CANADA: ECONOMIC DEPENDENCE Al\D POLITICAL DISINTEGRATION

Sense of History

It seems to have escaped the attention of the profession that the work of one of Canada’s most original and revered economists is highly relevant to a full understanding of the country’s present relations with the United States. It is unfortunate that the leads provided by the late Harold Innis is his “staples theory” have been so much more helpful to Canada’s historians than to her economists:

‘The economic history of Canada has been dominated by the discrepancy between the centre and the margin western civilization”, wrote Innis.

“Energy has been directed towards the production of the staple products and the tendency has been cumulative. Agriculture, industry, transport, trade, finance and governmental activity tend to become subordinate to the production of the staple for a more highly specialized manufacturing community. These general tendencies may be strengthened, as in mercantile systems.”

It is evident from his writings that Innis had important fragmentary insights into the processes by which the institutional aspects of commercial relations with the metropolis have shaped the economy, the society and the structure of government in peripheral countries of the New World. Canada was, and remains peripheral, in this sense. As Professor Aitken has put it: “Throughout its history Canada has been an economic satellite of both Britain and the United States”.

Once we place the contemporary problem in a historical perspective we can distinguish three broad stages in the development of the Americas.

The first was the period of the Old Mercantilism which began with the European exploration and colonization at the end of the 15th century. Its break-up began with its rejection by the American colonies and ended with the final dismantling of the exclusivist structure of Corn Laws, Navigation Acts, Timber and Sugar Duties, and the rest. The advent of the NEW order was hastened by the accession to the political and economic power of England’s industrial middle classes and by the emergence of the European industrial middle classes and by the emergence of the European nation-states in the wake of the French Revolution.

The second was the period of Western European Industrialization which was dominated by Britain and by the pound sterling. the Gold Standard and Free Trade. It witnessed large scale movements of capital, goods and people across the Atlantic and the consolidation of the nation-states of America. For the Americas the close of the period was heralded by the slide of commodity prices during the 1920’s. The end came with the dramatic collapse of the international system of trade and payments following the Great Cash.

The third period is the contemporary one.