensive
role by protecting the
liberty of each
individual to act as he
or she wishes as long
he or she does not
infringe on the same
liberty of another.
Ayn Rand (1905-1982)
Individualist Ideologies

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Utilitarianism
Liberalism
Libertarianism
Ayn Rand (1905-1982)
Utilitarianism

Utilitarianism advocates
those actions which bring
about the most good for the
most people

Supports the concept of
general good

"the only purpose for which
power can be rightfully
exercised over any member
of a civilized community,
against his will, is to prevent
harm to others."[
John Stuart Mills 1806-73
Utilitarianism

Utilitarianism is the ethical
doctrine that the moral worth of
an action is solely determined
by its contribution to overall
utility. It is thus a form of
consequentialism, meaning
that the moral worth of an
action is determined by its
outcome—the ends justify the
means.

Proponents include John
Stuart Mills
Liberalism

Value of a society is measured
in terms of the satisfaction of
the individual.

Personal freedom leads social
progress.

Laissez-faire and individualism

Governments do not give
people rights their job is to
protect them

Proponents include Thomas
Hobbs

Leviathan
Liberalism

Classical liberals emphasize
free private enterprise,
individual property rights,
laissez-faire economic policy,
and freedom of contract, and
oppose the welfare state.
Classical liberals support
equality before the law, and
hold that economic inequality,
arising from competition in the
free market, does not justify
wealth redistribution by
governments.
Adam Smith 1723-90
Economic Liberalism
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Laissez-Faire Capitalism.
No government intervention in economy
Adam Smith, The Wealth of Nations
If man is left to pursue his own interests, he will contribute
to the common good.
“Government is best which governs least”
Markets are self regulating and will control man’s
excesses. (The Invisible Hand).
Neo-Liberalism

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It has as its basic concern the development of the free-market.
Globalization and Neo Liberalism are often interchanged
The rule of the market — freedom for capital, goods and
services, where the market is self-regulating allowing the
“trickle down” notion of wealth distribution. It also includes the
de-unionizing of labor forces and removals of any impediments
to capital mobility, such as regulations. The freedom is from the
state, or government.
Reducing public expenditure for social services, such as health
and education, by the government
No protection of class or social order or institutions
Neo-Liberalism

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
Deregulation, to allow market forces to act as a self-regulating
mechanism
Privatization of public enterprise (things from water to even the
internet)
Changing perceptions of public and community good to
individualism and individual responsibility.
The role of government should be confined to creating and
defending markets, supporting business, protecting private
property and defending the realm
Neo-Liberalism vs Neo-Conservatism

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
Many neo-liberals have been defined as neoconservatives and vice versa. The main difference
between the two groups has mainly to do with defence
and foreign policy.
Neo-conservatives favor huge defence budgets and
foreign interventions. Neo-conservatism seeks to
maintain the status quo, traditional values
Neo-liberals are opposed to government spending since
it leads to large deficits and debt and see no role for
governments interfering with business. Governments role
is to ensure global free markets support business
Libertarianism

Libertarians are deeply
distrustful of anything that
limits their own personal
initiative, movement, or
talents.

Often related to Anarchists

The Only role of
government is to protect
individual rights
Ayn Rand 1905-82
Economic Ideologies
Capitalism
 Communism

The Concepts of Capitalism


Refers to an economic
system where the
means of production, or
capital, is owned
primarily by individuals.
Economic decisions are
made by market forces.
The Concept of Capitalism
Focus is on an open system of:
 Pricing
 Profits and Losses
 Private Property Ownership
 Capital Movement
Differing Models of Capitalism
1. Pure Capitalism
 Defined by lack of government regulation
 Laissez-faire approach by government
2. Mixed Economy
 Mostly privately owned, however, some degree of
government intervention
 Most modern developed economies have this element
Theorists of Capitalism




Adam Smith
Alfred Marshall
Joseph Schumpeter
John Maynard Keynes

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John Kenneth Galbraith
Frederic Hayek
Milton Freidman
Adam Smith (1723-1790)

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
Liberal
The pursuit of profit will
serve the best interests of
society
Market will self regulate.
Government should not
intervene in the
marketplace.
The ‘invisible hand’ of the
marketplace. – Perfect
Competition
Alfred Marshall (1842-1924)

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
Neo-Classical liberal.
He begins by isolating the primary
relationships of supply, demand, and
price in regard to a particular
commodity
Developed the concept of demand
curve and price elasticity
Studied why humans make the
choices they do.

He postulated that the central idea of
economics must be that of a living
force and movement, and its main
concern must be with human beings
who are impelled, for better or worse,
to change and progress.

Distilled concept of marginal utility.
Joseph Schumpeter (1883-1950)

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Capitalism is unable to elicit
peoples moral allegiance
Capitalism in order to operate
efficiently must exist in a social
environment that allows for
freedom on action.
Major contributions were the theory
of the entrepreneur as the dynamic
factor in fostering the business
cycle and the theory of economic
development of capitalism
Supported private monopolies in
knowledge-based sectors
John Maynard Keynes (1883-1946)

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

His ideas emerged out of the
disaster of the great depression.
Government is obliged to bring full
employment.
His contributions were well read in
the US and Britain in the 1930’s
and contributed to Roosevelt's
‘New Deal’.
Keynes was a major contributor to
the concept of the mixed economy.
John Kenneth Galbraith (1908 - )

In The Affluent Society Galbraith
argued that the expanding United
States economy needed more
public services such as highways
and educational institutions.

The economy, according to
Galbraith, had finally reached a
point at which less time and energy
had to be spent on consumer
goods.

Corporations often sought power
through market share over the profit
imperative.
Frederick A. Hayek (1889-1992)

Economic Libertarian

Private Market best suited for
managing large societies

Felt that any government intervention
in the marketplace was the first step
towards totalitarianism.

The marketplace provides the only
rational means of allocating existing
resources and finding ways to use new
ones

Defended individual liberty and the
free-market in an academic
environment where collectivism had
been more fashionable

Wrote The Road to Serfdom in the
waning years of World War II.
Milton Freidman (1912-2006)

Neo-Liberal Economist

Founded the so called Chicago
School of Economics. A great
follower and student of F. Hayek.

Strong support of Laissez-Faire

Argued for the elimination of social
security and other elements of the
welfare state.

Friedman argued that the
concentration of political power
inherent in socialist countries was
detrimental both to economic
prosperity and individual liberty.
Commanding Heights
PBS Production
 Based upon the
book by:
Daniel
Yergin
Joseph
Stanislaw

Commanding Heights

Opening Observations
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–
–
–
–

Look at sponsors
Clinton: Globalization makes us interdependent
Globalization results in Global Terrorism
It would appear that governments are the author of all
problems
The Economic Revolution will determine the future of
the planet – Is this True?
There is a Battle of Ideas
Commanding Heights
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
Episode 1 – Battle of Economic Theory
Keynes: Markets go to excess Governments need to step in
Hayak: Market would take care of itself – Views built on war
experience – Markets work Governments do not.
WW1 – Keynes oppose war reparations : Predicts another war
Failure of Market Economy leads to Communism and
Fascism
Socialism doom to failure because it has no pricing system to
send signals
Lenin had a change of heart at end re-introduced market
economy
Commanding Heights


US Stock Market Booms RCA $1.50 to $600.
Great Depression – Keynes predictions came
true



Government failed to stop the downward spiral
Roosevelt believed the Markets had failed
Governments can win if they act the are intrusive
if they don’t act they cause instability
Commanding Heights
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

1936 Keynes publishes the General Theory of
Employment, Interest and Money
Keynes saw the economy as a whole, a machine
that could be managed
Keynes viewed everyman’s right to work
Depression seemed to spell the end of capitalism
and democracy – Socialism and Communism grow
Compare cycle of startup go bust someone new
starts up go bust with Airline industry since deregulation
Keynes spend in bad times save in good
Section 4: The Ideological Framework of
Canada
Settlers to Canada brought with them
the ideologies of Old Europe
Conservatism
 Aristocracy
 The Church
 The status quo
Liberalism
 The rising commercial
class.
 Change agents
 Traders
The dominant Ideologies of
Canada
Political
 Conservatism
 Liberalism
 Social Democracy
Economic
 Capitalism within the
context of a mixed
economy.
What is a Mixed Economy?




Government regulated competition
Some State Ownership
Government protects indigenous industries.
(In Canada, timber, fishing, mining,
manufacturing.)
Government protects and develops social
programs.
Historic Differences of Ideology
Between Canada and the United States


Canadian Ideological thought is more of a
conservatism ideology and collectivist than the US.
Canadians feel government is responsible for its
citizens’ well being. There has been a strong
continuity of socialism in Canada not witnessed in
US.
In the United States there is a stronger belief of noninterference by government and the primacy of
individual liberties. Law will not allow Federal Gov. to
get involved in State issues. US appears to be
continuing to move ever more to the right and
individualistic
Is Canada’s Economy Changing?




In the 1960’s and 1970’s Keynesian economics with
increasing government intervention in the economy
was popular.
Governments owned and operated airlines (Air
Canada), oil companies (Petro-Canada), and
Electricity companies (Ontario Hydro, Hydro
Quebec).
Government was interventionist in its approach to
the economy.
Canada continues to suffer a severe identity crisis
Is Canada’s Economy Changing?

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
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In the 1980’s and 1990’s Neo-Conservative/Neo
Liberalism ideas began to emerge in Canada and
governments felt they no longer needed to protect
domestic industries.
NAFTA, Canada-US Free Trade, Privatization, and
the dismantling of the social welfare state became
normalized.
J.M. Keynes Out
Milton Freidman In
J.M. Keynes Back In ????
Where is Canada going in the
Future?


Further evolution
towards free markets?
Or
A return to the Canada
of the 1960’s and 70’s?
Ideology Question
$10 Minimum Wage

Socialist Argument

Conservative Argument

Liberal Argument
Next Week
Readings:
Between Public and Private:
Federal Government's Industrial Strategy to Regional
Economic Disparities: A Historical Overview pp. 379 - 396
The Constitutional Timeline of Canada, pp. 121 - 130
Canada And The New World Economic Order, pp. 60 – 82.
Case:
Between Public and Private:, Cultivating Cash, pp. 397 - 428.