The 2007–2008 Wilson series of lec­tures in Cana­dian His­tory kicked off at McMas­ter Uni­ver­sity today. John Weaver, the act­ing Wilson Chair in Cana­dian His­tory, has attrac­ted an excit­ing list of speak­ers for the com­ing year. Lou Pauly spoke on ’Glob­al­iz­a­tion, Polit­ical Author­ity and the paulyPre­ven­tion of Sys­temic Fin­an­cial Crises.’ He fol­lowed Angela Gra­ham who, less than 24 hours prior to her doc­toral defense, provided an enga­ging look at Cana­dian For­eign Policy towards the People’s Repub­lic China between the Second World War and recog­ni­tion in 1970.

After provid­ing a brief over­view of Chinese inter­na­tional rela­tions fol­low­ing the Second World War, Graham’s fram­ing ques­tion was why Canada, who ten­ded to fol­low US lead, seemed to pur­sue a dif­fer­ent for­eign policy with regard to the PRC. Her topic seems a pop­u­lar one these days after the suc­cess of Mar­garet Macmillan’s Nixon in China and Robert Wright’s Three days in Havana. Gra­ham con­tends that Canada engaged in a con­stant pro­cess of eval­u­ation of recog­ni­tion fol­low­ing the Second World War but did not act­ively pur­sue recog­ni­tion as it had more to lose in rela­tions with allies than to gain from formal recog­ni­tion of the PRC. Fol­low­ing the dev­ast­at­ing Great Leap For­ward, Canada enjoyed a fin­an­cial wind­fall from sub­stan­tial grain sales dur­ing an inter­na­tional glut. In a pos­i­tion of fin­an­cial gain and weak­en­ing Amer­ican oppos­i­tion to recog­ni­tion, Canada was able to care­fully nego­ti­ate recog­ni­tion that did not form­ally sup­port PRC claims on Taiwan. graham

This recog­ni­tion provided a model for other coun­tries’ (includ­ing the US) terms of recognition.

One is left won­der­ing whether Cana­dian recog­ni­tion was to just get wider access to Chinese trade agree­ments before Americans?

Lou Pauly’s paper “Glob­al­iz­a­tion, Polit­ical Author­ity and the Pre­ven­tion of Sys­temic Fin­an­cial Crises: The European Case in Com­par­at­ive Per­spect­ive” ques­tions the over­arch­ing ques­tion of how nation states deal with a legit­im­acy solidly stem­ming from sov­er­eignty and national autonomy in a global eco­nomy that is increas­ing integ­rated and relies on cross-national co-operation for its sus­tain­ab­il­ity. More dir­ectly, he is ask­ing what is going on with the cur­rent credit crisis? How severe is it? What can be done and more import­antly, what ‘should’ b done?

Dr.Pauly’s talk, was scin­til­lat­ing, bril­liant and chilling. He was able to con­tex­tu­al­ize the fin­an­cial tremors of the past few weeks and use them as a sand­box in which to prose some very ser­i­ous ques­tions. Pauly logic­ally asks whether our cur­rent sys­tem is sus­tain­able, give the huge imbal­ance between cap­ital import­ers and cap­ital export­ers. he argues that accord­ing to eco­nomic prin­ciples, cap­ital should be flow­ing to where is can get the highest return, but instead it is being fed by the dom­in­ant con­sumer engine of the Unites States. Not uniquely he charges that if the US was a third world coun­try, the IMF would have stepped in dec­ades ago. Non­ethe­less he argues that play­ers isn the world today are motiv­ated to per­petu­ate the cur­rent sys­tem, which raises his second ques­tion: is per­petu­ation of this sys­tem just and right? This is of course a more com­plex ques­tion and far harder to answer. What Dr. Pauly sug­gests is that as we speak, Canada and the Bank of Eng­land find them­selves arrayed against Ger­many and France over this ques­tion. The Ger­mans and French have pub­licly affirmed that they believe that they should imme­di­ately bail out any fail­ing insti­tu­tion, sta­bil­ize the sys­tem and then deal with the sub­sequent fal­lout. The Brit­ish and Cana­dian pos­i­tion is that it is just this guar­an­tee that will lead fin­an­cial insti­tu­tions to assume even ris­kier invest­ment vehicles armed with the know­ledge they will not be allowed to fail.

Effi­cient mar­kets depend on stable con­fid­ence gen­er­at­ing means. Sta­bil­iz­a­tion required tools for crisis man­age­ment and res­ol­u­tion. When they are in place, they also work towards crisis prevention.Canadians, he asserts are lucky to be able take the moral high ground.This wasn’t so clear 6 weeks ago, when there were fears of fail­ure of the CIBC. Now that that’s passed, Canada is in a pos­i­tion to assume this ground. Is it pos­sible that the Bank of Eng­land and Canada are rid­ing on the backs of the Ger­mans and French, let­ting them handle the bail out that calmed the mar­kets by flood­ing them with liquid­ity? How have the Brit­ish suc­ceeded for so long? Is Bri­tain one big off­shore market?

The bot­tom line for Pauly seems to be the sur­face appear­ance and the behind the scenes deeper cur­rents. On the super­fi­cial level, appeals are made to nation­al­ism and the pre­tense of regional interests. Below the sur­face, con­nec­tion are made that ensure that alow for co-operation and greater fin­an­cial integ­ra­tion between global insti­tu­tions.