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The Post-Staples State:

The Political Economy of Canada’s Primary Industries

Edited By

Michael Howlett

Department of Political Science

Simon Fraser University

Burnaby BC

Canada

Keith Brownsey

Department of Public Policy

Mount Royal College

Calgary, Alberta

Canada

Submitted to UBC Press

November 15, 2005

Table of Contents

Table of Contents ii

Table of Figures vii

Table of Tables viii

Acknowledgements ix

Part I – Introduction x

Chapter 1 – Introduction – Michael Howlett (SFU) and Keith Brownsey (Mt. Royal College) 1

Overview: Staples and Post-Staples Political Economy 3

Staples Theory 5

The Historical Foundations 8

Debates in the 1970s and 1980s 15

Contemporary Staples Theory 23

Organization of the Book 28

References 32

Part 2 – Consumption Industries: Agriculture and the Fisheries 37

Chapter II: “The Two Faces of Canadian Agriculture in a Post-Staples Economy” – Grace Skogstad (Toronto) 38

Introduction 38

Agriculture as a Dominant Staple: late 19th century – 1930 41

Depression and War and the National Interest: 1930-1945 42

State Intervention and Restructuring in the Post-war Period 44

State Retrenchment, Regionalisation, and Globalization in the 1980s and 1990s 46

Regional Market Integration and Dependence 47

Integration into the Multilateral Trading Regime 50

Redefining State Fiscal Obligations 51

The Political Organization of the Agri-Food Sector and State-Sector Relations 53

The Structural Inferiority of Staples Producers in a Mature Staples Sector 56

Conclusion 58

References 63

Chapter III: “The New Agriculture: Genetically-Engineered Food in Canada” – Elizabeth Moore (Agriculture and Agri-food Canada) 69

Introduction 69

The first wave of GE food policy: a mature staples context 70

Jumping on the bandwagon: investment in GE food technology 73

Regulation as a tool for promotion and protection 76

The second wave of GE food policy: post-staple pressures and responses 78

The road ahead for GE food policy in Canada 87

References 93

Chapter IV - The Relationship between the Staples State and International Trade As Pertains to the Canadian Fisheries Industry - Gunhild Hoogensen 99

Introduction: 99

Trade policy, Staples, and the fisheries 103

Subsidies 108

Trade Agreements 111

The role of the trade agreements and WTO – good, bad, and does it matter? 116

Conclusion: 118

References 121

Chapter V: "Caught in a Staples Vise: The Political Economy of Canadian Aquaculture” - Jeremy Rayner (Malaspina) and Michael Howlett (SFU) 125

Introduction: 125

(Overly) Optimistic Expansion in the 1980s and 1990s 125

Emerging Problems with Aquacultural Development 127

A Post-Staples Policy Process? 130

Aquaculture as a Problematic Post-Staples Industry 131

The Finfish Sector 135

The Shellfish Sector 137

The Existing Canadian Aquaculture Regulatory Framework 138

The Federal Situation 141

Provincial Developments 148

Conclusion 155

References 159

Part 3 – Extraction Industries: Minerals and Forests 169

Chapter VI: Shifting Foundations: a Political History of Canadian Mineral Policy - Mary Louise McAllister, 170

Promising Prospects: Staples and the nascent mineral industry 172

Embedded Interests: Establishing the Staples Economy 176

Shifting Ground: Competing Interests 179

Competitive Pressures on the Resource Industry: 180

Access to Land Issues 181

Adverse Environmental and Social Impacts of Mining 183

The Decline of the Resource Community 188

Uncertain Territory: Complex Environments 190

Emerging Conceptual Perspectives 190

Rising to the Challenge? Responses to Change 192

Seismic Shifts or Minor Tremors in the Status Quo? 193

Conclusions: New Frontiers 198

Chapter VII: “Complexity, Governance and Canada's Diamond Mines” – Patricia J Fitzpatrick (Waterloo) 206

Complexity, Governance and Canada's Diamond Mines 206

The Northwest Territories Policy Community 208

Aboriginal organizations 209

Territorial Government 211

Non-Governmental Organizations 212

Proponents 214

Summary 214

Diamond Development in the North 215

West Kitikmeot Slave Society 216

Community Capacity and Public Participation in the BHP Review Process 218

The Implications of Superadded Agreement 220

BHP Independent Environmental Monitoring Agency 223

The Diavik Diamonds (DDMI) Project: Comprehensive Study 224

West Kitikmeot Slave Society Revisited 224

Community Capacity and Public Participation in DDMI EA 225

Superadded Agreements: New Players 227

Advisory Board 229

Cumulative Effects Assessment and Management Strategy 230

Other Diamond Developments in the North 231

Cross Scale Institutional Linkages 232

Conclusion 235

References 236

Tables 237

Chapter VIII Knotty Tales: Exploring Canadian Forest Policy Narratives - Jocelyn Thorpe and L. Anders Sandberg, 240

Introduction 240

The Staples to Post-Staples Narrative 243

Questioning the Staples to Post-Staples Transition 247

The Softwood Lumber Dispute 248

Forests as Carbon Sinks 250

Parks Versus Staples? 251

Summary 253

Staples By and For More People 253

Summary 258

Beyond the Staples to Post-Staples Transition 259

Summary and Policy Implications 265

Conclusion 267

References 270

Chapter IX: “The Post-state Staples Economy: The Impact of Forest Certification as a NSMD (NSMD) Governance System” – Benjamin Cashore (Yale), Graeme Auld, James Lawson, and Deanna Newsom 281

Introduction 281

Emergence of Forest Certification and its Two Conceptions of Non-State Governance 282

Two Conceptions of Forest Certification 284

Key Features of NSMD Environmental Governance 291

Emergence and Support for Forest Certification in Canada 294

British Columbia 297

Standards-setting process 301

U-turn 305

Canadian Maritimes 308

Development of the Standards 310

Conclusions: Non-state Governance 315

Part 4 – Transmission Industries: Oil & Gas and Water 319

Chapter X: 1The New Oil Order: The Post Staples Paradigm and the Canadian Upstream Oil and Gas Industry - Keith Brownsey (Mount Royal College) 320

1. Introduction: 320

The Canadian Oilpatch 323

A History of the Canadian Oil and Gas Industry 327

The Colonial Period 329

The Era of Multinational Domination 330

The Nationalization of Oil and Gas 335

The Era of Benign Neglect 343

The New NEP and Kyoto 347

Conclusions 353

References 357

Chapter XI: "Offshore Petroleum Politics: A Changing Frontier in a Global System" - Peter Clancy, (SFX) 361

Offshore Petroleum as a Distinct Political Economy 363

Spatial and Temporal Dimensions 365

Offshore Petro-Capital as a Political Factor 370

Technology as a Political Variable 377

Science, Knowledge Domains and Epistemes 380

Federalism and the Offshore Domain 383

State Strength and Capacities 386

Offshore Petroleum Regulation in the New Millennium 390

Conclusions 395

References 399

1 409

Chapter XII Between Old “Provincial Hydros” and Neoliberal Regional Energy Regimes: Electricity Energy Policy Studies in Canada – Alex Netherton 409

Regulatory State / Urban Modernization & Resource Industrialization 409

Keynesian Welfare-State / ‘Permeable’ Fordism, 1946-1987 417

Provincial State Ownership, Mega-projects and Network Reorganization 423

New Interests and Structural Pressures for Change 427

Neoliberal-Sustainable / Regionalization 431

Drivers of Paradigm Change 436

Federalism and Electricity Grids: Interprovincial and Regional 437

Canada-United States Policy Integration as a Policy Driver: Conservation and Trade Regimes 441

The Emerging Supra National Power of FERC 443

Conclusions 451

Electrical Energy Policy: A Research Agenda 456

References 458

1Chapter XIII: "From Black Gold to Blue Gold: Lessons from an Altered Petroleum Trade Regime for An Emerging Water Trade Regime" - John N. McDougall, (UWO ) 472

The Cost of Bulk-Water Transmission 473

The Emerging Trade Regime Affecting Oil, Gas and Water Exports 477

Free Trade Agreements and Water Exports and Investments 482

Conclusion: The Effects of Free Trade Agreements on National Resource Policies 493

References 495

Part 5 – Conclusion: Toward a Post-Staples State? 499

Chapter XIV - Contours of the Post-Staples State: The Reconstruction of Political Economy and Social Identity in 21st Century Canada - Thomas A. Hutton 500

Introduction: the post-staples hypothesis in context 500

New dynamics of regional divergence in the post-staples state 511

Conclusion: normative dimensions of the post-staples state 523

References 527

Chapter XV - The Dynamic (Post) Staples State: Responding to Challenges—Old and new - Adam Wellstead 532

Introduction 532

Contemporary Staples Economies 535

Defining the Staples State 541

Minimalist State 541

Emergent State and New Industrialism: The Staples State’s Golden Era 543

KWS Legacy and Crisis: Wither the Staples State? 546

Competitive State: A Reconsideration of the Staples State 549

Governance 552

Anthropology of the state and neo-pluralism 554

Policy Communities and Networks: Drivers of Richardian (Staples) Competitive States 556

Conclusion 559

References 562

ENDNOTES 571

Table of Figures

Figure 1. Policy Instruments, by Principal Governing Resource 139

Figure 1 – Certfied Forest Land 318

Sources 318

Figure 1 - Offshore Petroleum Management Issue Areas and Instruments 399

Table 5. Policy Process Focus of the Volume’s Chapters 558

Table of Tables

Table 1. Canadians Living on Farms 61

Table 2. Changes in Canadian Farm Structure, Selected Years 61

Table 1: Modern land claims agreements settled in Northwest Territories and Nunavut. 237

Table 2: Northern and Aboriginal Employment Targets (as identified in the Socio-Economic Agreement) and Actuals at Ekatitm . 237

Table 3: Local Business Supply Targets at Ekatitm (as identified in the Socio-Economic Agreement). 237

Table 4: Northern and Aboriginal Employment Targets (as identified in the Socio-Economic Agreement) and Actuals at DDMI . 238

Table 5: Local Business Supply Targets at DDMI (as identified in the Socio-Economic Agreement. 238

Table 6: Capacity of the Institutions affecting diamond development in the north. 238

Table. 1.2, Conceptions of forest sector NSMD certification governance systems 284

Table 2: Comparison of FSC and FSC competitor programs in Canada 289

Table 3: Key Features of NSMD governance 291

Table 1. Economic indicators for Canada’s natural resource sectors 536

Table 2. The role of resources in provincial exports: 1997-2001 averages 538

Table 3 Evolution of the staples state 548

Table 4. Modes of Coordination within Competitive Capitalist States 552

Acknowledgements

Part I – Introduction

Chapter 1 – Introduction – Michael Howlett (SFU) and Keith Brownsey (Mt. Royal College)

For generations provinces like British Columbia and Quebec were known for their forestry resources, while others like Prince Edward Island, Saskatchewan and Manitoba were known for their farms. Ontario mining was legendary, as were the oil and gas wells of Alberta and the fisheries of Newfoundland, New Brunswick and Nova Scotia. It was common wisdom that fifty cents of every dollar in British Columbia came from the forestry industry and that aawmills, pulp and paper, and shingle mills and other related industry employed hundreds of thousands of people in cutting, hauling, and producing various wood products. Those days are gone. The Douglas Fir no longer reigns in British Columbia’s economy but rather, eco-tourism, film and television production, aquaculture and other industries have taken a strong if not leading role in the province’s economy.1 While still important to British Columbia’s economy, as with most other provinces, the original ‘staples’ resource industries of farming, fishing, mining and forestry have given way to service and other types of business. The wheat economy of the prairies has diversified into various agricultural products from canola seed to cattle as well as undergone a process of consolidated into large agribusiness. On the east and west coasts, the Atlantic cod fisheries have vanished and the Pacific salmon stocks have dwindled. Even in the energy sector a hegemony of high valued goods has emerged. The staples of hydroelectricity and crude oil and natural gas have been transformed by environmental regulation, decreasing conventional reserves of liquid hydrocarbons, conflict over land use, new technology, and scarcity of supply. As well, there is a security premium on oil and gas reserves that adds to the final production and consumption cost.

No longer tied to the original staples industries, Canada has become an advanced industrial economy but one which remains different from the typical model of advanced manufacturing and services found in Europe, the US and Japan. The new base of the Canadian economy retains its origins in early staples industries with many new activities grafted onto those traditional sector. This transformation of the old staples political economy has ushered in some elements of a new political and social order at the same time that it as exacerbated or worsened many elements of the old. Over the last several decades the transformation of significant components of Canada’s staples economy has led to demands for many institutional, legal and political reforms which would better represent the Canada’s new globalized and regionalized configuration of business and social life.

Changes in the staples economy are illustrated by the rise of social movements, urbanization and an increasingly disconnected regional politics. They are also a product of the globalization and regionalization of markets. All together, the transformation of the staples economy has been attributed to such factors as industrialization and urbanization, resources depletion, increasing competition from low cost producers, immigration from non-European countries, the regionalization of markets and industrial restructuring as well as the rising importance of social movements and knowledge elites. Simply put, the traditional staples industries within Canada have been affected by a variety of factors which together have transformed the Canadian political economy.

The contributors to this volume provide an overview of the changes in Canada’s political economy. Each tries to answer a series of questions. First, what was the traditional staples economy? Second, how were the various staples industries organized within the centre-periphery model? What was the political impact of the staples model of development? What factors led to change within a particular industry? How did a post-staples economy evolve? How does it differ from a staples economy? And what are the political consequences of the post-staples society? The different contributors examine industries as varied as diamond mining in the Northwest Territories and aquaculture off the coast of British Columbia. Yet, within the wide parameters of the post-staples paradigm there is a congruence of events and processes which can be identified as a new model of economic and political development which is dramatically different from its predecessor and which has altered domestic social relations.

Overview: Staples and Post-Staples Political Economy

A staple refers to a raw, or unfinished bulk commodity product which is sold in export markets. Timber, fish and minerals are staples, usually extracted and sold in external markets without significant amounts of processing.2 The significance of having an economy based on exporting unfinished bulk goods lies with how it affects policy-making in specific resource sectors by creating continuing issues with resource technologies, profits, rents, location and availability,3 how it affects policy-making in related areas such as the environment4 or transportation infrastructure,5 and also how it affects policy in less directly affect areas such as welfare, health and social policy.

As the Toronto School of staples theorists noted, many consequences for government and society flow from having an economy based on exports of such unfinished bulk goods. Their significance lies not only in how they affect resource policy-making by creating continuing issues with resource location and availability, provide only a limited need for education and technical skills in frontier resource communities, entrench a system of metropolitan-hinterland links in both economy and culture, but also in how populations, governments and industries in staples-dependent areas react to their continued vulnerability to international market conditions. As Naylor and others have shown, the development of a staple-based economy, for example, triggers government and private sector investments in large-scale infrastructure activities such as transportation and communications facilities required to co-ordinate the extraction and shipment of bulk commodities to markets in distant lands designed, as well as provisions of export subsidies and credits designed to facilitate trade and the distortion of the banking and financial system away from consumer and small business credit to a concentration on large industrial loans and profits. 6

The fact that staples reliant countries have tended to focus on markets in foreign lands is significant, in itself. As most staples-based countries have a monopoly or near-monopoly on the production of only a very few resources or agricultural goods, producers must sell at prices set by international conditions of supply and demand. While international demand for most resources—outside of wartime—has increased at a relatively steady but low rate, world supplies of particular primary products are highly variable. A good harvest, or the discovery of significant new reserves of minerals or oil, or the addition of new production capacity in the fishery or forest products sectors can quickly add to world supplies and drive down world prices until demand slowly catches up and surpasses supplies, resulting in sudden price increases triggering a new investment cycle and subsequent downturn.7 As Cameron has noted, these fluctuations in international supplies account for the “boom and bust” cycles prevalent in most resource industries and, by implication, most resource-based economies, and lead affected populations to press governments to provide a range of social, unemployment and other types of insurance schemes as well as make large-scale public expenditures in areas of job creation and employment.8

While most observers would agree that historically Canada can be characterized as a staples economy and that this has had a significant impact on the evolution of Canada's resource regimes and practices, as the discussion in other chapters of this book show, there is considerable disagreement over whether this depiction continues to characterize the overall Canadian economy and whether and to what extent it will continue to do so in future years.9

Staples Theory

The Staples approach was developed primarily by Canadian economists and historians whose works are rooted firmly in the historical examination of the development of the Canadian economy. They describe the effects of this development on Canadian social and political life. The school derives its name from the emphasis on staples industries, which, following Gordon Bertram, are defined as those industries ‘based on agriculture and extractive resources, not requiring elaborate processing and finding a large portion of their market in international trade’ (1967, p. 75). Staples theorists view Canadian political economy as having been shaped by the export of successive staples over the course of Canadian history from the earliest colonial times to the modern era.

Following Gordon Laxer, we can identify four main ‘analytical assumptions of the staples school’ (Laxer, 1989b, pp. 180-181). First, staples theorists believe that the key to understanding Canadian history is to discover the export commodity that the economy depends on. They argue that the Canadian state and Canadian capital devote themselves singlemindedly to discovering and extracting bulk resource commodities or staples that have a ready export market. The money thus derived is used to pay wages to Canadian workers and finance imports of goods demanded by Canadian consumers. Canadian economic growth, then, is intimately linked to the demand for staples in the industrialized nations, and this demand has shaped economic development in Canada: any shift in demand for the staple in question, while inconsequential for the importing country, has a pervasive impact on the local economy, which is dependent on its export. An example is the fading away for the fashion in beaver-felt hats in Europe, which had a serious, debilitating effect on the early nineteenth-century Canadian economy, which was almost completely dependent on the export of furs (Innis, 1956).

Second, staples political economists argue that Canadian political life is heavily influenced by the country’s staple export-dependent economy because economic wealth and political power are concentrated in Canadian business and political elites--often the same people--who act as the instruments of interests in the industrialized countries importing the staples. According to the theory, the Canadian business community has been more interested in promoting continued and expanded staples-resource exports than in acting as entrepreneurs developing an industrialized Canadian manufacturing economy.

Third, the staples school emphasizes history as a key to understanding the Canadian political economy. A study of the actual history of Canadian economic development enables these scholars to overcome the limitations of other models developed to understand the industrialized economies of Europe. They clearly understand that Canada and many other ‘new world’ economies have unique features that the most traditional theories cannot account for.

Fourth, analysts in this school argue that the need to overcome geographical impediments to the expansion of staples exports helps explain the state’s role in a staples-dependent market economy. They argue that confronting the harshness of the Canadian terrain and the physical distances that had to be traversed to get staples from the hinterland to ocean loading ports required large capital expenditures on transportation and communications infrastructure, which Canadian business could not afford to make. Instead, projects such as canals and river improvements, railway construction, and the establishment of telephone, electrical, and airline systems were all undertaken by the Canadian state.

Not all staples theorists place equal weight on all of these aspects, and significant debates exist between different groups concerning questions such as the historical time periods that the analysis can cover or whether the construction of transportation infrastructure amounts to industrial development or not. The most contentious question--one that divides staples political economy into two schools--is whether the reliance on staples exports rather than industrial manufacturing is a positive or negative development.

The Historical Foundations

The staples approach has its origins in research into Canadian social, political, and economic history carried out in Canadian universities, roughly between 1920 and 1940, by members of what were then known as departments of political economy. The two most prominent scholars following this approach were Harold Innis and W.A. Mackintosh. But numerous other scholars during the same era arrived at similar conclusions regarding the significance of the resource industries and their impact on Canadian settlement (Fay, 1934). These included, most notably, Arthur Lower, a Queen’s University historian; S.A. Saunders, a Dalhousie University historian; and Donald G. Creighton, a University of Toronto historian, as well as others scattered across the country. Lower (1938) explored the origins and impact of the lumber industry on Canadian development, while Creighton (1937) adopted several staples tenets in developing his ‘Laurentian thesis’ of Canadian history (Berger, 1976). Saunders examined the development of the Maritime provinces using a staples framework (Saunders, 1939).

Enough scholars were working in a similar vein by the mid-1930s to allow the publication between 1934 and 1938 of a nine-volume Frontiers of Settlement series on the history of Canadian economic, political, and social development. This series of books contains some of the finest writings in this tradition, including submissions from Lower (1938), Innis and Lower (1936), Mackintosh (1934), and Morton (1938). In 1939, major submissions by Saunders and Mackintosh to the Royal Commission on Dominion-Provincial Relations (the Rowell-Sirois Commission) presented the development of the Canadian economy in staple terms, and in 1941 V.W. Bladen (1943) relied on a staples framework to write the first textbook on Canadian political economy.

The two dominant thinkers in this tradition were clearly Innis and Mackintosh. While the two shared common theoretical premises in their emphasis on staples, they followed different lines of analysis and arrived at different conclusions in their works. Most later writings in the staples tradition can be classified according to whether they share Innis’s pessimistic outlook on Canada’s future or Mackintosh’s more optimistic analysis.

The Innisian Approach

Harold Innis, an economist at the University of Toronto and one-time head of the American Economics Association, wrote a series of books from the 1920s to the 1940s discussing the significance of various early resource industries to the development of different parts of Canada. These included the classic works A History of the Canadian Pacific Railway (1923), The Fur Trade in Canada (1930), and The Cod Fisheries (1940) as well as numerous essays and edited works on related topics.

Innis argues that the political economy of Canada was shaped by the successive concentration on exports of cod, fur, lumber (and pulp and paper), agricultural products (principally wheat), and minerals, which all went to the metropolitan economies of Europe and later the United States. As Innis summarized his staples thesis:

The economic history of Canada has been dominated by the discrepancy between the centre and the margin of western civilization. Energy has been directed toward the exploitation of staple products and the tendency has been cumulative. The raw material supplied to the mother country stimulated manufacturers of the finished product and also of the product which were in demand in the colony. Large-scale production of raw materials was encouraged by improvement of technique of production, of marketing, and of transport as well as by improvement in the manufacture of the finished product . . . . Agriculture, industry, transportation, trade, finance, and governmental activities tend to become subordinate to the production of the staple for a highly specialized manufacturing community. (1956, p. 385)

Innis argued that Canada’s export of staples products in unprocessed or semiprocessed forms was necessitated by the lack of technological capability to process them within the country and that exports were also essential to supporting the improved living conditions that had brought Europeans to Canada in the first place. The exportation of staples and the importation of consumer goods, while satisfying the needs of the immigrants, primarily benefited the interests of the industrialized nations, which secured a cheap and reliable supply of raw materials. The domestic commercial interests involved in the movement and financing of the export-import trade also benefited in the process.

With the passage of time, Innis argues, increasingly larger local resources had to be devoted to resource exports, which exacerbated the staples-orientation of the political economy. The railways built to transport wheat and lumber could not pay for themselves, which made it necessary to export pulp, paper, and minerals to take advantage of the railway’s unused capacity (Innis, 1956). The increasing dependence on staples correspondingly widened Canada’s technological backwardness, which only deepened the country’s dependence on unprocessed or semiprocessed raw materials. This was different from the situation in the United States, where a less harsh geography and a larger population enabled the economy to depend less on staples exports and to develop both a large and prosperous agriculture sector capable of supporting a large domestic population and an industrial sector to serve the growing domestic market.

Climatic and topographical difficulties prevented Canada from undergoing a similar process of development, and the resulting dependence on staples exports, according to Innis, doomed Canada’s chances of developing a domestic industrial base. Reliance on staples exports necessitated increasingly large investments in building a transportation infrastructure. The heavy debt-servicing charges that such investments involved diverted funds away from other areas of the economy, including manufacturing. The dependence on staples export also increasingly exposed the Canadian economy to the vagaries of international commodity markets, which tend to witness violent fluctuations as new capacity comes onstream in different countries, lowering world prices until world demand catches up with global supplies and prices rise accordingly. The ‘cumulative’ impact of all this, according to Innis, was that the Canadian economy became caught in what Mel Watkins (1963) would later call a ‘staples trap.’ This form of economic life could provide relatively high standards of living to citizens of exporting countries, but only as long as domestic resource supplies and world demand remained constant or increased. Any declines in demand or increases in supplies would have drastic consequences for the domestic political economy, which would be poorly placed to respond to the challenge of finding a new economic base. As a result, Innis and most staples political economists following his lead are pessimistic about Canada’s future as a reasonably wealthy ‘developed’ country.

The Mackintosh Approach

W.A. Mackintosh, a Queen’s University professor of economics and advisor to the federal Liberal government of William Lyon Mackenzie King, had more impact on practical political economy than most academics ever will. He served as a key researcher for the Rowell-Sirois Commission in the late 1930s, looking into problems caused in Canada by the Great Depression, and was one of the most powerful bureaucrats in the federal government during World War II--at a time when the federal government itself was powerful as a result of its war activities (Granatstein, 1982). Mackintosh was instrumental in introducing Keynesianism to Canada, and that approach formed the basis for Canada’s postwar strategy of economic growth, but with the twist that full employment was to be secured through increased staples exports and an inflow of investments in further resource extraction and branch-plant manufacturing.

In his theoretical writings Mackintosh argues that in a ‘new’ country dependence on the export of staples is an essential stage in economic growth. In his first article on the subject, in 1923, he states: ‘The prime requisite of colonial prosperity is the colonial staple. Other factors connected with the staple industry may turn it to advantage or disadvantage, but the staple in itself is the basis of prosperity’ (Easterbrook and Watkins, 1967, p. 3). In a report to the Rowell-Sirois Commission in 1939 he stands by this position: ‘Rapid progress in . . . new countries is dependent upon the discovery of cheap supplies of raw materials by the export of which to the markets of the world the new country may purchase the products which it cannot produce economically at that stage of its development’ (1939, p. 13).

Mackintosh presents economic development as a linear process in which each nation has to pass through a series of stages (Williams, 1983, pp. 131-132). For him, Canada’s dependence on staples reflects the nation’s early stage of development, when staples were the only area in which it enjoyed a comparative advantage. Unlike Innis, he argues that eventually the technology acquired and the profits accumulated from the extraction and export of staples will lead to investment in manufacturing industries. The expansion of the domestic population and the availability of foreign capital and technology in setting up manufacturing plants to supply the growing domestic market would further facilitate the process. He cites the Unites States as having followed this route. If Canada had not been as successful as the United States, it was because of its harsher climate and smaller population, which inhibited the establishment of efficient manufacturing industries. The implication of his analysis was clear: there was nothing wrong in depending on staples exports, for eventually industrialization would arrive in Canada.

After slowing down during World War II, more work in the staple tradition emerged following the war. These include works by Vernon Fowke (1946) and Kenneth Buckley (1958), which both follow Mackintosh’s line of reasoning. Both point out the tremendous economic spinoffs to the Canadian economy that had accrued as a result of booming wheat exports between the 1890s and 1920s. They argue that a large proportion of the benefits did not flow to the Western wheat producers but to Canadian manufacturers, most of them located in Central Canada. As John Richards concludes:

To Fowke and Buckley, the wheat boom was necessary to Canadian industrialization because it alone provided a sustained high level of demand necessary for the Canadian manufacturing sector to ‘take off.’ Without wheat Canada would have had a much smaller domestic market and, given serious barriers to any new manufacturing exporter, manufacturers could not easily have substituted export for domestic markets; their level of activity could have been seriously curtailed. (1985)

The discovery by Fowke and Buckley that wheat exports provided the impetus for industrialization lent credence to Mackintosh’s theory. Yet in Fowke’s work there is an Innisian strand: the wheat exports from the West (the periphery) primarily benefited the Central provinces (the centre), just as the industrialized nations benefited from Canada’s exports of staples (Richards, 1985, p. 53).

By the 1950s many different aspects of Canada’s resource-dependent economy were being investigated (Easterbrook, 1959), including the impact on provincial development (Dales, 1957) and the impact of U.S. investment in key industries (Aitkin et al., 1959; Aitkin, 1961). The high point in the staples analysis in a practical political sense was no doubt in the late 1950s when the Royal Commission on Canada’s Economic Prospects (the Gordon Commission) accepted Mackintosh’s version of the staples thesis and focused its efforts on planning for and controlling the various effects on Canadian society of resource-led economic growth (Canada, Royal Commission on Canada’s Economic Prospects, 1957).

By the 1960s the staples approach to Canadian political economy was being challenged on a number of fronts. The historical generalizations of the staple tradition were being subjected to detailed empirical scrutiny and to a demand for empirical verification on the part of quantitative economics and econometrics (Bertram, 1963). Secondly, the significance of the historical approach to understand contemporary economic and political phenomena was being undermined by alternative methodologies in contemporary political science, such as the systems and behavioural approaches, which promised greater insight into discovering solutions for contemporary political problems. Although the staples approach would receive its finest formulation at this point (Watkins, 1963), it would be increasingly relegated to the sidelines in academe as a conceptualization of the early developmental stages of a relatively new economy, an approach without much relevance to contemporary life.

Nevertheless, because most significant historical works on Canada’s development had been fashioned by staples theorists, the approach could never be completely eliminated. Any researcher delving into Canada’s past was bound to encounter the staple theorists and their powerful, inductively developed model of the Canadian political economy. This in fact occurred at the end of the 1960s as Canadian scholars rejected purposeless quantification and modelling for the broader insights offered by the staple perspective and as scholars of other nations searched for a superior approach to economic development than that provided by the orthodox liberal and socialist political-economic theories (Hirschman, 1958; North, 1961).

Debates in the 1970s and 1980s

The staples approach to Canadian political economy was revived at a time, towards the end of the 1960s, that was unusual in North American history, a time that had a pervasive impact on inquiries in social sciences. Civil rights activism in the United States and anti-Vietnam War protests across North America had rendered the intellectual milieu fertile for challenging established beliefs, while the anticolonialist nationalist struggles in the Third World in the years following the end of World War II had given a new impetus to nationalism. It was also the time when the emerging evidence of the increasing strength of multinational corporation was inculcating fears that these corporations would enable the former colonial powers to once again dominate the world.

In Canadian political economy, an enhanced nationalism and a scepticism about the validity of established liberal and socialist theories led to the search for alternative analyses, for an approach that would be more in tune with the realities of Canadian history and provide a more pertinent guide to political practice than the deductive application of a general liberal or socialist principles. Not surprisingly, this search led to a renaissance in staples theory.

However, the staples approach did not provide a clear guide for political action. Unlike the liberal and socialist theories, the staples analyses of both Innis and Mackintosh provided what were essentially descriptive evaluations of Canada’s economic growth. Moreover, the two differed in the prescriptions they proposed for influencing the course of Canada’s development, and in whether they felt the process had been harmful or beneficial to Canada. Before their analyses could be used to develop plans to improve Canada’s lot, it was necessary to synthesize their various writings, observations, and insights into a general model of economic growth.

When this was attempted, it became obvious to most observers that staples political economy existed simply as a specific case, a somewhat unique example of national development, or lack of it, within the more general theories. The neo-Innisian staples political economy combined, or attempted to combine, the work of Harold Innis with the theories of socialist political economy, especially the Leninist-dependency school. The resemblance of the Canadian economy to economies in the Third World--especially with respect to the high degree of foreign ownership--made such a line of analysis seem appropriate.

Two elements from Innis’s thinking hit a particularly harmonious cord with scholars attempting to develop a new political economy. One was his conclusion that dependence on staples exports inhibited independent industrial development. The second, expressed in his later writings, was the fear of U.S. dominance of Canada.



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