Essay About Staples Approach And Canadas Contributions

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History in the Staples Approach
One of Canadas contributions to the history of ideas has been a kind of historical
economics influential also within Canada as a nationalist inspiration. Now a neglected
artefact within the history of economic thought, as economics has moved on to nonhistorical,
modelling approaches to understanding, the staples approach can serve to show
how economics can be enriched by a historical dimension.
What is the staples approach and what makes it especially suitable to an
investigation of how history informs economic understanding? The staple theory has
been Canadas original contribution to the world of economic ideas (along with the
notion of “effective protection” devised by Clarence Barber of the University of
Manitoba3). The observations of Harold Innis, and others, in the 1930s led to an
understanding that the nature of natural resource based industry differed from that of
other industrial sectors, so that a country heavily dependent on the export of natural
resources would tend to develop in ways shaped by the export staple.
In Canada the approach was for many years the leading one employed to explain
Canadas economic development (Phillips, 1985). The staples approach suggested that
the pattern, pace and nature of development of a natural resource exporting economy,
relying on one sort of commodity for a large part of its exports, would depend essentially
on the mode of production of the staple export – the staple being the name given to a
natural resource intensive export good (Neill, 1991, chap. 5).
By “mode of production” is meant the production function of neoclassical
economics and also an array of associated variables – the distribution of income, the
population and demographic effects of the staple, the institutions growing up around the
trade, the structure of costs (e.g. overhead cost) and so on. This then was a theory of
Canadian economic development, embellished at length by Professor Harold Innis of the
University of Toronto in the 1930s and 1940s in a series of books dealing with the
Canadian fishing, the fur trade and mining economy (Innis, 1930; Innis, 1936; Innis,
1940).
It should be emphasised that Harold Innis was an economist and the staples
approach he put forward was market driven, in the sense that prices for the staple and for
the inputs into its production were the dynamic motive force in triggering, and sustaining,
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the staple development. However, he was clear that Canadas development took place
with massive government intervention – the railways, the National Policy, the geological
survey – and accepted that without it Canada might never have come into existence as a
leading world power. Since The Wealth of Nations in 1776 economists had moved away
from a study of what induces economic development to a study of the allocation of
resources . One of the virtues of the staples thesis was its rounded approach to both
development and efficient allocation. In the language of Thomas Kuhn (1962) this was a
paradigm, reflecting a world view.
In Inniss staples approach considerable attention is directed towards the physical
characteristics of the particular staple product under consideration. One of his most
important works, The Fur Trade in Canada, has as its first chapter a short description of
the beaver and its typical locale, commencing with this passage:
The history of Canada has been profoundly influenced by the habits of an animal
which very fittingly occupies a prominent place on her coat of arms. The beaver
was of dominant importance in the beginnings of the Canadian fur trade. It is
impossible to understand the characteristic developments of the trade or of
Canadian history without some knowledge of its life and habits (Innis, 1930,1 ).
These physical attributes not only determine the geography of the staples
production but also influence significantly the economics of the process. In particular
they help to determine the form which a particular mode of staple production will
assume. Will there be small independent producers or a labour force subject to industrial
discipline? Will there be large overhead costs or a trade based mainly on working capital?
Will private capital find it profitable to develop and exploit the resource, or will state
involvement be needed to set up infrastructure or to provide and train the required
labour? Of course, the physical qualities of the commodity do not alone ensure that the
production mode takes the form that it does, though they are an important determinant.
Also important are the prevailing technology, the industrial structure and the nature of the
demand for the exported staple (McCallum, 1980:118-20).