Canada’s story and the art of middle-power politics

Hard power matters. When middle-ranking powers forget this, they put themselves at the mercy of great powers, such as Trump’s America and Xi’s China. Some members of the European elites believe the old rules-based order can be salvaged, perhaps protected within western-aligned regional zones. Canadian Prime Minister Mark Carney has been perhaps the most clear-eyed western statesman about how the world has changed. At Davos this year, he declared, ‘We know the old order is not coming back. We shouldn’t mourn it. Nostalgia is not a strategy.’ European leaders would do well to pay attention. Canadians are all-too-familiar with the perils of being a middle-ranking power in a world it cannot control.

Britain is particularly vulnerable at this point. The flexibility of post-Brexit foreign policy allowed a decisive response to the war in Ukraine but has dissolved into political drift. Polarisation at home has also grown. In opinion surveys, many young people have expressed that they would not fight for their country. Public trust in national institutions is at a serious low. Separatism in Northern Ireland, Scotland and Wales remain potent political forces. Religious sectarianism is beginning to make itself felt in elections. A dilapidated industrial base makes any effort to rearm the country incredibly difficult. Many western democracies are suffering along similar faultlines. Their elites interested in national renewal should not only look to the current prime minister of Canada for wisdom. They should look back to Canada’s very first prime minister who faced a similar set of challenges in the 19th century.

The premiership of John A. Macdonald is still lauded by many Canadians today despite the attempts, driven by identity politics, to remove him from the national pantheon. Macdonald was effectively the founding father of Canadian sovereignty and set the country on its path towards what we commonly associate it with: decency, moderation, orderliness and pragmatism. While the country can fall short of these ideals, just as any country can, they can be traced back to Macdonald.

Born in Scotland, Macdonald and his parents emigrated when he was five years old, settling in Kingston in Upper Canada. He became a successful defence lawyer before moving to commercial law, investing in land and stocks to bring him wealth and prestige. Active in civil life and a leading Presbyterian, Macdonald then became a Kingston alderman in 1843 and stood for the Province of Canada assembly in 1844 as a Conservative. Macdonald was steeped in British culture and identity, but he was not an Anglican High Tory like the Family Compact, the elite that dominated the province.

Macdonald’s conservatism combined commercial instincts with an attachment to the British tradition. However, he stood by the leadership of a propertied elite under the watchful eye of the British Government. As Westminster ceded more power to Canadian representatives, this forced a change. Macdonald joined the newly formed Liberal-Conservative coalition in 1854 as attorney-general. This moment is often seen as the founding of the Canadian Conservative Party. He oversaw passage of the 1855 Act that introduced separate schools for Catholics to satisfy the demands of French-speaking Canadians.

On becoming leader, he shared power with George-Étienne Carter, named after George III, leader of the Parti bleu bloc of conservatives in Quebec. He also courted moderate Reformers as part of holding power in Upper Canada. To blend these different groupings into a national force, Macdonald campaigned for a North American federation and used the slogan ‘no looking to Washington’ to defend the idea of a Canada that would be sovereign but still British.

Canadian sovereignty was born in the shadow of American independence. Although we associate Canada with political stability, the provinces of British North America had grown increasingly restless during the early 19th century. Reformers demanded greater political representation and religious pluralism from London. Loyalists in Ontario stood by the British governing elite. French-speaking Quebecois jealously defended their culture and place in the empire. It made for an eclectic melting pot in which different political parties and factions churned.

Lord Durham, a young whig aristocrat, toured the provinces and helped inform debate about how to deal with the rising political dissent. A major concern was about how this could influence stability back home in the wake of the Reform agitations and then the Chartist movement in the 1830s and 1840s. Britain wanted to avoid the mistakes that led to the loss of the 13 colonies. After years of negotiation and careful diplomacy, the British Empire made a striking innovation: dominion status. Self-governance would be given to colonies like Canada, which were believed to have reached political maturity. It was an enduring success. But not one that was guaranteed.

A federal constitution was first proposed after the 1863 general election as a means of dialling down polarisation while still allowing the provinces to organise their own affairs. Macdonald supported the idea but was not enthusiastic about a federal solution. He was worried about the dangers of a weak central government illustrated by troubles in the United States. Against the backdrop of the American Civil War, this scepticism was warranted, but ultimately federation was the preferred alternative to disorder in order to defang the Reformers. Macdonald made it his mission to push for a union of all provinces.

This culminated in the British North America Act 1867, bringing together Upper and Lower Canada, along with Nova Scotia and New Brunswick. Macdonald was granted a knighthood and appointed as the first prime minister of the Dominion of Canada. He worked to create a strong centralised state led by a powerful executive. The ‘Peace, Order and good Government’ clause in the Canadian constitution is crucial and speaks volumes about the difference between Canada and the United States, with its dedication to ‘Life, Liberty and the pursuit of Happiness’. Canadians would now be responsible for matters like defence, trade, fiscal policy, currency and finance. The new federal government could also reject provincial legislation.

It would be Canadian political elites who would have to make both dominion status and Confederation last. As the first prime minister of Canada, Macdonald faced three immense tasks. First, to show that Canadian self-governance could succeed within the British Empire. Second, to unite the different provinces and cultures into a coherent nation with a strong central government. Third, to protect the new Canadian nation from the American hegemony spreading across the Americas.

This required deft political manoeuvring at home and abroad to advance each of these goals. Macdonald did this through his critical brand of economic nationalism and political moderation. This was predicated on the need to ‘strengthen the Central Parliament, and make the Confederation one people and one government, instead of five peoples and five governments, with merely a point of authority connecting us to a limited and insufficient extent’. As Britain continues its post-Brexit journey as a middle-ranking power, Canada provides a rich source of historical insight. There is much to be said for Commonwealth nations to pay closer attention to each other’s political traditions given their shared parliamentary and common law traditions.

To conquer these tasks, Macdonald had to command a political coalition that could secure majority support for his policies. The Canadian Conservative Party owed much to the Anglican elites of Ontario and their roots going back to the American Revolution when loyalists and Tories fled northwards. But the Parti bleu of Quebec was also an essential ally as represented by Macdonald’s partnership with Cartier. Macdonald could not swing towards the extremes. He had to build a consensus around what should underpin the Confederation, and that was reflected in the composition of his government.

In some regards, the Canadian constitution resembles its southern counterpart, being a federal entity with checks and balances. But its national government replicated the Westminster parliamentary model. The executive and legislature were blended together in Parliament. Two chambers composing a popular element in the Commons and an elitist element in the Senate held power. The monarch was represented by the governor-general. The judiciary was independent and operated according to the common law.

The fact that this constitutional settlement endures to this day, even with the revisionism of the 1960s, is a testament to Macdonald’s success. But there were certainly failures to integrate all elements of the new nation. French Canadians were deeply dissatisfied with the execution of Louis Riel, the Francophone rebel and defender of Métis rights. Protestants opposed the Jesuits’ Estates Act in 1888 and anything that might undermine ‘equal rights’ between different faiths. The Maritime provinces chaffed at Macdonald’s economic policies. But, above all, Macdonald’s First Nations policies and treatment of Chinese immigrants are the primary source of controversy about his record.

While there were certainly significant racism and cultural prejudice towards and between these groups, including widespread abuse in underfunded and unsupervised schools for Indigenous children, Macdonald did not pursue anything that can be credibly described as ‘genocide’. Macdonald’s intention was to integrate the Indigenous peoples into the new Canadian nation. He tried to extend federal voting rights to all Indigenous peoples under the Electoral Franchise Act 1885, though this would have to wait until 1898 by Sir Wilfred Laurier’s Liberal government. But these were undeniably ways in which Macdonald and his governments fell short.

Confederation was the achievement of many hands. But Macdonald made the system work and dedicated 19 years of his life to it as prime minister. Politics cannot be reduced to regulations, laws and procedures. It is also a product of customs, norms and practice. Macdonald set the template and it was by no means an easy task. Provinces had their own individual interests, prejudices and priorities. But Macdonald harnessed them together into a nation that is still recognisable today. To do this, he deployed an ambitious economic programme of nation-building.

Confederation created a new nation, but it needed to be made a reality for its people. Macdonald’s ‘National Policy’ echoed the developmentalist economics of the early United States under Alexander Hamilton. The theory of Canadian nationalists was that greater economic integration would foster closer political integration, too.

Following his centralising instincts, Macdonald wanted to use the power of the state to expand Canada’s productive capacity. This would ensure Canada could become sovereign, resilient and less dependent on the United States for manufactured goods that were protected by steep tariffs. Ben Woodfinden and Sean Speer rightly refer to this as ‘state-capacity conservatism’. It was based on the three key platforms of protective tariffs, the construction of a transcontinental railway and other critical infrastructure, and support for population expansion in the western provinces.

This economic plan did not emerge fully formed in Macdonald’s mind. He was always a pragmatic conservative rather than an ideological one, and had moved only gradually towards economic nationalism. During the 1850s, Macdonald made his first forays into developing what would later become his ‘National Policy’. He also supported the Grand Trunk Railway, the postal service, roads, banking and insurance. Macdonald had even been sympathetic towards trade reciprocity with the United States during his first government.

By the 1870s, a wave of nationalism was transforming global geopolitics. Italy and Germany unified. Bismarck humiliated Napoleon III and triggered his downfall in the Franco-Prussian War. Macdonald’s first government was brought down by the Pacific Scandal in 1873 over bribes from investors in the Canadian Pacific Railway (CPR). But the new Liberal government coincided with this nationalist wave and a global depression. The Liberals failed to provide a remedy to the crisis and Canadian products could not compete with cheap American imports.

Macdonald’s Conservatives fought the 1878 election on the call for a ‘National Policy’ to restore Canadian prosperity. This put clear blue water between the opposition Conservatives and the governing Liberals. At the heart of this appeal was protectionism. Tariffs would prevent Canada from being overwhelmed by its prosperous and rapidly industrialising neighbour. Developing the Canadian economy by supporting trade within Canada’s borders would give infant industries the space they needed to grow. This would primarily cover textiles, iron, steel and agricultural tools. Cities in central Canada would boom like Toronto and Montreal. The logic was that the domestic production of manufactured goods would create jobs and good wages while feeding industries in the west such as timber, wheat and mining.

This ambitious vision required a reorientation of Canada’s economic geography. Trade tended to flow from north to south, creating interdependence with the United States. National developmentalism required a stronger flow of trade from east to west. As a result, tariff rates were high, ranging between 10 and 30 per cent. This was not without risk. Provincial resentment against the growth of industry in Ontario and Quebec, benefitting commercial and financial elites in Toronto and Montreal, was significant. Wheat was not protected and prices did go up, though the absence of an income tax compensated for this effect. Despite these tensions, it prevented Canada from becoming an extension of the US economy with its larger, more efficient manufacturers. Debates around economic integration and potential annexation continue to this day.

The Canadian Pacific Railway (CPR) would be a lasting achievement from this period. Without a transcontinental railway, western settlers had to travel through the Great Lakes and over rivers and by wagon. Alternatively, they could travel through the United States, where many settled in the American West instead. It was argued that the CPR would stimulate a broader infrastructure expansion. Railways, roads and waterways would provide the basis for trade and industry to spread across the provinces and make them increasingly integrated. Preference was also given to Canadian companies for the construction of the CPR, even if they cost more than American and British bidders. The CPR was given $25 million from central government and an additional $32 million was provided for building subsidiary railway lines.

Building the CPR was intimately connected with Confederation. It was promised to British Columbia as a condition for it entering the union with the other provinces. The Liberal government’s failure to invest in the railway contributed to its 1878 downfall. The new railways were also critical to managing Canada’s future political challenges. When the North-West rebellion happened in 1885, it was agreed that the CPR would be given additional money to complete the line. The region would benefit from the infrastructure, but it would also speed the flow of troops if disorder should arise again. It was finished in 1885, and Macdonald made his first trip to British Columbia the following year.

The third and most problematic plank of the ‘National Policy’ was western expansion. It was vital to develop these lands under Canadian governance with Canadian settlers to prevent American annexation. The prairies would be Canada’s breadbasket, feeding workers in Central Canada and exporting to the rest of the British Empire. In return, Central Canada would manufacture agricultural equipment for western farmers and ranchers. During his governments, Macdonald would add Manitoba, Prince Edward Island and British Columbia to the union and acquire the North-West Territories. By 1880, Canada completed its annexation across the British North American territories except for Newfoundland, which joined in 1949.

To help govern these new lands, Macdonald founded the North-West Mounted Police, the forerunner to the Royal Canadian Mounted Police. This was part of his efforts to maintain good order in the territory and avoid the anarchy that defined the American West. This happened ahead of settlement by Canadians and immigrants. Travelling magistrates and territorial courts supported these efforts to maintain order. This meant keeping order between settlers and Indigenous peoples as well as tackling American whisky smugglers and wolf hunters.

The Dominions Land Act 1872 had also been passed to incentivise more people to make the journey west. But population growth and increased immigration to fill the vast reserves of land would not follow until after Macdonald’s time in office. The attraction southwards to the United States remained stubbornly strong during the late 19th century. What he did achieve was a foundation for this future expansion to build upon. Steamship services, harbour developments, telegraph services, farming and ranching all grew in scale and sophistication after the turn of the century. The CPR as a landowner, employer and consumer of manufactured goods underpinned much of this national enterprise.

When the 1891 election arrived, the popularity of his ‘National Policy’ carried Macdonald’s Conservatives to victory once again. The Liberals campaigned against the tariff and for trade reciprocity with the United States. But there was serious concern about American expansionism, especially after Secretary of State James Blaine tried to use tariffs to pressure Canada into joining the United States. Whipping up nationalist sentiment, Macdonald declared: ‘I am a British subject and British born, and a British subject I hope to die.’ Liberal opposition to protectionism had failed and ensured the ‘National Policy’ endured for decades under both Liberals and Conservatives. But years of intense work and drinking problems finally caught up with Macdonald. He had a stroke and died in office in 1891.

Britain and its European allies are in a situation altogether different to Victorian Canada. Yet in many ways the predicament is similar. Britain is navigating a course between two large entities, namely the EU and the United States, while trying to establish itself as an independent power. The decline of European industry has shown how vulnerable the West has become in the new age of great-power competition. There are undoubtedly strengths, such as British and French membership of the UN Security Council and their nuclear deterrents, as well as the broader institutional strength of NATO. But European hard power must be restored.

They can only do this by regenerating the manufacturing sector. Failure to do this will force Britain and other European middle-ranking powers into a submissive foreign policy that follows the whims of Washington, Beijing and Moscow. But they can realistically follow Macdonald’s example and rebuild themselves as prosperous and sovereign middle-ranking powers. Macron’s decision to expand the French nuclear umbrella and Merz’s rearmament plan are encouraging signs. But there is so much more incredible potential that can be tapped in London, Paris and beyond. It requires a blend of economic nationalism and political moderation.

The current historical moment demands a renewed National Policy. At the heart of Macdonald’s vision was the realisation that national power depended on productive capacity. Canada was able to build its industrial strength and, in turn, make the sovereignty promised by Confederation into a reality. Canada is also an instructive example of successful nation-building that should inform European elites in national capitals as much as in Brussels. Europe must now guard against the immense power of China as the world’s largest manufacturer as well as rebuild its defences against Russia. Navigating between the squabbles of great powers has been done before by middle-ranking powers. It is an art that must be mastered again.