The Passing of Canadian Economic History

The Passing ofCanadian Economic History R.F. NEILL Economic history in Canada has been buried and the epitaph chosen has been ''The Staple Theory.'' The epitaph is appropriate, indicating the cause of death, but the death itself has been most untimely. Its effect on our ability to come to grips with the basic problems of the Canadian economy is already evident. It is not the staple thesis of the 1930s that has done the damage, but its more recent appearances as a staple theory of economic growth. Over the past twenty years partisan scholars have pressed the thesis into service on every side in the debate over growth. In so doing they have transformed it from an historical thesis into a set of theoretical models. The fine distinction between the two is of crucial importance. A theoretical model of the historical process is indeed founded in historical fact. It finds its plausibility as an explanation of history in the wide range of events and institutions for which it can account. It is, nonetheless, a formal categorization of these things. It is a formula or pattern into which history is fitted. Once the theory becomes the centre of attention other possibilities to a large extent are ignored and all energies are spent in showing that this or that significant element fits the pattern. An historical thesis does not have the degree of generality that such a theory implies. It is concerned with specific explanations. What may be called a broad picture of events may emerge but the picture will be unique, essentially non-transferable to other places or times. The greater play given to chance and personal creativity as factors in the historical thesis makes it a more apt instrument for exploring the distinctiveness of any set of events. Greater emphasis is placed on the facts speaking for themselves. With the theoretical approach emphasis is placed on making the facts speak for the theory. Generally there are competing theories, the proponents of each making the facts speak for their own theory and against Journal ofCanadian Studies that of their opponents. Theoretical revisions of the staple thesis put forward by the proponents of the New Economic History on the one side and the Neo-Marxians, on the other, illustrate the point. The work of the New Economic Historians (e.g. E.J. Chambers and D.F. Gordon) has been a derivative of the work of D.C. North, who was important in the development of the New Economic History in the United States. North elaborated a version of the staple thesis in which economic growth was defined as an increase in per capita income.I With this definition quantitative testing of the contribution of various staple exports to growth became relatively simple and the thesis itself became indistinguishable from an application of neoclassical economic theory to international trade in the Canadian case. According to the neoclassical theory a division of tasks with specialization and exchange is beneficial to all involved, if self-interest (the profit motive) is the directing force. Whether those involved are individuals or nations seems not to make a substantive difference to the result; and the staple thesis, in this view, is simply the theory of exchange looked at from the point of view of a nation which has specialized in natural or semi-processed resources. Natural endowment (comparative advantage) is presumed to determine the specialization in resource exports. Given the specialization, economic growth is dependent on external demand and the only wise move for governments of nations which are so specialized is to facilitate meeting that demand. Any contrary policy would reduce the rate of growth in per capita income; by clear implication a regressive move. In this version the staple thesis is not historical . It is a normative, theoretical model. North asserts, however, that governments have in fact conformed to the norm,2 making ceaseless efforts to get outside subsidization for internal improvements, particularly in transportation, in the hope of improving their competitive position abroad. He makes specific reference to the Canadian case.3 The effects of these efforts are alleged to have reinforced dependence on staple exports. According to North, secondary and tertiary 73 industry developed...