Dancing around the Elephant: Creating a Prosperous Canada in an Era of American Dominance, 1957 – 1973 (review)

Dancing around the Elephant is a thoughtful and carefully argued study of Canada’s international economic policies from the beginning of the Diefenbaker era until the early 1970s. Above all, the monograph provides scholars with a rich resource of information on the country’s trade and investment policies; however, it also serves as a provocative challenge to the economic nationalist school of Canadian history. Bruce Muirhead expands his analysis beyond the traditional Canada–United States focus to consider Canada’s economic relations with Britain and the European Economic Community (eec). The book is extensively researched as Muirhead casts a wide net, consulting government archives in Canada, the United States, and Britain. Traditional diplomatic records are supplemented by those of national banks, as well as trade and finance departments.

Left-wing economic nationalists who accuse Ottawa of ‘selling out’ the Canadian economy to American interests after 1945 will bristle when reading the dust cover, and will find the arguments inside difficult to swallow. Muirhead waists no time stating his thesis: ‘[W]here the United States was not concerned about its national security, Canadian governments, even Pearson’s, worked assiduously to promote their country’s interests in Washington to the point of violent disagreement.’ Although one can question whether any economic issue could be separated from us national security during the Cold War, Muirhead convincingly challenges the argument that Canadian governments meekly ‘bowed and scraped in the face of American power.’

The author evaluates the conduct of Canada’s international economic relations, concluding that critics – left-wing nationalists who ‘despised’ the federal government and civil service they considered ‘weak and uninterested in, or incapable of, projecting a Canadian interest, especially in its relations with the United States’ – were motivated primarily by emotional anti-Americanism and failed to support their positions with convincing evidence. Canadian officials did not reject economic diversification in favour of continentalization; on the contrary, Ottawa ‘made the best of the hand it was dealt.’ A combination of factors – weak economies in Western Europe, and primarily in Britain; the failure to develop meaningful economic relationships with the eec and Japan; the Canadian business community’s continental focus; and the presence of an overwhelmingly dynamic and rich economy to the south of the border – taken together meant that, in order for Canada to develop economically, and for its citizens to prosper, Canadian policy-makers were left with little option but to expand the Canada–United States economic relationship.

Muirhead does not deny that the closeness of the relationship has had obvious disadvantages for the smaller partner. However, he concludes that the advantages clearly outweigh them. As he states in the conclusion, ‘The period between 1957 and 1973 witnessed the flowering of Canada into one of the richest countries in the world and, ironically, the near-total domination of its economy by American business . . . Canada’s growth was based at least partly on U.S. investments and markets that, in the context then prevailing, seemed to represent the only option for politicians who were mesmerized by the siren call of prosperity and the re-election it seemed to promise.’ A lack of alternative sources of investment and markets left Canadian policy-makers with one option – develop the Canadian economy using the resources available or risk economic stagnation and the political consequences that come along with it.

This book provides a vivid depiction of the prevailing international economic conditions in the post-1945 world (although more attention might have been paid to the impact of decolonization on Britain’s global economic position), and the impediments Canadian policy-makers faced when trying to balance the demands of left-wing economic nationalists with those of an electorate increasingly cosy in the prosperity made possible through the American connection. It is a sympathetic account of the politicians and civil servants whose policies expanded the Canadian economy and improved the living standards of...