Carney Should Channel His Inner Lougheed

In a “ruptured” global order, Canada remains tied to a passive economic model: de-risking private capital rather than directing the national economy

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Canada is once again trying to convince itself it can run an industrial strategy, but the Carney Government’s upcoming September investment summit points in the opposite direction. The gathering is framed as a bold effort to attract global capital into strategic sectors. Yet, the underlying logic is old hat: government sets the table, reduces risk, and waits for private investors to decide what gets built. That is the continuation of a long-standing approach that treats the state as a facilitator rather than a driver.

This matters because the global context has shifted.

Industrial strategy today is about security, supply chains, and geopolitical positioning. Countries that are succeeding are not simply attracting capital; they are directing it, shaping outcomes, and accepting the risks that come with that role.

Canada, by contrast, continues to rely on incentives and partnerships, hoping that markets will deliver strategic results without the state having to take on strategic responsibility. What makes this choice more striking is that Canada has already shown it can operate differently.

Under Peter Lougheed from 1971 to 1986, Alberta pursued a far more assertive model, one in which the state took equity positions, captured value, and actively shaped the trajectory of its core industry. The modern oil sands exists because Lougheed invested heavily in research and development. Alberta has the second largest petrochemical sector in North America because Lougheed required ethane, a component of natural gas, to be first offered for provincial use.

Lougheed said that Albertans should think like owners of the province’s abundant hydrocarbon resources. Owners take risk. They invest with expectation of a return. And they assert their interests using innovative policy tools. Lougheed’s Progressive Conservative government demonstrates that an entrepreneurial state is possible within Canada.

Why then, faced with a more demanding and fragmented world thanks to Donald Trump, does the country continue to fall back on a passive economic approach? And what should it do differently at the investment summit?

Lougheed and the Logic of His Time

Lougheed’s approach did not emerge in a vacuum. It reflected a broader postwar consensus in which governments were expected to shape economic outcomes, not merely respond to them. Public ownership, industrial policy, and strategic intervention were not ideological outliers but mainstream tools used across the Western world to build national capacity and secure long-term prosperity.

In that context, Alberta’s actions looked less like an exception and more like a regional expression of a global governing philosophy. The province used its resource wealth to take equity stakes, restructure royalties, and push for upgrading and diversification.

The state was not simply regulating markets; it was participating in them, directing them, and extracting value from them.

What distinguished Lougheed was not that he invented a new model, but that he applied this prevailing logic with clarity and discipline. He understood that control over resources could translate into broader economic leverage, and he acted accordingly. The political culture of the time allowed for that kind of ambition, and the public accepted the risks that came with it.

The Turn After 1980

That governing philosophy began to unravel in the late 1970s and early 1980s. A new intellectual and political movement challenged the idea of an active state, arguing instead that markets were better suited to allocate capital and drive efficiency. The rise of figures like Milton Friedman, Margaret Thatcher, and Ronald Reagan marked a decisive shift toward deregulation, privatization, and fiscal restraint.

At the same time, the global economic environment became more stable and integrated. Trade expanded, capital flowed more freely, and the United States anchored a relatively predictable international system. In this setting, the urgency for state-led economic direction diminished. Governments no longer needed to act as aggressively because the system itself appeared to deliver growth and stability.

Canada adapted quickly to this new reality. Policy shifted toward creating favourable conditions for investment rather than directing it. The state withdrew from ownership and risk-taking, replacing those roles with tax incentives, regulatory frameworks, and partnerships.

What had once been seen as prudent statecraft began to be viewed as unnecessary intervention.

The Institutionalization of Passivity

Over time, this shift hardened into a governing instinct. Risk-taking by the state came to be seen as politically dangerous, while reliance on private capital became the default position. Governments were judged less on their ability to shape outcomes and more on their ability to avoid costly mistakes.

Institutions evolved to reinforce this mindset. Pension funds became global investors rather than domestic nation-builders. Bureaucracies prioritized caution and process over experimentation and speed. Policy tools narrowed to those that minimized exposure rather than those that required direct participation or ownership.

This was not simply a policy choice renewed with each government. It became embedded in Canada’s political culture. By the early 2000s, the country was no longer actively choosing a passive model; it had internalized it.

The idea of the state as an entrepreneurial actor had largely disappeared from the mainstream policy imagination.

A Changed World

The problem is that the conditions which supported that model no longer exist. The global economy is fragmenting, with countries increasingly prioritizing resilience, security, and control over key supply chains. Energy systems are being transformed, requiring coordinated investment on a scale and timeline that markets alone struggle to deliver.

In this environment, leading economies are moving decisively toward more active forms of industrial policy. The United States under President Joe Biden deployed massive subsidies tied to domestic production and strategic goals. China continues to direct investment through state-led mechanisms. Even Europe, long committed to market integration, is adopting more assertive policies to secure its industrial base.

Canada, however, remains anchored in its earlier approach. It continues to rely on attracting capital rather than directing it, assuming that private investors will align with national priorities.

That assumption is increasingly difficult to sustain in a world where capital is itself strategic and often politically conditioned.

Carney’s Strategy in Context

A more assertive Canadian state does not begin with strategy, because in many respects that work is already underway. In his first year, Mark Carney has articulated a coherent post-American economic strategy—one that links energy, industrial policy, and geopolitics in a way previous governments did not. It is not without flaws, particularly its reliance on incumbent corporations, but it provides something Canada has long lacked: a clear sense of direction.

The problem is not vision, but execution.

That is where the model breaks down. Canada continues to rely on tools designed to minimize state exposure—tax credits, subsidies, carbon pricing, and regulatory support—rather than instruments that give it direct influence over outcomes. This is the approach Justin Trudeau used during his 10 years as prime minister.

Carney, befitting an economist and former central banker, has a more explicit strategy and talks like the Goldman Sachs deal maker he once was, but the economic tools his government wields are little changed from previous governments.

A more assertive approach would move beyond de-risking private capital and toward participating alongside it through equity stakes, public investment vehicles, and co-investment structures. Without that shift, the state remains a facilitator of projects rather than a shaper of them, with limited ability to capture value or steer development once capital is committed.

And, instead of focusing on incumbents with shovel-ready projects, it would pay far more attention to emerging startups with innovative technologies. Over the years I have interviewed dozens of these companies—Eavor Technologies, Summit Nanotech, Northern Nations Cooperative, to name a few—who have failed, stalled, or moved to the United States because Canada didn’t adequately support them.

The deeper constraint, however, is cultural.

Canada has the capacity to coordinate, to convene, and even to plan, but it lacks the political tolerance for risk that an entrepreneurial state requires. An assertive model would demand a different set of expectations: that governments will sometimes fail, that public capital will be exposed, and that long-term returns matter more than short-term political safety.

Until that shift occurs, Canada’s industrial strategy will continue to be executed through a passive framework, no matter how ambitious the vision that sits above it.

In that sense, the investment summit illustrates the limits of the current model. It assumes that the state can achieve strategic outcomes without fully embracing strategic responsibility.

It is an attempt to run industrial policy through the tools of a passive economic framework, and that tension is unlikely to resolve itself.

Conclusion

The contrast with Lougheed is not about nostalgia. It is about recognizing that Canada has already operated under a different set of assumptions about the role of the state in the economy. At a moment when conditions demanded it, governments were willing to take risks, assert control, and shape markets in pursuit of long-term objectives.

What has changed since then is not just policy, but political culture. Decades of relative stability encouraged a model in which markets could be trusted to deliver outcomes and governments could limit their role to facilitation. That model worked, for a time, because the global system supported it.

But that system is now under strain, and the assumptions that underpinned it are eroding. The challenge facing Canada is not simply to design a new industrial strategy, but to reconsider the instincts and expectations that shape how policy is made. Without that shift, the country risks continuing to pursue ambitious goals with tools designed to avoid the very risks those goals require.

It’s not too late. There are plenty of industrial policy models to guide Canadian policymakers, both federal and provincial.

But nothing will change until Canadian think differently about the economy and demand that their political leaders do so as well. September’s investment summit might be an ideal platform from which to launch that new conversation.