ECON 2K03 Lecture Notes - Factor Endowment, Diminishing Returns, Comparative Advantage

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Marxist Class Analysis
• evolution of Canadian economy shaped by the unequal competition between capitalists and labour
• key moment in Canadian history is the emergence of a working class in the early 19th century
The Staples Thesis
• central role of economic culture
• focus on exported primary products - For the staple theory to apply, the economy must be highly
specialized in the production of one or more natural resources to export. For example, cod and timber.
Canada remains HIGHLY dependent on the export of natural resources.
Things such as oil may not be able a staple in Canada, but is a staple for Alberta.
Basically, if you continue exporting your staple, it should get a world price. If demand increases, the
world price increases, therefore = growth
• typical staples (fish, fur, timber, wheat)
• Canada emerges because of its geography, not in spite of its geography
The staples thesis is a theory of Canadian economic development. The theory “has its origins in
research into Canadian social, political, and economic history carried out in Canadian universities…by
members of what were then known as departments of political economy.” From these groups of
researchers, “the two most prominent scholars following this approach were Harold Innis and W.A.
Mackintosh.”[1]
Innis argued that Canada developed as it did because of the nature of its staple commodities: raw
materials, such as fish, fur, lumber, agricultural products and minerals, that were exported to Europe. This
trading link cemented Canada's cultural links to Europe. The search for and exploitation of these staples
led to the creation of institutions that defined the political culture of the nation and its regions.
Innis argues that different staples led to the emergence of regional economies (and societies) within
Canada. For instance, the staple commodity in Atlantic Canada was cod. This industry was very
decentralized, but also very co-operative. In western Canada the central staple was wheat. Wheat
farming was a very independent venture, which led to a history of distrust of government and corporations
in that part of the country. (Also important, however, were the shocks caused by volatility in the market for
wheat and by the weather itself on the growing season.) In Central Canada, the main staple was fur, and
the fur trade dominated the economy for many years. This fur trade was controlled by large firms, such as
the Hudson's Bay Company and thus produced the much more centralized, business-oriented society that
today characterizes Montreal and Toronto.
Innis depicted the relationship between regions of Canada as one of "heartland" to "hinterland": The
periphery, or hinterland, is dominated by the core, or heartland. Because the heartland was dependent
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Document Summary

Marxist class analysis: evolution of canadian economy shaped by the unequal competition between capitalists and labour, key moment in canadian history is the emergence of a working class in the early 19th century. The staples thesis: central role of economic culture, focus on exported primary products - for the staple theory to apply, the economy must be highly specialized in the production of one or more natural resources to export. Canada remains highly dependent on the export of natural resources. Things such as oil may not be able a staple in canada, but is a staple for alberta. Basically, if you continue exporting your staple, it should get a world price. If demand increases, the world price increases, therefore = growth: typical staples (fish, fur, timber, wheat, canada emerges because of its geography, not in spite of its geography. The staples thesis is a theory of canadian economic development.

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