When Mark Carney stood before Canadians on June 9 to announce a bold leap toward NATO’s defence spending benchmark of two per cent of GDP, the subtext was revolutionary.  

What could have been framed as an act of geopolitical compliance or national security enhancement was instead narrated as an economic renaissance. “Rebuilding, rearming, and reinvesting” was not just rhetorical symmetry, it was the architecture of a new political economy.  

What we are witnessing is not merely a budgetary shift, but the articulation of a distinctly Canadian form of Keynesian militarism — one rooted not in jingoism or expansionism, but in a sophisticated fusion of fiscal credibility, productive state intervention, and strategic narrative control. 

Carney, a central banker by training, came to the nation’s leadership as a technocrat equipped with the moral authority of global financial stewardship. His past roles — governor of both the Bank of Canada and the Bank of England, as well as UN climate finance envoy — signaled prudence, not militarization.  

And yet in this moment he is recoding the defence portfolio not as a drain on the nation’s social model, but as a scaffold for its economic durability. This is a profound departure from Canada’s historical ambivalence toward defence spending, typically treated as a necessary concession to external pressure or a token gesture toward NATO cohesion. Carney is recasting defence as a source of sovereign economic agency. 

Militarism without militarization 

What makes this moment particularly complex is that Carney’s militarism does not carry the traditional baggage of military nationalism. This is militarism without spectacle, without the boots-and-flags theatre often associated with defence expansion in larger powers. There are no sweeping declarations of global posture, no hints of expeditionary ambition. Instead, the language is resolutely domestic, even intimate: “protecting Canadians,” “resilience,” “strategic autonomy.”  

It is in this quiet reframing that the ideological breakthrough occurs. Defence is no longer a siloed ministry of war; it has now been recast as a lever of economic security, a form of insurance against both kinetic threats and systemic shocks. 

This discursive shift mirrors what scholars like Karl Polanyi might call a re-embedding of the economy into the social fabric. In the post-COVID landscape, where global supply chains fractured and state capacity was tested, Canadians have become more amenable to state-led investments in national capability.  

Carney is leveraging this disposition, reframing military expenditure not as an exception to welfare economics but as an extension of it. In this narrative the state’s coercive arm is reconciled with its redistributive one — a subtle but profound shift in Canada’s economic self-conception. 

From embedded liberalism to strategic productivism  

Canada’s postwar political economy was long anchored in a model of embedded liberalism, wherein open markets coexisted with a strong welfare state. Defence spending never functioned as an economic cornerstone. It was peripheral, restrained, and often outsourced to the protective umbrella of U.S. hegemony.  

Carney’s move signals a mutation of this model into what might be termed strategic productivism: a system where state-led investment is deployed to build national capability in geopolitically sensitive sectors. 

What differentiates this from classical Keynesianism is the instrumental specificity of the spending. This is not a generalized stimulus à la New Deal or post-recession infrastructure plans. It is targeted, purpose-built, and future-oriented — defence as both narrative and node in a larger strategy of industrial autonomy. And while the numbers themselves are not staggering by global standards (two per cent of GDP is modest relative to Cold War peaks) they are symbolically maximalist in the Canadian context.  

For a country that has long struggled to reconcile defence with domestic priorities, the emerging Carney Doctrine suggests that Canada no longer has to choose between the two. 

Fiscal conservatism as moral cover 

The political genius of Carney’s militarized Keynesianism lies in its aesthetic of restraint. By presenting the policy as fiscally disciplined — paid for through reallocation, efficiency, and the cancellation of politically unpopular tax cuts — Carney neutralizes opposition from both deficit hawks and social democrats. The moral anxiety that often accompanies military spending in Canada is soothed by the promise that the money is not just for tanks, but for jobs, skills, and sovereign capability. 

This duality of security spending cloaked in economic virtue echoes the U.S. Cold War model, where Pentagon budgets were justified through their civilian spillovers such as aerospace, computing, and interstate highways. Yet Carney’s Canada is not replicating that model wholesale. It is instead adapting it to a context where citizens are wary of overreach, sensitive to social tradeoffs, and alert to the risk of dependency on foreign supply chains.  

By framing defence as a productive good rather than a consumption item, Carney aligns himself with what some political economists term supply-side progressivism — a mode of statecraft that prioritizes national capability, public goods, and structural investment over short-term redistribution. 

Geoeconomics over geopolitics 

One of the more subtle but critical dimensions of Carney’s doctrine is the deprioritization of geopolitics in favour of geoeconomics.  

While the language of his defence spending announcement nods to threats (Russia, China, and a less reliable United States), the dominant register is economic. The justification for spending is not fear but strategic necessity. The implication is that defence is no longer about foreign adventurism but about domestic industrial survival in a world of increasingly transactional alliances and volatile supply chains. 

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This is where Carney’s vision departs most starkly from prior Canadian governments, who tended to view NATO commitments as diplomatic obligations. Under Carney, NATO is not just a military alliance, it is an opportunity for national renewal. Meeting the two-per-cent funding target becomes a signal of economic seriousness, a down payment on credibility not only with allies but with markets and voters. In this way, Carney subtly repurposes the postwar logic of alliance-based deterrence into a logic of market-oriented resilience. 

The risk of a self-perpetuating logic 

Still, every paradigm shift brings its shadows. The risk of this new synthesis lies in the normalization of defence as a central pillar of economic planning. While it may be wise to invest in national capabilities, it is less clear that the logic will remain bounded. If defence becomes a politically bulletproof form of stimulus — more palatable than welfare, more permanent than infrastructure — it may begin to crowd out more deliberative forms of industrial strategy. Once militarism is moralized as economic stewardship, the line between strategic investment and path dependency can blur.  

Moreover, this framing could alter the political calculus around social spending. If Carney’s technocratic militarism becomes the default framework for high-impact government action, other areas — health care, education, green transition — may struggle to compete for attention. Defence, long the underdog in Canada’s public finance debates, may soon become its sacred cow. 

What Carney has done in a single speech is more than announce a defence budget. He has changed the grammar of Canadian political economy, elevating military expenditure from a reluctantly borne cost to a generative force of national renewal. In doing so he has crafted a new Canadian doctrine, one where Keynesian logic, fiscal credibility, and strategic capability coalesce under the rubric of resilience. It is a bold move, not because of its scale but because of its narrative in which the arsenal is no longer a symbol of war, but a tool of prosperity. 

Whether this fusion holds, and whether Canadians will continue to see their armed forces not only as protectors but as engines of economic well-being, will define the next chapter of the Carney era.  

For now, however, it signals that Canada is entering a new ideological terrain, one where guns and butter are not opposed, but harmonized in the key of Keynes.