Leo Panitch
Dependency and Class
in Canadian Political
Economy
"There is no doubt that the construction of a new political economy
going to be an intellectually messy and very difficult task."
Kari Levitt I
is
While Canada's new political economy has fostered more productive
research and had wider intellectual impact than could safely have been
predicted a decade ago, it has also been marked by a striking eclecticism.
Its combination of classical Marxist, "neo-Marxist"
and non-Marxist
concepts is in part a reflection of unresolved problems associated with the
revival, extension and recomposition of Marxist theory in the West. Yet
the problem is compounded in Canada by the attempt to conjoin a
Marxist political economy with an older, primarily non-Marxist political
economy tradition. This has been most notable with regard to "dependency", the central focus of the new political economy throughout the
1970's.
That dependency should have been at the core of a new radical political economy in Canada is not surprising. The early dependency theories
bore a certain similarity to the long standing and home-grown staples
thesis. While the former had a Marxian vocabulary and inspiration and
the latter was in the tradition of classical political economy, the two
converged in their concern with unequal exchange between societies. But
Studies in Political Economy, No.6, Autumn, 1981
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Studies in Political Economy
the centrality of dependency as a theme also rested, and still rests, on the
necessity for any radical thought in this country to escape from the
restrictive and mystifying conceptual
frameworks
of "comparative
advantage"
and "national sovereignty" of bourgeois economics and
political science, and analyze contemporary Canada in the context of
twentieth century imperialism. Nor is this an easy task, as Innis long ago
recognized. "American imperialism ... has been made plausible and
attractive in part by the insistence that it is not imperialistic. Imperialism
which is not imperialistic has been particularly effective in Canada with its
difficulty in dealing precisely and directly with foreign problems because
of divisions between French and English."?
But if the theme is valid, it must also be said that the eclecticism of the
new political economy has hampered its ability to address the issue clearly
both theoretically and strategically. In its formative stages, and with
lasting effects, the new political economy rather uncritically borrowed
formulations on dependency and development from Latin America and
the Caribbean with little regard to their degree of compatibility with the
Marxian class analysis which it was also developing. At the same time, in
attempting to establish the validity of dependency theorizations
for
Canada, comparisons were usually made with the advanced capitalist
countries. The difference between Canada and other dependent societies,
however much they were acknowledged in passing via the paradoxical
phrase "rich dependency", have been relatively ignored. Any systematic
examination of this question would have to go beyond the recognition of
Canada's "intermediary
status" in the imperialist chain, as many have
done by focusing on Canadian investments in the Caribbean and Latin
America. Serious study of Canada's position in the world system would
surely inquire into the ways in which Canada's class structure, much more
similar to the advanced capitalist societies and particularly the United
States than to the Third World, has historically differed from that of
other dependent societies. Moreover, in focusing primarily on the "mercantile orientations" of the capitalist class in Canada, studies of the relationship of dependency and class have overlooked the more important
dimension of the relations between classes as an element in assessing the
particular nature of Canadian dependency. Similarly, work on the Canadian state in relation to dependency has not addressed itself seriously to
the question of how a liberal democratic state in form and substance, in
contrast with the authoritarian states of most other dependent societies,
sustains and reproduces the imperialist connection. These differences
between Canada and other dependent societies cannot be relegated to the
status of epiphenomena. They constitute vital elements in understanding
Canada's
particular relationship with American imperialism and in
delineating possible strategies appropriate to overcoming it.
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AND CLASS
The Neo-Mercantilist Metaphor
The greatest shortcoming of the new political economy in Canada is its
tendency to view dependency in neo-mercantilist terms. Ever since Kari
Levitt used the notion of the "new mercantilism" as the centrepiece of
her influential work,' the new Canadian political economy has laboured
under its profoundly misleading implications, straining against them but
never quite casting them off. What the neo-mercantilist metaphor fails to
capture by virtue of its primary concern with trade relations, is the fact
that the class structure of a developed capitalist mode of production has
been internalized in Canada. The direct foreign investment of the multinational corporation,
which comprises the "neo" in the mercantilist
analogy, undermines the analogy itself precisely because this form of
investment is accompanied by the development of a working class and a
capitalist class in the full sense implied in the concept of a capitalist mode
of production. The importation of capital in this form is not the import
of a thing, but of certain social relationships which are uncharacteristic of
peripheral societies in the mercantile era proper. The shift from commercial loan capital to direct foreign investment can only be properly
understood in terms of the way a given set of class relations in the host
country induces this shift, and the way in which this capital in turn
accelerates changes in class structure appropriate to its functioning. While
the neo-mercantilist
approach ignores class relations, from a Marxist
perspective an appreciation of class relations of exploitation and struggle
is essential to make sense of what is going on in a society and in relations
between societies. Without this, one is forced to see development or
underdevelopment entirely as the creation of international relations or of
ruling classes or of reified organizations. As a result, our ability to understand Canada as a society which is both rich and dependent is severely
limited.
It is true that the most celebrated studies in the new political economy
of the 1970s (those of Naylor and Clement) have been distinguished by
their explicit connection between class and dependency. But the definition
of class that has been operative here has been one which puts emphasis on
the characteristics of the various fractions of the capitalist class to the
virtual exclusion of a conception of class as a contradictory social relation
between workers and capitalists, exploiters and exploited. Naylor and
Clement both used class categories primarily to enable them to distinguish
between the industrial entrepreneur and the financial capitalist. The first
was seen as having his origins in the small independent manufacturer and
was treated as the innovative, productive element in the political
economy; the second was seen as emerging out of merchant trade, as nonproductive and as inhibiting industrial development. Since the first was
located in the sphere of production, and the second in distribution, it was
alleged that they stood in a contradictory relation to one another, since
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Studies in Political Economy
the "maximization of the mercantile surplus will minimize the industrial
surplus."4 It was the dominance of the financial fraction in Canada,
established by the original mercantile linkage with the British metropole,
which was understood to determine Canadian dependency. This fraction
suppressed an indigenous class of industrial entrepreneurs, maintained a
course of extensive staple exports over the last century, and induced the
enormous branch plant manufacturing production of American multinationals in Canada.
Whereas Gunder Frank sought to differentiate
between North
American (including Canadian)
and Latin American development I
un development by arguing that the former had the blessing of being
"ignored"
by the metropole due to its poverty of resources, (thus
allowing a diversified economy of small agricultural holdings and small
industries to be established which avoided the super-exploitation
by the
metro pole characteristic of Latin America)', the new Canadian political
economy argued that the Latin American and Canadian case were
fundamentally the same. Both experienced the suppression of industrial
entrepreneurship due to the dominance of a mercantile bourgeoisie which
had its origin in the original staple export linkage between the colonies
and the metropole. "The experiences of Canada and Latin America,
when compared, are similar in the underdevelopment
of industrial
sectors, although Canada's level of industrialization is much higher. In
each case, local capitalists gained their positions of power by acting as
mediators between indigenous natural resources and external markets ...
Both areas have been caught in the web of mutual dependence between
external and internal elite groups that reduces the likelihood that an
indigenous elite from the industrial sector may rise to dispute successfully
the power of the internationally dependent elite. This has been a similar
experience for both Latin America and Canada."6
While Frank's
speculations on North America being "ignored" are properly refuted at
least as they apply to Canada, it can be seen that, as with Frank, the
subordinate classes of direct producers, the mode of extracting surplus
from them, and the conflicts this generates simply do not enter as
determinant elements in the explanation of dependency by the neomercantilist version of Canadian political economy.
I shall not attempt to replicate here in any detail the various criticisms
that have been made of this dominant version of Canadian political
economy. Most of them have centred around the artificiality or brittleness
of the distinction between industrial and financial capital, assuming that
the source of the distinction lies in the Marxian distinction between
production and circulation. Such criticisms are to the point but they have
not for the most part appreciated that the difference between industrial
entrepreneurship
and financial capitalism is derived not from Marx's
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AND CLASS
distinction between productive and unproductive labour located in the
spheres of production and circulation but from Joseph Schumpeter's
distinctions between entrepreneurs and capitalists. Naylor's (and following him, Clement's) notion of the industrial entrepreneur who "creates
profitable productive opportunities through various forms of innovative
activity,"? appears to have been taken over from Levitt, who makes this
debt to Schumpeter explicit:
Joseph Schumpeter provides the most relevant insight into the nature
of modern capitalist profit. In Schum peter's world profit derives from the
deliberate introduction of innovation by the entrepreneur.
Profit is thus
created by his 'will and action.' Entrepreneurs
are distinguished from
'capitalists' who are merely rentiers who lend funds and receive interest.
Capitalists have money; entrepreneurs
have wits, and they use these to
create situations of a type which result in venture profit ... which is a
'quasi-rent' accruing to the temporary monopoly created by the innovators.
An innovation, in the Schumpeterian sense, consists of the introduction of
a new process of production, a new or improved commodity or service, the
opening up of a new source of supply and the introduction of new methods
of business organization,
including the creation or destruction of market
monopoly through mergers. In this scheme of things, innovation implies
economic development
and economic development
cannot take place
without innovation: 'without development there is no profit, with profit no
development. '8
Here we can also see the link between the notions of class and development which has so heavily influenced the new Canadian political
economy. For according to Schumpeter it is only indigenous local
entrepreneurship that yields development: "By development ... we shall
understand only such changes in economic life as are not forced upon it
from without but arise by its own initiative from within;"? Explicitly or
implicitly, Levitt, Naylor and Clement operate with virtually identical
definitions.
For Clement and Naylor capitalist development is largely about small
local entrepreneurs
"making it", independent of finance capital and
foreign capital.
Finance capital tended toward secure investment with a profitable return
while industrial capital attempted to secure profits through production
which was initially more venturesome and required entrepreneurial
skills.
As industries become established and profitable as joint stock companies,
financiers tended to move in with capital resources and secured control ...
An industrial structure did exist at the turn of the century in Canada which
was independent of the United States and the ruling financial elite but it
lacked the power, especially in terms of capital and market access, to
survive within this environment ... The effect of the merger movement
and organization
of production through corporate capitalism was for
increasing participation by the dominant Canadian commercial interests in
manufacturing
but at the ownership
and control
level through
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consolidation
and not in entrepreneurial
activities . . . The result of
integrating leaders of Canadian manufacturing
with commercial interests
was an interpretation of both the top-most manufacturing
families and the
tradition ruling class. Alongside this alliance was the beginning of another
emerging group, those associated with U.S. branch plants. In between there
was little room for the entrepreneur from outside the upper class .. .10
It appears that what is being said here is that small industrialists cannot
survive in the era of "corporate capitalism". It is hardly peculiar to
Canada that big capital takes over small. But "corporate capitalism",
even if some or many of its capitalists made their money originally in
merchant activities, is nonetheless industrial capitalism. The fact that
Canada's financial capitalists (as did the same breed of capitalists in the
American North-East at the beginning of the American industrial
revolution in the 1830'S)11 demonstrably shifted capital into industry
where it was profitable to do so, and joined with American
manufacturing firms in squeezing out or taking over smaller industrial
firms, suggests that explanations based on the different skills or
best partial and misleading. What is significant about Canada is not so
much that only a few small industrialists "made it" to be corporate
capitalists and that those that did integrated with financial capitalists into
a system of "finance capital'"? (this after all is common in all advanced
capitalist societies), but that more American corporations than Canadian
ones dominated industry at the end of this process. This does indeed
require explanation, and the explanation is to be found in the fact that
Canadian capitalists "lacked the power, especially in terms of capital and
market access, to survive." But the Schumpeterian mode of analysis
resting on the orientations of various groups of capitalists will give us a
very different answer as to why this was the case than a Marxian mode of
analysis.
The intellectual messiness of the new Canadian political economy
stems in large part from an attempt to combine rather indiscriminately
Schumpeter with Marx. To be sure, Levitt makes it perfectly clear what
she is about: "Unlike Marx's capitalist who makes profit from exploiting
labour in the production of standard commodities, Schumpeter's entrepreneur mayor may not be a producer ... The innovative entrepreneur
primarily creates situations in which the selling price of his product
exceeds the cost of producing and marketing it. Profit is a surplus to
which there corresponds no liability. The forerunner of the modern entrepreneur is the old-time mercantile trader ... ".13 Naylor does not differ
in his operative definition of profit, but he insists that only the industrial
entrepreneur creates profit (thus excluding by definition the merger
activities of the bankers which Schum peter included) and makes vague
reference to the "internal dialectics of class and capital accumulation" as
teterminants of the nature of metropolitan (but not peripheral)
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Leo Panitch/DEPENDENCY
AND CLASS
expansion."
Clement seeks to make Naylor's industrial entrepreneur
consistent with Marx's industrial capitalist, quoting Marx to the effect
that the "industrial
capitalist is a worker, compared to the money
capitalist, but a worker in the sense of a capitalist, i.e. an exploiter of the
labour of others."!' But in terms of identifying the motive force of capitalist development, Clement operationally follows Naylor and Levitt in
taking the absence of indigenous entrepreneurial innovation as the guidepost to Canadian dependency rather than the form and rate of exploitation. In each case, it is manifestly not capitalist profit as the "specific
form in which unpaid surplus-labour is pumped out of the direct producers" (Marx) that is seen to be the determining element in capitalist
development, but rather the presence or absence, the suppression or
expression, of entrepreneurial "will and action" (Schumpeter). Given the
importance of Schumpeter to modern elite theory, the facility with which
studies in Canada that revised and up-dated Porter's elite analysis were
combined with Naylor and Levitt's historical accounts of Canadian
dependency, may precisely lie in the common Schumpeterian grounding
of both endeavours. We would do well to spend more time asking to what
extent Marx is compatible with Schum peter rather than to what extent he
is compatible with Innis if we want to assess the theoretical coherence and
explanatory possibilities of the new Canadian political economy.
Class and Dependency
It will be the subsequent argument of this paper that only if political
economy turns to an examination of class in Canada taken as a totality,
only if it specifies the historically developed class structures, patterns of
exploitation and class struggles in Canada, will it be able to adequately
explain Canada's trajectory to a "rich dependency."16 The starting point
for such an analysis rests on the perception that class is a contradictory
social relationship
between producers and non-producers,
entailing
mutual dependence but also entailing mutual power. "The historical
evolution or emergence of any given class structure is not comjrehensible
as the mere product of a ruling class choice and impositio.i ... but
represents the outcome of class conflicts through which . he direct
producers have; to a greater or less extent, succeeded in rest cting the
form and extent of ruling class access to surplus labour. "17 It is precisely
this perception that lies at the theoretical core of Marxism: "The specific
economic form, in which unpaid surplus-labour is pumped out of the
direct producers, determines the relationship of rulers and ruled, as it
grows directly out of production itself and, in turn, reacts upon it as a
determining element ... It is always the direct relationship of the owners
of production to the direct producers ... which reveals the innermost
secret, the hidden basis of the entire social structure, and with it the
political form of sovereignty and dependence ... " .18 Looked at in this
light, one of the first questions a Marxist political economy will want to
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Studies in Political Economy
ask regarding why Canadian industrial entrepreneurs "lacked the power
... to survive" is whether their ability to extract surplus from the direct
producers was limited by class relations and class struggles of nineteenth
and twentieth century Canada.
What marks Canada off most fundamentally from classical underdevelopment is the fact that this society was from the beginning
constituted in terms of free wage labour or tendentially free wage labour.
Despite the small size of the proletariat at the time of Confederation,'?
both agricultural and craft production took place predominantly
for
exchange. Unlike other dependent societies which were characterized by
the attachment of mercantilism to a pre-capitalist mode of production
(wherein the direct producers were unfree, not directly engaged in market
exchange, and sustained themselves by producing their own means of
subsistence), Canada was a society where exchange value predominated in
social relationships. This had much to do with the fact that Canada was
composed of "white settler" colonies. As Innis pointed out, the very
development of staple exports could not be attributed unidimensionally
to the extractive rapacity of the metro pole , but also to the colonial
population's
need to find goods for export which would allow the
migrants to maintain an historically-determined
level of subsistence - a
standard of living and a culture which they carried with them from
Europe. "Peoples who have become accustomed to the cultural traits of
their civilization ... on which they subsist, find it difficult to work out
new cultural traits suitable to their environment . . . The methods by
which the cultural traits of a civilization may persist with the least possible
depreciation involve an appreciable dependence on the peoples of the
homeland ... goods supplied by the home country enabled the migrant
to maintain his standard of living and to make his adjustments to the new
environment without serious loss. The migrant was consequently in
search of goods which could be carried over long distances ... and which
were in such demand in the home country as to yield the largest profit."?"
If we take the case of Ontario (Upper Canada), which proved to be the
major site of the penetration by American manufacturing capital, what
must be recognized is that its place in the world market as a staple
exporter in the pre-Confederation
period did not itself necessitate the
development of underdevelopment
characteristic
of the dependency
model. The Ontario farmers operated as petty capitalists through
successful specialization in the wheat crop. This structure of exchange
value production,
based on the direct producer being invested with
property in the means of production and with enough class power to
prevent their direct expropriation by the colonial ruling class, had two
important consequences. It meant that the ruling classes in Canada and
the metro pole could not extract a surplus through the direct imposition by
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Leo Panitch/DEPENDENCY
AND CLASS
force of greater absolute exploitation (as was the case with plantation
agriculture). This helps account for the importance of building an
efficient infrastructure for the transportation of the staple. The internal
market created by the successful wheat staple of Ontario allowed, as
McCallum has so admirably shown, a growing division of labour whereby
a section of the population could move into non-agricultural production
both in small towns and larger urban centres such as Hamilton and
Montreal to service this internal market." As was the case with the New
England and mid-Atlantic states by the 1830's, the growth of cities and
industry in Ontario after 1850 took place in terms of a symbiotic
relationship with the agricultural staples hinterland.
In the case of
Quebec, where the farmer was unable to produce a wheat staple competitively, mainly due to climatic factors, and which lacked a substantial
internal market that would allow the development of commercial substitutes for wheat, a more subsistence, non-market oriented form of
production prevailed. As McCallum shows, the distinguishing feature
separating rural Quebec and Ontario in the nineteenth century was not
the entrepreneurial innovative ness of one set of farmers as opposed to the
other, but nature and markets. And whereas inability to engage in the
world market forced the Quebec farmer into poverty or emigration, the
very linkage of Ontario with the world market through the wheat staple
provided the conditions for industrial development extensive enough to
absorb many farmers into wage labour when natural and competitive
conditions shifted wheat production further west. To ascribe the failure
of Quebec to industrialize in the nineteenth century to the anti-industrial
attitudes of the Montreal merchants, not only ignores the fact that such
industry as did develop in Montreal did so mainly to service the Ontario
market, but also the fact that when American "entrepreneurship"
arrived
it came not to Quebec where cheaper labour was available in abundance
but to Ontario where skilled craft labour and a domestic market were in
place.
A further consequence of the capitalist nature of production in the
colonies was that the direct producer was tendentially a free wage
labourer. For insofar as farmers were subject to elimination through
economic competition, they had three choices: "super-exploit"
themselves by remaining on the land, move to more productive agriculture in
other parts of North America, or move to wage labour. As with the
craftsmen who became factory hands in the latter half of the nineteenth
century, the independent commodity producers on the land were a
transitional class to the proletariat in that, unlike serfs and slaves, their
transition to wage labour was based on a direct shift to formally capitalist
class relations due to the pressures to which they were subject as
competitive individual producers in the market. In this sense, and above
all in Ontario where dependent industrialization
first and most strongly
took root, the development of capitalism in Canada was predicated on a
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class structure which facilitated capitalist industrialization.
This was not
the case where mercantilism maintained and reproduced pre-capitalist
forms of production in the periphery. These forms of production, even
where nature yielded a marketable staple, were based on absolute surplus
extraction from the direct producers and their direct non-market production of means of subsistence. This closed off the possibility of the
development of an internal market for manufactured goods and for the
division of labour necessary for industrial production. In these conditions
neither indigenous nor foreign industrial entrepreneurship,
however
innovatively-minded,
took strong root. The conditions for a transition to
an industrial proletariat, the prime source of accumulation for advanced
capitalist societies, simply did not obtain.
What has often apparently confused Canadian political economists is
that, in Canada as a whole, the portion of the population engaged in
staple production did not decline as industrialization developed in the late
nineteenth century. The particular nature and timing of Canadian
capitalist development in fact expanded the class of petit bourgeois
farmers through the development of the wheat staple in the West at the
same time as it created an industrial proletariat in southern Ontario. But
while this pattern certainly differed from Britain, it resembled that of the
United States. In both societies, moreover, the transportation infrastructure that was built to service the wheat staple of the West simultaneously
expanded the class of wage workers not only in the building of the
railway, but also in the iron and steel industries that it called into being. It
was thus the very nature of staple production in mid and late nineteenth
century Canada that yielded a proletariat. Although it was concentrated
very largely in the cities of Ontario and in Montreal, and although it was
not to become the largest subordinate class until a half-century after
Confederation, this proletariat was to have significant effects in economic
and political terms from the 1870's onward.
Most important, in relation to the question of the influx of American
manufacturing industry and why Canadian industrial entrepreneurs in the
late nineteenth century "lacked the power ... to survive" , is the fact that
this proletariat was a high-wage proletariat, not only relative to the Third
World but relative to the capitalisms of Europe. Edward Young's monumentally detailed study of wage rates and subsistence costs across a vast
array of occupations throughout Europe and North America on the eve
of the onset of the Great Depression in 1873 makes this abundantly clear.
(Tables I, II and II pp 29-31 below). Real wages in Canada were substantially higher not only than in England, but also than in countries like
Sweden and Germany whose industrial "take-off"
comes closer to
Canada's in terms of timing but not in terms of foreign ownership.F And
while wage rates in Canada appear in general to have been quite a bit
16
Leo Panitch/DEPENDENCY
AND CLASS
lower than in the United States in the early 1870's, subsistence costs were
also lower. Moreover, in such a critical sector for industrialization as the
railway shops, wage rates were quite comparable. Certainly by the turn of
the century Canadian workers had secured - and subsequently maintained - wage rates which in general tended to be only marginally below
those in the United States."
Various reasons might be adduced for this, not least among them
being Canada's roots as a white settler society carrying with it the level of
civilization achieved by Western Europe and increasingly dependent on
the attraction of skilled labour from Europe by the mid to late nineteenth
century. To this should be added the availability of western (and
American mid-western) land for the wheat economy, which in terms of
exchange value calculations vis-a-vis the labour market, ensured that
wages could not fall too far below returns in the most competitive sectors
of independent commodity production in agriculture. Above all, perhaps,
the very proximity to the relatively open American labour market
guaranteed that wage rates in Canada would move towards those in the
United States.
Finally, one must take into account the unionization of skilled workers
after 1870 (with the state actually abetting this unionization, primarily out
of a concern to stem the tide of emigration of skilled labour to the United
States). These workers undertook collective struggles over wages and
conditions as well as over retaining elements of craft control in the production process. This did not occur later or on a lesser scale than in most
of continental Europe. The militancy of the American working class was
notable in contrast to Europe during the Great Depression, and there is
accumulating evidence to suggest that skilled workers in Canada were also
relatively more militant in this period than their European counterparts.
Can any serious political economy really leave the limits which this highwage proletariat posed to accumulation out of the account of why
Canadian industrial entrepreneurs of the late nineteenth century, unlike
those of Sweden or Germany, "lacked the power ... to survive"?
Recent Marxist studies in Canadian labour history, particularly those
of Palmer and Kealey, have attempted to counter the neo-mercantilist
thesis by arguing that in the latter half of the nineteenth century Ontario
exhibited extensive industrial production, a politically influential manufacturing bourgeoisie, and a proletariat in the process of class formation
through cultural, economic and political struggle.P This is most valuable
social history, making an enormous contribution to our understanding of
Canada from a Marxist perspective. Yet it must be said that in relation to
the question of explaining Canada's historical trajectory to dependent
industrialization,
they teU us little directly. The evidence they provide of
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substantial industrialization does not in any sense undermine Naylor's
and Clement's case, since it is crucial to the latter's argument that such
industrialization did occur but was suppressed by the mercantile bourgeoisie in alliance with American multinationals. Nor do the histories of
Palmer and Kealey even attempt to explain why it was the case that,
despite this indigenous industrialization,
Canadian industry in the
twentieth century succumbed to such extensive American ownership with
all the attendant limitations of branch-plant industrialization. Although
Kealey, in particular, persuasively demonstrates that the National Policy
cannot be explained in terms of the hegemony of the financial elite, and
that any balanced historical account must recognize the political importance of the alliance between Ontario industrialists and workers around
the tariff to protect industry and jobs." he goes to the opposite extreme
of Naylor and Clement to proclaim that "by 1879 Canadian industrial
capitalists had come to dominate the state and were able to dictate their
self-interested policies in the name of the common good. "26 Can we do no
better than oscillate between two diametrically opposed but equally
instrumentalist views of the Canadian state?
What the existence of class struggles in the industrial sphere suggest
about late nineteenth century Canada is not that we should now invest
industrial capital with the mantle of monolithic power that Naylor and
Clement previously assigned to the financial bourgeoisie, but rather that
we should examine the way in which these struggles limited the power of
the Canadian bourgeoisie as a whole and constrained the policy choices of
the state. The emergence of a high wage proletariat had two effects which
are crucial to understanding Canada's subsequent development. First of
all, it meant that industrialization in Canada was developing on the basis
of a domestic market, above and beyond what the Ontario wheat
economy had previously established. The National Policy was designed to
expand that market further through settlement in the West and through
protectionist trade policies which fostered import substitution. But it
must not be forgotten that it was this expanding market, especially in
Ontario itself, which was a primary inducement to American direct
investment. American capital came to Canada to secure raw materials,
and to use Canada as a staging post for exports to the British empire; it
did not come in search of cheap wage labour (in which case it would have
gone to Mexico or at least much more to Quebec than to Ontario). But it
also came, as Myra Wilkins' major study of the American multinational
corporations has shown, to realize surplus value, to secure the sale of
manufactured goods in Canada's domestic market. This was manifestly a
different situation from that in Latin America where American
investment was overwhelmingly "supply-oriented."
American firms
usually saw the Canadian market as part and parcel of the expansion of
their domestic sales operations. And although the contradictory outcome
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Leo Panitch/DEPENDENCY
AND CLASS
of the National Policy was not only to protect Canadian industry, but
given the free movement of capital, to induce the establishment of
American branch plants as well, it would be absurd to contend that
protectionist legislation was designed to - or did - cause American
manufacturing investment in Canada. As Wilkins puts it:
It is important that all such legislation - involving patents, tariffs,
industry incentives and 'made-in-Canada'
rulings - would not have been
enough to 'force' investments by American manufacturing
firms in
Canada. Just as the Canadian legislation did not force Americans to invest
in the processing of paper and pulp (they only invested when the paper and
pulp could be exported and used in the United States), so too unless
American companies desired to sell in Canada and unless the market was
there (or could be created), Americans would not have invested. The
presence in the Dominion of a demand for American products was a
prerequisite for these expansion moves. Unlike Mexico, where the main
American investments were in railroads, mining, and land, in Canada by
1908 the largest single sector of U.S. direct investment
was in
manufacturing - and the bulk of the manufacturing was not by processors
of raw materials, but by U.S. businesses that 'spilled' across the border to
sell their wares. 27
Apart from markets, the second effect of Canada's high-wage proletariat for the profits of both Canadian and American capital was on the
rate of exploitation. It meant that industrial production in Canada had to
expand on the basis of relative surplus value, the application of extensive
fixed capital to the production process to expand labour productivity,
and not on the basis of cheap labour with the extension of working hours
and absolute immiseration
of the direct producers.
It was in the
employment of labour-saving technology that Canada again resembled
Europe and the United States itself rather than the classically dependent
societies. But this very pattern of expansion had severe consequences for
Canada's indigenous industrialists. Given Canada's later start toward
industrialization
and its more limited domestic market (even with tariff
protection) than the United States, the only way Canadian capitalists
could have competed successfully with the financially stronger and more
productive American capitalists was through a much higher rate of absolute exploitation of the Canadian working class than was possible
given the conditions outlined above. Thus the very struggles of the
Canadian working class (emboldened by similar struggles in the United
States and the fluid continental labour market) put limits on the potential
competitiveness of Canadian capitalists. Whether these struggles took
place over the shorter work week, factory discipline, the importation of
cheap foreign labour, or resistance to wage cuts, their effects cannot be
measured just in terms of the immediate economic or cultural benefits
gained by workers, but must be seen in terms of their impact on the
Canadian manufacturers and their ability to extract enough surplus value
to compete against their real or potential American competitors. These
19
Studies in Political Economy
struggles did not dissuade American firms from investing in Canada they were experiencing the same or worse at home. In any case, as Wilkins
points out: "There seems no satisfactory evidence to indicate in earlier
years or in recent times that on an overall basis differential rates of return
were the crucial motivation behind U.S. stakes in manufacturing
abroad. "28 It was markets they were after, and in these circumstances it
was the Canadian capitalists (industrial and financial) who had to worry
about rates of return to invested capital in manufacturing in Canada.
These considerations should be juxtaposed with the dominant line of
argument of the new political economy. Tom Naylor's most sophisticated
statement of the neo-mercantilist thesis goes as follows:
There are two principal routes. with some minor variants. that an
economy can follow on the road to industrialization.
Manufacturing
can
grow up 'naturally' from a small scale, even artisanal mode of production
when capital accumulation is a largely internal phenomenon based on the
reinvestment of the firm's own profits. A second path implies direct
development to large-scale oligopolistic enterprise where outside capital is
invested to facilitate its expansion and where the state takes an active,
direct role in its growth. The outside capital required could come from
commercial capital accumulation,
from the state, or from foreign investment. The first path, if successfully followed, would lead to the emergence
of a flourishing and independent national entrepreneurial class. The second
mayor may not: it may simply reproduce the conservatism of commercial
capitalism in a new guise, the development of inefficient, non-innovative
and backward industrial structures with a penchant for dependence on
foreign technology, foreign capital, and state assistance. In Canada during
the formative years of the Confederation
era, both paths of development
were available.I?
If considered in Marxist terms, it will be seen that the first path is
entirely dependent on Canadian industrial capitalists generating a large
enough surplus through the exploitation of their workers to sustain
indigenous industrialization.
At a minimum it would be necessary to
examine whether the conditions for such surplus extraction (with the
attendant subsequent problems of realization in the domestic market)
existed in Canada at the time. Yet the only point at which this question
makes an entry to Naylor's argument occurs (in passing) in his explanation of the influx of American capital in the post-World War One period.
"An organized and militant labour force in Canada entered the political
scene for the first time as a factor of immense importance, and the possibility to finance expansion by a squeeze on working class incomes was
considerably circumscribed.v"
Is it not worth asking whether the
working class "considerably circumscribed" the indigenous financing of
industrial expansion "during the formative years of the Confederation"
period as well? The limits which workers (and farmers) posed to the rates
of exploitation were constantly tested in struggles by both sides, but given
20
Leo PanitchlDEPENDENCY
AND CLASS
a balance of power in which the subordinate classes were implicated as
well as the capitalists, it was scarcely surprising that the Canadian state
fostered protectionism, the development of the wheat staple in the West
and direct foreign investment, in order to promote capital accumulation
and to mediate between the class forces in Canada. Insofar as this entailed
a clear strategy at all (and Canadian political economy remains far too
open to such subjectivist notions of historical development derived from
bourgeois historiography and political science), it was arrived at more
through the push and pull of contending social forces rather than
springing from the heads of a fully conscious and cohesive mercantile
ruling class.
American capital came to dominate Canadian industry because, given
the balance of class forces in a continental capital and labour market
which the National Policy could not alter even if it had wanted to,
American industry was more profitable than Canadian in a great many
cases. And this has not produced by any means the conditions of
underdevelopment that dependency theory identifies. Indeed, even under
the aegis of this capital, Canada's class structure has evolved in the
twentieth century increasingly along the lines of advanced capitalism. It is
sometimes contended that the large service sector in Canada today is
proof of "the uneven nature of Canada's development and the effects of
external control"
in stunting industrialization,
as in Canada "the
economy changed from primary to tertiary without developing the area of
secondary production.t' '! Yet the growth of the service sector in Canada
tends to resemble that of the United States itself. Both societies were
marked by the simultaneous expansion of an industrial proletariat and a
class of independent farmers in the Western frontier. The relative decline
of the latter class in North America therefore came later than in Britain,
and in the context of Canada's later industrialization than the U.S., the
rapid decline of the number of independent farmers after the Depression
more directly coincided with the great expansion of white collar
employment under monopoly capitalism and the interventionist state. In
both Canada and the United States employment in secondary manufacturing fell slightly in the twenty-five years after World War Two (with
similar proportions
of the labour force employed in this sector).
Employment in the service sector increased to the point that it achieved
predominance over both primary and secondary employment (in the U.S.
by the late 1950's, in Canada by the early 1960's) much earlier than in any
other countries.P
Far from indicating that Canadian
secondary
production was underdeveloped,
these trends would tend to suggest its
extensive development reflecting the spill-over of the enormous productivity of American capitalism through the Americanization of Canadian
industry.
Insofar as the dynamic of both economies was based on relative
surplus extraction,
entailing
labour-saving
capital investment
in
21
Studies in Political Economy
secondary manufacturing, the fact that the proportion of the population
employed as industrial manual workers remained stable or declined
relative to the labour force as a whole is what one would expect on the
basis of the most elementary principles of Marxian political economy.
Moreover, as Braverman showed, white collar employment largely grows
up on the basis of industrial production,
reflecting functional and
organizational changes in production relating to the separation of manual
from mental labour in production as well as the manifold activities
associated with the realization of surplus value." Even Britton and
Gilmour's study of "Canadian
Industrial Underdevelopment"
for the
Science Council of Canada indicates that "due to services purchased by
the manufacturing
sector and to the spread effects within the service
sector ... twenty-six jobs in the service sector were linked to each 100
jobs in manufacturing by 1961. By 1971 there were 33 dependent service
jobs." Using the concept of the "goods economy", whereby employment
in trade, finance, insurance and half of public administration are defined
as linked to primary and secondary industry, Britton and Gilmour
contend that goods-related employment accounted for about 80 per cent
of total employment in 1951 in Canada and 76 per cent in the United
States, declining to about 64 per cent in both economies two decades
later. "The Canadian pattern of change was most like that of the U.S .
. . . In spite of change, employment is still dominated by activities concerned ultimately with goods production. "34
Where Canada seems to have been particularly affected by its branchplant industrialization relative to the United States is in the proportion of
professional and technical employees in manufacturing industry, where at
the beginning of the 1970's such employees constituted 9.1 per cent of the
manufacturing workforce in the U.S., but only 5.3 per cent in Canada,
with the differential really opening up since the beginning of the 1960's
(when the relevant percentages were 5.0 per cent for Canada and 6.4 per
cent for the U.S.). If we look at such key industries as chemicals,
electrical products and transport equipment, the proportion of such
technical and professional employees in Canada was lower than the U.S.
at the beginning of the 1960's but higher than in Britain. By the start of the
1970's, however, technical and professional employment in both the U.S.
and Britain had moved substantially ahead of Canada in these industries." This may indicate that Canada's
branch-plant
industry is
experiencing a decline in its ability to rationalize and to sustain such
sectors of white collar employment critical to advanced capitalism. But
we can make little sense of this trend at all if we begin with the notion that
"Canada changed from primary to tertiary without developing the area
of secondary production."
In the course of the capitalist restructuring
associated with changes in international
economic order that have
destabilized American global hegemony, Canada may now be suffering
22
Leo Panitch/DEPENDENCY
AND CLASS
the effects of its industrialization under the aegis of American capital. But
these effects are the product of the nature of our industrialization not of
the relative absence of industry in Canada.
All this is not to suggest that we should ignore the effects of Canada's
industrialization in the twentieth century within the orbit of American
imperialism but only to insist that we stop trying to fit this industrialization into the pattern of Latin American dependency theory on the
foundation of a Schumpeterian version of capitalist development.
Canada needs to be distinguished from other advanced capitalist societies
in terms of its dependent industrialization entailing such features as a
significant level of production of the means of production in the imperial
country, low domestic technological development and research expenditure by the branch plants of the multinational corporations, and relatively
low exports of finished products. Rather than pretend that our historical
trajectory has been one of the development of underdevelopment, it is
perhaps more relevant to ask whether Canada stands as the prototype of
the form of dependent industrialization which, given the changing international division of labour over the last three decades, has come to
characterize countries on the periphery of Europe such as Spain and
Greece, or certain countries in Latin America such as Brazil and Argentina. These developments have shaken the static perception of a link
between dependency and underdevelopment which dependency theory
projected. Whether Canada is the image which imperialism presents to
even the most successful of those countries where foreign investment has
shifted toward industrial production, transforming class relations in the
process in these societies, can only be answered in terms of concrete
assessments of whether such branch-plant industrialization is based on
fostering the development of an internal mass market and whether it
entails reliance on relative surplus extraction rather than cheap labour. It
certainly appears to be the case that Canada's early history of simple
commodity production, its proximity to the United States geographically
and culturally, and above all perhaps the timing of its industrial "takeoff" determined aspects of Canada's trajectory to a "rich dependency"
which cannot be matched by contemporary branch-plant industrialization
elsewhere.
The State and Dependency
The foregoing argument, which attempts to situate American imperialism and Canada's capitalist development in relation to the specific class
configuration of the dependent society, has significant implications for
the way we understand the role of the state in Canadian history. Within
the neo-mercantilist
version of Canadian political economy, the
determination of the state can be understood in only one of two ways.
Either the state is seen as acting at the behest of the American bourgeoisie
23
Studies in Political Economy
and the American state or it is seen as acting at the behest of the mercantile I financial fraction of Canadian capital. The former assumes a unity of
purpose and direction which is belied by the competitive clash of interests
that characterizes American capitalism and liberal democracy, and is
certainly inadequate in terms of explaining those aspects of Canadian
state behaviour, from the National Policy to the National Energy
Programme, which are characterized by a "defensive expansionism" visa-vis American imperialism. As for perceiving the Canadian state as the
satrap of financial capital, the evidence that this fraction has
predominated over other fractions of the bourgeoisie in terms of linkages
with the state has always been weak, as I have argued before." In any
case, the distinction between the fractions of capital is often too brittle
and static to be employed usefully in political analysis. As Poulantzas
properly pointed out:
The distinction between cornprador and domestic bourgeoisie ...
is
not a statistical and empirical distinction fixed rigidly once and for all. It is
rather a tendential differentiation.
the concrete configuration
it takes
depending to a certain extent on the conjuncture. This capital or that. this
or that fraction of capital. may in this process acquire a relative autonomy
and gradually come to take its place in the ranks of the domestic bourgeoisie. just as in the opposite direction capitals that were originally
autochtonic may gradually fall under the thumb of foreign capital - a
process of constant reclassification
which must always be taken into
accounr.t?
Clement's own evidence on the overall "junior partnership" status of
the financial fraction with American capital already suggests that his
refusal to label them as comprador, because of the relative absence of
direct foreign ownership in the banking sector, is misleading. On the
other hand, Larry Pratt's recent accounts of the attempts by Alberta
capitalists to renegotiate through the Alberta state their degree of
dependency vis-a-vis the multinational oil companies is suggestive of how
a comprador bourgeoisie may "acquire a relative autonomy" more
characteristic of a domestic (but not a national) bourgeoisie.'! Finally, the
current National Energy Programme, under which central Canadian
capital (including many elements classified by Clement as financial) is
attempting to obtain a piece of the action in the highly profitable oil and
gas industry, is indicative again of the necessity for "constant
reclassification" rather than a differentiation of capital along spatially
fixed sectoral lines.
To speak of a state as a capitalist state does not mean that certain or all
capitalists rule directly at the political level. It means rather that the
state's role primarily entails maintaining the social conditions for
economic growth and the reproduction of classes in a way consistent with
the dynamics of the capitalist economy. This means promoting capital
24
Leo Panitch/DEPENDENCY
AND CLASS
accumulation,
but within the framework of containing and mediating
relations among the various fractions of capital and between the
subordinate and dominant classes. The degree to which the state is
relatively autonomous
from particular classes cannot be given in the
abstract. It can only be assessed through concrete analysis of the balance
of forces at each particular conjuncture. The strength of the subordinate
classes, not only in mobilizing politically, but also in terms of their ability
to resist increased exploitation at the economic level, are just as critical
elements in assessing this balance as are the accumulation strategies of the
bourgeoisie. The Canadian state's historical "reading" of this array of
forces, its calculation of the political and economic costs and viability of a
strategy of autochtonic
development which depended on a massive
increase in the rate of absolute exploitation of the direct producers, has
generally led it to favour capital mobility into the country. If this has
meant that our development has been based on the shifting sands of
foreign investment, it has as much to do with the strength of the
subordinate
classes as with strategies imposed on the state by the
bourgeoisie.
It should be stressed in this regard that the common notion that the
Canadian state has lost power to the multinationals
is particularly
misconceived. Statements such as "when levels of foreign ownership
become high the result is an erosion of the autonomy of the state itself"
and "the extent of foreign control (in the private sector) reduces the
sovereignty of the Canadian state'"? are highly problematic. The role of
the state was if anything increased by the internalization of American
capital within Canada, entailing new problems of mediation among
internal social forces. It extended the state's role vis-a-vis American
capital beyond relating to it as an external force (through negotiations
with the American state and through foreign trade and commerce
policies) to incorporating the interests of American capital as an element
within the Canadian social formation. To a significant extent, in Canada
at least, the balance of social forces takes places within the domestic hegemony of American capital in the host society. The rhetoric of "good
corporate citizens" as applied to the branch plants is not merely symbolic
- it reflects the fact that foreign capital is legally and socially in place in
Canada as a hegemonic class force, one which is directly implicated in
regional conflicts on both sides in the name of the "national interest"
(e.g. United States and Canadian oil interests in Alberta versus United
States and Canadian manufacturing interests in Ontario) as well as in
class conflicts (Chrysler is no less capable of appealing for state aid in the
name of protecting Canadian workers' jobs than is Massey-Ferguson).
Insofar as American capital has been at the source of both accumulation
and the extended reproduction of capitalist social relations in twentieth
century Canada, the expanded role of the state as an employer, as an
25
Studies in Political Economy
administrator, and as a distributor of the surplus can be seen as a product
of the internalization of American capital within Canada. Paradoxically,
it is precisely this expanded state which now has the "power" , as is seen
most clearly in Edmonton and Ottawa at the moment, to sustain sections
of the domestic bourgeoisie in renegotiating their position vis-a-vis the
multinational
oil companies.
Yet these continuing
conflicts with
American capital on the part of the indigenous bourgeoisie remain cast
within the framework of American hegemony in Canada.
Although we may speak abstractly of a dependent type of state for
dependent societies, we cannot ignore the importance which the particular form of state has in terms of the concrete effects of imperialism on
those societies. The importance of this factor is immediately seen when we
consider the difference it makes to the subordinate classes whether a
regime is fascist, a military dictatorship,
an authoritarian
one-party
regime, or a liberal democracy. Since a liberal democratic regime does set
limits to the repressive role of the state, it constrains the extent and form
by which the surplus may be extracted from the direct producers. The
very economic constitution of Canadian social relations in terms of independent commodity production and free wage labour was the fundamental basis of Canada's political constitution as a liberal democracy, as the
struggles for responsible government in the 1830's and 1840's and for the
extension of the franchise and freedom of association (trade union rights)
in the post-Confederation
period attest. In turn, the liberal democratic
form of state set limits on the possibility of increasing the rate of exploitation in as repressive a fashion as would have been required by
autochtonic industrialization
in Canada, or as was the case with the
imperialist development of underdevelopment
in Latin America. The
significance of this is that we can't understand the place of a society in
relation to imperialism in terms of economic dependence alone. Sociopolitical distinctions, domestic political institutions, must enter into the
picture as well. In this we see one of the most important differences
between most Third World countries and Canada in terms of dependency.
This distinction brings me to my final point - in a sense the point of
the whole exercise. It is to stress that it is not the state that primarily
sustains American imperialism within Canadian society. The imperial
relation is secured and maintained more fundamentally
within civil
society itself - in the integration of all the dominant fractions of capital
under the hegemony of the American bourgeoisie, in a continental labour
market and international unions, and above all, in our culture - not so
much the "haute culture" of the intellectuals but the popular culture
which is produced and reproduced in advertising, the mass media and the
mass educational system. Just as it is by virtue of a cultural hegemony in
26
Leo Panitch/DEPENDENCY
AND CLASS
civil society that bourgeois domination is made compatible with liberal
democracy in advanced capitalist societies, so Canadian dependency
remains compatible with liberal democracy by virtue of the penetration of
civil society itself by American culture. In contrast, the penetration of the
culture of the metropole in most Third World societies is largely restricted
to the ruling classes alone and its inability to penetrate or displace the
culture of the mass population is kept closed by an authoritarian state
structure which dominates over civil society.
Nationalism, Marxism and Canadian Political Economy
What these differences between Canada and the Third World suggest
is that struggles against imperialism will have to take different routes in
Canada than in other dependent societies. The new Canadian political
economy has always recognized this, although its simultaneous tendency
to assimilate Canada into the classical dependency model has sometimes
obscured this conclusion. Amidst all the smoke currently generated by the
bourgeois nationalism of the National Energy Programme and the Great
Constitutional Debate, it may be useful to recall the words of one of the
founders of the new political economy in Canada, Ian Lumsden:
Of course, I have stressed the paramount
importance of American
imperialism in shaping the nature of Canada's dependent capitalism. But I
am skeptical of the belief that Canadians wilt be mobilized to overthrow
capitalism merely on that account; they are, for the most part, materially
too well off for that. Rather they must come to grasp the growing
contradictions
of our dependent integration within American capitalism,
even as they see more clearly the exploitive and alienating system of
capitalism for what it is. The two strands so interpenetrate in the Canadian
context that they cannot be neatly separated. This means, in turn, that if a
sine qua non for the mobilization of the Canadian people is their prior
cultural decolonization - and consequent ability to identify the American
factor in our oppression - this cultural decolonization
must occur
alongside a struggle to overcome the social alienation which is inherent in
all forms of capitalism ... 40
Lumsden was responding to critics who saw in the new political
economy a left-nationalist
cover for "chauvinism,
reformism and
opportunism,"
and who located the theoretical weaknesses of the new
political economy - particularly its tendency to equate Canada with the
classical dependent societies - in the fundamental
incompatibility
between its nationalism and its Marxism."! Yet the weaknesses of the new
political economy cannot in my view, be ascribed primarily to a
"fanatical nationalism" of the kind which Innis himself warned against
in the 1940's, whereby "social scientists can be seen carrying fuel to
Ottawa to make the flames of nationalism burn more brightly.t 'V An
objective reading of the political economy literature as it evolved over the
1970s does not support such an interpretation, even if certain tendencies
27
Studies in Political Economy
in this respect are visible. If nationalism has been at the root of its
weaknesses, this has on the whole less to do with a "parti-pris" political
nationalism directed toward the powers-that-be, and more to do with a
certain insularity of focus that tends to discourage (and not count as part
of Canadian political economy) contributions to general theoretical
debates or to comparative research. In this sense what Innis wrote in the
1940's perhaps remains true: "The state of the arts in Canada is
threatened by a fanatical interest in nationalism reflecting our inability to
grapple with the problems of Western Civilization. The drain of
nationalism on our energies all but exhausts efforts to appreciate our
position in the West."43
A more precise source of the weaknesses of the new political economy
than nationalism, however, may be said to be its insufficiently dialectical
approach to social phenomena. It is not enough, for instance, to study
imperialism in terms of its effects on Canada. We have to recognize that
imperialism has effects not only on the periphery but on the metro pole
itself. Indeed, if Canadian political economy has much to learn from
Innis today, this pertains less to his geographic determinism in the framework of unequal market exchange and more to his appreciation of
imperialism as a contradictory phenomenon. One might note in particular
his perception that Canadian staples exports have been "a source of
disturbance to the economies of other countries ... wheat production
. .. brought a revolution in British agriculture and led European
countries to impose barriers or to undergo revolutions. Pulp and paper
production facilitated the rapid growth of advertising in the United States
and contributed to the problems of industrialism and the destruction of
stable public opinion. "44 One might question the particulars here, but the
lesson is a rich one. A similar openness to the notion of contradiction
would make Canadian political economy not only more sensitive to the
roots of the current crises besetting America's international hegemony
and her domestic economy, but also less prone to accept the static isomorphism between dependency and underdevelopment which was posed
in dependency theory and which always looked odd in relation to
Canada's history. More fundamentally, an awareness of social phenomena as contradictory would entail seeing domination and exploitation as
other than one-way streets. It would mean that explanations of, and
strategies for overcoming, Canadian dependency would concentrate less
on ruling class (or metropolitan) actions and strategies alone, and more
on historically structured relations of conflict between exploiters and
exploited, not least between dominant and subordinate classes both in our
own society and elsewhere. The failure to take this approach, which stems
from a failure to take Marxism seriously enough, rather than from any
necessary "contamination"
which results from incorporating certain
expressions of nationalism (or insights of Innis) into a Marxian
framework, may be said to lie at the core of the new political economy's
weaknesses.
28
TABLE I: Comparative Weekly Wage Rates, Selected Countries and Occupations, circa 1873*
Canada
(a) Hamilton,
1873
(b) Cornwall,
1874
Blacksmiths
Carpenters
Painters
Wheelwrights
Boiler-makers
Iron-molders
Labourers, carters
$12.00
9.90
9.60
10.50
15.00
12.00
6.00
(a)
(a)
(a)
(a)
(b)
(b)
(b)
England
Sheffield,
1872
Germany
(a) Berlin,
1873
(b) Frankfort,
1874
$6.53
7.26
6.53
7.74
6.53
7.87
4.36-5.08
$7.20 (a)
5.20-6.00
4.30-6.00
7.20-9.60
6.43-7.20
7.20-7.04
2.88-4.32
• All figures in U.S. gold currency equivalents;
approximately
(b)
(b)
(b)
(a)
(a)
(a)
Belgium
Antwerp,
1872
$4.20
3.72
4.22
4.80
Sweden
France
(a) Marseilles,
(locale
1873
unspecified)
(b) Paris,
1871-72
$5.14
7.20
4.80
5.14
(a)
(a)
(a)
(a)
4.80 (b)
$4.80
4.80
7.56
2.76
U.S.
(a) New York
State,
1874
(b) Mass.,
1874
$15.34 (a)
15.90 (a)
15.78 (a)
17.70 (b)
15.75 (b)
15.00 (b)
9.00-11.00 (a)
60 hour week.
Source: Data compiled from tables on individual countries and locales in Edward Young, Labor in Europe and America,
Washington,
1875.
TABLE II: Cost of Subsistence: Selected Items, Working Class Family, circa 1873*
w
~
t:l.
0
Canada
Average in
Ontario,
1874
England
Sheffield,
1872
Germany
Frankfort,
1874
Belgium
Antwerp,
1872
France
Marseille,
1874
Sweden
Stockholm,
1873
U.S.
New York
State,
1874
Items
5"
S·
-a
~
::;..
r;'
~
Q
:::
Flour (per bushel)
Bacon (per lb.)
Lard (per lb.)
Cheese (per lb.)
Potatoes (per lb.)
Fuel, coal
(per ton),
Hard wood
(per cord)
Rent, (per month,
four rooms)
$6.00
.13
.17
.16
.562/3
8.33
$8.00-8.57
.16- .20
.18
.14- .20
.16- .20
(per stone)
3.14
3.50
4.50
.18
.16- .32
.26
.36
7.20
$9.00
.15
.20
.16
.75
8.00-9.00
4.00
3.36-4.32
7.50
8.00
$ .04
(per lb.)
.20
.25
.22
.01 (per lb.)
1/2
su.ooe
.14b
.16
.20
.60
6.20
$9.12
.14
.17
.18
Q
~
3/4
1/2
1/2
.77
7.88
5.00c
8.00
5.27
5.00
4.ood
8.50
-----
• All figures in U.S. gold currency equivalents.
a) best flour; b) salt pork; c) in Nice, France; d) two rooms.
Source: Data compiled from tables on individual countries and locales in Edward Young, Labor in Europe and America,
Washington,
1875.
Leo Panitch/DEPENDENCY
AND CLASS
TABLE III: Comparative Weekly Wage Rates: Railroad Companies,
U.S. and Canada, 1874
Canada
(Grand Trunk)
United States
(General Average)
$15.00
10.00
18.00
5.70-10.00
15.00-16.50
14.50
$15.49
10.83
14.35
8.86
15.45
16.27
Occupation
Machinists
Firemen
Boilermakers
Labourers
Blacksmiths
Pattern Makers
Source: Data compiled from tables on U.S. and Canada in Edward Young, Labor
in Europe and America, Washington, 1875.
It is unclear from Young's tables whether the U.S. rates for Labourers includes
Labourers in the track department
as the Canadian figures here do. If only
Labourers in the locomotive and car departments are consjdered for Canada, the
rate would be $8.50-$10.00.
NOTES
This article is a substantially revised and elaborated version of an address on
"Imperialism,
Dependency and the Canadian State", given at the conference on
"The American Empire and Dependent States" at the University of Toronto,
Nov. 18-19, 1977. For his very persistent encouragement that the notes for this
lecture should be developed into article form, I must thank David Wolfe. Wallace
Clement, Colin Leys, Rianne Mahon and Allan Moscovitch also made useful
criticisms and suggestions on a first draft of the article, as did Kristen Ostling,
whose considerable
help in the construction
of Tables I and 11 should be
particularly acknowledged.
I Kari Levitt, Silent Surrender (Toronto 1970), 20.
2 Harold \ Innis, Essays in Canadian Economic History, M.Q. Innis, ed.,
(Toronto 1956),407.
3 "The central thesis of our argument is that the subsidiaries and branch plants
of large American-based
multinational
corporations
have replaced the
operations of the earlier European-based
mercantile venture companies in
extracting the staple and organizing the supply of manufactured goods. In the
new mercantilism, as in the old, the corporation based in the metropole directly
exercises the entrepreneurial
function and collects a 'venture profit' from its
investment. It organises the collection or extraction of the raw material staple
required in the metropolis and supplies the hinterland with manufactured
goods, whether produced at home or 'on site' in the host country."
Levitt,
Silent Surrender, 23-4.
4 T. Naylor "The rise and fall of the third commercial empire of the St. Lawrence," in G. Teeple ed., Capitalism and the National Question in Canada
(Toronto 1972), 3. Cf. W. Clement, Continental Corporate Power (Toronto
1977), 17.
31
Studies in Political Economy
5 A. Gunder Frank, Lumpen Bourgeoisie: l.umpen Development (New York
1972), 19.
6 Clement, Continental Corporate Power, 129. For Naylor's methodology, more
generally put, but identical in substance, see "The rise and fall," 2, 24.
7 Naylor, "The rise and fall," 3.
8 Levitt, Silent Surrender, 27-8.
9 Quoted in Silent Surrender, 26.
10 Clement, The Canadian Corporate Elite, 74-5, emphasis added. For Naylor,
see fn.31 below.
II See J. McCallum, Unequal Beginnings (Toronto 1980), 110.
12 One of the confusing aspects of the new Canadian political economy (most
marked in Naylor's work) is the tendency to refer to the fraction of the
capitalist class engaged in circulation activities (e.g. banking) as "finance
capital"
(in contrast with the "industrial
capital"
fraction engaged in
production).
In most common Marxist usage, however, "finance capital"
refers not to a fraction of the capitalist class, but to a stage of capitalism, or at
least to an aspect of its historical development, whereby the concentration of
capital leads to the coalescence, through monopolies, of banks and industry.
Clement usefully criticized Naylor on his confusing terminology and drew the
necessary distinctions between "financial capital" (the class fraction) and
"finance capital" (the stage of "corporate
capitalism")
in The Canadian
Corporate EWe, 42, fn.22. Unfortunately in his text he still slipped sometimes
into Naylor's usage, as is seen in the long passage from Clement quoted above.
13 Levitt, Silent Surrender, 28.
14 Naylor, "The rise and fall", 2.
15 Clement, Canadian Corporate Elite, 95, fn.16.
16 Of all the work in Canadian political economy on dependency in the 1970's, I
believe that only Glen Williams' outstanding short article "Canada - The
Case of the Wealthiest Colony," This Magazine, 10: I (Feb.-Mar. 1976), comes
close to unravelling the historical roots of our "rich dependency" status. It is
one of the saddest comments on our intellectual progress that this article has
been so badly neglected in subsequent work. I find it almost incomprehensible
that when "the best of the essays printed in This Magazine" over the years
1974-79 were collected in book form (D. Drache ed., Debates and Controversies, Toronto 1979), Williams' highly original and critically important essay
should have been left out. My own debt to the essay should be apparent in the
argument that follows.
17 R. Brenner, "The Origins of Capitalist Development: A Critique of NeoSmithian Marxism." New Left Review, 104, (July-Aug. 1977),59-60.
18 Marx, Capital, III (Moscow 1959), 772, emphasis added.
19 It should be noted that while only 13"70of the Canadian labour force was in
manufacturing
in 1870, in the United States in 1860, on a much more
developed industrial base already, the comparable figure was only 18"70. See
Clement, Continental Corporate Power, 41, 50.
20 H.A. Innis, "The Importance of Staple Products" in W.T. Easterbrook and
M.H. Watkins, Approaches to Canadian Economic History (Toronto 1967),
16-17.
21 See McCallum, Unequal Beginnings.
22 Edward Young, Labour in Europe and America, A Special Report on the
Rates of Wages, the Cost of Subsistence and the Condition of the Working
Class in Great Britain. Germany, France, Belgium and other Countries of
Europe. Also on the United States and British America (Washington 1875).
23 Taking Young's data for the early 1870s as the starting point, see H .A. Logan,
"Labor Costs and Labor Standards"
in H.A. Innis ed., Labor in CanadianAmerican Relations, Toronto, 1937, and Allan A. Porter and Others, Wages in
32
Leo Panitch/DEPENDENCY
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
AND CLASS
Canada and the United States, Canada Department of Labour, Occasional
Paper No.6, 1969.
See esp. B.D. Palmer, A Culture in Conflict, Skilled Workers and Industrial
Capitalism in Hamilton. Ontario, 1860-1914 (Montreal 1979), and G. Kealey,
Toronto Workers Respond to Industrial Capitalism,
1867-1892 (Toronto
1980).
Kealey, Skilled Workers, especially chaps. I and 9. Cf. P. Craven and
T. Traves, "The Class Politics of the National Policy, 1872-1933," Journal of
Canadian Studies, 111;3, (Fall 1977).
Kealey, Skilled Workers, 16.
M. Wilkins, The Emergence of Multinational Enterprise: American Business
Abroad from the Colonial Era to 1914 (Cambridge Mass. 1970), 143-4.
M. Wilkins, The Maturing of Multinational
Enterprise: American Business
Abroad from 1914 to 1970 (Cambridge Mass. 1974),379.
R.T. Naylor, "Dominion of Capital: Canada and international investment" in
A. Kontos ed., Domination (Toronto 1975), 52.
R.T. Naylor, "Dominion of Capital", 60.
Clement, Continental Corporate Power, 95-6.
See J. Britton and J. Gilmour, The Weakest Link, A Technological Perspective
on Canadian Industrial Underdevelopment,
Science Council of Canada, Background Study 43 (Ottawa 1978), 68-9, Figures 1I1.1 and 1II.2.
H. Braverman, Labour and Monopoly Capital (New York 1974).
Britton and Gilmour, The Weakest Link, 71.
Britton and Gilmour, The Weakest Link, 75, Table 1I1.3; 79, Table 1II.6.
L. Panitch, "The role and nature of the Canadian state" in Panitch ed., The
Canadian State (Toronto 1977), 17.
N. Poulantzas, The Crisis of the Dictatorships (London 1976),45.
See L. Pratt, "The state and province-building:
Alberta's development strategy" in Panitch, The Canadian State, 133-62; and J. Richards and L. Pratt,
Prairie Capitalism (Toronto 1979).
Clement, Continental Corporate Power, 299-300.
I. Lumsden
"Thoughts
on Canadian
Dependency",
This Magazine,
9
(Nov.-Dec. 1975),44-5 (reprinted in Drache, Debates and Controversies).
S. Moore and D. Wells, Imperialism and the National Question in Canada
(Toronto 1975), esp. 99-116.
Harold Innis, Political Economy in the Modern State, (Toronto 1946), xii.
Innis, Political Economy. This attitude is exemplified in Drache's claim that
Macpherson's
writings on liberal democracy as a general system since
Democracy in Alberta prove that his interests "lie elsewhere"
than in
Canadian political economy. His contribution is taken to be "international"
and this is apparently proof that his "intellectual milieu remains very much
part of British scholarship."
It seems that the British can take the world as
their oyster and yet remain British, but Canadians must only study the
particularities of Canada (are we not a liberal democracy?) to qualify as part of
the Canadian intellectual milieu. See Daniel Drache "Rediscovering Canadian
Political Economy"
in W. Clement and D. Drache, A Practical Guide to
Canadian Political Economy (Toronto 1978), 48, fn.22.
Innis, Political Economy, ix-x.
33