Escape from the Staples Trap: Canadian Political Economy After Left-Nationalism by Paul Kellogg (review)

The field of Canadian political economy has changed a great deal over the last several decades along with Canadian political economy itself. Staples theory, once key theoretically and politically, as well as parts of the "New Political Economy" of the 1980s, have been replaced by a field with more powerful tools of analysis, drawn not only from institutionalism but also Marxian political economy. In spite of having a robust tradition, there are relatively few book length treatments of this history.

Paul Kellogg's Escape from the Staples Trap: Canadian Political Economy After Left-Nationalism is the first of a two volume contribution to the history of Canadian political economy from a Marxist perspective. The book's focus on the class nature of Canadian society and its relationship to the structure of the world market, makes it directly relevant to the fields of labour studies and industrial relations.

Although polemically written, Kellogg uses a combination of theoretical and empirical material to challenge the claims of dependency theory. Against this point of view, Kellogg demonstrates that: 1) Canada developed a manufacturing sector; 2) Canadian capitalist firms compete globally; 3) that American-owned assets comprise a small share of total assets in Canada; and, 4) Canada's experience of de-industrialization has been similar to other advanced capitalist countries.

Amongst institutionalist and neo-Marxian economists, the notion of monopoly capitalism has for many decades been widely accepted. The underlying laws of motion Marx identified are overlaid with new institutional structures of cartelized capitals dominated by banks. Monopoly power causes economic stagnation as business enterprise reduces output and employment and adjusts prices to a new point of profit-maximization based on the monopolistic market structure. But, there are empirical and logical issues with this theory. First, competition is not static. The experience of the Asian Tigers and other late-developing countries attest to this reality. The corollary to monopoly theory is the theory of perfect competition, which suggests that capitalism could achieve an ideal state in which total social welfare is maximized. More importantly, however, the notions of "monopoly," and perfect competition as well as the causal relationship between market structure and market outcomes is an extension of the neoclassical quantity theory of competition.

Prior to Marx's time, the rise of neoclassical economics, classical political economy's labour theory of value had more purchase amongst intellectuals concerned with the nature and inner-workings of the capitalist system. Central to this approach were classes in capitalism and the relations between them. Many political economists emphasized class-based exploitation. Thus, the labour theory of value helped the labour movement to develop its political strategy, one guided by a realistic understanding of the nature and boundaries of class struggle within the capitalist system. With the so-called marginal revolution in economics in the 1870s, and the introduction of a static theory of perfect competition, a new foundation was pursued by mainstream economists, one that from the outset rules out classes and exploitation, which was the core of the classical theory of income distribution.

In recent years, Anwar Shaikh and other writers have reinvigorated economics by introducing the theory of real capitalist competition as an alternative to the neoclassical quantity theory of competition, which creates a dichotomy between "perfect" and "imperfect" market structures. Although from the discipline of economics, this theory is highly relevant to the theoretical alternative needed to conduct Marxian political economy in terms independent of the mainstream theory of competition, as well as the mainstream economic categories that many Left analysts uncritically use in the place of Marxian measures. After the contents of the book are summarized in the next section, the last part returns to the question of theoretical alternatives.

Escape from the Staples Trap opens with a discussion of Left Nationalism. Kellogg argues that it emerged as both an intellectual and political force in Canada in the early 1980s. During this period, Left nationalists evoked Canada's early legacy as...