On
Determining
Canada's
Location
Within the
International
Political
Economy
GLEN WILLIAMS
N
oting that the United States government had refused
to allow the U.S. branch plants of Canadian companies to sit on its free trade talks advisory committees
for "national security" reasons, New Democratic Party (NDP)
trade critic Steven Langdon questioned in the fall of 1986 why
the Canadian government had appointed at least fifteen representatives of U.S. subsidiaries to sit on Canada's trade advisory committees.
postulate
granted
that
Grounded
both
foreign
in our
and
the same status as Canadian
ister of State for International
StudiesinPoliticalEconomy
state elite's decades-old
domestic
firms
"corporate
Trade
25, Spring 1988
should
be
citizens," Min-
Pat Carney
refused
to
107
-
Studies in Political Economy
be drawn. Instead, she matter-of-factly affirmed that her appointments of representatives
from the multinationals would
serve to clarify the Canadian national interest in trade matters;
"We have appointed representatives
to our trade committees
because we want to ensure the broadest possible consultation
with all sectors of Canadian industries, Canadian provinces,
and Canadians generally on the issues before the negotiators
to ensure a free trade agreement which meets the concerns of
all Canadians ....
I and the Government approve of the process of consultation on a national issue which affects all Canadians."'
For the first time since the nationalist glory years of the
early 1970s, the free trade debate has brought to the fore the
need for a clear theoretical determination
of Canada's location
within the international
political economy. How are we to
interpret the debate, or even exchanges like that of Carney
and Langdon,
without a clearly reasoned position on the
manner in which, at a minimum, the U.S. and Canadian social
formations stand in relation to each other?
Generally speaking, three positions on the place of Canada
in the international hierarchy have dominated thinking within
the post-1960s revival of Canadian political economy. Two have
been antagonists, while the third has sought refuge in middle
ground. On the one hand, the dependency school has argued
that Canada is an economic colony with a client state, while in
the class-analysis view, only Canada's historical specificity separates it from other advanced Western societies and polities.
Moderates have temporized
that Canada shares features of
both the dominant and dominated tiers in the world capitalist
economy and, depending on the weight of their analysis, have
frequently gone on to suggest that Canada is progressing or
regressing in one direction or the other.
It is in their analysis of how the Canadian state relates to
foreign capital that these three positions have demonstrated
their greatest weaknesses. While the dependency position captured the centrality of foreign capital to Canada's accumulation
process, its single-minded
focus on the "national question"
tended to reduce analyses of the state to rather mechanical
accounts of the facilitation and legitimation of Canadian subordination by a comprador bourgeoisie. Neo-Marxist class approaches offered far greater sophistication in exploring the
108
Williams/Political
Economy
totality of state-society relations, but most often either explicitly
or implictly premised their work on the belief that Canada's
social formation was in essence little different than that of
Britain, France or Sweden. Since the positions of the moderates were derived from an attempt to combine insights from
both dependency and class analyses, these accounts reflected,
rather than advanced upon, the theoretical shortcomings of
their progenitors.
There has also been a much less well-known fourth view.
In contrast to both the dependency
and class frameworks,
which posit the nation-state as their basic unit of analysis, this
fourth approach interprets Canada as a lesser political, economic and cultural region incorporated
within a succession of
powerful empires. Accordingly, Canada is seen to mirror in
her own particular fashion the political and socio-economic
formations characteristic
of the centre of these empires. In
one dimension, the Canadian liberal-democratic
and federal
state system serves as a locus of struggle for competing social
classes and provincial and national elites. In a second related
dimension, the state system serves as a point of balance for
the political instability that attends our standing both inside
and outside of empire. It is in this second dimension that the
federal and provincial states carry out their roles in focusing,
mediating, protecting and developing the regional position of
the Canadian social formation within the continental political
economy.
Viewing Canada as a lesser region of the centre can provide
a useful vantage point from which political economists can
begin to make sense of the present conjuncture, with its turn
to the political right. This rightward turn can be most obviously seen in the free trade negotiations, which point both to
the erosion of Canada's more progressive social policies and
the further institutionalization
of our position as a relatively
low-wage, low-skill ghetto within North America. It can also
be discovered in the Meech Lake consensus on weakening the
constitutional powers of the federal state. Before we can turn
to a fuller elaboration and appreciation of the robust analytical
power of this fourth approach, however, we must first place it
in the context of a careful review of thp three previously
mentioned
hierarchy.
approaches to locating Canada in the international
For reasons that we will soon discover, Innis, the
109
Studies in Political Economy
most important figure in classical Canadian political economy,
has also played a central role in the framing of this question
for those in the new political economy.
Innis and Canada's Position in the International Political
Economy Innis held a clear, if somewhat imprecise (by contemporary
standards),
view of hierarchy within the international political economy and Canada's location within this hierarchy.
He mapped
human
history as a succession
of
"civilizations" marked by "empires" which arose within them
and determined
the character of their development.
When
civilizations collided, it could be with devastating consequences
for the economy and social organization of the weaker ones.
Recent centuries had been dominated by "Western civilization;' composed of Europe and its overseas colonies of settlement. Western civilization's progress had been fuelled, at least
to some extent, by the unbalanced relationships it had developed
with the rest of the world.
Innis
wrote
in a general
comment:
European civilization lived off the intellectual capital of Greek
civilization, the spiritual capital provided by the Hebrew civilization,
the material capital acquired by looting the specie reserves of
Central American civilizations, and the natural resources of the
New World .... The enormous capacity of Western civilization to
loot has left little opportunity for consideration of the problems
which follow the exhaustion of material to be looted. But this
civilization has shown continual concern in the common man and
in the distribution of loot."
In the Americas, Innis observed how the European search for
gold had harnessed the labour of "the aborigines" of Africa
and North America. For the former, this had meant plantation
slavery» For the latter, this had resulted in a near-genocidal
catastrophe "for which no remedy was adequate":
The fur trade was a phase of a cultural disturbance incidental to
the meeting of two civilizations with different cultural traits. The
demand for a more efficient route to the interior, the struggle with
the Iroquois, the modification of trade organization, the limited
growth of the colony, and the disappearance of native peoples were
phases of the catastrophe which swept over the northern furproducing areas of North America.'
110
Williams/Political
Economy
Within Western civilization, Innis's attention was drawn
primarily to the "Anglo-Saxon world." This research focus has
important implications for understanding
his view of the international political economy. British imperialism, in contrast
to other European empires, had linked a high wage, settler
economy to the institutions
necessary for the evolution of
liberal democracy:
The expansion of Great Britain was in terms of the migration of
Englishmen and the development of industries, either, as in the
northern colonies, by using English labour in the production of
bulky commodities or, in the tropical regions, by organizing imported labour on a large scale for the production of sugar and
cotton. Spanish feudalism and militarism exploited native labour
primarily for precious metals, and French feudalism for furs ....
But British maritime expansion meant parliamentary institutions
and decentralization characteristic of the Anglo-Saxon world."
The Anglo-Saxon economies became characterized by an "emphasis on consumer's goods and the use of advertising as a
device for persistently educating the consumer to a higher
standard of living.?« Mass economic participation
reinforced
mass political participation:
Precisely because of the character of its commercial civilization the
Anglo-Saxon community, especially in North America, has linked
trade to opinion. Advertising has become an integral part of the
activities of the press with vital implications to opinion. Political
activity and trade are facets of this civilization. This background
implies a distinct and possibly unbridgeable gap between AngloSaxon and other European communities .... In Anglo-Saxon countries the spread of democracy has accompanied the penetration of
politics."
Innis never tells us that Canada is anything but a full
member in the North American branch of the Anglo-Saxon
community within Western civilization. Indeed, as if in fear of
how his work might later be misinterpreted,
he declared that
"fundamentally
the civilization of North America is the civilization of Europe" and specifically located his intellectual project in opposition to "the stress placed by modern students on
the dissimilar features of what has heen regarded
as two
separate civilizations.?» And so: "Migration of [the] European
population to North America was successful insofar as it was
111
Studies in Political Economy
accompanied
by methods of producing foodstuffs demanded
by this population,
that is by European agriculture
with its
emphasis on mixed farming-domesticated
animals and cereals.?« And: "Not to be British or American but Canadian is
not necessarily to be parochial. We must rely on our own
efforts and we must remember that cultural strength comes
from Europe,"!»
And even: "The history of the Canadian
Pacific Railroad is primarily the history of the spread of Western civilization over the northern
continent." I I
half of the North American
This is not to suggest that Innis saw Canada as being at
the "centre" of Western civilization. After a decade and a half
of the new Canadian political economy, we are all by now very
much aware that he saw us at the "margin" and that our
economic history was viewed has having been "dominated by
the discrepancy between the centre and the margin of Western
civilization,":« We should also be familiar with the many economic disadvantages
that Innis believed were associated with
our marginal status-most
notably, that Canada's staple export
specialization and relative industrial backwardness meant that
our pace of economic development was vulnerable because it
was conditioned
by the shifting demands of more advanced
industrial centres for our resource products.n
Innis's portrayal of weaknesses in the Canadian position,
however, can only properly be understood within the context
of his international
schema, in which Canada stood prominently amongst those at the centre of the world political
economy. Whatever the "handicaps" flowing from our impossible geography, plentiful resources, and scanty population,
Western civilization had developed, not underdeveloped, Canada.
To illustrate:
The structure of the Canadian economy was an extension of the
European or British economy, with a consequent increase in efficiency guaranteed
by cheap water transport, imperial preferences,
and the opening of new resources. It was handicapped
by the
extent of government
intervention,
the rigidity of government
indebtedness,
railway rates and tariffs, and dependence on a commodity subject to wide fluctuations in yield and price. I I
Even though
in response
112
"no country
has swung backwards
to such factors as improvements
and forwards
in the technique
Williams/Political
Economy
of transport, exhaustion of raw materials and the advance of
industrialism with such violence as Canada," Innis noted, "the
elasticity of Canada's political, economic, and social structure"
cushioned the blows of cyclical resource development
and
allowed the country to adapt.» Always central to this process
of adaptation was the Canadian state.ie This "elasticity" also
allowed the "new" or "frontier" countries of Western civilization to progress on the base of the earlier industrialization of
the older centres. "Industrialization of the new countries, given
suitable political and social organizations," Innis wrote, "tends
to become cumulative-the
United States became industrialized more rapidly than Great Britain, and Canada more rapidly than the United States. The more recently the country
has been industrialized, the more rapid tends to become its
industrialization."
At the same time, Innis held that the character of this industrialization
tended to reinforce the relative
resource specialization of the new countries by increasing their
capacity to be more efficient producers of raw materials.!"
On the other hand, the prospects of the underdeveloped
tropical-resource-export
political economies were portrayed as
bleak. Their comparatively inelastic character made them far
more vulnerable in the world economy than the new countries:
The demand for salt cod in tropical and Catholic countries has
been more directly exposed to the effect of fluctuations in economic
activity incidental to regions producing tropical commodities. These
tropical products, being luxuries, are subject to wide variations of
demand from countries in the temperate zone. Such variations are
due to many things-to
cyclical business disturbances; to the influence of mechanization
on tropical commodities as, for example,
citrus fruits, bananas, sugar, and coffee; to the weakness of government machinery in countries whose peoples have low standards
of living, as is made evident in bankruptcies, exchange rates, and
revolutions ....
Demand for luxury products fluctuates sharply, as
it does for dried cod, whereas fluctuations in the cost of provisions
and supplies such as flour, salt pork, and salt beef from temperate
continental areas have been less pronounced. I"
Innis was not elaborating a theoretical model of economic
exploitation or underdevelopment
of the new countries like
Canada. His, rather, was an inquiry directed toward understanding
the regional relationships within that same civilization.
Unquestionably,
because the new countries
followed the pace
113
Studies in Political Economy
and pattern of industrial development set in more advanced
centres, the regional relationship was asymmetrical. But in
economic development, as measured by productivity and living
standards, and in political development, as measured by liberal
democracy, the centre and margins of Western civilization were
largely equivalent. The asymmetry was also balanced to some
degree by the reciprocal way in which economies of the new
countries and the centre caused "disturbances" for each other.
While Innis's views on the manner in which the changing
demand by the centre for our staples presented Canada with
structural problems and a series of adjustment crises are by
now well known, it is still not sufficiently appreciated that his
focus also encompassed the disruptive effects of staple production on the centre:
The peculiar geographic setting of Canada has made its economy
a source of disturbance to the economies of other countries. The
enormous importance of water navigation and the vastness of the
Precambrian
formation have necessitated concentration
on large
scale production of basic commodities and intense pressure on the
markets of other countries. The markets of Europe were bombarded in turn with such staple products as fur, timber and wheat
and of the United States with minerals and newsprints. Wheat
production, supported by energetic governmental assistance, brought
a revolution in British agriculture and led European countries to
impose barriers or to undergo revolutions. Pulp and paper production supported by provincial governments facilitated the rapid
growth of advertising in the United States, and contributed to the
problems of industrialism
and the destruction of a stable public
opinion.!v
One final area which must be sketched in examining Innis's
view of Canada's position in the international political economy
is the nature of the continental relationship between Canada
and the United States. Following the establishment of a European civilization in North America, the continental economy
became separated into three distinct areas: a northern Canadian territory which developed as a region within the British
economy; a diversified centre which achieved industrialization;
and a southern region producing cotton for Europe. After the
U.S. civil war, the southern region was integrated in a "sub-
ordinate"
relationship
with the North American centre, 'Just
as;' after World War I, "the northern
114
fur-producing
area ...
Williams/Political
Economy
producing the staples, wheat, pulp and paper, minerals, and
lumber [tended] to be brought under its influence'v" Canada
then, while remaining within Western civilization, simply shifted
its regional focus from one Anglo-Saxon empire to another.
It is quite true that Innis became increasingly concerned
with the deleterious effects of Canada's entry into the orbit of
the American empire. It could scarcely have been otherwise
as Innis was himself a witness to the chaotic manner in which
the Great Depression had exaggerated the strains of the transition from a British to a U.S. focus for Canadian economic
activities. One must also remember that in his schema, structural problems and adjustment crises always seemed more of
a feature of life at the margins than at the centre. Nevertheless,
there is little to suggest that he believed we were any more
likely to be "underdeveloped"
by this new association than by
the old. The "Siamese twin" metaphor
that Innis uses to
describe the essential unity of the continental
economy III
respect to trade, capital and wages is a telling one:
The Siamese twin relationship between Canada and the United
States-a very small twin and very large one, to be exact-is evident
not only in the exports from Canada and the United States but
also in the establishment of branch plants in Canada, important
wage levels, for example in railway labour, competitive railway
rates, movement of liquid capital, ownership of government securities, and the temporary migration of tourists, to mention significant relationships.n
What, then, are we to make of the oft-cited "Great Britain,
the United States and Canada" essay published at the end of
Innis's career, in which he railed against U.S. imperialism in
Canada? "American imperialism has replaced and exploited
British imperialism," he wrote, and "Canada has had no alternative but to serve as an instrument
of British imperialism
and then of American imperialism.'w
In interpreting
the significance of these passages, it is important to keep in mind
that Innis had no precise definition of "imperialism"
and
certainly did not apply it in a Leninist sense. Suggesting nothing more than its general dictionary sense of aggressive cultural, political, economic, military or diplomatic behaviour on
the part of one nation
toward
to time in a variety of contexts
another,
he used it from time
in his work. As Reg Whitaker
115
Studies in Political Economy
has pointed out, it would be incorrect to read into his work
"a consistently anti-imperialist
bias. On the contrary, balanced
empires sum up what is best in human aspiration.t'w
Innis
from time to time even referred
policy">
to Canada's
"mild imperialistic
American
economic imperialism
in Canada was certainly
one of the concerns that Innis displayed in this famous essay,
but it was not toward this aspect of imperialism that his antiAmerican
passions in this instance were primarily directed.
The "dangerous"
conduct of U.S. military and diplomatic affairs was, instead, the target for which his most cutting criticism was reserved. Innis had been deeply disturbed
by the
loss of life in the two world wars which had deprived Canadian
"democracy"
of the "energy" and "vigorous effective leadership" of young men. "The basic post-war problem," he wrote,
"is that of stopping the loss of blood or the problem of peace."
Innis believed that the wars represented
"the breakdown
of
Western civilization" and partially blamed them on "instability"
manufactured
by the press.ss Developed in the U.S., the "new
journalism,"
with its dependence
on attracting advertising, had
played an important
role in emphasizing
international
instability as a means of increasing circulation.e' Indeed, the mechanized transmission of information which characterized
American society degraded Western civilization and threatened world
peace.s? Further: "Surely the lowest ebb in any civilization was
reached when it was possible to threaten the lives of thousands
of people with atomic bombs, with scarcely a protest in the
interest of common humanity've
In "Great Britain, the United States and Canada," Innis
linked his analysis of journalism
and international
instability
to a critique
political
policy":
of the manner
system
led to the
in which the populist
"military
domination
American
of foreign
In the Anglo-Saxon world we have a new mobilization of force in
the United States with new perils, and all the resources of culture
and language of the English-speaking peoples, including those of
the United States will be necessary to resist it. In the crudest terms,
military strategy dominated by public opinion would be disastrous.
The future of the West depends on the cultural tenacity of Europe
and the extent to which it will refuse to accept dictation from a
foreign policy developed in relation to the demands of individuals
116
Williams/Political Economy
in North America concerned with re-election. American foreign
policy has been a disgraceful illustration of the irresponsibility of
a powerful nation which promises little for the future stability of
the Western world.w
Canada was also implicated by Innis in the development of
this "peril." In keeping with the reciprocal manner in which
staple "disturbances" were manifested in both the centre and
margin, he observed at the beginning of this essay that
newsprint production in Canada is encouraged, with the result that
advertising and in turn industry are stimulated in the United States,
and it becomes more difficult for Canada to compete in industries
other than those in which she has a distinct advantage. Increased
supplies of newsprint accentuate an emphasis on sensational news.
As it has been succinctly put, world peace would be bad for the
pulp and paper industry.w
Appropriating Innis: The Dependency School Although a
faithful interpretation of Innis's views on any topic is never
the easiest of tasks, those who participated in the establishment
of the new political economy rendered his opinions on Canada's position in the international political economy in a decidedly one-dimensional fashion. It need not have happened this
way. Mel Watkins, one of the leaders of the revival, had
published in 1963 an account of staples theory which closely
mirrors the manner in which Innis developed his own beliefs:
The staple theory is ... not ... a general theory of economic
growth, nor even a general theory about the growth of export._oriented ~bolJ.omie_s,
but rather [is] applicab~~:::l;.b...~-ilt}'1.'lj€!!~:-t')(l~.
of the new country. The phenomenon of the new country, of the
"empty" land or region overrun by the white man in the past four
centuries, is, of course, well known. The leading examples are the
United States and the British dominions. These two countries had
two distinctive characteristics as they began their economic growth:
a favourable man/land ratio and an absence of inhibiting traditions
.... These conditions and consequences are not customarily identified with underdeveloped countries, and hence are not the typical
building blocks of a theory of economic growth. Rather, the theory
derived from them is limited, but consciously so in order to cast
light on a special type of economic growth."
Had he maintained it at the centre of his work, this interpretation of the staples approach as a special theory of eco117
Studies in Political Economy
nomic
growth
branded
that
could
Watkins
economy.
During
characterized
be applied
a heretic
to Canada
its formative
years, three
perspective
themes
a Third
on the development
have
political
important
this school: an Innis connection;
dependency
would
in the new dependency
World
of Canadian
derdevelopment;
and a weak Canadian
a client Canadian
state. These three themes were often logically
connected
by the political
Americanism,
The early
submitted
project
anti-imperialism,
that
tic." "It is perplexing
nationalist
theme
in reading
of American
Harold
and Creighton
historians
acter
observed.w
was "imperialis-
were an "essential"
who wish to understand
as a resource-extractive
imperial
rialism
powers.T"
argues
nationalism
for
between
ories were drawn.
Innis's
economies.?>
and dependency
of the Latin American
approach
Ian Parker contended
colonial
relations,
margins."36 John
Hutcheson
has been
dependent
explained
from
the
economists
in de-
to American
staple
fundamentally
under
economies.T"
of colonial
of a 'peripheral'
'centre' countries.">?
staple-oriented
dependent
capitalism
from developing
which char-
standpoint
noted that "Innis showed us" that
Innis's view that "Canada's
gin relations
the-
that Innis analyzed "more
in the position
on a series of imperial
would remain
prevented
anti-impe-
of a Canadian
than Marx had the forms of dependency
"Canada
char-
on outside
that "Innis's
necessity
scholarship
veloping a 'metropolis-periphery'
118
continuing
dependent
Kari Levitt wrote that "Innis was the chron-
ological antecedent
acterize
that Innis
point for socialist
"Canada's
the
to
of the left."34
Parallels
deeply
starting
country
and
by the Cana-
Laxer argued
Watkins suggested
powerfully
of Canada
in this country
unnoticed
James
Drache
Innis's writings in the
imperialism
realize that his work went apparently
dian left," Drache
anti-
and "resolutely
that continentalism
I930s and the 1940s on the political economy
on the
them:
with Innis citations.
that Innis was a Canadian
believing
underlay
managing
and socialism.
1970s were littered
anti-American,"
bourgeoisie
un-
because
country,
Drache
economy
centre-mar-
are such that dependencies
into self-generating
are
industrialized
Williams/Political
Economy
Innis and the Latin American school were seen as having
legitimacy because they were both located outside of the hegemony of U.S. scholarship. Watkins observed:
I think that the way in which the Latin-American economists have
developed this [metropolis-hinterland] schema for purposes of
studying Latin America have probably generated more useful insights and more useful models than, certainly, those we have in
Canada, with the exception of some of the things that Innis said.
My argument here is that if we want to study the Canadian
condition, we would be much better off reading what Latin Americans write, or reading what Europeans write, when faced with
American penetration than anything we will ever learn by reading
what American social scientists write about. There is virtually no
literature produced by Americans on multi-national corporations
that can be taken seriously.... :\'1
This theme also figures in the more recent work of Watkins.
Claiming that orthodox "branch plant" economists in Canada
"ignored and suppressed
the essence of Innisian theory because it was necessary to do so to avoid facing its implications
of inherent tendencies toward hinterland dependency," he goes
on to argue that
there has been a revival of interest in Innis precisely because of his
understanding of Canada's sateIIitic position, his distrust of orthodox economics and ... his nationalism when it mattered. In the
context of the revival of political economy and the right-wing bias
of the dominant monetarist, or neo-conservative economics, Innis
became, by default, the property of the left.
III
And so, by invoking Innis, we were brought to a Third
World dependency
perspective
on Canadian underdevelopment. The essence of the many arguments that were made in
support of the underdevelopment
thesis are all too familiar
and need not be repeated in detail here. They centre around
a statistical series of economic indicators related to foreign
investment, export and import trade, and the manufacturing
sector, which when comparatively
profiled show considerable
similarity with the indicators presented by semi-industrialized
developing countries.
Levitt built the prototype of this method of applying dependency analysis to Canada, concluding that it demonstrated
our "regression to a condition of underdevelopment
in spite
119
Studies in Political Economy
of continuous income growth,"!' The contradiction at the heart
of the "rich, industrialized,
underdeveloped"
formula, however, always left it exposed to attack. The central problem for
the dependency school's case for Canadian underdevelopment
lay in accounting for all the other obvious economic indicators
of our high-wage location within the international
hierarchy.
Some, like Cy Gonick, merely argued that Canada had "stopped
developing.?« Hutcheson warned that Canadian development
was "threatened." "The succession of capitalist development by
underdevelopment
has been a common fate for many regions
of capitalist countries; as the history of the Maritimes testifies,"
he pointed out; "In fact, as the example of Argentina may
show, this is a fate which can be visited upon whole countries/'<' J. Laxer attempted to make an empirical case for "deindustrialization"
resulting from the U.S. domination of Canadian manufacturing.«
Drache saw Canada being brought to
the "point of collapse ... on a not too distant horizon" and
concluded that "Canada's status has regressed from that of a
semi-centre economy to a semi-peripheral
one."~'
Canadian economic underdevelopment
was directly linked
by the new dependency political economy to an "underdevelopment" of the Canadian bourgeoisie and the weakness of
"their" state. Levitt opined that "Canada provides a dramatic
illustration of the stultification of an indigenous entrepreneurial class" by foreign capital.« Watkins wrote that Canada was
dependent "because a full-blown industrial capitalist class does
not emerge." He reasoned that "the only obstacle to independent capitalism was foreign domination; the obverse of this, is
that the failure to remove that obstacle, as in Canada, is
sufficient to explain-indeed
it defines-the
persistence of
dependency'vr
Drache asserted that "the Canadian bourgeoisie
have never sat at the high table as an industrial bourgeoisie
in their own right. A colonial bourgeoisie gains admittance to
the club for its weakness, not its strength." "Their national
programmes
reflect a simple design," he clarified, "making
Canadian resources cheap and accessible to British and American capitalists.ve
R.T. Naylor became the leading figure within
the cult of the enfeebled Canadian capitalist class. In his highly
influential 1972 account, dependence and underdevelopment
in Canada could be fathomed as the unfortunate
result of the
playing out of a form of species hostility toward independent
120
Williams/Political
Economy
industrialists on the part of the dominant, but colonized,
merchants and financiers who organized Canadian resource
capiralism.w
A weak and dependent capitalist class was matched with an
"underdeveloped" Canadian state that functioned in their hands,
and in the hands of foreign capital, as an instrument of
dependency. Gonick remarked:
The developing continentalization of Canada has led to the deterioration of Canada as a nation-state. The policies which guide the
direction of Canada's cultural and economic future emanate more
and more from Washington and from the board rooms of the
multinational corporation in New York, Chicago, and Detroit. Consequently, it has been the task of Canadian governments to administer this country and its provinces as a region and as sub-regions
of the great American metropolis.50
J.
Laxer spoke of the "informal American imperial control of
the Canadian state" and of 'American capitalist control of the
Canadian state both directly by American corporations and
indirectly through the military and political sway of the U.S.
state over Canada .... "51 Gary Teeple was puzzled by those
who hold that "Canada is a politically independent state" when
one remembers that "little control of industry lies in the hands
of Canadian capitalists." "The appearance of autonomy is illusory," for "this nation has the trappings of independence but
not the reality because politics under capitalism are ultimately
subordinate to the amassing of capital by individuals and
corporations, the most powerful of which in this country are
American.t'es Naylor argued that merchant and financier control of the Canadian state enabled them to defeat their industrialist rivals at the price of collaborating with U.S. branch
.plants in their own eventual subordination as American capital
came to dominate Canadian economic life. This "ruling class
of the hinterland" became "virtually irrelevant to the management of the northern periphery of the continental system." .~
Canadian capitalist state cannot survive," he concluded, "because it has neither the material base nor the will to survive,
the former contributing substantially to the latter.?»
The political project which underlay the academic analysis
of the dependency school was at once Canadian nationalist
and socialist. "An anti-imperialist struggle is the only way to
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Studies in Political Economy
break through the tight circle of Canadian history," Drache
wrote; ''Anti-imperialism,
anti-capitalism and Canadian independence are an inseparable unity,">' In their pursuit of this
project, the dependency
school claimed both lineage from,
and the legitimacy of, the Innis staples approach. Some of the
more significant points of divergence between the dependency
school and Innis on the question of Canada's position in the
international political economy can now be summarized. Where
Innis was concerned with understanding
the relationship between the centre and marginal regions of "Western civilization," the dependency school drew its insight from a perspective that inquired into the relations between the centre and
periphery of the world capitalist economy. Where Innis suggested reciprocal "disturbances"
attend centre-margin
relations, the dependency
school proposed exploitation. Where
Innis set out a model of economic growth under structural
constraints, the dependency
school suggested aborted development or a tendency toward underdevelopment.
Finally, where
Innis attached great importance to the Canadian state as an
adaptive mechanism during adjustment crises, and to liberal
democracy as an essential characteristic of the ''Anglo-Saxon
world," the dependency school reduced the state to an instrument subject to the control of external forces.
These points of divergence take on special significance in
the light of a recent attempt to present Innis's work as a more
formal theory of underdevelopment
that can be considered "a
natural bridge between neo-classical economic theory and
Marxist theory of dependency."
Drache has proposed that
Innis be read as a "general theory" of peripheral capitalism
and, inspired by "Innis's insights," he has consolidated this
theory into a ten-item "staple mode of development." Suggesting that Innis divided the international political economy into
two regions-a
centre and a periphery-Drache
drew parallels
between the work of Innis and the Third World economist,
Samir Amin:
There is a striking similarity between Innis's theory of rigidities
and Arnin's theory of extroversion. Even though one must tread
cautiously and avoid superficial comparisons between developed
dependency and stark underdevelopment, Innis and Amin share
a common perspective in their respective efforts to discover the
dialectic of incomplete development and the complex means by
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Williams/Political
Economy
which centre economies have been able to impose through intensive
specialization a division of labour on periphery formations .... In
language which echoes Innis's reasoning, he explains how a country
at the periphery has a narrow range of productive activities and
expansion of the economy via export-led growth in primary resources means that indebtedness grows faster than income."
When Innis's own view that Canada stood prominently at the
centre of the world economy is combined with the realization
that Amin himself has specificallyclassified Canada as a central
formation, and that an application to Canada's case of Arnin's
''structural characteristics of underdevelopment" confirms our
centre status, the unintended irony in Drache's argument is
breath-taking. 56
Drache's "general theory" does not appear to come from a
strict reading of Innis himself. Rather, Drache seems to read
theories of dependency and underdevelopment into Innis,
interpreting selected passages as if Innis had indeed been a
scholar of dependent "peripheral capitalism." For example, the
following description by Innis established a reciprocal relationship between "disturbances incidental to dependence on staples" in Canada and "difficulties within Canada and without":
The disturbances incidental to dependence on staples, including
the essential importance of governmental support, created difficulties within Canada and without. Concentration on large-scale
production of single staples involved sharp fluctuations in output
which bombarded with violent intensity the international economy,
to mention especially the case of wheat. The study of the Canadian
economy becomes of crucial significance to an understanding of
cyclical and secular disturbances not only within Canada but without. In a sense the economies of frontier countries are storm
centres to the modern international econorny.s?
Drache, however, rendered this passage as an assertion by
Innis that economic development in the centre and periphery
of the world economy are subject to different laws which
feature development for the former purchased at the expense
of the latter:
Innis argued that the equilibrium model of the price system only
accounted for development in the advanced economies of the
international price system.'When Innis says that the periphery "is
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Studies in Political Economy
the storm centre to modern economies," it is a statement referring
to the long-term trends of international capitalist development
from the perspective of the periphery. The periphery is subject to
another dialectic, the dialectic of equilibrium/disequilibrium, with
the stability of the centre economies resting on the disequilibrium
economies at the margin .... At the periphery labour, capital, and
resources were exploited by the centre in a trade arrangement
which constituted normal market behaviour for the imperial economy, but had the effect of depriving the periphery of capital and
resources to revolutionize its own mode of production.ss
Successors to the Dependency School The intellectual hegemony of the dependency
school within the new Canadian
political economy fell into serious decline toward the end of
the 1970s. However, an important aspect of its discourse continued to define the character of many of the neo-Marxist
class approaches
that succeeded it. Using a model derived
from theories of imperialism, the dependency
school sought
to represent Canada's position as the result of a lost, aborted
or foregone
conflict between national capitals. This, as we have
observed, set it far apart from Innis's conception of Canada
as a regional staples case within the empires of "Western civilization." We will soon see that Innis's regional theme has been
modified and redeveloped
as one perspective
in the postdependency
era. However, the more orthodox
neo-Marxist
scholars that came to dominate
the new political economy
regularly passed over the thorny questions surrounding
ada's unique location within the international
hierarchy.
when class analysis did contest directly the dependency
tion, it typically remained
within the theoretical
CanAnd,
posi-
framework
of
imperialism, simply arguing that Canada has an intermediate
or higher rank in the ongoing conflict of national capitals.
The dependency
school and the more orthodox neo-Marxist approaches
have also commonly shared an inability to
theorize adequately on the Canadian state by putting together
a full account of the unique specificity of its internal and
external dynamic. Put simply, the study of the political economy of Canada, whether employing "multinationals"
or "classes" as the primary units of analysis, has often suffered through
the subjugation
opment
of economic and socio-economic
dependency
124
of its political world through
school
has portrayed
the overdevel-
categories.
the Canadian
Where the
state as an
Williams/Political Economy
instrument of foreign capital, the neo-Marxist school has too
frequently highlighted the instrumental use of our federal and
provincial state structures by various fractions of the Canadian
capitalist class. Neither has been particularly adept at coming
to terms with the exceptional and problematic nature of Canadian state sovereignty. Historically, this sovereignty has been
politically defined through elite and class struggle over various
images of Canadian nationality in civil society, and expressed
through the state system's historic role in reproducing the
Canadian accumulation process through bargaining the regional relations of empire.sv
A brief survey of the three distinct perspectives on Canada's
position in the international political economy which developed
outside of the dependency school will serve to illustrate these
general points. The reader must be cautioned that the categories which are created here, like the "dependency school"
above, are meant only as an analytic shorthand to guide our
discussion of the development of these ideas within the new
Canadian political economy, not as prisons for their occupants.
Canada the Intermediary Those who have approached the
question in this fashion have suggested that the tendency for
Canada to be imperialized is largely balanced by our participation in imperialism. This perspective utilizes primarily economic and social variables in its analysis, attempting to account
for indicators of both weakness and strength in the structure
of Canadian production, trade, and capital investment, and in
the composition of the Canadian bourgeoisie. Accordingly, it
seeks to accommodate within itself the arguments and the
evidence of both those who hold that Canada is a dependency
and those who believe Canada to be a fully developed socioeconomic formation.
Tim Draimin and Jamie Swift first launched this perspective
within the new Canadian political economy in 1975. Working
from research on Canadian investment in Brazil, they argued
that Canada, along with Israel, Iran and South Africa, should
be considered "sub-imperial powers," neither wholly developed
or wholly underdeveloped. On the one side, Canada's relationship to world capitalism and to the U.S. has fragmented its
internal economy. On the other, it acts as an economic "troubleshooter for American imperialism." They submitted that "Can125
Studies in Political Economy
ada is very successfully able to utilize the conventional
mechanisms of imperialism (aid, trade and investment) to drain
resources
from Latin America and the Caribbean
for the
ultimate benefit of the main imperialist centre, the United
States.w
The most important intellectual figure within the new political economy adopting the intermediary perspective has been
Wallace Clement. Because his approach to this question has
been thoroughly eclectic, his vision is far wider than others in
this group. For example, he alone has attributed some significance to the political realm in classifying Canada's position in
the world economy, although it is not a theme he systematically
pursues. "Canada is not a puppet state," he noted, "because it
is a liberal democracy, a society which maintains a distinction
between public and private power.?«: Concentrating
his research on capital flows and the composition of the Canadian
and U.S. economic elites, Clement concluded that Canada's
position in the "world system of inequality is ambiguous."
Located midway in the world economic system, it is both a
receiver and a sender of multinationals.
However, "taking a
broad view of the world order, it is clear that Canada sits
firmly among the advantaged."62 As an alternative to the dependency perspective, he has proposed Galtung's "go-between
nation theory" as a way of identifying "both Canada's specific
location within the continental economy and its general world
position":
Certain members of the Canadian economic elite ... are integrated
into the world order in two distinct ways: as go-betweens of foreign,
predominantly United States, interests and through their own indigenously controlled corporations. Canada has a rather unique
role as mediator of foreign-controlled capital, as holder of its own
foreign investments, and as host to extensive foreign investment.
Thus a framework differing somewhat from the one emerging
from the dependency literature is needed for placing Canada in
the world systern.w
P. Ehrensaft
place Canada
and W. Armstrong
have recommended
in a group of five "dominated
they call "dominion
capitalist"
countries:
that we
economies"
Canada,
which
Australia,
New Zealand, Argentina and Uruguay. These are located within
the international
126
political economy
at the top of an interme-
Williams/Political
Economy
diate "semi-industrial"
category between the "dominant capitalist societies" and the "periphery"
of the world economy.
Because of the structural weaknesses of their economies, these
countries face an inherent tendency toward "declassification."
Ten characteristics of dominion capitalism are set out. Briefly,
these can be summarized,
on the one side, as indicators (including high wages) which display these countries' "fundamental character as an extension of the European
social space"
and, on the other hand, as indicators of their "truncated
economic base."64 Curiously, given the rather obvious parallel,
state structure is not treated as one of the characteristics
of
dominion
capitalism.
Instead, state policy is treated as an
extension of the economic policy of the bourgeoisie, mediated
only partially by the social and political expressions of other
classes.ss
More recently, Jorse Niosi has argued that Canada should
be seen as a "semi-industrial"
country with an "intermediate"
position in the international
political economy. As a consequence of this intermediate
position, the Canadian bourgeoisie
is fragmented
with a "comprador"
fraction linked to foreign
capital and a "national" fraction controlling domestic capital
and mainly interested in finance, commerce, resources, service
and transportation.
The national bourgeoisie is dominant with
a ''continental
or rentier nationalism"
development
strategy,
concentrating on competing with their many financial and nonfinancial industries in the North American market while buying back foreign subsidiaries in the resource sector.w When
discussing the manner in which this development
strategy is
operationalized,
Niosi presents us with a less-than-complex
model of the political relations between state and society:
Although the Canadian bourgeoisie is highly divided as a social
group, its indigenous element ... has succeeded in establishing
itself as a ruling class. It directly controls half the state apparatus,
namely the crown corporations, in alliance with the senior state
elite. . .. Continental nationalism is a development strategy constructed jointly by senior state managers such as Herb Gray and
Marc Lalonde, and intellectual leaders of Canadian business such
as Walter Gordon and Senator Molson. It has not been imposed by
the state (something business would not have accepted), nor by
business leaders. It is in fact a compromise that has been worked
out between the more conservative elements of Canadian business,
who want less government intervention, and the more nationalist
127
Studies in Political Economy
wing of industry and the upper state bureaucracy, who advocate a
full-fledged industrial policy,w
Canada the Advanced Imperialist Those who have approached the question from this position argue that Canada
is itself a minor imperialist nation presenting, in most respects.
the normal profile of any fully developed socio-economic formation. Like the "intermediary" perspective, it utilizes primarily economic and social variables in its analysis, but argues that
any weaknesses in the structure of Canadian production, trade
and capital investment, and in the composition of the Canadian
bourgeoisie, are far outweighed by growing strengths in all
these areas. As a consequence, this perspective has dismissed
as an epiphenomenal consideration the central line of general
agreement between Innis and all the other approaches in the
new political economy-that Canada cannot be understood
outside of its relationship with more-advanced metropolitan
markets. David McNally, for example, has categorized the
staples approach as ''commodity fetishism-the attribution of
creative powers in the historical process to the staple commodity as a natural and technical object." He has contended that
"it is high time that the fetishistic preoccupation with staples
was abandoned in favour of a concentration on class formation
and capitalist development in Canada. And it is high time that
vulgar materialism was supplanted by historical materialisrn/'ss
This perspective first made its appearance within the new
Canadian political economy literature in 1975. Rejecting completely the analysis of the dependency school, Steve Moore
and Debi Wells classified Canada as a "secondary imperialist
power," along with Federal Republic of Germany, Japan. Britain, and France-although they conceded that Canada was
"near the bottom of the barrel." Nor did they accept the thesis
that Canada is a "sub-imperial" power like Israel or South
Africa, for these countries lack an "independent economic
basis." An analysis of a series of statistical indicators relating
to the structure of the Canadian economy and Canadian investment led them to conclude
that Canadian monopoly capitalism is well developed and highly
concentrated; that the Canadian bourgeoisie is holding its own in
home market expansion; that foreign control of the Canadian
economy is declining slowly on a relative percentage basis in recent
128
Williams/Political
Economy
years; that Canada's industrial growth statistics are comparable with
other imperialist countries; that there is a substantial Canadiancontrolled section of the bourgeoisie that has large numbers of
branch plants abroad; that Canadian investment is rapidly increasing in the Third World; and that there has been a much more
rapid increase in Canadian investment abroad than in foreign
investment in Canada. Equally as important, we have challenged
the left-nationalist counter-historical tendency of deindustrialization. We have shown it to be a temporary phenomena linked to
the world-wide recession of 1969-71.6"
Moore and Wells argued that the "strategy" of the Canadian
bourgeoisie in relation to the inter-imperialist struggle was to
"increase its control of natural resources at home and abroad
as an economic base for buying back Canadian subsidiaries of
foreign firms and purchasing new multinationals abroad." This
will set the stage for heightened "inter-imperialist rivalry between the U.S. and Canada" in the future.?v
During the 1980s, William Carroll. has developed similar
themes. Hypothesizing that "to the extent that a fraction of
Canadian capital manifests a capacity to control its own extended reproduction, we may entertain the possibility of a
national bourgeoisie with some degree of autonomy from
foreign dependence, and of an independent Canadian imperialism," he has examined statistical data sets on foreign ownership and interlocking directorships in post-1945 Canada.n
His results indicate that indigenous Canadian capital has controlled not only Canada's financial sector, but a steadily growing portion of the country's industrial sector as well. In addition, he pointed to a "dramatic" increase in the value of
Canadian-controlled investment abroad. On this basis, he reasoned that,
on balance, Canada seems to present the example of a middlerange imperialist power in an era of thoroughly internationalized
monopoly capitalism. The post-Second World War pattern of accumulation makes it clear that a focus on Canadian dependency
ascribes increasing significance to a phenomenon that has been in
decline. This decline is both relative to other advanced capitalist
economies, as monopoly capital has further internationalized, and
absolute, as the proportion of Canadian industrial capital under
U.S. control has dropped while indigenous capital exports have
continued to expand.»
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Studies in Political Economy
Phillip Resnick has been a convert to this perspective from
the dependency
school. Reviewing a statistical set similar to
Carroll's, he has explained that while it might have been
possible a decade ago to use a Latin American dependency
model when describing Canada, because of its excessive degree
of foreign ownership and "American client state" status, both
Canadian capitalists and the Canadian state have now "come
of age." This has been the result of the many dislocations in
the international
economy in the 1970s and 1980s, the "maturing of Canadian corporate capitalism;' and "the emergence
of the Canadian state as the mid-wife of economic development."73 He has cautioned that the new political economy
should now
break with an analysis that spoke in terms of dependency and
assumed the hegemonial role of foreign ownership in this country
. . .. The left must begin to see Canadian capitalism as a First
World capitalism analogous to metropolitan capitalisms like the
U.S., Western Europe, or Japan. Foreign ownership is no longer
the Achilles heel of Canadian capitalism, and the left should not
delude itself that attacking it will open the door to socialism. The
strategy of the Waffle and of left nationalism makes absolutely no
sense in the 1980s.74
Canada Within the Centre This perspective evokes Innis's
views by treating Canada as a lesser region within the centre
of the international political economy, rather than focusing on
its place in the inter-imperialist
struggle of national capitals.
Placing stress on the decisive role played by cultural and
political variables in determining the structure and content of
our socia-economic formation, this approach reads the Canadian political economy through the prism of its links with
more advanced regions.
Like the other two perspectives, this one first emerged in
the mid-1970s as a critique of the dependency school. In 1976,
I suggested that the comparisons between Canada and poor
Third World resource exporters, repeatedly indulged in by
nationalist political economists, were misleading because they
accounted for neither the basically autocentric nature of our
economic structure
nor the long-term stability of Canada's
position
near the top of the international
(as measured
130
by living standards).
This
hierarchy
"rich"
of wealth
basis to our
Williams/Political
Economy
social formation, I argued, was the direct result of Canada
having been developed historically as an extension of the
centre:
Canada and the other white Dominions stood in sharp contrast to
the colonies of conquest and impoverishment. The colonies of
settlement were developed as overseas extensions, miniature replicas, of British society, complete with a large measure of local
political autonomy. In terms of the standard of living, Britons who
emigrated did so for the most part freely, induced by relatively
high wages and opportunities to improve their material conditions'?'
This thesis was elaborated by a presentation of Arghiri
Emmanuel's contention that the relatively high wage levels in
the white dominions of the nineteenth century accelerated
these countries' industrialization.tv By his account, high wages
created consumer demand through a rich internal market and
forced industries to invest in labour-saving machinery to increase productivity (in order to remain competitive with lowwage countries). Following a discussion of how, around the
turn of the twentieth century, the question of "high wages"
had received political expression through debates on tariff and
immigration policies, this article was concluded with the observation that Canadian political economists should begin to
pay greater attention to the "political implications" of our
position at the centre of the world order. 77
Five years later, Leo Panitch developed and extended in
several essential new directions the "implications" of white
settler colonization: "We can't understand the place of a society
in terms of economic dependence alone," he suggested; "Sociopolitical distinctions, domestic political institutions must enter
the picture as well."78Panitch made three original and valuable
contributions to the debate. To begin, he drew attention to the
central importance of the continental labour market in conditioning wages, industrialization, and class conflict in Canada.ts Panitch further observed that possession of the institutions of liberal democracy have framed and determined our
position in relation to both the centre and periphery of the
world order. Finally, he suggested that it is not a "client" state
working on behalf of foreign capital, but rather the popular
culture of our continent that "sustains American imperialism
within Canadian society"- .
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Studies in Political Economy
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 education system. Just as it is by virture of a
cultural hegemony in 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.w
Gordon Laxer has recently suggested that "we must go
beyond the givens of geography and external influence and
look at the role of Canada's internal social formation" if we
are to understand the incomplete character of Canadian economic development. During the formative period before the
end of World War I, Canada,
by volunteering to be a "Dependency of the Empire;' ... did not
develop strong armed forces. The Empire, along with America's
Munroe Doctrine, it was thought, would protect Canadian independence. Thus the strategic factor providing the strongest motive
for blocking foreign ownership in other countries failed to operate
in Canada during the formative period of initial industrialization
. .. the state discarded the first line of defence against foreign
ownership and technological dependence by choosing to be a British dependency.e!
The commercial capitalism that thrived on the imperial connection and dominated this formative period, G. Laxer adds,
was not threatened by popular nationalist movements, as it
had been in other countries, because of sectional divisions in
Canadian society and the relative weakness of the agrarian
classes.
My own inquiry into the arrested nature of Canadian industrial development contends that it was an initial location
within the British Empire that accounted for its peculiar import substitution character while its later organization as a
regional extension of continental industrial production rendered its modern branch plant [orm»» In a parallel archival
survey of Canadian production and trade in the new industrial
staples of oil, nickel, and forest products, Melissa Clark-Jones
has concluded that since 1960 the Canadian state has been
"formalizing the relationships of a mode of production" she
calls "continental resource capitalism." This has involved "treat132
Williams/Political
Economy
ment of the Canadian political economy as a specialized (resource-producing)
adjunct to the American
political economy."S3 In this regard, a number of excellent studies in the
new Canadian
political economy document
the active role
played by provincial states in promoting the interests of local
or sub-regional social formations within the fluid production
regime of the continental econorny.w
Indeed, when investment, production,
and trade are considered, the Canadian economy may now be usefully conceptualized as a geographically large zone within the U.S. economy.
While itself regionally divided, this zone has until now maintained the capacity to reproduce
its own unique social and
political formations rooted in various popular and elite conceptions of a distinct Canadian nationality and culture.ss As
continental
economic integration
has grown, however, farreaching constraints on the ability of the federal and provincial
states to challenge the power of America in Canada with
nationalist programmes
have resulted, not only from the primacy of the continental relationship in economic policy-making, but also from the continentalist
definitions of the Canadian national interest found both generally within civil society
and especially amongst our state elites.
While the formal autonomy of the Canadian state which
makes possible nationalist initiatives has not until very recently
been directly challenged,
nationalist threats to the continentalist status quo have very often been forestalled, muted, or
repudiated
at a later point after a concerted campaign of
pressure
by U.S. multinationals
and the U.S. government.
These campaigns need never step outside the normal decision
rules of Canadian liberal democracy, but can simply utilize all
the many points of political access and leverage available within
a multi-party, executive-dominated,
federal system. Pat Carney's statement at the beginning of this article strikingly illustrates that in making their representations,
Canadian branches
of multinationals are typically accorded the same legitimate
"corporate citizen" status by state elites as domestically owned
firms. This allows foreign firms to press with vigour their own
(continentalist)
version of the Canadian national interest. As the
fate of the Trudeau government's
early 1980s nationalist initiatives on the Foreign Investment Review Act (FlRA) and the
National Energy Program (NEP) vividly demonstrate,
key to
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Studies in Political Economy
the success or failure of American pressure campaigns is the
degree to which fractions within the executive class of our
bureaucracy, the Cabinet, and the leadership of our political
parties resonate within their own decision forums the multinationals' arguments for a continentalist vision of the Canadian
national interest.e« Key, as well, is the manner in which the
maintenance or cultivation of the global continental relationship can hold even nationalist Canadian policy-makers hostage
on specific issue disputes.
Curiously, this decade's most serious challenge to the continentalist project has come from within the American state,
where national and continental interests are more easily disaggregated. This challenge has come in the form of actual
and anticipated protectionist trading measures. In the face of
serious and unfavourable international trade dislocations, U.S.
politicians have sought to respond to both general discontent
over the lack of American industrial competitiveness and specific complaints about Canadian producers being able to take
advantage of favourable exchange rates in recent years. In
keeping with its mandate to protect the regional position of
the Canadian social formation within the continental political
economy, in 1985 the Canadian state system petitioned the
U.S. to enter into a free trade agreement to protect the
continentalist economic status quo.
Now that a free trade deal has been signed, our political
and economic elites are deeply divided over whether it will
retain for the Canadian state system sufficient sovereign capacity to represent effectively a distinct regional position for
the Canadian socio-economic formation. Even the Canadian
continentalist camp is fractured. This is scarcely surprising
when the very limited nature of the mostly symbolic trade
concessions granted by the American state to preserve the
southward flow of Canadian goods is considered in the light
of the quite substantial Canadian undertakings on energy and
the regulation
of foreign investment.
Some of the more
thoughtful continentalists have now begun to make common
cause with the nationalists believing that these undertakings
go too far in constraining the traditional ability of our state
and economic elites to use the Canadian federal and provincial
governments as levers in prising out a share for themselves
within continental production. Others are supporting the deal
134
Williams/Political Economy
out of fear that its rejection will allow the state interventionist
nationalists to seize the initiative. For example, Gordon Bell,
president of the Bank of Nova Scotia, has warned that if the
agreement is scuttled, free trade opponents will seek "more
vigorous use of subsidies, quotas, regulations and governmental decisions as to winners and losers-all those Government instruments that the free-trade agreement would proscribe."87
Conclusion In reference to the debate on "Canada's posiuon
within the circuit of international capital" that we have just
reviewed, Paul Phillips has recently argued that "given the
importance of understanding the nature of Canada's past
economic development to the on-going free trade debate in
the context of the contracting American economic empire and
a stagnant Canadian and world economy, it is important that
some kind of resolution take place-soon." Phillips has further
suggested that no resolution of the debate between the dependency and neo-Marxist approaches is possible "without
incorporating perspectives from both schools."88
The "Canada within the Centre" approach is neither as well
known nor as explicitly developed in the literature as its
competitors. It can nonetheless usefully serve, if not as a point
of intersection or reconciliation, at least as an indigenously
generated framework for the productive re-evaluation of the
new Canadian political economy's first generation of analytic
models derived from the study of European or Latin American
experiences. It would do this by asking the partisans of the
dependency and orthodox neo-Marxist positions to be more
sensitive to the positive implications of employing a spatial
focus giving primacy to the regional relations of empire, rather
than assuming that Canada relates in the first instance to the
international political economy through the struggle between
national capitals. As with the dependency model, the "Canada
within the Centre" perspective demands the consideration of
the spatial dimensions of uneven development. However, these
considerations are not at all incompatible with the deeper
insights provided by the more sophisticated neo-Marxist literature addressing- the internal dynamic of our socio-economic
formation. Indeed, because of the central role given by this
approach to political, cultural, and social institutions in repro135
Studies in Political Economy
ducing Canada as a region within the centre, such sophistication is essential.
Notes
I. Canada, House of Commons, Debates, 6 October 1986, pp. 101-2.
2. H.A. Innis, "On the Economic Significance of Cultural Factors," in idem,
Political Economy in the Modern State (Toronto, 1946), P: 102. See also idem,
"The Political Implications of Unused Capacity," in idem, Essays in Canadian
Economic History (Toronto, 1956), pp. 372-3.
3. H.A. Innis, The Cod Fisheries: The History of an International Economy, rev. ed.
(Toronto, 1978), p. 50 I.
4. H.A. Innis, The Fur Trade in Canada, rev. ed. (Toronto, 1970), pp. 42, 83.
5. Innis, "On the Economic Significance of Cultural Factors," p. 88. (See n. 2
above.)
6. H.A. Innis, "Reflections on Russia," in idem, Political Economy in the Modern
State, P: 259. (See n. 2 above.)
7. Innis, Political Econom» in the Modern State, pp. 122-3.
8. Innis, The Fur Trade in Canada, p. 383. (See n, 4 above.)
9. H.A. Innis, "The Historical Development of the Dairy Industry in Canada,"
in idem, Essays in Canadian Economic Histor», p. 211. (See n. 2 above.)
10. H.A. Innis, "The Strategy of Culture," in idem, Changing Concepts of Time
(Toronto, 1952), p. 2.
II. H.A. Innis, A History of the Canadian Pacific Railway (Toronto, 1971), pp. 287,
294.
12. Innis, The Fur Trade in Canada, p. 385.
13. G. Williams, Not For Export: Toward a Political
Econom» of Canada's
Arrested
updated ed. (Toronto, 1986), pp. 130-7.
14. H.A. Innis, "Economic Trends in Canadian-American Relations," in idem,
Essays in Canadian Economic Histot», pp. 234-5.
15. H.A. Innis, Problems of Staple Production in Canada (Toronto, 1933), pp. 82,
Industrialization,
88.
16. This is a theme
17.
18.
19.
20.
21.
repeated throughout Innis's work on Canada. For an
introduction to his views, see his "Government Ownership and the Canadian
Scene" and "Decentralization and Democracy," in idem, Essays in Canadian
Economic His/01)"
Innis, Problems of Staple Production in Canada, pp. 90-2. (See n. 15 above.)
Innis, The Cod Fisheries, p. 493. (See n. 3 above.)
H.A. Innis, "Preface," in idem, Political Economy in the Modem State, pp. ix-x.
Leo Panitch has also drawn attention to Innis's "appreciation of imperialism
as a contradictory phenomenon" in his "Dependency and Class in Canadian
Political Economy," Studies in Political Economy 6 (Autumn 1981), P: 28.
Innis, The Fur Trade in Canada, p. 393.
Innis, "Economic Trends in Canadian-American Relations," p. 238. (See n.
14 above.)
22. H.A. Innis, "Great Britain, the United States and Canada," in idem, Essays
in Canadian E({)nomic Hisun», pp. 395, 405.
23. R. Whitaker, "To Have Insight into Much and Power Over Nothing': The
Political Ideas of Harold Innis," Queen's Quarterlv (Autumn 1983), p. 828.
136
Williams/Political
Economy
24. For example: "Having exhausted our more available resources, we may
continue to thrive by sharing in the exhaustion of the resources of less
industrialized parts of the Empire and the world. Our mild, imperialistic
policy will look for new territory. British imperialism was brought face to
face with Canadian imperialism at the Imperial economic conference." See
Innis, Problems of Staple Production in Canada, p. 121. Also: "The character
of Canadian imperialism became evident in the growing insistence on nationalism shown in the defeat of the Reciprocity Treaty, in the peace treaty
of Versailles, in the Statute of Westminster, and finally in the acquisition of
Newfoundland. It would not be difficult to collect a series of slogans comparable to those of the United States illustrating our imperialistic ambitions."
See H.A. Innis, "Roman law and the British Empire;' in idem, Changing
Concepts of Time, pp. 69-70 (see n. 10 above). See also idem, "Great Britain,
the United States and Canada;' p. 411 (see n. 22 above).
25. H.A. Innis, "The Problems of Rehabilitation;' in idem, Political Economy in
the Modem State, p. 57.
26. H.A. Innis, "The Press, A Neglected Factor in the Economic History of the
Twentieth Century;' in idem, Changing Concepts of Time.
27. H.A. Innis, Empire and Communications (Toronto, 1972), pp. 169-70.
28. Innis, "Roman law and the British Empire;' p. 70. (See n. 24 above.)
29. Innis, "Great Britain, the United States and Canada;' p. 412. Further discussion of the theme of militarism in U.S. politics can be found in Innis's
"Military implications of the American constitution" and his "Roman law
and the British Empire;' in idem, Changing Concepts of Time.
30. Innis, "Great Britain, the United States and Canada;' p. 396.
31. M.H. Watkins, ''A Staple Theory of Economic Growth;' in Approaches to
Canadian Economic History, ed W.T. Easterbrook and M.H. Watkins (Toronto,
1967), p. 53. Watkins, in his capacity as a leading member of a dependency
school obsessed with Canadian "underdevelopment;' lost interest in developing the lnnisian position of the Canadian political economy as a special
type of centre political economy in the world hierarchy. To his credit,
however, this perspective did not disappear entirely from his analysis. After
completing his work with the Dene in the mid-1970s, Watkins suggested a
scenario in which "the aboriginal population, which we would have to assume
was much larger, had not been easily pushed to the margins of society,
geographically and socially.Rather than being a 'colony of conquest' analogous to those of Asia and Africa. Or it might have been a 'white settler
colony' proper, like the Union of South Africa or Rhodesia. Or it might
have been a mixed case such as abound in Central and South America. In
any event, Canadian development would have been different and much
more difficult. A pre-capitalist indigenous population that could not be
ignored would be reduced to underdevelopment, and either slowlyconverted
to the capitalist mode of production or contained by massive repression and
discrimination. We would not have our very high average standard of living;
though the European stock-if it had not yet been turfed out-might be
doing very well. Methodologically,there would be no special case amenable
to the literal staple theory." M. Watkins, "The Staple Theory Revisited;'
Journal of Canadian Studies (Winter 1977), p. 90.
32. D. Drache, "Harold Innis: A Canadian Nationalist," Journal of Canadian
Studies (May 1969), p. 7; and idem, "The Canadian Bourgeoisie and Its
National Consciousness;' in Close the 49th Parallel, etc.: The Americanization of
Canada, ed. I. Lumsden (Toronto, 1970), p. 24.
33. J. Laxer, "The Political Economy of Canada;' in (Canada) Ltd.: The Political
Economy of Dependency, ed. R. Laxer (Toronto, 1973), p. 28.
137
Studies in Political Economy
34. M.H. Watkins, "The Dismal State of Economics in Canada," in Lumsden,
Close the 49th parallel, pp. 205-6. (See n. 32 above.)
35. K. Levitt, Silent Surrender: The Multinational Corporation in Canada (Toronto,
1970), p. 46.
36. 1. Parker, "Harold Innis, Karl Marx and Canadian Political Economy," Queen's
Quarterly (Winter 1977), p. 561.
37. J. Hutcheson, Dominance and Dependency: Liberalism and National Policies in the
North Atlantic Triangle (Toronto, 1978), p. 28.
38. D. Drache, "Rediscovering Canadian Political Economy;' in A Practical Guide
to Canadian Political Economy, ed. W. Clement and D. Drache (Toronto, 1978),
p.14.
39. M.H. Watkins, "The Branch Plant Condition," in Canadian Confrontations:
Hinterland vs. Metropolis, ed. M. Davis (Edmonton: Western Association of
Sociology and Anthropology, 1969), p. 39.
40. M. Watkins, "The Innis Tradition in Canadian Political Economy," Canadian
Journal of Political and Social Theory (Winter/Spring 1982), pp. 21, 26.
41. Levitt, Silent Surrender, p. 48. (See n. 35 above.)
42. C.W. Gonick, "Foreign Ownership and Political Decay," in Lumsden, Close
the 49th Parallel, p. 59.
43. J. Hutcheson, "The Capitalist State in Canada," in R. Laxer, (Canada) Ltd.,
pp. 166-7 (see n. 33 above). See also idem, Dominance and Dependency, pp.
26-8 (see n. 37 above).
44. J. Laxer, "Manufacturing and U.S. Trade Policy,"in R. Laxer, (Canada) Ltd.
45. D. Drache, "Canadian Capitalism: Sticking with Staples," This Magazine (julyAugust 1975), p.IO; and idem, "Rediscovering Canadian Political Economy,"
p. 41 (see n. 38 above).
46. Levitt, Silent Surrender, p. 58.
47. M. Watkins, "Economic Development in Canada;' in World Inequality: Origins
and Perspectiveson the World System, ed. 1. Wallerstein (Montreal, 1975), p. 75.
48. Drache, "The Canadian Bourgeoisie," pp. 19-20. (See n. 32 above.)
49. RT. Naylor, "The Rise and Fall of the Third Commercial Empire of the St.
Lawrence," in Capitalism and the National Question in Canada, ed. G. Teeple
(Toronto, 1972). Naylor subsequently shifted his thesis onto somewhat higher
ground, suggesting that it was the imperatives of commercial capitalism,
rather than the machinations of mercantile-financial capitalists per se, that
stultified Canadian industrial capitalism, rather than capitalists: "The strength
of commercial capitalism in Canada was the result of the British colonial
connection and together they served to lock the Canadian economy into the
staple trap. The domination of the Montreal commercial community in the
colonial economic and political structure was the outgrowth of the pattern
of dependence, and the stultification of industrial entrepreneurship followed
from their control of the state and state policy.... " See idem, The History
of Canadian Business 1867-1914 (Toronto, 1975), 2:283.
50. Gonick, "Foreign Ownership and Political Decay," p. 69. (See n. 42 above.)
51. Laxer, "The Political Economy of Canada," p. 35. (See n. 33 above.)
52. G. Teeple, "Introduction," in idem, Capitalism and the National Question in
Canada, p. x. (See n. 49 above.)
53. Naylor, "Rise and Fall of the Third Commercial Empire," p. 36. (See n. 49
above.)
54. Drache, "The Canadian Bourgeoisie;' p. 22.
55. D. Drache, "Harold Innis and Canadian Capitalist Development," Canadian
Journal of Political and Social Theory (Winter/Spring 1982), P 49.
56. S. Arnin, Accumulation on a World Scale: A Critique of the Theory of Underdevelopment (New York, 1974), 1:297; G. Williams, "Canada-The Case of the
138
Williams/Political
Economy
Wealthiest Colony," This Magazine (February-March 1976), pp. 29-30; and
Williams, Not For Export, pp. 3-4 (see n. 13 above).
57. H.A. Innis, "The Political Implications of Unused Capacity," in idem, Essays
in Canadian Economic History, p. 382.
58. Drache, "Harold Innis and Canadian Capitalist Development," pp. 41-2. (See
n. 55 above.)
59. I gratefully acknowledge Leo Panitch's assistance in clarifying this view of
Canadian sovereignty.
60. T. Draimin and J. Swift, "What's Canada Doing in Brazil?" This Magazine
(January-February 1975), p. 7.
61. W. Clement, Continental Corporate Power: Economic Elite Linkages between Canada and the United States (Toronto, 1977), p. 300. See also p. 14.
62. Ibid., pp. 131, 289.
63. Ibid., pp. 23-4.
64. P. Ehrensaft and W. Armstrong, "The Formation of Dominion Capitalism:
Economic Truncation and Class Structure," in Inequality: Essays on the Political
Economy of Social Welfare, ed. A. Moscovitch and G. Drover (Toronto, 1981),
pp.99-103.
65. Ibid., pp. 143. Armstrong has recently moved away from the "dominion
capitalist" position and now stresses the "political, economic and cultural
chemistry developed between each society of European settlement and the
dominant power of the nineteenth century, Great Britain [which] locked the
economic development of each society into the expansion of the century's
industrial, financial and commercial giant." See his "Imperial Incubus: The
Diminished Industrial Ambitions of Canada, Australia, and Argentina, 18701930" (Conference paper, McGill University Department of Geography, February 1987).
66. J. Niosi, "The Canadian Bourgeoisie: Towards a Synthetical Approach,"
Canadian journal of Political and Social Theory (Fall 1983), pp. 133, 141-2.
67. J. Niosi, "Continental Nationalism: The Strategy of the Canadian Bourgeoisie," in The Structure of the Canadian Capitalist Class, ed. R. Brym (Toronto,
1985), p. 63.
68. D. McNally, "Staple Theory as Commodity Fetishism: Marx, Innis and
Canadian Political Economy," Studies in Political Economy 6 (Autumn 1981),
pp. 38, 57.
69. S. Moore and D. Wells, Imperialism and the National Question in Canada,
(Toronto: privately published, 1975), pp. 92-3.
70. Ibid., pp. 96-7.
71. W. Carroll, "The Canadian Corporate Elite: Financiers or Finance Capitalists," Studies in Political Economy 8 (Summer 1982), p. 90.
72. W. Carroll, "Dependency, Imperialism and the Capitalist Class in Canada,"
in Brym, Structure of the Canadian Capitalist Class, p. 45. P. Stevenson critically
comments on the underdeveloped notion of the state in both Carroll's and
Niosi's work in his "Capital and the State in Canada: Some Critical Questions
on Carroll's Finance Capitalists," Studies in Political Economy 12 (Fall 1983).
73. P. Resnick, "The Maturing of Canadian Capitalism," Our Generation (Fall
1982), pp. 11-2.
74. Ibid., p. 22.
75. G. Williams, "Canada-The Case of the Wealthiest Colony," This Magazine
(February-March 1976), p. 30.
76. A. Emmanuel, Unequal Exchange: A Study of the Imperialism of Trade (New
York, 1972).
77. Williams, "Canada-The
Case of the Wealthiest Colony;' p. 32. (See n. 75
above.)
139
Studies in Political Economy
78. Panitch, "Dependency and Class;' p. 26 (see n. 19 above). For a disappointingly rhetorical and misdirected critique of this article see D. Drache, "The
Crisis of Canadian Political Economy: Dependency Theory Versus the New
Orthodoxy;' Canadian Journal of Political and Social Theory (Fall 1983).
79. Panitch, "Dependency and Class;' pp. 19-20. The manner in which the
continental labour market affected the Canadian political economy was also
a theme of considerable interest to Innis. See, for example, The Cod Fisheries,
pp. 152, 425; and "Labour in Canadian Economic History;' in his Essa»s in
Canadian Economic History, pp. 196-9.
80. Panitch, "Dependency and Class;' pp. 26-7.
81. G. Laxer, "Foreign Ownership and Myths About Canadian Development,"
Canadian Review of Sociology and Anthropology
(August 1985), p. 336; and
idem, "Class, Nationality and the Roots of the Branch Plant Economy;'
Studies in Political Economy 21 (Autumn 1986), pp. 46-7. See as well his
"Political Economy of Aborted Development: The Canadian Case;' in Brym,
Structure
of the Canadian
Capitalist
Class.
82. Williams, Not For Export, chaps. 2, 6.
83. M. Clark-Jones, A Staple State: Canadian Industrial Resources in Cold War
(Toronto, 1987), pp. II, 211.
84. See, for example, W. Coleman, The Independence Movement in Quebec, 19451980 (Toronto, 1984); P. Marchak, "The Rise and Fall of the Peripheral
State: The Case of British Columbia," in Regionalism in Canada, ed. R. Brym
(Toronto, 1986); H.Y. Nelles, The Politics of Development: Forests, Mines and
Hydro-electric Power in Ontario, 1849-1941 (Toronto, 1974); and,.J. Richards
and L. Pratt, Prairie Capitalism: Power and Influence in the New West (Toronto,
1979).
85. Williams, Not For Export, chap. 9. See as well my "Canadian Sovereignty and
the Free Trade Debate;' in Knocking at the Back Door: The Political Economy of
Canada-U.S.
Free Trade, ed. A.M. Maslove and S.L. Winer (Halifax: Institute
for Research on Public Policy, 1987).
86. For relevant discussions of this point see S. Clarkson, Canada and the Reagan
Challenge (Toronto, 1982); G.B. Doern and G. Toner, The Politics of Energy:
The Development and Implementation of the NEP (Toronto, 1985); and Williams,
Not For Export, chap. 8. Prime Minister Mulroney recently indicated how the
pursuit of the continentalist vision guided the Conservative government's
dismantling of FlRA and the NEP during the early years of its regime: "We
did not do that because we were doing the Americans a favour;' he argued;
"We did that because we were building a stronger Canada." See, Canada,
House of Commons, Debates, 23 September 1987, p. 9232.
87. Globe and Mail, 27 October 1987, p. B20.
88. P. Phillips, "Review-Retrospection and Revisionism: Dependency and Class
in Canadian Political Economy;' Journal of Canadian Studies (Summer 1987),
pp. 206-7.
140