Was Innis Wrong?

by
Mel Watkins
My articles My booksMy videos
Follow on:

The question is taken from the title of an article by Nancy Olewiler of Simon Fraser University in the Canadian Journal of Economics (November 2017), which, as it happens, was delivered as the Innis Lecture at the meetings of the Canadian Economics Association in 2017: “Canada’s dependence on natural capital wealth: Was Innis wrong?”  Her answer: she writes “Literature and recent debate reject his prediction that Canada would suffer lower levels of economic growth and well-being due to its dependence on exporting its natural resources,” and then, after some testing of her own, reaffirms this position. Her research is of interest in its own right but quite misleading as to Innis.

It is not even clear that Innis can be read as holding to such a pessimistic view. The economic historian Peter George, in an overview of the history of mining in Ontario in 1967 writes: “Innis believed that the mining industry would reduce Ontario’s dependence on the export of staple commodities  by contributing to a highly integrated advanced economy” and adds “Ironically Innis was wrong in his optimism with respect to mining.”

Innis was, it must be insisted, an economic historian  and can hardly be said to have had a central interest in “prediction”  – or even policy which is the central concern of the economist today. In fact, Olewiler offers no evidence that he was wrong in his historical writings which is what matters most in an evaluation of Innis. The jury can give little weight to Olewiler’s substantive contemporary findings, post-1990 – being  two decades of a half-millennium!

Olewiler’s error lies in imagining that she is giving a definitive assessment of Innis or of the staple approach to Canadian economic history.

What is lost in Olewiler’s reductionism of Innis is the breadth and depth and sheer power of his historical writings: “The economic history of Canada has been dominated by the discrepancy between the centre and the margin of western civilization. Energy has been directed toward the exploitation of staple products and the tendency has been cumulative…Agriculture, industry, transportation, finance and government activities tend to become subordinate to the production of the staple for a more highly specialized manufacturing country.”

It is true that Innis was incorporated in the 1960s and 1970s into the emergent New Canadian Political Economy where there was a tendency to see Innis as a pessimist and Mackintosh as an optimist on Canada’s economic prospects as an exporter of staples. But to be fair both to Innis and to the new political economists, their focus was more, much more, on Canadian dependence as a  marginal area within the American empire. This is not a matter on which Olewiler has anything to say; she is an economist and not a political economist and her answer must be seen in that context.

Daniel Drache described Canada as a case of “advanced resource capitalism” and Olewiler’s evidence on productivity supports that designation. Drache is also known as a leading analyst of the “staple trap” and it would be hard to find a clearer example of that than today’s bitumen.

Olewiler is also unaware of the important post-Innisian book by the respected economic historian W.T. Easterbrook, North American Patterns of Growth and Development (1990) which sees Canada’s economic history in a continental context in the long run as one of “growth, “of a “pattern of persistence” as a staple exporter, in contrast to a “pattern of transformation,” of “development,” in the northern United States. To return to mining as a staple, to further complicate the story, Canada’s new global dominance in gold might be cited today as evidence of imperial competence suggestive more of the transformation of a centre than the persistence of a margin.

Where Olewiler is to be lauded – and forgiven overall – and where Innis, albeit like the mainstream economists who were his contemporaries, was wrong, was with their general neglect of social costs such as the consequences for the environment of resource extraction. I am wholeheartedly in agreement with Olewiler that, whatever our view of Innis, climate change from fossil fuels – from oil and gas as staples – compels us to see their extraction as intolerable.

Olewiler is also right in seeing Innis as a student of regionalism and its exacerbation by staple exports, which is indicative of his relevance to the study of Alberta and the tar sands.  National policy on climate change is presently impaled by this. In the insightful language of Brendan Haley, the staples trap is alive and well as it has morphed  into the carbon trap. And as Gordon Laxer has demonstrated in his research on the tar sands, the staple approach has, unfortunately, been given a new life in Canadian studies. Olewiler, in her deft description of the tar sands and climate change, unwittingly affirms the staple approach and Innis in the large.