Social Affairs, Science and Technology

The Standing Senate Committee on Social Affairs, Science and Technology

Final Report On Social Cohesion

Chapter 4

The Choices Before Us
The Need for Intelligent Alternatives
The Roles of the Corporate and Voluntary Sectors
Finding the Balance Between Social and Economic Goals: A Challenge for the Political Process
Towards a New Social Investment State
Less Talk, More Action!

The Choices Before Us

The tensions between globalization and social cohesion are real, and are unlikely to disappear of their own accord. If the tensions are not managed intelligently and creatively, they may lead to a breakdown in social consensus and erode the legitimacy of our institutions. If nothing is done, the danger is that globalization will contribute to social disintegration, as the nation is split along the lines of economic status, region, or social norms. This is not a pleasing prospect, even for those on the winning side of the divide who have little empathy for the other side.

"Social disintegration", writes Harvard economist D. Rodrik, "is not a spectator sport – those on the sidelines also get splashed with mud from the field. Ultimately, the deepening of social fissures can harm all."(37) This includes markets themselves as they depend on social stability to function well.

What should be done to ensure that global economic integration does not lead to social fragmentation? In this world of growing interdependence, governments cannot do everything alone, and neither can business or the voluntary sector. Each of these sectors has a role, and the three complement each other. The goal is to achieve a new balance between government, market and society - a balance that will continue to unleash the creative energies of private entrepreneurship without eroding the social consensus.

How do we strike this new balance? There are no easy answers, no magic formula. We need to think imaginatively without being blinded by the kind of self-interest that sometimes leads us to overlook problems and their potential solutions.

The Need for Intelligent Alternatives

As most witnesses recognized, part of the difficulty in addressing this question is that more of the basic analytical and empirical work on the consequences of globalization remains to be done. In this context, the work of the Policy Research Committee is certainly a positive development, as well as the recent decision of the Social Sciences and Humanities Research Council (SSHRC) to provide funding for research on the theme of Social Cohesion in the Era of Globalization.

When societies face new challenges and problems they certainly need good research and a solid evidence base. This is an essential ingredient. But they also need creativity, patience and above all, political imagination.

John Maynard Keynes, whose thinking provided much of the intellectual foundation on which countries like Canada built their social consensus after the Second World War, once argued that "bad" ideas (like laissez-faire or communism) sometimes became dominant in history because of the lack of intelligent alternatives.

In the same way, if we are becoming a more polarized society - this has not been a deliberate choice by Canadians. If social cohesion is indeed unravelling in Canada, it has happened by default. It has happened, to use Keynes’ words, because of the lack of "intelligent alternatives".

For most of the past 20 years, decision-makers in government and in the corporate sector have focused on short-term economic considerations and did not pay sufficient attention to the longer-term societal implications of their policies because the alternatives – either a retreat from our commitment to economic openness or excessive government intervention – proposed a cure worse than the disease.

But societies and governments, like individuals, learn from their past experiences. Decision-makers almost everywhere are becoming increasingly conscious that without a proper balance between social and economic goals, some of the policies and strategies that they have implemented since the 1980s are going to erode society’s cohesiveness.

But even if many now recognize that there is a problem, we have not yet found or agreed on a solution on how to achieve a more sustainable balance between economic globalization and social cohesion. Canada lacks a social consensus on this question.

There has been no comprehensive blueprint of a social contract for the new global era; no equivalent of the Marsh report to provide an integrated vision of the ways in which the economic and social imperatives of the contemporary era should be reconciled. Indeed, to the extent that new visions and approaches have been articulated, they have often tended to come from outside, rather than inside, government.

These hearings are just a beginning – witnesses have provided both a diagnosis and a sense of what is possible. In effect, they have begun to re-evaluate the essential roles for state, market and society.

The Roles of the Corporate and Voluntary Sectors

In Canada, as elsewhere in the developed world, the corporate sector has been more on the ‘winning’ side than on the ‘losing’ side of the new social divide created by globalization. Accordingly, the public is challenging the private sector to play a more important role in Canadian social life. As Mr. Courtney Pratt said, people "are looking to the corporate sector to play a much larger role in shaping and supporting the social fabric in Canada." (Pratt, October 27, 1998)

The development of new ideas and approaches based on the notion of "corporate citizenship" is a sign that business is responding positively to this challenge and becoming increasingly aware of the need to play a greater part in shaping the social well-being of communities.

As the examples presented in Chapter Three show, the voluntary sector is very often the channel through which corporations exercise their social responsibilities. The Committee wishes to recognize the active and essential role that the voluntary sector plays in fostering social cohesion and in building bridges across Canadians.

Voluntary organizations also offer individuals opportunities to express their own personal hopes and dreams for themselves, for their neighbours and their communities. But it is only through democratic institutions that societies and nations can express their hopes and dreams. The Committee heard many ideas, and witnesses have provided numerous examples in terms of the possible routes that Canada could take in trying to reconcile social and economic objectives. But in the end, the decision as to where we decide to strike this balance is, ultimately, a political or a policy decision. It is a challenge for government and the political process as a whole.

Finding the Balance Between Social and Economic Goals: A Challenge for the Political Process

Striking a balance between economic openness and domestic social needs is not a mere "communication challenge for governments" as the Policy Research Committee argued in its February 1999 report.(38) It is not a simple public relations matter. It is a policy matter. It makes little sense to sacrifice social progress for the sake of economic liberalization. Put differently, as policy-makers sort out economic and social objectives, policies designed for deepening global economic integration should not be automatically entitled to first priority.

Equally important is to give citizens a sense of security, a sense that their lives and that of their children will not be suddenly and arbitrarily disrupted by changes in the global economy.

But as some witnesses argued before the Committee, the conception of security that was part of the postwar social consensus in Canada is fading as a policy goal. Security as a means of protecting Canadians against the risks inherent in the modern world is slowly disappearing. This is particularly evident in the reforms adopted in the area of unemployment insurance and social assistance. And all these changes are happening at a moment where we are increasingly becoming a Risk Society. (39)

Canadians are being asked to take on more risk in many ways. They experience greater risk of involuntary job change or of a job with no benefits, and the risks associated with high debt burdens. They see their children encountering more risk – in the streets, in the labor market and as recent events show, even in the schools. They also see more homeless people on the streets, and they are taking on more of the responsibility for the health care as a result of changes in the system.

Towards a New Social Investment State

Today, most countries believe that the goal of social policy should no longer be to provide security by trying to shield people from economic disruptions in their lives. We are told that security no longer means protection from change, it now means help in building the capacity to change; hence the emphasis on human capital as the surest form of security in the modern world, and the centrality of debates over education and training.

This change in the definition of security means that governments should use social policy more as an instrument of economic transformation. This, in turn, implies a shift from a social expenditure to a social investment perspective(40). A shift away from the traditional welfare state based on the direct provision of economic maintenance, to a new social investment state where:

• social spending represents a way for governments to invest in human capital by helping individuals to acquire the skills they need to adapt to the rapidly changing circumstances of the new global economy;

• economic development means job creation in industry and in a social economy which meets the needs of the community.

The new social investment state has the potential to provide a viable model for balancing economic flexibility and social cohesion in the era of globalization. By re-defining the relationship between risk and security embedded in the postwar welfare state, the new social investment state could help us to develop a society of responsible risk takers. People need protection when things go wrong, but also the material and moral capabilities to move through major periods of transition in their lives.

In the new social investment state, the main instruments of security are:

• investing in human capital, training and education;
• developing partnerships involving federal and provincial governments, and the private and voluntary sectors;
• removing barriers and improving access to the resources needed for social and economic participation;
• promoting citizen engagement and public dialogue;
• enhancing corporate social responsibility;
• creating opportunities, giving people a sense of belonging, and helping them manage the risks associated with globalization and technology; and
• ensuring the responsible regulation of global markets.

But unfortunately for now, this new kind of state exists only at the level of rhetoric. Despite all the talk, Canada is not investing heavily in the new instruments of security. In fact, access to the old instruments has been reduced (unemployment insurance and social assistance), while at the same time education expenditures are being cut in many provinces and transfers from Ottawa reduced. In addition, the private sector is showing significant weaknesses in the area of training, as the 1998 OECD survey of Canada made clear. No wonder that Canadians are feeling anxious and insecure!

Less Talk, More Action!

Based on what we have heard during the hearings, there is absolutely no doubt in the Committee’s mind that in Canada we do have "intelligent alternatives" to the downward spiral of the polarized society toward which we seem to be slowly drifting. We have choices. The ideas are there, but not the investments and the commitment. As one witness said: "we talk a good line but I am not sure we are delivering" and in the meantime, "it is a little bit more of everyone on their own." (Banting, May, 12, 1999)

The Committee is challenging decision-makers in the public and private sectors to do "less talking" and "more delivering" and to start investing more time and energy in the new instruments of security for a knowledge–based economy.

A state and a society based on the social investment principle is one where:

• Education and learning are regarded as an investment and financed by students, families, taxpayers, employers and employees. Many families and students will be able to finance this investment on their own. But young people from low-income backgrounds do not have full access to post-secondary education because they and their families are unable or unwilling to take on a high debt burden;
  
• There is a real commitment to the learning culture. Governments create opportunities to study and to improve literacy, while employers create new forms of school to work transitions, and invest in training their employees. Employers have taken a first step in this direction with the Career-Edge program described in Chapter 3. But, in general, employers provide training for their highly skilled and best-educated employees, not for those with low skill. Governments have to respond to this market failure;(41)
  
• The caring role of the family is valued and supported by strong community institutions, thoughtful public policies and family-friendly work arrangements. Families wish to take responsibility for the healthy development of their children, but they cannot do this alone. Governments and corporations must provide access to robust education, health, community services, flexible working hours, good quality child care and parental leave for example;
  
• Social solidarity and cooperation are nurtured by finding new forms of collective action, which depends less on the direct unilateral action of the state and more on partnership arrangements involving government, business, citizens and the voluntary sector;
  
• The new spirit of partnership must also pervade the new Social Union framework to make sure that the provinces and the federal government work together effectively to the benefits of all Canadians and to improve capacity to collaborate on building the new social investment state.
  
• New technologies, with their limitless potential, are harnessed and dispersed amongst all people. Knowledge and technology have the possibility today as never before to educate, liberate and expand horizons. A social divide in technology in the Information Age would be a disaster and it must be avoided. For example, we are beginning to see significant gains in access to the Internet in schools and in voluntary organizations as a result of SchoolNet and the Community Access Program.

The goal is to take the idea of the social investment state and translate it into a concrete set of public policies so that Canadians can have access to the means and resources they need to confidently face the challenges of globalization and technology. Already, in a variety of initiatives presented in Chapter Three, we can see that a new model is beginning to emerge and is influencing the thinking of many in the private and public sectors. But we have not yet established a "new paradigm".

The new model will become reality when business and government decisions are based on an understanding that social and economic policies work hand in hand. That understanding will lead us away from polarization and build the foundations for a more cohesive society.

In our dialogue with witnesses, we have opened the public debate on social cohesion. They have provided evidence of the unintended consequences of globalization and technology. Their stories have also kindled our hope for the future.

Where next?

We believe this dialogue should continue. We think that more Canadians, and most particularly more corporate and political leaders need to begin a sober reflection of how they can think and act in new ways. It is no longer possible to accept a polarized society as the inevitable price of economic progress. The cost is too high for each and everyone of us.

Social cohesion is a societal project which transcends all the institutions in a society. It is the ultimate common property resource. We can all benefit from it if it exists, but it is far too easy to let the social fabric deteriorate as we each pursue our own short-term self-interest.

To knit the social fabric together under the stresses of globalization and technological change will require leadership to set the vision, and stewardship to track progress and call institutions and citizens to account.

The Committee has met many leaders and stewards at the community level who are making a difference by building bridges, improving access, giving citizens a voice, and forging partnerships. We have met a few citizens with a national presence and we have cited key comments by Ministers of the Crown.

What we have not found is a national leadership coalition dedicated to enhancing social cohesion and sustaining a caring community in Canada. Ideally, this should be a national coalition embracing governments, business leaders, and the leaders in civil society. This coalition would have the capacity to frame the vision which balances economic and social goals, and would set the standards for public and private action. It would also track progress and call institutions to account if they do not take up the challenge.