Economics 2K03 Notes.docx

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19 Nov 2012
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Economics 2K03 Notes 7/11/2012 9:19:00 AM
Lecture 2: Introduction
Why study economic history?
o Beaver: national animal?
o Curiosity of the past why it happened
o Economic history: the study of economic growth and
development
G: we increase the overall productive capacity of the
economy we become more productive, associated
with productivity
D: change in actual structure, composition of total
output
Theories:
o Classical: Adam Smith early 19th century
Ricardo, Malthus and Mill
If you want to produce more, you would need more and
more of variable input (labour) diminishing marginal
product
With DMP, average product falls until it reaches a
subsistence level
Why economics is called the dismal science produce
enough to not let every starve
o Marx analysis : Karl Marx Das Capital
Labour theory of value the value of any good
(commodity) comes from the labour time that is
invested in it
Capitalists who own the means of production they
don’t pay the full value of the commodities of the
worker (they exploit the workers and do not pay their
full labour value)
The workers (proletariat) difference between the value
what the worker produces and what they are being paid
in labour gap (surplus value)
Because workers are exploited, they become alienated
form the commodities they are producing the
“immiseration of the proletariat” by the capitalists
Conflict immerges Marxist revolution occurs
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Workers rise up and revolt, and immerges a dictatorship
of the proletariat
End result: new communism economic order
capitalism is over
o John Keynes influential after the second world war, put
emphasis on investment, saving, and the capital to output
ratio
More capital, more producing of output you need
higher levels of aggregate demand
Investment and maintaining full employment keys to
economic success
o Neoclassical: technology driven
You can increase output, more labour, more capital,
through technological innovation
Compensate DMP through technology
Weakness: where does the technological change come
from?
o Staples approach (theory) Canadian
First conceived in 1923 by W.A. Mackintosh
Canada has been created in science geography?
Harold Innis: 1930 did work on this theory and became
famous for it
Canada developed the way they did because of
our history with staples (that went to Europe)
until we developed a strong relationship with USA
Became very European in culture
Fur trade created the geography of Canada
The link between ports on the East and the
interior where the fur was Canadian unity
o Staple: commodity that is extracted, not processed, and
exported in huge quantities
Natural resources and wheat
Who controls exporting prices? Foreign demand,
external buyers
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The 5 Fs: Fish, Fur, Forests, Farming, Fuel (in that
order)
Cotton was an American staple that led to settlement
you develop out of the staple primary focus lead to
diversification
Fur trade: you had to follow the fur no settlement
No population growth, no large scale economic
development
o Staple production leads to linkages
Backward linkages build infrastructure to help extract
the staple
Roads, canals, railway lines
Forward linkages processing the staple (to some
degree) before we export them
Building saw mills, grain mills
Starting to develop because of the staple
Final demand linkages: got to the point of local demand
for finished goods
Want furniture, and can buy it locally
o Problem: you can over-concentrate just extracting will get
backward linkages, but no other linkages
So focused on cutting trees and sending them off, can
become caught in a Mel Watkin’s “Staple Trap” –
getting myopic
Staples are completely reliant on what the world wants
if tastes change, you could be producing the wrong
staple adapt to survive
Dependence
o Atlantic coast: Cod as a staple decentralized
Individual fisherman cooperative
o Linked interior and eastern Canada
Lecture 3: The Background to Colonization
Norse: first to arrive to Canada 1025 Leif Erikson Newfoundland
o Looking for wood in Labrador
o Small settlement of 80 people at L’Anse aux Meadows
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