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A Staple Theory of Economic Growth*

Published online by Cambridge University Press:  07 November 2014

Melville H. Watkins
Melville H. Watkins*
Affiliation:
University of Toronto
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The staple approach to the study of economic history is primarily a Canadian innovation; indeed, it is Canada's most distinctive contribution to political economy. It is undeveloped in any explicit form in most countries where the export sector of the economy is or was dominant. The specific terminology—staple or staples approach, or theory, or thesis—is Canadian, and the persistence with which the theory has been applied by Canadian social scientists and historians is unique.

The leading innovator was the late Harold Innis in his brilliant pioneering historical studies, notably of the cod fisheries and the fur trade; others tilled the same vineyard3 but it is his work that has stamped the “school.” His concern was with the general impact on the economy and society of staple production. His method was to cast the net widely. The staple approach became a unifying theme of diffuse application rather than an analytic tool fashioned for specific uses. There was little attempt to limit its application by the use of an explicit framework. Methodologically, Innis' staple approach was more technological history writ large than a theory of economic growth in the conventional sense.

Type
Articles
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 29 , Issue 2 , May 1963 , pp. 141 - 158
Copyright
Copyright © Canadian Political Science Association 1963

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Footnotes

*

Financial assistance for the summer of 1961 is gratefully acknowledged from the Ford Foundation. For helpful comments on earlier drafts of this paper, I am indebted to J. H. Dales, W. T. Easterbrook, J. I. McDonald, A. Rotstein, and S. G. Triantis of the University of Toronto and C. P. Kindleberger of the Massachusetts Institute of Technology.

References

1 The American economic historian, Guy S. Callender, however, devoted considerable attention to the importance of international and interregional trade in staples in the United States, an aspect of American growth which has been much neglected but has recently been revived by Douglass C. North. See Callender, , Selections from the Economic History of the United States, 1765-1860 (Boston, 1909)Google Scholar, and North, , The Economic Growth of the United States, 1790-1860 (Englewood Cliffs, NJ, 1961).Google Scholar

2 See his The Fur Trade in Canada: An Introduction to Canadian Economic History (Toronto, 1930; 2nd ed., 1956)Google Scholar; The Cod Fisheries: The History of an International Economy (Toronto, 1940; 2nd ed., 1954).Google Scholar For a collection of his writings in the Canadian field, see Essays in Canadian Economic History (Toronto, 1957).Google Scholar For a complete bibliography of his writings, see Jane Ward, this Journal, XIX, May, 1953, 236–44.

3 W. A. Mackintosh is sometimes given credit as a co-founder of the staple theory; see his “Economic Factors in Canadian History,” Canadian Historical Review, IV, 03, 1923, 12–25 Google Scholar, and “Some Aspects of a Pioneer Economy,” this Journal, II, 11, 1936, 457–63.Google Scholar

4 This point has often been noted; see, for example, Caves, Richard E. and Holton, Richard H., The Canadian Economy: Prospect and Retrospect (Cambridge, Mass., 1959), 30 CrossRefGoogle Scholar; and Easterbrook, W. T., “Problems in the Relationship of Communication and Economic History,” Journal of Economic History, XX, 12, 1960, 563.Google Scholar

5 Kenneth Buckley makes this point strongly; see his “The Role of Staple Industries in Canada's Economic Development,” Journal of Economic History, XVIII, 12, 1958, 442.Google Scholar

6 For its use in communications study–where, following the later Innis, the media become the resource or staple–see McLuhan, Marshall, “Effects of the Improvements of Communication Media,” Journal of Economic History, XX, 12, 1960, 566–75CrossRefGoogle Scholar; and The Gutenberg Galaxy (Toronto, 1962), particularly 164–6.Google Scholar

7 “The Role of Staple Industries,” 444, 445.

8 Fowke, , The National Policy and the Wheat Economy (Toronto, 1957), chap. 2.Google Scholar

9 Easterbrook, , “Trends in Canadian Economic Thought,” South Atlantic Quarterly, LVIII, Winter, 1959, 91–107 Google Scholar; and “Recent Contributions to Economic History: Canada,” Journal of Economic History, XIX, 03, 1959, 76–102.Google Scholar

10 Aitken, , “The Changing Structure of the Canadian Economy” in Aitken, et al., The American Economic Impact on Canada (Durham, N.C., 1959)Google Scholar, and American Capital and Canadian Resources (Cambridge, Mass., 1961).Google Scholar

11 “Discussion,” Journal of Economic History, XVIII, 12, 1958, 451.Google Scholar

12 American Capital and Canadian Resources, 74.

13 North, , “Location Theory and Regional Economic Growth,” Journal of Political Economy, LXII, 06, 1955, 243–58CrossRefGoogle Scholar; “International Capital Flows and the Development of the American West,” Journal of Economic History, XVI, 12, 1956, 493–505 Google Scholar; “A Note on Professor Rostow's ‘Take-off’ into Self-sustained Growth,” Manchester School of Economic and Social Studies, XXVI, 01, 1958, 68–75 Google Scholar; “Agriculture and Regional Economic Growth,” Journal of Farm Economics, XLI, 12, 1959, 943–51Google Scholar; The Economic Growth of the United States, 1790-1860.

14 Caves and Holton, The Canadian Economy, Part I.

15 Baldwin, , “Patterns of Development in Newly Settled Regions,” Manchester School of Economic and Social Studies, XXIV, 05, 1956, 161–79.CrossRefGoogle Scholar

16 Levin, , The Export Economies: Their Pattern of Development in Historical Perspective (Cambridge, Mass., 1960).Google Scholar

17 Meier, G. M., “Economic Development and the Transfer Mechanism: Canada, 1895-1913,” this Journal, XIX, 02, 1953, 1–19 Google Scholar; Ingram, J. C., “Growth and Canada's Balance of Payments,” American Economic Review, XLVII, 03, 1957, 93–104 Google Scholar; Stovel, John A., Canada in the World Economy (Cambridge, Mass., 1959).Google Scholar

18 Perloff, and Wingo, , “Natural Resource Endowment and Regional Economic Growth” in Spengler, Joseph J., ed., Natural Resources and Economic Growth (Washington, 1961), 191–212 Google Scholar; this article draws on Perloff, Harvey S., Dunn, Edgar S. Jr., Lampard, Eric E., and Muth, Richard F., Regions, Resources and Economic Growth (Baltimore, 1960).Google Scholar

19 Both features are recognized by Rostow, W. W. in The United States in the World Arena (New York, 1960), 6 Google Scholar; the first is also cited by Hoselitz, Bert F., “Patterns of Economic Growth,” this Journal, XXI, 11, 1955, 416–31.Google Scholar

20 Fay, , “The Toronto School of Economic History,” Economic History, III, 01, 1934, 168–71.Google Scholar See also Easterbrook, , “Problems in the Relationship of Communication and Economic History,” 563.Google Scholar

21 Hirschman, Albert O., The Strategy of Economic Development (New Haven, 1958), chap. 6.Google Scholar

22 North's book is weakened by his failure adequately to appreciate the importance of the resource base. He applies Baldwin's polar cases to the American South and West in the period prior to the Civil War, but has very probably exaggerated their efficacy in explaining rates and types of development by understating differences in the general resource base which favoured the West.

23 Note the Canadian mineral discoveries consequent on railway building and hence linked ultimately to the development of the western wheat economy.

24 On external diseconomies generated by an expanding sector when factor supplies are inelastic, see Fleming, Marcus, “External Economies and the Doctrine of Balanced Growth,” Economic Journal, LXV, 06, 1955, 241–56.CrossRefGoogle Scholar On the character of export-led booms in Canada, see the literature cited in n. 17.

25 Rostow, , The Stages of Economic Growth (Cambridge, 1960), 36.Google Scholar

26 North, after appeal to the American case, reaches a similar conclusion.

27 See his “The Climate of Enterprise,” American Economic Review, XXXIX, 05, 1949, 322–35Google Scholar; “Uncertainty and Economic Change,” Journal of Economic History, XIV, Autumn, 1954, 346–60Google Scholar; “Long Period Comparative Study: Some Historical Cases,” Journal of Economic History, XVII, 12, 1957, 571–95.Google Scholar

28 Wallich, , Monetary Problems of an Export Economy (Cambridge, Mass., 1960), 12.Google Scholar

29 Singer, , “The Distribution of Gains between Investing and Borrowing Countries,” American Economic Review, XL, 05, 1950, 482.Google Scholar

30 The classic example is the building of two additional transcontinental railways during the wheat boom, 1896-1913. The general phenomenon is noted by Plumptre, A. F. W., “The Nature of Economic Development in the British Dominions,” this Journal, III, 11, 1937, 489–507.Google Scholar

31 The high correlation between depressions and tariff increases is noted by Young, John H., Canadian Commercial Policy, A study done for the Royal Commission on Canada's Economic Prospects (Ottawa, 1957).Google Scholar

32 For a formal presentation of the theory of immiserizing growth, see Bhagwati, J., “Immiserizing Growth: A Geometric Note,” Review of Economic Studies, XXV, 06, 1958, 201–5CrossRefGoogle Scholar, and “International Trade and Economic Expansion,” American Economic Review, XLVIII, 12, 1958, 941–53.Google Scholar

33 This mechanism has recently been emphasized by Hirschman, , The Strategy of Economic Development, 120 ff.Google Scholar

34 Kindleberger, C. P., Economic Development (New York, Toronto, London, 1958), chap. 14.Google Scholar

35 Lewis, , The Theory of Economic Growth (Homewood, Ill., 1955)Google Scholar; Nurkse, , Patterns of Trade and Development, Wicksell Lectures, 1959 (Stockholm, 1959).Google Scholar

36 Myint, H., “The Gains from International Trade and the Backward Countries,” Review of Economic Studies, XXII, 1954–1955, 129–42.CrossRefGoogle Scholar

37 Lewis, W. Arthur, “Economic Development with Unlimited Supplies of Labour,” Manchester School, XXII, 05, 1954, 139–41.CrossRefGoogle Scholar

38 Singer, “The Distribution of Gains.”

39 Lewis, , The Theory of Economic Growth, 348.Google Scholar

40 G. Haberler provides a geometric demonstration of a case where free trade is harmful, given rigid factor prices. “Some Problems in the Pure Theory of International Trade,” Economic Journal, LX, 06, 1950, 223–40.Google Scholar The argument is extended in Linder, Steffan Burenstam, An Essay on Trade and Transformation (New York, Stockholm, 1961), chap. 2.Google Scholar

41 Ball, R. J., “Capital Imports and Economic Development: Paradoxy or Orthodoxy,” Kyklos, XV, 1962, fasc. 3, 610–23.CrossRefGoogle Scholar

42 Gerhard, Dietrich, “The Frontier in Comparative View,” Comparative Studies in History and Society, I, 03, 1959, 205–29.CrossRefGoogle Scholar

43 Firestone, O. J., “Development of Canada's Economy, 1850-1890” in Trends in the American Economy in the Nineteenth Century (Princeton, 1960), 217–52.Google Scholar

44 “The Role of Staple Industries,” 447.

45 Firestone, O. J., Canada's Economic Development, 1867-1953 (London, 1958)Google Scholar, and “Development of Canada's Economy, 1850–1900”; McDougall, Duncan M., “Immigration into Canada, 1851-1920,” this Journal, XXVII, 05, 1961, 162–75Google Scholar; Hartland, Penelope, “Canadian Balance of Payments since 1868” in Trends in the American Economy in the Nineteenth Century, 717–55Google Scholar; Bertram, Gordon W., “Historical Statistics on Growth and Structure of Manufacturing in Canada, 1870-1957,” Canadian Political Science Association Conference on Statistics, 06 10–11, 1962.Google Scholar

46 Mackintosh, W. A., The Economic Background of Dominion-Provincial Relations, A Study Prepared for the Royal Commission on Dominion-Provincial Relations (Ottawa, 1939), 84 ff.Google Scholar; and Barber, Clarence L., “Canadian Tariff Policy,” this Journal, XXI, 11, 1955, 513–30.Google Scholar

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48 Easterbrook, W. T. and Aitken, H. G. J., Canadian Economic History (Toronto, 1956).Google Scholar

49 See English, H. E., “The Role of International Trade in Canadian Economic Development since the 1920's,” unpublished Ph.D. thesis, University of California, 1957 Google Scholar; Stykolt, S. and Eastman, H. C., “A Model for the Study of Protected Oligopolies,” Economic Journal, LXX, 06, 1960, 336–47CrossRefGoogle Scholar; Dehem, Roger, “The Economics of Stunted Growth,” this Journal, XXVIII, 11, 1962, 502–10.Google Scholar