Canadian Political Economy Ray Schmidt

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Ray Schmidt

CanadianPolitical 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 bour-

geois 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 imposesome 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 feetJ

Studies in Political Economy, No.6, Autumn, 1981 65


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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-classicaleconomics 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 revolution-

ary problematic.' Contemporary Marxian Canadian political economy,

on the other hand, is an eclectic melding of at least three major intellec-

tual 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 scientific-

materialist 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 contradictionsresulting 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 interna-

tional division of labour. It insisted on the specificity of historical circum-

stances 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 was seen as a process of integration into the expanding

world capitalist system. The essentially diffusionist element of this theme

is most explicit in the concept of metropolitanism identified with writers

such as Lower." It is interpreted by Innis as the inexorable "Penetrative

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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 econo-

mic power - the wealth, the energy and ability of the colony ... It was a

re-enactment, upon a distant and insignificant stage, of the classic West-

European struggle - the struggle between insurgent commercial capitalismand a decadent and desperately resisting feudal and absolutist state.?

The merchants were, in effect, the "class medium" by which these

progressive ideals were transmitted to Canada.

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 geo-

graphic obstacles - the imperfections of the St. Lawrence as a transpor-

tation 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 reac-

tionary 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 continen-tal 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.

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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 allencompassing 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 trans-

portation 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 economyaccentuated 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 longterm 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, becameincreasingly 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

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Therefore, it can be seen that Innis and Creighton established the

theme of th e 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-national-

ists. How adaptable is their framework to a Marxian analysis?

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 continentalcommercial 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 hier-

archy 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" conclu-

sions inherent in their work. Rather, the specification of their problematicitself 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 behav-

ioural characteristics of the dominant social classes. Neo-Marxian inter-

pretations were to a large degree anticipated in Watkins' 1963 reformula-

tion 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

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development. Watkins formalized many of the concepts implicit in Innis'

work in terms of contemporary development theory and theories of inter-

national 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 extentto 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 provid-

ing 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 depen-dent 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 unfavour-

able political, ideological and institutional factors. This social environ-

ment 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.

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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 tech-

nology and the availability of factors. The point is that each resulting

social structure had radically different implications for the future devel-opment 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 throughimports. 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 note-

worthy that this conclusion can be formulated entirely within the

parameters of bourgeois social science. Subsequent reformulations of thisthesis 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

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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 toCanada.!? 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 ofdenigration 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 wasmost 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 a n explicit

attempt to establish their analysis within a Marxian perspective. 19

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 outpopular 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

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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 ofNaylor'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 economyhas been the over development of the Canadian commercial classes. The

reason is that historically, the extractive resource extensive form of pro-

duction tended to minimize capital in production relative to capital in

circulation, thus restricting indigenous capital accumulation and concom-

mitantly, 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 mani-

fest. 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 entre-

preneur".

The first operates in the sphere of production, the second in distribu-

tion. 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

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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 isopposed to the mode of operation of industrial capital - the accumula-

tion of surplus value through production. The merchant-financial frac-

tion clung to their mercantile position as intermediaries and, therefore,

participated fully in the import of capital and the alienation of the pro-

ductive 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 produc-

tive 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 commer-

cial origins of the dominant fraction of Canadian capital and in the com-

mercial origins of the Canadian state: "the predisposition of the Cana-

dian 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 pre-

disposition 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 andindustrial capitalists were in any case not distinct." Examples of com-

mercial ventures in the productive sphere include railway investments and

large scale industrial ventures such as textiles, sugar refining and steel

production.

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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 "merchantsagainst industry" thesis. Rather, he suggests instead that

There are two principal routes, with some minor variants, that aneconomy can follow on the road to industrialization. Manufacturing indus-try can grow up 'naturally' from a small scale, even artisanal mode ofproduction when capital accumulation is a largely internal phenomenonbased on the reinvestment of a firm's own profits. A second path impliesdirect development to large-scale oligopolistic enterprise where outsidecapital is invested to facilitate its expansion and where the state takes anactive, direct role in its growth. The first path, if successfully followed,

would lead to the emergence of a flourishing and independent nationalentrepreneurial class. The second mayor may not; it may simply reproducethe 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 interpre-

tation 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 adependency 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 outsidedirection of its development process. However the degree to which theCanadian capitalist class not only has bowed to pressures from abroad buthas deliberately and earnestly set out to induce those very pressures towhich 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 non-

productive contradiction is dismissed, the materialist basis of the analysis

is also undermined. In the end, Naylor fails to transcend the "entrepre-

neurial-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 laissez-

faire 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

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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 inwhich 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 withrespect 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.


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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 insearch 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 transcen-

dent 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 ofcapital 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, underdevelop-

ment 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

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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 consciousresponse 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 classdevelopment are dogmatically transposed to the periphery. In their pole-

mical 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

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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 thusincreasing 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 neo-

Marxist 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 somerethinking 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.

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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 accumu-

late 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 marketimperative 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 re-

creation 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. Inde-

pendent 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. Inde-

pendent commodity production in North America was not simplydominated 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 obser-

vations 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

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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 com-

modity 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 largebody 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 pheno-

menon 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 cap-

italists. However, a potential wage labour force awaited mass immigra-

tion from Europe and the closing of the agricultural frontier.

The social relations of production established in North America pre-sented few barriers and a positive incentive to the development of

sustained technological innovation. There was nothing inherently back-

ward about North American commercial capitalists or the dominant pro-

duction process. This cannot be attributed simply to the enterprising pro-

gressive 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

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of the will or the entrepreneurial orientation of the ruling elite, but was

determined by the balance of class power.

A further note should be made concerning the question of market sizeor, 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 borrow-

ing. 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 depen-

dency of Canadian capital which determined the persistence of commer-

cial 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 character-ized 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

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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 develop-

ment 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 accu-

mulation 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 immisera-tion 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 thesecountries 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 conditionsunder 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 aparticular 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,

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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 theruling 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 asser-

tion of an independent working class political position extremely diffi-

cult. 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, articu-

lated 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 developmentfostered 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

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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 pos-

sibility 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 extra-

neously 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 mechani-

cal 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 politicalparties 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.

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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 extend-

ed 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 contra-

dictions of capitalist accumulation necessitate the organization and inte-

gration of the work force to varying degrees and in particular structuresby 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 andsystematic 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.

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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 indepen-

dence 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 variousskilled 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 period-

and within the class hierarchy as skilled or unskilled, as independent

commodity producers or wage labourers.

ConclusionsThe 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

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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 bysocialists. 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 aquestion 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 forma-

tion, 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 tothose 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

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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, "Redis-covering.' ,

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 advantagetheory 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

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from committed Marxists to left-liberals to anti-nationalist Trotskyist ele-

ments. Obviously, all left-nationalists were not a part of the Waffle either.

19 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.

20 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).

21 The notion of the state as a "capitalist state" is interpreted in an instrumental-

ist manner by Naylor in his assertion that Canadian capitalists "created the

Canadian state in their own image" in "Domestic and Foreign Capital," 45.

22 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 Canadiancommercial 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.

23 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.

24 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.

25 Ibid., 3.

26 The prime example of an industry which Naylor appears to suggest was

developing spontaneously was the agricultural implements industry.

27 The most important contributions to this debate are L.R. MacDonald, "Mer-

chants 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).28 Naylor, "Critics Straight," 63.

29 Ibid., 63.

30 Williams, "National Policy Tariffs."

31 MacDonald, "Merchants Against Industry."

32 Naylor, "Dominion of Capital," 52.

33 Ibid., 67.

34 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 thedynamic 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

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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.

35 Naylor, "Rise and Fall," 2.

36 Ibid.

37 The worst examples of this have been in contemporary critiques of dependency

theory.

38 Robert Brenner, "The Origins of Capitalist Development," New Left Review,

104 (July/August 1977).

39 Arghiri Emmanuel, Unequal Exchange (New York 1972).

40 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.41 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 invest-

ments which increase the productivity of the producer.

42 "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 self-sufficient," 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).

43 McCallum, Unequal Beginnings, 97n.

44 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.

45 McCallum, Unequal Beginnings, 97.

46 For example, iron was probably smelted in Ontario as early as 1800 near

Gananoque and sporadic attempts to establish a blast furnace continued untilthe 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.

47 It should also be noted that the period of most rapid industrial expansion in

Canada was based partly on the extension of independent commodity produc-

tion in the opening of the Canadian west and, therefore, considerable commer-

cial as well as industrial expansion.

48 Leo Johnson, "The Development of Class in Canada in the Twentieth

Century," in Teeple ed., Capitalism and the National Question.

49 P. Craven and T. Traves, "The Class Politics of the National Policy,1872-1933," Journal of Canadian Studies, 14:3, (1979).

50 Ibid., 37.

51 B. Palmer, A Culture in Conflict: Skilled Workers and Industrial Capitalism in

Hamilton. Ontario, /860-/9/4 (Montreal 1979).

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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).

Canadian Political Economy Ray Schmidt

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