Chapter 9. Cold War Canada, 1945-1991
9.12 The 1980s
The oil crises of the 1970s continued to damage the western economy, driving up government deficits in one country after the next (see Section 8.10). Economic stagnation combined with inflation — a rare occurrence — to produce what was called “stagflation.” The dominant economic theory of the time in Canada, a kind of modified Keynesianism, offered limited help in dealing with this new phenomenon. Trudeau’s 1975 to 1979 administration responded with wage and price controls and limited the ability of trade unions to bargain for improved incomes as a means of controlling inflation. This strategy undermined the postwar settlement and brought the Liberals into conflict with labour, thereby enhancing the NDP’s position.
At the same time, the most — and increasingly —popular economic theory on the right called for achieving growth through monetary policy. Monetarism (described in Section 8.16) was invoked as a way of adjusting incomes outside of wage settlements. Coupled to a belief in the efficacy of free markets and the necessity of reducing the role of the state, these approaches together constituted the neo-liberal (sometimes referred to as neo-conservative) agenda. Canadians were not in a hurry to embrace these policies, but the outside world — specifically, the United States and the United Kingdom — did so from the late 1970s on. Canada was inevitably caught up in this tide.
Trudeau’s Return
It is worth noting that Trudeau’s unpopularity in 1979 — particularly in the West— did not recover during the Clark administration. Ontario, Quebec, and the Maritimes returned a Liberal majority in 1980, in a campaign in which Trudeau was regarded by his own minders as a liability to be kept mostly out of sight. Apart from two seats in Manitoba, the West did not elect a single Liberal. If this reflected, in part, the Liberal approach to energy politics the situation only worsened with the subsequent introduction of the National Energy Policy (see Section 8.10). These developments were bound up in what became known as western alienation, a parallel to Quebec’s dissatisfaction with Confederation and longstanding Maritime disenchantment.
What sustained Trudeau’s standing nationally was his constitutional achievement in 1982. Efforts began in 1980 to recreate the consensus between provincial leaders that was briefly achieved at Victoria (in 1971) but these ended in bitter disagreement between the premiers and Trudeau’s designate in this process, Jean Chrétien (b. 1934). A November 1981 meeting between Chrétien and a group of Premiers in the kitchen of the Government Conference Centre produced what was called the Kitchen Accord (and its makers, inevitably, were the Kitchen Cabinet). Lévesque arrived the following morning and rejected the Accord as a betrayal of trust on the part of his colleagues, after which it was known in Quebec as the “Night of the Long Knives.”[1]
The federal government then settled on a un