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There is an incredible outpouring of nationalist sentiment in Canada resulting from the phenomenon of a capricious American president running roughshod over the traditional Canadian-American relationship. 

As Canadians puzzle over the astonishing turn, they might well reflect back on the key developments that launched us deeply into the embrace of the hegemonic power with which we share a border and which now is a threat. 

It was the Brian Mulroney government’s adoption of the signature recommendation on free trade from a royal commission 40 years ago that left Canada profoundly exposed to the vicissitudes and whims of the extravagantly unpredictable and dangerous U.S. President Donald Trump. 

Similarly, the next 40 years may well be defined by what we do in this moment. 

Reversing 100 years of trade policy with a royal commission 

It’s an appropriate time therefore to revisit how the Royal Commission on the Economic Union and Development Prospects for Canada (the Macdonald Commission 1982-85), came to its free trade conclusion and to look at the majority nationalist opinions it ignored in its seminal report. 

Given that royal commissions are as Canadian an institution as one could imagine, perhaps a new royal commission centred on our newly (re)emerging nationalism could assist in planning the way forward for the next four decades. 

The conventional wisdom about royal commissions is that they are policy tools meant to obscure or defuse contentious issues or to delay having to make decisions. Their findings often gather dust on the shelves of government archives.  

But once in a while, a royal commission does make a significant contribution to public policy after it is adopted in whole or in part by the government that receives its report. 

The Macdonald Commission is in such rarefied company and was unique for two main reasons. 

First, its signature recommendation – that Canada enter into a free trade agreement with the U.S. – was hastily adopted and implemented by the Mulroney government and subsequently had a profound impact upon public policy and Canada’s future. 

Second, it was radical because this signature recommendation called for a reversal of more than 100 years of Canadian economic development strategies. 

Instead of suggesting that Canada proceed cautiously down a path of gradual elimination of tariffs through multilateral agreements or even through the quicker, but still cautious, road of sectoral free trade, the Macdonald Commission recommended a “leap of faith.” 

The struggle among ideas at the heart of the commission 

It is worth looking back at the ideological struggle within the commission to see what social actors were saying and thinking at that time. For it is here that we find a majority nationalist viewpoint was ignored and the minority position in favour of free trade embraced. 

At three years and $20 million, the Macdonald Commission was the largest and most expensive such inquiry in Canadian history to that date. 

It received more submissions than any other royal commission in Canadian history. It also published the single largest social science analysis of Canada in a massive 72-volume collection of scholarly studies. As well, its broad – some said absurdly broad – mandate meant that this was the “royal commission on everything” and therefore a real mirror of Canadian society. 

Remarkably, though, the Macdonald Commission omitted one key area of investigation, that of Canada-U.S. relations. Despite political economist Stephen Clarkson submitting a proposal that this should be a central area of analysis, none of the 72 research studies focused on this. 

One hypothesis concerning the central free trade recommendation is that it was predetermined by virtue of the commission being “captured” by corporate Canada. 

I reject this hypothesis because the business community which was supposed to have engineered this capture was itself divided. Several other factors illustrate my argument, including: 

•  its unwieldy size (13 commissioners); 

• its massive and unfocussed mandate; 

• the differing ideological predispositions of the prime minister who initiated it (Pierre Trudeau) compared to who received it (Mulroney); 

• its ill-conceived structure for receiving and reviewing evidence, and writing the final report. 

The second hypothesis is that only one economic model was presented to the Macdonald Commission. But a careful study of the submissions reveals two clear and broad arguments at play. 

The first was nationalist in perspective, arguing for more government intervention in the economy to support an independent Canada and a more robust social safety net. 

The other was continentalist, advocating that the government get out of the way, let the free market loose and, most significantly, that Canada hitch its wagon to the American star and engage the U.S. in a comprehensive free trade agreement.  

Justification for a diminished state 

The overwhelming majority of submissions to the commission favoured the nationalist position. But the commission ignored their advice and opted for the minority continentalist view. 

Thus, its adoption of free trade and the ideological worldview accompanying it reveals the commission actually to have been quite radical because these were not the views of the mainstream, nor indeed even the entire business community. 

Therefore, unlike many other royal commissions, instead of defusing and obscuring issues, this royal commission gave credence to an ascending ideological worldview. This view had not yet gained broad acceptance with the Canadian public, but it ultimately led to a whole set of ideological justifications for a diminished role for the state in Canada, coupled with free trade with the U.S. 

The staunch support of the nationalist view found its voice largely through submissions to the commission by the union movement as well as many rights-based interest groups and new social movements.  

Many of these groups had emerged in the wake of the newly minted Charter of Rights and Freedoms, which had inspired a new activism, and as traditional political parties proved to be inadequate to the task of representing their views. 

The nationalist view received its early articulation in the 1982 Catholic bishops’ statement Ethical Reflections on the Economic Crisis and later went on to influence the anti-free trade forces in the debate and election of 1988. 

The adherents to this view who made submissions to the commission also included environmentalists, seniors, the cultural community, Indigenous Peoples, women’s groups, others in the popular sectors and, surprisingly, some segments of the business community. 

The continentalist view was presented by academic economists and portions of the business community, particularly big business interests that were already integrated into the continental economy. 

The Macdonald Commission inspired the enduring shift from nationalism to continentalism, thus providing legitimization for the whole gamut of neoconservative continentalist prescriptions that the Mulroney and subsequent governments then pursued. 

The 1988 federal election mirrored the positions recorded by the Macdonald Commission – 53 per cent of voters supported the two parties opposed to free trade, while only 42 per cent supported Mulroney’s Progressive Conservative Party, which however won the election because it secured the most seats in Parliament when the other two parties split the anti-free trade vote. 

Indeed, a furious battle of the paradigms was engaged in both the Macdonald Commission and that election. 

Open letter to the next prime minister: We need a royal commission on Canada’s future 

Forty years later, we’re due for another big rethink about Canada’s future 

On one side were those who looked back longingly to the old Keynesian model, sought to modify it in light of changing conditions by emphasizing things such as economic democracy and local control, and linking it with nationalism. 

On the other side were those who worked to discredit that model by drawing on the economic crises of the time – the recession of 1981-82, which prior to the 2007-09 recession, was the worst economic downturn in Canada since the Great Depression.  

They used this crisis to forward a model premised on less state intervention, freer markets and continentalism.  

But the great global free trade experiment of the past 40 years has failed. It made a small number of people richer, but what did it do to the rest? And at what cost to democracies around the world?  

How has it left Canada positioned – in strength or weakness? Did anyone see this coming? Well, yes, the majority of Canadians did.  

But 40 years ago, the nationalist perspective was dismissed. Will anyone listen now?