Ray Schmidt

Canadian Political Economy: A Critique

Introduction The most striking feature of the literature pertaining to the political economy of Canadian development written in the last decade from a Marxian perspective is the continuity which it exhibits with earlier bourgeois interpretations. What is perhaps more remarkable is the fact that a large segment of Marxist or, perhaps more accurately, nee-Marxist contributions to Canadian political economy consciously conceive of their work as the logical culmination of the conclusions already implicit in bourgeois Canadian political economy. This stress on the essential continuity of thought is the principal theme of the extensive bibliographic essay by Drache appropriately entitled "Rediscovering Canadian Political Economy." 1 Drache discusses the "new" political economy of Canada as an outgrowth of the old. Naylor, whose work can justifiably be ranked as the foremost recent contribution to a Canadian Marxian political economy of development, humbly acknowledges his debt in the following terms:
All I really did was to attempt to spell out rigorously what was already inherent in some of the best Canadian historical literature, to try to impose some order upon it, and attempt to draw some conclusions regarding the relations between Canadian capital and the capitalist elite of the various metropolitan economies. It was, in brief, an attempt to stand Creighton on his feet J

Studies in Political Economy, No.6, Autumn, 1981

65

Studies in Political Economy

Naylor's phraseology is, of course, reminiscent of Marx's assessment of the relationship of his work to Hegel's. The deference to bourgeois political economy is perhaps appropriate to the extent that early Canadian political economy stands in a relationship to neo-classical economics which is in some ways analogous to the relationship of the classical political economy of Smith and Ricardo to the marginalist economics which succeeded it. It seems clear, however, that Marx did not simply systematize and draw out conclusions already contained in either Hegel or classical political economy. Rather, he posed a new revolutionary problematic.' Contemporary Marxian Canadian political economy, on the other hand, is an eclectic melding of at least three major intellectual influences: (I) bourgeois political economy nationalist themes and issues, (2) third-worldist/dependency theory concepts, and (3) classical Marxist language. In this paper I shall argue that the exercise of rethinking the bourgeois problematic and establishing a distinctly Marxian problematic has not occurred. This failure has had serious implications for the scientificmaterialist character of the neo-Marxian problematic in that it remains permeated with the ideological baggage of its various origins. I shall attempt to illustrate this by tracing the major aspects of its origins and evolution" I will conclude with some suggestions for the establishment of a new starting point. Bourgeois Canadian Political Economy If we specify the minimum requirements for the title "political economy" as, (a) a focus on the totality of social, political and economic structures which are (b) specified in a determinant hierarchy, then it is apparent that political economy in Canada has a tradition which precedes Marxian influence by some three decades. The foremost representatives of this intellectual current were Innis and Creighton.' Canadian political economy was cognizant of the contradictions resulting for peripheral development within the expansion of a world capitalist system. It was distinctive since its starting points of analysis were the international character of the market economy and the international division of labour. It insisted on the specificity of historical circumstances in the understanding of development, rejecting for the most part the abstract normative assumptions of modern economics. In this sense it posited the necessity for the recognition of the specificity of Canadian capitalism and Canadian capitalist development. Development world capitalist is most explicit such as Lower." 66 was seen as a process of integration into the expanding system. The essentially diffusionist element of this theme in the concept of metropolitanism identified with writers It is interpreted by Innis as the inexorable "Penetrative

Ray Schmidt/POLITICAL

ECONOMY:

A CRITIQUE

Power of the Price System' '7 and by Creighton as the expansion of British liberal ideals. To Innis the mechanism for this diffusion was the expansion of the market to the periphery in search of staple commodities and the concommitant adoption of capitalist technology to cheapen costs. With the wheat economy in the late 19th and early 20th Century "Canada came under the full swing of modern capitalism with its primary problem of reducing overhead costs."! Creighton's emphasis was on the role of the merchant princes of Montreal as the outpost of the British ideals he
admired so much: In the commercial group was concentrated a great proportion of economic power - the wealth, the energy and ability of the colony ... It was a re-enactment, upon a distant and insignificant stage, of the classic WestEuropean struggle - the struggle between insurgent commercial capitalism and a decadent and desperately resisting feudal and absolutist state.?

The merchants were, in effect, the "class medium" progressive ideals were transmitted to Canada.

by which these

It should be pointed out however that the diffusionist perspective in this analysis bears little resemblance to more recent diffusionist schools of bourgeois development theory. First, Creighton's work at least contains some recognition of the importance of class and class struggle. Secondly, development is not seen as an automatic process of "becoming." There is the recognition that the process of development was inherently uneven, and also that it was not automatically equilibriating. Both Creighton and Innis appear to identify a "fatal flaw" which inhibited the ultimate realization of this process in a fully developed form. The "flaw" was however situated primarily in "natural" environmental and/or economic disadvantages. Creighton believed that the heroic attempt of the Montreal merchants to create a continental empire was stymied by environmental and geographic obstacles - the imperfections of the St. Lawrence as a transportation system. Their successes are counted as major victories of visionary men; their failures as the legacy of an intractable environment, and the weaknesses and obstinacy of lesser men who failed to share their dreams. Progressive commercial capitalism is juxtaposed to the supposedly reactionary and parochial values of French Canada. In this sense his work is in large part a justification of conquest and a dismissal of the aspirations and historical role of French Canada after the conquest. Creighton's works are a legitimation of the creation and consolidation of a continental Canadian commercial state as a complete identification with the "national interest." His problematic can thus be seen to originate in large part in internal national conflicts between the French and English. 67

Studies in Political Economy

The staple approach taken by Innis also attributed the problems of Canadian development to the environment - that is, the character and availability of resources. As with Creighton however, the development of the social structure is a dominant theme. The staple was an all encompassing notion. It left an indelible stamp upon the entire social structure:
Concentration on the production of staples for export to more highly industrial areas of Europe and later in the United States has had broad implications for the Canadian economic, political and social structure. Each staple in its turn left its stamp, and the shift to new staples invariably produced periods of crisis in which adjustments in the old social structure were painfully made and a new pattern created in relation to a new staple. 10

In essence his theory embodied a unique combination of technological and environmental determinism. According to Innis, cheap water transportation favoured the rapid exploitation of staples and dependence on more highly industrial countries for finished products. It favoured the position of Canada as an exporter of staples to more highly industrialized areas ... 11 At a later stage of development the need for an efficient mode of transportation was seen as the crucial determinant of the formation of a highly centralized state because the staple economy necessitated infrastructure extension at a scale beyond the capacity of the private sector. Such a single focused commitment to one sector of the economy accentuated the severity of cyclical crises, and through the one-sided development of the economic, political and social structure, limited the flexibility to adapt to other types of production. Like Creighton, however, the core of Innis' concern was national unity, and not a critique of Canadian society or the capitalist economy per se. The concluding chapter to The Fur Trade in Canada is perhaps Innis's clearest statement of a staple theory of development. His final remarks return to the question of whether this development entailed long term national unity.
The present boundaries were a result of the dominance of furs ... The geographic unity of Canada which resulted from the fur trade became less noticeable with the introduction of capitalism and the railroads. Her economic development has been one of gradual adjustment of machine industry to the framework incidental to the fur trade.l?

The logic of Canadian unity, predicated upon an east-west commercial system centered on Montreal and oriented to western Europe, became increasingly tenuous as economic ties were restructured in a north-south direction. In another work, Innis was to characterize this process as a devolution from "colony to nation to colony. "13

68

Ray Schmidt/POLITICAL

ECONOMY:

A CRITIQUE

Therefore, it can be seen that Innis and Creighton established the of the origins of Canadian society within a highly dependent commercial capitalist system. The notion of dependency and the weakness of Canadian capitalism are, of course, the reasons these writers have been adopted as intellectual mentors by contemporary left-nationalists. How adaptable is their framework to a Marxian analysis?

theme

It must be stressed again that their discussion of the nature of Canadian capitalism was largely incidental to their principal theme which was the question of the logic of a unified Canadian nation-state. They asserted, in contrast to many who wrote before and after, that Canada was not an historical accident. There was a real material basis for the origins and maintenance of a distinct Canadian state. The determinant of this unity was located in the nature of the early Canadian continental commercial economy, structurally tied by the simple import/export base of its economy across an entire continent to western Europe. Their economic determinism is an implicit suggestion of a determinant hierarchy of relationships between economic and social structures, and that is what distinguishes their approach as political economy. However, it is a political economy of a different variety from Marxism. It is not, as many left-nationalists would like to think, that their ideological dispositions did not allow them to draw the "logical" conclusions inherent in their work. Rather, the specification of their problematic itself establishes definite limits to any potential social critique. That is, the dynamic of capitalist development is seen essentially as a market response to natural environmental imperatives. It is a fatalistic and mechanical conception of social development in which, at most, the human and class agency in the making of history is limited to the facility with which "objective" opportunities are recognized and exploited. Classes can be defined in terms of their behavioural characteristics with respect to these opportunities, but not in relation to other classes. Thus, class analysis takes the form of a judgement as to the more or less progressive nature of particular social groups in relationship to the achievement of some existential national goal. A debate as to the relative progressiveness of particular social groups is the limit to which the discussion of class is capable of moving within the bourgeois problematic. In large measure, the neo-Marxian reformulation is based upon the further exposition of the bourgeois problematic in terms of the behavioural characteristics of the dominant social classes. Neo-Marxian interpretations were to a large degree anticipated in Watkins' 1963 reformulation of staples theory. A Staples Theory of Economic Growth Despite its suggestive nature, Innis' work really contains no coherent and systematic exposition of a theory of economic growth or 69

Studies in Political Economy

development. Watkins formalized many of the concepts implicit in Innis' work in terms of contemporary development theory and theories of international trade. 14 Through Watkins, staples theory was transformed from a specific interpretation of Canadian development to a general theory of the development of white settler colonies within a world market system. In broad terms, staples theory can be summarized as follows: in a frontier economy where both capital and labour are scarce relative to resources, the staple, as a saleable commodity pursued by the metropolitan economy, provides the impetus for the incorporation of the periphery, and is the sole initial basis of the economy. The speed and extent to which integration occurs is contingent upon: (1) international demand for the staple, (2) the current stage of development of the technology requisite for the staple's production, (3) the mobility of productive factors, and (4) the character and availability of the staple supply. If variables one, two and three are held constant, the extent of development will be totally determined by the specific character and supply of the staple that is exploited. The associated production function of the staple, which can be assumed to be given at anyone point in time and level of production, will then determine the specific coefficients by which factors are combined in the production process; that is, the extent to which the migration of factors is induced and the spin-offs to related sectors. The greater these spin-offs or linkages, the greater the possibility that the economy will transcend its purely staple base. The production function associated with staples such as fur or lumber generated few spin-offs of significance because of low capital investment and labour demand, while the wheat economy has been viewed as providing a sufficiently secure base to generate the backward, forward and final demand linkages requisite for a modern economic structure. Thus, there are both "good" and "bad" staples. The developmental result is dependent upon the good fortune to be blessed with an abundance of a 'good" staple. It is purely a question of having the proper resource base at the right point in time, at least so far as economic theory is concerned. Watkins also develops a more sociological argument. "Objective" economic opportunities may not be exploited internally due to unfavourable political, ideological and institutional factors. This social environment may, in fact, be the historical legacy of earlier staples production. For example, backward economic linkages such as a transportation system are mechanically determined necessities if production is to occur at all. On the other hand, forward and final demand linkages are largely behavioural decisions. If the requisite entrepreneurship is lacking, effective demand might be satisfied through imports.

70

Ray Schmidt/POLITICAL

ECONOMY:

A CRITIQUE

In other words, geographical areas enter the world capitalist system on the basis of a relatively few commodities required by the expanding metropolitan core of the system. However, in this process the social structure of the periphery takes a particular form most conducive to the production of that particular staple. For instance, the same conditions of international demand which produced plantation agriculture and slavery in the Caribbean in search of sugar, resulted in petty commodity production of the wheat staple in Canada. The dynamic is one of maximizing the efficiency of production, the assumption being that slavery and petty commodity production were the most efficient forms of producing sugar and wheat respectively, given the current stage of technology and the availability of factors. The point is that each resulting social structure had radically different implications for the future development of these geographic areas. The problem is in part due to the structure of institutions and a potential source of entreprenteurial talent, and in part due to the precise nature of the socio-economic hierarchy of the respective areas. The legacy of a slave system is an aristocratic elite on the one side, and the mass of the population living at a bare subsistence level on the other. Under these conditions, demand for manufactured items may be limited primarily to luxury goods which can be most easily satisfied through imports. Petty commodity production on the other hand presents the possibility of a substantial internal market and local manufacturing. In other words, if economic linkages are not captured, because of either entrepreneurial failure or a bimodal income structure which limits the consumption potential of the internal market, then the legacy of the staple will be continued dependency and underdevelopment. It is noteworthy that this conclusion can be formulated entirely within the parameters of bourgeois social science. Subsequent reformulations of this thesis in the language of Marxism add little to its essential thrust.

Dependency

Theory and Canadian

Political Economy

Marxism has been introduced to the revision of Canadian political economy by way of dependency theory. The borrowing of concepts was to some degree direct, through writers such as Levitt who did much of her earlier work in the Caribbean. Levitt's analysis explicity compared the structure of the Canadian social formation to that of an underdeveloped country, freely utilizing the concepts developed by the Latin American structuralists. Nevertheless, she credits Innis' work as "the chronological antecedent of the Latin American economists in developing a 'metropolis-periphery' approach ... "15 7!

Studies in Political Economy

There can be no doubt that the parallels suggested by Levitt do exist.!" and subsequent revisions of the structuralist theory by neo-Marxists such as Frank have their Canadian counterparts. Watkins simply endorsed Frank's hierarchical model of surplus extraction as applicable to Canada.!? Other writers, such as Naylor, followed a similar route, but through the revision of Canadian historiography and historical study of the Canadian social formation. The dependency rhetoric was a handy crutch, given the relatively unsophisticated development of Marxist theory in the late 1960s and early 1970s in Canada. Nevertheless, it was as much a process of convergence as it was one of simple borrowing. Many of the ideas propounded by dependency theory already had a broad popular currency in Canada. For instance, the notion of Canadians as "hewers of wood and drawers of water" is an implicit statement of denigration of the Canadian position in a world division of labour. The attraction of dependency theory then was that it articulated a radical nationalist sentiment, systematizing it into a critical abstract descriptive model of the operation of the world market and the position of Canada in that market. It is important to situate Canadian neo-Marxism within the historical and social context in which it arose. It was primarily a result of an effort to mediate between orthodox Marxist interpretations, and the eclectic left-nationalist movement of the 1960s and early 1970s. The latter was most fully represented politically by the Canadian Waffle. As a heterogeneous left-wing tendency within the social democratic New Democratic Party (NDP), the Waffle officially articulated the position of a nationalist movement aimed at the repatriation of the Canadian productive sector from foreign control through parliamentary means." To that extent, the Waffle program failed to break with social democracy. The expulsion and disintegration of the Waffle marked the definitive defeat of its strategy and, on the part of some elements at least, a profound disenchantment with social democracy and explicit attempt to establish their analysis within a Marxian perspective. 19

an

In the polemical enthusiasm of this criticism and self-criticism, Marxist theory served more as an appeal to authority than as a method for analysis. For instance, the muckraking character of some of this work involved little more than the use of class categories as pejorative epithets describing the anti-nationalist character of the Canadian bourgeoisie.t? Similarly, concepts such as that of the' 'bourgeois state" served to justify the claim of the futility of utilizing bourgeois institutions to carry out popular objectives." Above all it is necessary to note that the original nationalist questions and concerns were not themselves reformulated or posed from the perspective of a Marxian socialist position. The primary thrust was directed at illustrating the primacy in Canada of a nationalist 72

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

focus, and its consistency with a Marxist perspective. Naylor's work remains the most systematic reinterpretation of Canadian development from a left-nationalist perspective. Since it is in many ways paradigmatic, much of the remainder of this essay will be devoted to the discussion of Naylor's contribution. Mercantilism and Underdevelopment A simple precis of Naylor is not a straightforward task since he has retreated from his initial theoretical statement without systematically advancing an altemative.F My statement of his theory is, therefore, "teased" out of his book and several articles." According to Naylor, the primary significance of the staple economy has been the over development of the Canadian commercial classes. The reason is that historically, the extractive resource extensive form of production tended to minimize capital in production relative to capital in circulation, thus restricting indigenous capital accumulation and concommitantly, the development of a national bourgeoisie with an autonomous economic base. The dominant fraction of the Canadian bourgeoisie was therefore based in the international circulation of commodities. Initially these commercial groups were mere agents of foreign capital, often linked directly through mercantile companies. As the international capitalist economy advanced to its imperialist stage, and the local economy grew more sophisticated, alternate opportunities became manifest. That these opportunities were not seized or, rather, were developed in a particular way, is interpreted in terms of the mode of operation of mercantile capital. According to Naylor, it was not simply a lack of entrepreneurship, as Levitt and many left-nationalists suggested, but the dominance of a particular type of entrepreneurship.P Naylor attempted to specify this in materialist terms as a fundamental contradiction between productive and non-productive capital between the "industrial-capitalist entrepreneur" and the "mercantile-financial entrepreneur".
The first operates in the sphere of production, the second in distribution. Thus, maximization of the mercantile surplus will minimize the industrial surplus. Furthermore, industrial capital is typified by a high ratio of fixed to circulating capital and is concommitantly long-term and often high-risk, while mercantile capital is typified by a low ratio of fixed to circulating capital and is directed towards short-term, relatively safe investment outlets.s>

Naylor suggests that, because of the historical dominance of merchant capital in Canada, this contradiction was transposed to the level of the state. Thus, the form which Canadian development took was guided, not '13

Studies in Political Economy

by the realization of "natural" economic advantages, but by a mercantile state philosophy which conceived of the accumulation of national wealth as the maximization of the inflow of factors of production (capital and labour) and the minimization of their outflow. That philosophy is opposed to the mode of operation of industrial capital - the accumulation of surplus value through production. The merchant-financial fraction clung to their mercantile position as intermediaries and, therefore, participated fully in the import of capital and the alienation of the productive sector to foreign control. By so doing, they perpetuated foreign dependency. Since industrialization possibilities were limited to a strategy of coercing branch plant transference to a tariff protected market - that is, import substitution - economic specialization in a smaller range of products in which Canada had a natural advantage was inhibited.i" Naylor's work has been the target of a prolonged and often bitter debate which has raised both theoretical and empirical objections." The validity of the assumption of a universal contradiction between productive and non-productive capital has been the primary theoretical issue. I shall refrain from a detailed review of this aspect of the debate since Naylor has retracted somewhat in his emphasis upon this contradiction: "Undoubtedly ... I exaggerated the point and inadvertantly caused some confusion. What is at issue ... (is) ... the relative strength of commercial and industrial capital in Canadian society.r'P Thus, he appears to have remained intransigent in his insistence upon the necessity of recognizing Canadian economic problems in the commercial origins of the dominant fraction of Canadian capital and in the commercial origins of the Canadian state: "the predisposition of the Canadian economy towards staple extraction for export to a metropolitan economy is the consequence of the historically determined power of commercial interests in conjunction with metropolitan capital. "29 Naylor's retreat from an attempt at a materialist explanation centering around a competition for surplus value serves to intensify the reliance of his explanation on the behavioural characteristics of capitalist fractions in the reproduction of dependency. Commercial capitalists, it would appear, have an overwhelming predisposition to commercial activity. It is precisely this assertion which has been challenged on empirical grounds. Critics have suggested that far from opposing industrial capitalist development, the National Policy tariffs represented the unified program of Canadian capital as a whole.P Others have claimed that the boundaries between commercial and industrial capitalists were in any case not distinct." Examples of commercial ventures in the productive sphere include railway investments and large scale industrial ventures such as textiles, sugar refining and steel production.

74

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

A sterile legacy of this exchange has been the rather esoteric debate regarding what is a commercial capitalist and what is an industrial capitalist. I do not believe it is fruitful to engage further in this intellectual exercise. In any case, Naylor's work has evolved beyond the "merchants against industry" thesis. Rather, he suggests instead that There are two principal routes, with some minor variants, that an economy can follow on the road to industrialization. Manufacturing industry can grow up 'naturally' from a small scale, even artisanal mode of production when capital accumulation is a largely internal phenomenon based on the reinvestment of a firm's own profits. A second path implies direct development to large-scale oligopolistic enterprise where outside capital is invested to facilitate its expansion and where the state takes an active, direct role in its growth. The first path, if successfully followed, would lead to the emergence of a flourishing and independent national entrepreneurial class. The second mayor may not; it may simply reproduce the conservatism of commercial capitalism in a new guise .. )2 It seems clear that Naylor was correct in his suggestion that Canadian industrial development was guided by a state policy oriented primarily to import substitution. It is also quite clear that this has had certain negative effects upon the flexibility of the Canadian economy, and that this problem has to some extent been cumulative. However, that interpretation in itself is not unique to Naylor. What is unique in Naylor's thesis is the suggestion that this strategy was the deliberate reconstruction of a dependency relationship in a new form by Canadian commercial capital. Despite the qualifications to his earliest formulations, that aspect of his thesis is retained. Every 'small' capitalist economy is susceptible to a degree of outside direction of its development process. However the degree to which the Canadian capitalist class not only has bowed to pressures from abroad but has deliberately and earnestly set out to induce those very pressures to which it has bowed results in a difference in kind in its external relations, rather than just in degree.r' The problem is that once the centrality of the productive versus nonproductive contradiction is dismissed, the materialist basis of the analysis is also undermined. In the end, Naylor fails to transcend the "entrepreneurial-failure" thesis of writers such as Levitt, but merely postulates it in a different form. Still, to simply dismiss Naylor's work as a deluge of invectives heaped upon Canadian capitalists for their lack of a laissezfaire entrepreneurial ethic does not do justice to the significance of his contribution, and fails to grasp the reasons for the limitations of a dependency analysis. Nationalism, Ideology and the Left-Nationalist Problematic A full understanding of Naylor must recognize his work for what it is:

an internal critique of the original bourgeois problematic. As such it fails 75

Studies in Political Economy

to transcend the original ideological concepts and develop an opposing theoretical problematic. Here I shall not recapitulate the exercise of "setting Naylor straight" by revealing the inconsistency of his framework with received doctrine. I am concerned primarily with the manner in which his work has come to form the central core of the left-nationalist problematic and the stultifying effect this has had on the development of a revolutionary problematic.l" As we have seen, bourgeois Canadian political economy is not so much a critique as a confession to fatalism - a justification for remaining failures in the achievement of national political and economic sovereignty and the failure to transcend the internal national problem. Naylor's response was to take this theory and, in his own words with respect to Creighton, to "stand it on its feet." The process of standing Creighton on his feet essentially consisted of a reversal of Creighton's eulogy to the progressiveness of the dominant Canadian commercial class fraction, while retaining the notion that they were the driving force in Canadian development or perhaps more accurately, underdevelopment. Naylor correctly assesses the fatalistic interpretation of bourgeois theories of development as an ideological apologetic. He concludes instead that, far from representing a progressive force that epitomized national aspirations, it was not in the class interest of the Canadian bourgeoisie to pursue distinctly independent interests. Thus his analysis is aimed essentially at debunking the myth of the validity and integrity of Canadian bourgeois national leadership. In itself, this is an important ideological task. However, it is merely a first step. If we leave the matter here we are simply substituting for the bourgeois apologetic a trite and moralistic apportionment of blame. Continued theoretical development is limited by the extent to which nationalist ideological concepts are retained. No simple equation between a national focus and ideology should be made. By nationalist ideology I mean a process of reification through which the nation assumes a validity and integrity, and is attributed with a will and goals which are independent of the particular social and class interests of which it is composed. An analysis is nationalist insofar as it poses its question in terms of national leadership. It is ideological insofar as the crisis of national leadership is seen as fundamentally a crisis of unfulfilled national aspirations rather than as an inability to sustain accumulation in the face of foreign oppression. The notion common to both Canadian left-nationalists and bourgeois nationalists is that manufacturing is synonymous with development - that a manufacturing economy is the natural goal of national development.

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

There is a logical fallacy here and it is very close to the stages theory of vulgar Marxism. The implication is that the struggle for class hegemony is based on the need to accomplish some teleologically defined goal which proceeds through discrete stages. As such, the analysis is fundamentally idealist. In political terms the conclusion appears to be that if we desire independent industrial development, then socialism is the only alternative since it is not in the class interests of the Canadian bourgeoisie to pursue distinctly independent interests. Perhaps so, but such radical rhetoric falls far short of a materialist analysis. Rather, it appears as a slight of hand by which socialism is substituted for liberalism as an alternate route to the same national goal - a goal which appears to exist in an ideal world in search of a class bearer. However, if the structural relations of the world economy have not relegated such a role to Canadian capital, in what sense can it be said that this role has been displaced to the exploited classes? Here we are left in a complete theoretical vacuum. According to Naylor, "the dominant class is directly dependent on the metropole; other classes, in contrast, are defined by their productive relationships with the dominant class and thus are related only indirectly to the metropolitan class structure. "35 Thus the entire question of the nature of the subordinate classes and class struggle is left in abeyance. It is not simply a matter of filling in the gaps, of adding class categories to the dependency framework. Classes exist in dependency theory formulations, but as passive categories defined in relation to a transcendent structure or, at best, as categories whose precise status and role is left undefined. Naylor, for instance, suggests that "while the internal dialectics of class and of capital accumulation may determine the nature of metropolitan expansion, the social structure and the structure of capital in the hinterland cannot be regarded as independent of the metropole.' '36 The issue here is not the dogmatic assertion of the primacy of internal over external social forces, but the problem of conceptualizing class struggle at all within a dependency framework. The difficulty can be illustrated through an examination of the basic concepts which define dependency theory. For example, underdevelopment is not a theoretical concept, but is always a descriptive category defined in comparative terms to development. In the Canadian case, a similar binary focus is apparent in the categories of staples versus industrial production. As opposite poles in a structural unity, these categories are critical abstract representations of a condition, of a failure to achieve a goal. It is not a social process and a social relation which is

77

Studies in Political Economy

the object of the critique. That is, the problematic remains bounded by the empirical bourgeois categories of "efficiency" and "rationalization" rather than the social analytical concepts suggested by the notion of class exploitation and class domination / subordination. Therefore, the radical rhetoric notwithstanding, the nature of the debate is restricted to a debate over policy alternatives. This conclusion is, of course, circumvented by the imposition of the Marxist concept of class struggle on the basic model, but the ad hoc character of this appendage is clear. For instance, the commercial classes become class enemies but they become so by virtue of their identification with the structure of dependency and their position as impediments to economic rationalization. Class struggle then emerges as a conscious response to a perceived social malaise. It is not a constant and driving force of historical development. It is necessary to repeat that the critique of dependency theory must not be based on the assertion of the primacy of internal class dynamics over external relations." That is pure ideological dogma. The problem is the difficulty of finding any central place for the notion of class struggle at all within a dependency framework. It is not that classes are not referred to - much bourgeois analysis does as much. Where Marxism differs is in the specification of classes as they arise within struggle. As such they are analytical concepts rather than descriptive categories. It is this dynamism which is missing from dependency formulations, and it is this which marks the origins of the theory within a policy debate rather than within a class struggle perspective. External Control, Capital Accumulation and Class Structure

Let us be clear on one thing - Naylor's work and that of his counterparts concerning third world development should have long since rid us of analytical frameworks in which Euro-centered models of class development are dogmatically transposed to the periphery. In their polemical confrontations with the ideologues of both the right and the left, they have been instrumental in undermining both orthodoxies. I believe that we all owe them a tremendous debt. Their very real accomplishment has been the assertion of the specificity of capitalist development in peripheral social formations, It is necessary to take seriously the core of Naylor's analysis in so far as it suggests that the central dynamic of capitalist accumulation in countries such as Canada did not conform to the classical Marxist model of class formation. Classical Marxist theory suggests that development is synonymous with self-sustained capitalist accumulation - the extended reproduction of the capital/wage labour relationship. The theory requires the existence

78

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

of generalized commodity production and, through the alienation of the means of production from the direct producers and its concentration in the hands of the few, the division of society into two fundamental classes of capital and wage labour. The result of this "primitive accumulation" is that both classes are then dependent for their existence on the sale of commodities/labour power in a competitive market. Individual capitals are, therefore, forced into competition with one another in the sale of commodities. The form that this competition takes is to cheapen the value of the commodity through reducing the value of labour power; either absolutely, by lowering the level of subsistence of the working class, work intensification or lengthening the working day or relatively, by increasing the organic composition of capital and thus increasing productivity per worker. When the working class has achieved a sufficient level of organization to defend wage levels or further increases in the absolute exploitation of the labour force are blocked, competition between capitals in the sale of commodities will increasingly be forced to take the form of innovation and investment of capital to raise the productivity of labour. Thus capital comes to rely on relative surplus value as a normal means of competing with other capitals. It is this built in imperative to accumulate and constantly increase productivity which Marx saw as unique to the capitalist mode of production, and it is this which constitutes its "progressive face." This classical formulation, with its insistence upon (I) the centrality of class production relations for the understanding of development and (2) the understanding of development as the establishment of the expropriation of relative surplus value as a normal condition, is rigorously asserted in a recent article by Brenner" as a critique of neoMarxist interpretations of capitalist development and underdevelopment. Brenner's contribution has been both valuable and timely. Nevertheless, I believe that the basis for the achievement of condition (2) requires some rethinking with respect to Canada. Some years ago, Emmanuel'? advanced the revisonist thesis that, under capitalism, it is consumption that fuels production. That is, those areas of the world which began with a relatively high standard of living maintained an inherent advantage in that capitalist production was stimulated by the prospects of the internal market. In this simplistic form, the idea has rightly been rejected by Marxists because it seemed to place the emphasis on the sphere of exchange rather than the relations of production as the driving force of development.w Nevertheless, I believe that Emmanuel does identify a real exception with respect to white settler colonies and this exception can be explained in terms of the development of the relations of production.

79

Studies in Political Economy

Fundamentally, the understanding of the peculiarities of the Canadian development pattern entails the reconceptualization of the role of independent commodity production. Under certain conditions pertaining to white colonial settlement, namely, where commodity exchange on a world market is an immediate and absolute necessity for survival, there is reason to believe that competition between independent commodity producers in the sale of commodities provides an imperative to accumulate in the interests of increased productivity which is analogous to the innovative imperative generally attributed solely to the capitalist production process." The family farm in North America has been the most outstanding example of the viability and persistence of independent commodity production. The a priori notion that the independent ownership of the means of production allows escape from the market imperative through recourse to a natural or subsistence economy is valid in an abstract sense, but that was certainly an ultimate resort." The level of subsistence already accepted as normal by immigrants, along with integration into a world commodity exchange system, implies social needs for both producer and consumer goods and the continual creation and recreation of these needs on an expanding scale. A retreat to natural economy was as socially unacceptable as would be any reduction in the historically and socially defined subsistence level of a wage labour force. It must be remembered that the form of legal ownership of the means of production and the relatively progressive political system allowed the benefits of innovation to accrue in large measure to the individual. Independent commodity producers, in this situation, could and did compete by raising their own surplus through technological innovation, thus sustaining and increasing their real income. A mode of production constitutes a separate mode of production insofar as it is governed by a distinctive developmental dynamic. Independent commodity production in North America was not simply dominated by the capitalist mode of production, but was governed by a similar dynamic imperative. The theoretical elaboration of this thesis is beyond the scope of the present work. However, some preliminary observations can be made. In the North American situation, characterized by a fairly constantly expanding agricultural frontier, concentration of ownership over the principal means of production, land, was not always feasible or realistic. First, such concentration did not necessarily guarantee access to a cheap and plentiful supply of labour since it did not entail the dispossession of direct producers. The principal regions where concentration did occur at an early stage were associated with slavery rather than a free wage labour force. Secondly, independent commodity producers were far from being

80

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

a mute political force. Certainly they occupied the first line of resistance to either the imposition of slavery or a Wakefieldian solution. Their political strength was in part due to a cultural tradition of independence and a democratic legacy inherited from Britain. Ultimately however, the relative abundance of cheap land and the difficulty of limiting access to it were the crucial factors tipping the balance in favour of independent commodity production as opposed to a capitalist production process. With perhaps some noteable exceptions, such as the virtually destitute Irish, the opportunity existed for the immigrant to choose between wage labour and independent commodity production. A statement by a British trade unionist in 1875 reflects this expectation: "Farm labour for hire is in Canada only a transient avocation, there being in this country no large body of men who expect to devote their lives to working for wages, as every healthy and sober man can easily become a landholder. "43 However unduly optimistic this assertion might be,44 the point is that "in a situation where the bulk of the agricultural work force was made up of owners of land rather than landless farm labourers, incomes were tied securely to agricultural productivity.t'< The existence of this relatively progressive and high income alternative to wage employment, provided an upwardly buoyant pressure on the general level of wages. The phenomenon of a comparatively high wage economy in turn determined that, if the capitalist production process was to take place at all, it had to be relatively capital intensive. Potential industrial capitalists existed in the form of enterprising independent commodity producers as well as merchant and financial capitalists. However, a potential wage labour force awaited mass immigration from Europe and the closing of the agricultural frontier. The social relations of production established in North America presented few barriers and a positive incentive to the development of sustained technological innovation. There was nothing inherently backward about North American commercial capitalists or the dominant production process. This cannot be attributed simply to the enterprising progressive culture of the North-western European immigrant. Neither was it purely the result of a high living standard guaranteeing a secure internal market. While market factors are important, the point is that the successful defence of an historically established subsistence level provides a barrier to increasing the extraction of surplus labour through the absolute immiseration of the direct producers. The process of innovation and accumulation, therefore, can be seen as a social process and a social imperative and not an entrepreneurial instinct. The relative speed with which the capitalist production process was established was not the result 81

Studies in Political Economy

of the will or the entrepreneurial orientation determined by the balance of class power.

of the ruling elite, but was

A further note should be made concerning the question of market size or, more precisely, the importance of securing a captive market. The establishment of a capitalist production process faced serious obstacles in terms of competition with better established foreign producers. As we have seen, the option of competing against more technically sophisticated foreign capital by the super-exploitation of a low wage labour force was severely restricted. Therefore, a logical option was to by-pass that route in favour of large scale production. In practice, it is difficult to conceive of how such an abrupt leap could have been accomplished without tariff protection of the internal market and technological and capital borrowing. Some industrialization was and might have continued to occur in any case: for example, manufacturing based upon uniquely North American market needs such as certain sophisticated farm equipment, or industry based upon particularly rich or unique resource endowments. However, in basic producer goods sectors such as steel, and for many consumer goods such as textiles, innovations in transportation technology and economies of scale in mass production had by the second half of the nineteenth century already begun to undermine the viability of small scale industry oriented towards geographically sheltered local markets." Seen in this light, Naylor's thesis pertaining to the two major routes to capitalist development strikes close to the mark, although he has misconstrued the fundamental forces at work. The first route is, in fact, that described by the classical Marxist model of primitive accumulation, and is probably most fully applicable to Britain, the first country to industrialize. The Canadian variant of the second route cannot be explained simply as a process of merchants "reaching back" to control production. The point is that industrialization, as the culmination of a lengthy process of primitive accumulation, was in large measure blocked; not by the conservatism of merchant capital, but by the strength and viability of independent commodity production. It was not the dependency of Canadian capital which determined the persistence of commercial capital as a dominant fraction of capital, but the inability of capital to exert effective control internally over the means of production or, more to the point, the impossibility of excluding the majority of the population from ownership of the means of production.f Therefore, while both processes of capitalist development were in evidence, as Naylor suggests, Canadian industrialization was characterized by a comparatively rapid adoption of large scale, relatively capital intensive industry, and this did represent something of a disjuncture. There is nothing particularly unique in this aspect of the Canadian

82

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

experience. In fact, to the extent that the National Policy can be seen as an industrialization policy, it was a conscious effort to emulate the earlier economic protectionism of the United States whose industrial development was also financed by Britain. Whether the first route was a possibility is speculative. The real point is that once the world economy reached a certain stage of sophistication and integration, the pace of technological advancement and capital accumulation became increasingly governed by competition between the production units of various nation-states for the sale of commodities on indigenous and world markets. Given the tremendous disadvantages of late-comers to the scene, technological and capital borrowing may appear as an attractive political alternative to increasing the absolute immiseration of the population to socially and/or politically unacceptable levels. Thus, capital accumulation becomes more and more guided by conscious political decisions. Third world states, in alliance with foreign capital, have adopted the route of technological borrowing and the development of sectors whose growth is based on relative surplus value rather than pre-capitalist forms of production and/or absolute surplus value, despite the fact that a wage labour/capitalist relationship may be poorly developed internally. We would be hard put to identify a primitive accumulation process in these countries analogous to that of Britain. Yet, it is capitalism that is being developed in any case. Given the possibility of the development of capitalism in this manner, the question arises as to the extent to which this form of capitalism retains its progressive face - that is, a self-sustained accumulation dynamic. In contrast to the bleak prognostications of dependency theory, I do not believe that a definitive a priori statement can be made. The precise nature of the development route taken, and the period and conditions under which it is taken, have serious implications for subsequent development. Ultimately it is always necessary to refer to the specific balance of class forces within each social formation. An import substitution model such as Canada followed can lead to technological dependence, vertical integration across national boundaries and, consequently, continued economic and perhaps political dependence. Yet, there is as much to distinguish Canadian development from a third world development model as there is to link it. The advantage that Canada enjoyed compared to third world countries was a particular balance of class forces capable of maintaining high wage levels and a relatively viable internal market. Even so, without protectionism and the existence of a captive market in the form of the Canadian west, 83

Studies in Political Economy

the high income of the internal market may not have been enough. In any case, the combination of these factors determined that the accumulation dynamic was not dependent solely on external forces, but was also internally induced. Class Formation and Class Struggle

The most glaring weakness of the left-nationalist problematic is its inability to add much of substance regarding the specificity of class struggle in Canada. In seeking to illuminate external relationships, the normal conflicts pertaining to a working class/capitalist relationship are simply assumed. Despite the fact that the capitalist production process belatedly came to dominate in Canada, the history of its development undoubtedly had a profound influence, not only on the character of the ruling class, but on the distinctive character of the Canadian working class - its ideology and its political and economic organization. A few speculative points can be drawn from the preceding analysis. (1) The particular balance of class forces in Canada made the assertion of an independent working class political position extremely difficult. On one level, the persistence of an agrarian economy meant that the Canadian working class, even defined as all those who work for wages, constituted a numerical minority of the population until well into the twentieth century." When a political party with a significant working class mass base was finally formed in the 1930's, its viability necessitated an alliance with radical agrarian elements. This political alliance, articulated by the Cooperative Commonwealth Federation, was a reflection of the real weakness of the working class within what was still largely an agrarian economy. In an earlier period, the working class was frequently driven into a collaborative electoral strategy with the bourgeoisie against low tariff agrarian interests, in defence of the indigenous industrial development fostered by the National Policy.s? While the support of organized labour for such a policy was far from universal, there remained an uneasy tension, never decisively resolved, between those labour leaders who threw in their lot with one or another of the major bourgeois parties, and those who sought to assert an independent labour interest. The difficulty was that an independent labour interest was far from being clear within a political economy as apparently artificial as Canada's. The Canadian route to industrialization allowed the ruling class to more effectively represent itself as the embodiment of a corporate national interest. At least until the 1930's and possibly beyond, the uneven nature of the expansion of capitalism in Canada determined that it was independent commodity producers rather than the working class which often offered 84

Ray Schmidt/POliTiCAL

ECONOMY: A CRITIQUE

the strongest political opposition to Canadian capitalists. The effect was to blur the distinctiveness of class political positions on a variety of issues. "A triadic class structure has a unique complexity resulting from the possibility of co-operation in conflict, the more so since there seemed on practically every issue of significance to be grounds to unite class interests as well as to divide them. "50 The lack of a long history of distinctive class struggle oriented political organizations is a legacy to which the contemporary Canadian working class is heir.

(2) Numerical strength is important, but it is not necessarily a decisive variable in the development of independent political organization. I have argued that the general level of incomes was determined partially extraneously to the capitalist production process. In contrast to Europe, independent commodity production in Canada provided an upwardly buoyant pressure on the general level of wage income. A purely mechanical transposition from this thesis would suggest that high incomes made more cohesive forms of mass organization somewhat superfluous. However, the idea that the intensity of class struggle is an automatic response to the level of absolute immiseration is not tenable. It is not necessary to succumb to the frontier myth of a uniquely North American individualism to appreciate the significance of high incomes on the development of working class organization. The transition from absolute surplus value to relative surplus value in Europe ultimately necessitated the intervention of the state to counter the worst abuses of an unrestrained capitalist accumulation process which was, quite literally, in danger of killing off its own labour force. State intervention was carried out partly as a result of working class pressure, and partly through the foresight of more progressive allies drawn from within the ruling class itself. The point is that, in capitalist social formations, it has generally been the state itself which has provided the locus for political organization - through the legitimation of political parties and/or through fostering the development of corporatist political forms. The electoral weakness of the Canadian working class meant that the party option was scarcely viable. On the other hand, the objective basis did not exist for the development of corporate structures either. Corporatist forms of class collaboration have utility for capital as a whole only as a vehicle for ensuring the stability of wage levels and the uniformity of the rate of exploitation of labour power in the production process. Corporatism is as much a guarantee against "cheating" by competing capitals by way of reducing the level of established labour conditions, as it is a means of easing working class militancy. Its political attractiveness to capital is in periods of crises of accumulation. 85

Studies in Political Economy

In some European contexts the establishment of at least a minimum level of uniformity in the conditions of labour was in the long term interests of the reproduction of capital as a whole on the basis of relative surplus value. The Canadian ruling class, despite its .official corporatist ideology, bitterly resisted any real working class input in terms of the establishment of actual organizational structures. Even the minimum guarantee of the right to collective bargaining was not achieved by the Canadian working class until the middle of the Second World War. The fact was that Canadian capital had nothing to gain from corporatism beyond the assurance of a reduction in working class militancy something which the working class had no interest in offering and the labour leadership would have no power to ensure. That the conflictual process between labour and capital took place largely outside of the mediation of firmly established and formalized state structures meant that the ability to sustain mass organizational forms of the working class was correspondingly reduced. There was simply no common ground upon which they could obtain legitimacy over an extended period. The Canadian pattern was not simply an indication of the greater strength of Canadian capital relative to its working class, and it was not a question of the size of the latter per se. The specific contradictions of capitalist accumulation necessitate the organization and integration of the work force to varying degrees and in particular structures by the state which, as the organizational locus of capital as a whole, is also the organizational locus of class conflict. In Canada, the particular problems of capital accumulation allowed a policy of systematic exclusion of the working class and, thus, the continued failure to establish the legitimacy of its separate organization. (3) The development of a class' distinctive sense of itself is forged in a specific history of struggle. The working class of each social formation has a specific history, tradition, and, if not a culture, at least a popular ideology which defines it in varying degrees as distinctive from, and in opposition to, the dominant class forces. This approach to working class formation has only recently begun to receive serious attention in Canada.!' There is no lack of a militant and often radical working class history in Canada. Workers do not adjust passively to their role as wage labourers, and nothing in the preceding analysis should be taken to suggest that capital did not attempt to reduce the value of labour power to the minimum possible level. Nevertheless, the lack of a consistent and systematic historical process of primitive accumulation in Canada has undoubtedly had serious consequences in terms of the development of a more general sense of class consciousness and class solidarity.

86

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

Primitive accumulation entails not only the alienation of property, but the usurptation of what are considered to be fundamental and vested human rights. The "trauma" of dispossession appears .to have been crucial in the welding of a sense of solidarity and common resistence in the early stages of class formation. The uneven development of capitalism in Canada meant that this process was experienced to varying degrees and at different times by elements and sectors of the Canadian working class. There has evidently been a lack of a shared tradition of struggle and a common struggle to preserve and extend a specific tradition of independence such as was shared by, for instance, the British working class. To be sure, similar types of processes can be seen at work at various times. For example, there were the individual traditions of the various skilled crafts which stubbornly resisted large scale industry and its attack on their control of the labour process." It is just such a common response to a common process which can be seen to be the basis of unity. However, the effect of immigration on the uniformity of experience of such a process was far reaching and, ultimately, it was through immigration that the Canadian working class was constituted. 1fhe divisions within the working class created by language and ethnicity were one source of disunity, as was the ability to create wage competition between immigrants and the more established work force. More to the point however, immigration created a series of disjunctures within a common history of the development of the class struggle. Each wave of immigration corresponded to a distinct stage of accumulation, and immigrants were incorporated in a specific manner and through specific struggles - regionally and sector ally, depending on the periodand within the class hierarchy as skilled or unskilled, as independent commodity producers or wage labourers. Conclusions The dominant neo-Marxian interpretation of Canadian development has evolved out of a revision of bourgeois historiography with the addition of concepts adopted from dependency theory. To a large extent, this has limited its scope to a polemical confrontation with bourgeois interpretations and strategies of development. Its focus has been on the behavioural characteristics of the dominant fraction of Canadian capital and this has limited its ability to formulate a class analysis. On the other hand, an entire body of class analysis, both from an earlier Marxist tradition-" and subsequently'< has either rejected or ignored the left-nationalist contribution. This is justified in so far as the notion of Canadian capitalists as a "degenerate" form of capital is scarcely a useful analytical starting point. Nevertheless, the features of

87

Studies in Political Economy

Canadian development which left-nationalists have identified as unique, however obscured their understanding of these features might be, do have important implications for our understanding of class formation and the future of Canadian development. First, the comparative weakness of Canadian capital historically or more precisely, its long standing inability to transcend independent commodity production, led to a prolonged commercial orientation and a greater dependence upon foreign capital and foreign technology when industrialization did occur. The circumstances which led to Canadian industrialization by way of an import substitution model have had long term consequences in terms of foreign ownership and the branch plant nature of the Canadian productive sector. That fact cannot be ignored by socialists. The future of the Canadian economy cannot be predicted through the use of traditional Marxist concepts defining the existence or non-existence of a national bourgeoisie. The Canadian bourgeoisie occupies a structural position in the world economy which is qualitatively different from that of a national bourgeoisie, although it is certainly not simply comprador.P Pertinent to this debate is the question of what role Canada will come to assume in the present restructuring of the world economy. 56 A dependency framework, however, has limited utility in the further analysis of this question and in particular, in the development of a socialist strategy. The future of capitalist accumulation in Canada is not a question that can be resolved through an analysis of the entrepreneurial orientation of the Canadian elite. The present restructuring of the labour process and the social division of labour in Canada is part of a global restructuring of capitalism and must be analysed on that level. The resolution of this process will not be determined by the willingness or unwillingness of Canadian capitalists to "sell-out." The concentration on but one side of the development of the capitalist relationship has obscured the appreciation of the importance of class struggle in this process. In part, what is lost is the recognition that capitalism is not just capitalists. The importance of an internally induced process of accumulation should not be overlooked. I have attempted to illustrate the specificity of Canadian class formation, particularly in terms of the centrality historically of independent commodity production. In doing so, I have attempted to establish some links between the development process and the particular ideological and political character of the Canadian working class. The failure to develop distinctive and lasting ideological and organizational forms similar to those in Europe has often been interpreted as a sign of the relative weakness of the working class in Canada. However, I have argued that North American "exceptionalism" arises largely from the differences in

88

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

the accumulation imperative in the respective continents. While its historical and cultural heritage is important, the future volatility of the Canadian working class cannot be predicted by its present conservatism. Finally, I have attempted to show that the question of Canadian class formation cannot be reduced to a Naylor versus Ryerson dichotomy. As much as we might strive to assert the universality of class struggle of a particular form, or to disguise our impotence through polemics aimed at our capitalist elite, we are continually forced to face reality and the infinite complexity of that reality.
NOTES See Daniel Drache, "Rediscovering Canadian Political Economy." Journal of Canadian Studies, 9:3 (1976). 2 R.T. Naylor, "Setting Naylor's Critics Straight," Canadian Dimension (1974), 63; emphasis added. 3 For example, the Marxist theory of value is fundamentally different from that of classical political economy. It involves a conceptual leap from the notion of "labour" to that of "labour power." It is not the moralistic conclusion that, since labour is the source of wealth, it should derive the benefits of its creation. No such leap is evident in Canadian neo-Marxism. Rather, I shall attempt to show that its conclusions are primarly moralistically based. 4 I have attempted to isolate only those who I hold to be absolutely key figures. For a much more extensive bibliographic review, see Drache, "Rediscovering.' ,

5 To a lesser extent we might add Lower and MacIntosh to this group. However, they have been less influential in terms of left-nationalist thinking. 6 A.R.M. Lower, Great Britain's Woodyard: British America and the Timber Trade, 1763-1867 (Toronto 1973), xiii. 7 Harold A. Innis, Essays in Canaian Economic History, ed., Mary Q. Innis (Toronto 1956), 252-72. 8 Ibid., 399. 9 Donald G. Creighton, The Empire of the St. Lawrence (Toronto 1956), 40. 10 Harold A. Innis, The Fur Trade in Canada: An Introduction to Canadian Economic History (Toronto 1956), 5. II Ibid., 74. 12 Ibid., 401-2. 13 Innis, Essays, 405. 14 Mel Watkins, "A Staple Theory of Economic Growth," Canadian Journal of Economics and Political Science, 29:2 (1963). 15 Kari Levitt, Silent Surrender: The Multinational Corporation in Canada (Toronto 1970), 46. 16 Like the ECLA economists, Canadian political economists such as Innis viewed the international capitalist system as an interdependent structure based on a world division of labour. Advantages and disadvantages are related to the character of the commodities specialized in. Both, therefore, reject the notion of a natural equilibrating dynamic assumed by the comparative advantage theory of international trade. 17 Mel Watkins, "Resources and Underdevelopment" in Robert Laxer, ed., Canada Limited: The Political Economy of Dependence (Toronto 1973). 18 The Waffle's constituent elements were extremely diverse including a range

89

Studies in Political Economy

19

20

21

22

23

24

25 26 27

28 29 30 31 32 33 34

from committed Marxists to left-liberals to anti-nationalist Trotskyist elements. Obviously, all left-nationalists were not a part of the Waffle either. For the first Marxist debate on the "National Question" see Gary Teeple ed., Capitalism and the National Question (Toronto 1972). Canada Limited contains selections by the most prominent leaders of the Waffle. For example, R.T. Naylor, "The History of Domestic and Foreign Capital in Canada" in Canada Limited discusses the origins of Canadian capital as a history of corruption and brigandry reminiscent of Gustavus Myers, A History of Canadian Wealth (Toronto 1972) (original 1914). The notion of the state as a "capitalist state" is interpreted in an instrumentalist manner by Naylor in his assertion that Canadian capitalists "created the Canadian state in their own image" in "Domestic and Foreign Capital," 45. The article in Gary Teeple ed., Capitalism and the National Question is the first statement of his theory. Naylor's "Domestic and Foreign Capital" adds little of substance theoretically; The History of Canadian Business, 2 Vol. (Toronto 1975), is more an empirical account of the operation of Canadian commercial capital than a further development of theory. A subsequent, "Dominion of Capital: Canada and International Investment" in A. Kontos ed., Domination (Toronto 1975), appears to respond to some of the most glaring points of controversy generated by his early work but the gist of it is within a dependency framework. The problem is that the "Naylor thesis" has subtly evolved over time. This evolution is of interest in itself for it illustrates the difficulties of working within a dependency framework. Ultimately, Naylor does not transcend his initial theoretical inconsistencies. R.T. Naylor, "The Rise and Fall of the Third Commercial Empire of the SI. Lawrence," in Teeple ed., Capitalism and the National Question, 24. Naylor's discussion of entrepreneurship is actually based upon Schumpeter, ibid., 37n. Naylor develops a notion of intra-capitalist class conflict out of a Schumpeterian analysis which discusses the divisions within capital in terms of the five functions of capital, ibid., 3. Ibid., 3. The prime example of an industry which Naylor appears to suggest was developing spontaneously was the agricultural implements industry. The most important contributions to this debate are L.R. MacDonald, "Merchants Against Industry: An Idea and Its Origins," Canadian Historical Review, 53 (1975); Stanley B. Ryerson, "Who's Looking After Business," This Magazine, 10 (Nov I Dec 1976); and Glen Williams, "The National Policy Tariffs," Canadian Journal of Political Science, 12 (1979). Naylor, "Critics Straight," 63. Ibid., 63. Williams, "National Policy Tariffs." MacDonald, "Merchants Against Industry." Naylor, "Dominion of Capital," 52. Ibid., 67. One aspect of this is the continuing one-sided focus on the precise nature of the Canadian elite. See Wallace Clement, The Canadian Corporate Elite: An Analysis of Economic Power (Toronto 1975); Continental Corporate Power: Economic Elite Relations between Canada and the United States (Toronto 1977). While Clement's contribution to Marxist scholarship is certainly not trivial, the failure to situate his analysis of the Canadian ruling class within the dynamic of class struggle leaves the continuing impression of a capitalist class acting unilaterally cognizant only of its "external relationships." This poses the question of how and where a socialist strategy might enter the analysis. On the other hand, the contention that capitalism is propelled by a universal

90

Ray Schmidt/POLITICAL

ECONOMY: A CRITIQUE

35 36 37 38 39 40

41

42

43 44

45 46

47

48 49 50 51

development dynamic, and that there is nothing particularly distinctive about Canadian capitalism with respect to this dynamic, is scarcely enlightening. The polarization of the interpretation of Canadian class formation between Stanley Ryerson and Naylor has extended for too long. It is not a question of finding a middle ground but of transcending both of them. Naylor, "Rise and Fall," 2. Ibid. The worst examples of this have been in contemporary critiques of dependency theory. Robert Brenner, "The Origins of Capitalist Development," New Left Review, 104 (July/August 1977). Arghiri Emmanuel, Unequal Exchange (New York 1972). In Canada, with the possible exception of Glen Williams "Canada: The Case of the Wealthiest Colony," This Magazine, 10 (Feb/Mar 1976), the "rich colony" phenomenon has been ignored. Of course, Emmanuel's thesis did not go greatly beyond Watkin's, "Staple Theory" article written a decade earlier. Capitalist accumulation, of course, has a specific meaning pertaining to the extended reproduction of a capitalist relationship of exploitation. Here I am obviously using the term more loosely to apply to any improvements or investments which increase the productivity of the producer. "Backwaters," of course, did exist. However, they were the exception rather than the rule. V. Fowke, The Nationa/ Policy and the Wheat Economy (Toronto 1957), chap. 2, suggests that the notion of a subsistence agricultural economy was largely mythical. "The pioneer settler relied continuously from the time of his arrival upon the commercial and processing facilities which formed the basic capital equipment of these non-agricultural centres. The hundreds of, urban communities which existed in Upper Canada in the late 1940s could not have become established in areas in which the settlers were selfsufficient," ibid., 2. More recent analysis suggests that, to the extent that stagnation occurred, it was limited to those areas that were to prove decisively inferior in an environmental sense to the land subsequently settled in the western interior, see D. McCallum, Unequal Beginnings (Toronto 1980). McCallum, Unequal Beginnings, 97n. While land may have been relatively cheap, it was seldom completely free. Even when the possibility of homesteading or simply squatting existed, it was some time before the settler could derive a livelihood from the land. McCallum, Unequal Beginnings, 97. For example, iron was probably smelted in Ontario as early as 1800 near Gananoque and sporadic attempts to establish a blast furnace continued until the mid-century. The last attempt, near Marmora in 1847, failed when "after the construction of the St. Lawrence canals British iron could be brought up the country and sold at a much lower rate, and Mr. VanNorman was compelled to close his works with the loss of everything," Report of the Ontario Bureau of Mines (1893),21. It should also be noted that the period of most rapid industrial expansion in Canada was based partly on the extension of independent commodity production in the opening of the Canadian west and, therefore, considerable commercial as well as industrial expansion. Leo Johnson, "The Development of Class in Canada in the Twentieth Century," in Teeple ed., Capitalism and the National Question. P. Craven and T. Traves, "The Class Politics of the National Policy, 1872-1933," Journal of Canadian Studies, 14:3, (1979). Ibid., 37. B. Palmer, A Culture in Conflict: Skilled Workers and Industrial Capitalism in Hamilton. Ontario, /860-/9/4 (Montreal 1979).

91

Studies in Political Economy

52 Palmer, A Culture in Conflict; Greg Kealey, Toronto Workers Respond to Industrial Capitalism, 1867-1982, (Toronto 1980). 53 S.B. Ryerson, Unequal Union: Roots of Crisis in the Canadas 1815-1873 (Toronto 1973). 54 Palmer, Culture in Conflict; Kealey, Workers Respond. 55 Nicos Poulantzas, "Internationalization of Capitalist Relations and the Nation-state," Economy and Society (1974), has suggested the inapplicability of the concept of the national bourgeoisie with respect to the analysis of the present stage of imperialism and the "internationalization of capitalist production relations" within advanced capitalist formations. In some respects, Canada might be seen as a proto-type of the process Poulantzas describes in Europe. 56 F. Caloren, M. Chossudovsky and P. Gingrich, Is the Canadian Economy Closing Down? (Montreal 1978).

92