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Alberta’s economic reliance on oil and the subsequent symbiotic relationship that developed between the provincial government and Big Oil seemed a foregone conclusion.
The Progressive Conservatives had gone virtually unchallenged for decades and criticism of government policy fell on voters’ deaf ears. Some critics argued that this reliance on oil had weakened democratic structures in Alberta, and across Canada, and that the oil industry was actually shaping federal policy.
And according to the new compilation Alberta Oil and the Decline of Democracy in Canada edited by Lorna Stefanick and Meenal Shrivastava, those critics are not wrong.
The Alberta oil industry has impacted Indigenous rights, environmental policy, social infrastructure and the list goes on. Now with Rachel Notley and the NDP in power, they have the opportunity to reverse the democratic deficit and get Alberta, and Canada, back on track.
Read this excerpt from Alberta Oil and the Decline of Democracy in Canada and find out why we can’t let Big Oil continue to influence our governance.
In 1953, C.B. Macpherson’s Democracy in Alberta: The Theory and Practice of a Quasi-Party System appeared. Much has changed in the 60 years since the publication of this influential work, which explores the nature of democracy in a jurisdiction dominated by one class of producers — the farmers.
Today, more than ever before, Alberta can be seen as a one-industry economy, with agricultural interests having been replaced by those of the oil industry. Since Macpherson’s analysis, Alberta’s population has also grown dramatically as a result of both national and international migration. Calgary and Edmonton have become major urban centres, and economic and political power has incrementally and steadily shifted from central Canada to western Canada.
What did not change until 5 May 2015 — when the New Democratic Party (NDP) formed a majority government in Alberta, decisively ending nearly 44 years of rule by the Progressive Conservative (PC) Party — was the dominance of one party in the provincial political system and the resultant concern for the health of democracy in this province. While the symbolic significance of the NDP electoral victory is enormous, it remains to be seen to what extent the NDP’s traditionally social democratic stance will alter the course of provincial energy policy.
At the time Macpherson wrote, the state of democracy in Alberta might have been assumed to be of only local importance. This, too, has changed: it is now clear that contemporary trends in Alberta have significant national and international implications. Because of Alberta oil, Canada joined the list of theworld’s top ten oil producers in 2006, and it subsequently rose to number five on the list in 2014 (USEIA 2014, 2). The far-reaching ramifications of environmental damage caused by unconventional oil extraction and the intensification of neoliberal policies in the country have garnered interest in the health of democracy in both Alberta and Canada.
In this context, it is worth exploring Macpherson’s thesis that a society dominated by petit bourgeois producers tends to reduce politics to a single-minded focus on maximizing returns from sales of commodities for these producers. In such a society, in which there is an unequal distribution of wealth, inevitable conflicts of class interests, if they are recognized at all, are treated as irrelevant to political life (Macpherson 1953).
This collaborative project originated in an article that we co-authored (Shrivastava and Stefanick 2012). The article provides a survey of studies, most of them focused on countries in the Global South, that explore the relationship between oil dependence and liberal democracy. Reliance on oil exports can provide important revenue that might be used for development purposes, but it can also have negative economic and political effects.
From the studies focused on the Middle East (e.g. , Mahdavy 1970) to wide-ranging cross-national studies (e.g. , Ross 2001, 2009; Tsui 2011), much of the vast literature under the banner of “oil and democracy” argues that reliance on oil exports is strongly associated with undemocratic, authoritarian rule (e.g. , Bulte, Damania, and Deacon 2005; Karl 1997; Lowi 2004; Wantchekon 2002). This is not to suggest that “oil undermines democracy” is an unchallenged thesis, since some studies have also shown the pro-democratic effects, in varying degrees, of the discovery of oil wealth on countries such as Ecuador, Congo, Nigeria, Trinidad, and Venezuela (e.g. , Herb 2005; Smith and Kraus 2005).
Nevertheless, the bulk of the oil and democracy scholarship has found a negative relationship between natural resource dependence, particularly oil revenue, and democracy.
This negative relationship has been traced to phenomena such as the rentier state (that is, a country that derives a high proportion of its income from resource rents) and the “Dutch disease.” The term rentier state is most frequently used to describe countries in the Middle East and in North Africa, along with characteristics of their national economies and state institutions and their governments’ attitude toward their citizens. Using the revenue generated by the extraction and export of resources as the independent variable, theories of the rentier state draw causal links between the income derived from resource rents and poor economic governance as well as authoritarian rule (Ross 2001, 2006).*
The term Dutch disease — which first appeared in The Economist (1977) to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959 — refers to another causal mechanism, one that harms a country’s non-resource sectors. A sharp rise in revenue from the export of primary commodities, such as oil, has the effect of strengthening the country’s currency, which in turn drives up the cost of its other exports. This reduces the competitiveness of the country’s agricultural and manufacturing sectors, which have already been weakened by the booming resource sector, and thus draws both capital and labour away from these sectors, thereby raising production costs (Gylfason 2001).
These mechanisms are part and parcel of what is often called the “resource curse.” Sometimes described as the “paradox of plenty” thesis, the resource curse is used to explain why countries rich in natural resources — notably, petroleum- producing countries — have been unable to use that abundance to boost their overall economic growth — although recent studies have shown that it is the volatility in commodity prices, rather than abundance per se, that drives the resource curse paradox (e.g. , Cavalcanti, Mohaddes, and Raissi 2012; Leong and Mohaddes 2011).
Simply put, the resource curse posits that the narrowing of a capitalist economy down to one commodity gives those with control of that commodity inordinate power. This skewed power is particularly evident when comparisons are drawn to economies in which the competition between different factions of capital creates opportunities for varied agendas on the part of both the state and civil society.
Our 2012 article applies measures of democracy (such as the principles of “good governance”) used in the oil and democracy literature to assess the impact of oil wealth on fundamental elements of liberal democracy in Canada. Specifically, we set out to determine whether relationships between oil dependence and democracy similar to those found in the Global South could be found in Alberta, a subnational jurisdiction in the Global North.
We argue that the political influence of the powerful oil lobby in the province has led to a decline in political liberalism — which refers to the limited role of government, reduced to that of a neutral referee mediating among competing definitions of the public good (see Rawls 1993) — and that the result constitutes a democratic deficit that is fuelling political and economic inequality in the province and the country. Although our focus is subnational, the implications of our findings are national in scope.
In any given context, political, economic, and social variables, which are the product of a range of historical factors, mediate the relationship between resource management and political economic outcomes.**
These contextual differences might explain, at least in part, the discrepancy in development outcomes in different resource-abundant countries. Most importantly, these contextual variables are strongly influenced by the prevailing political dynamics. In the Canadian context, the strident rhetoric that characterizes debates about whether Alberta oil is “ethical” or whether reliance on “dirty” oil is turning Canada into a petro-state tends to deflect the focus from the political system and the policy apparatus that is shaping the relationship between resource management and political economic outcomes — in particular, the role of neoliberalism.
The term neoliberalism most commonly refers to economic reform policies and measures such as eliminating price controls, deregulating capital markets, lowering trade barriers, and reducing state influence on the economy, especially through privatization, fiscal austerity, and financialization.***
Additionally, neoliberalism can be a political ideology that explains and justifies a preferred economic and governmental order for society (Knight 2006).
In Canada, neoliberalism entered the national scene under the regimes of Jean Chrétien and Paul Martin, which oversaw the first wave of rollbacks of the national welfare state. Changes they made to the Canadian Assistance Program, for example, enabled welfare restructuring at the provincial level; Alberta and Ontario were the first provinces to replace welfare with workfare (Herd 2002; Peck and Theodore 2010).
The Conservative-led government under Stephen Harper has overseen what Jamie Peck and Adam Tickell (2002) characterize as “roll-out neoliberalism”: strategies for restructuring the state characterized by authoritarian measures that rollback the welfare state while maintaining class privilege and market dominance.
In Alberta, restructuring of the welfare state through privatization, deregulation, the tightening of eligibility requirements for assistance, and the devolution of welfare services to nonprofit and voluntary sectors, has a long pedigree but certainly reached its zenith under Premier Ralph Klein in the 1990s. The intensification of neoliberal policy provincially and federally has implications for both natural resource management and political economic outcomes.
Contributors to this volume, therefore, consider two sets of issues: the first pertains to broad questions about institutions of liberal democracy in Alberta and Canada, and the second concerns specific trends in an oil-exporting jurisdiction. Unsurprisingly, these issues often overlap and are guided by similar questions: What are the historical, socio-political, and political economic trends that have played a role in the evolution of governance, equity, and citizenship issues in Alberta? How are these trends being felt on the national level? How does political ideology affect provincial and federal public policy issues? What are the impacts of economic and political inequality on resource management and governance?
This collection takes a different approach from that of much of the oil and democracy literature. Instead of relying on quantitative measures of democracy, the volume provides a critical evaluation of the application of the principles of liberal democracy in Alberta, and in Canada generally, by investigating significant public policy areas, such as energy, Aboriginal issues, the environment, labour law, and urban planning.
Additionally, the book includes a selection of largely qualitative studies of political ideology, political economy, national security, political activism, gender, labour, and the visual arts in the milieu of increasing oil dependence federally and provincially. While most chapters focus primarily on Alberta as the major oil-producing jurisdiction in Canada, others draw comparisons between Canada and oil-rich powers in the Global South — notably, Venezuela and Iran.
The 14 scholars contributing to this book are from nine different academic disciplines; this diversity of approach and method reflects the cross-disciplinary reach of this topic. These many perspectives on the nature and operation of democracy in Alberta, all informed by liberal democratic theory, have significant ramifications for the country as a whole.
Meenal Shrivastava is associate professor of political economy and global studies at Athabasca University.
Lorna Stefanick is a professor at Athabasca University, where she serves as coordinator for the Governance, Law, and Management program.
* Resource rent is the surplus revenue generated from the extraction of a natural resource. That is, it is the revenue that remains after all the costs of extraction and production, including the minimum return that investors need on the capital they have invested, have been deducted from the total revenue. Governments do not typically engage directly in extraction and production activities. Instead, as the holders of the rights to a country’s natural resources, they levy a tax on the resource rents earned by businesses.
** We use the term political economy in its broad sense to refer to the influence of political ideologies on economic life, particularly in relation to the development of public policy. Although specific political economic analyses inevitably reflect the disciplinary framework and theoretical orientation of the researcher, all begin from the fundamental insight that politics and economics are inextricably bound up with one another.
***Financialization is explained in more depth in the next chapter. Briefly, it refers to changes in the structure and operation of financial market that lead to an increase in the size and importance of a country’s financial sector relative to its overall economy (Krippner 2005).