Staples Thesis Canada

The specific terminology—staple or staples approach, or theory, or thesis—is Canadian, and the persistence with which the theory has been applied by Canadian social scientists and historians is unique.

The leading innovator was the late Harold Innis in his brilliant pioneering historical studies, notably of the cod fisheries and the fur trade; others tilled the same vineyard3 but it is his work that has stamped the “school.” His concern was with the general impact on the economy and society of staple production. The staple approach became a unifying theme of diffuse application rather than an analytic tool fashioned for specific uses.

Perhaps more to the point, Innis is credited with developing the “staples thesis” of economic development, a class of arguments warning of the dangers of relying on natural resource wealth — “staples” — as a driver of economic growth.

The fact that the staples thesis was never developed in a formal axiomatic framework — this is why it’s called a “thesis” instead of a theory — was not considered to be a fatal flaw in Innis’ time, and it continued as a basis for an active branch of Canadian scholarship after his death in 1952.

Many of the problems that Innis identified can be put down to bad choice for an exchange rate policy.

A depreciating currency can go a long way to mitigating the effects of a bust, and to moderating a boom.

This question — asked by Simon Fraser University’s Nancy Olewiler in the lead article of the latest issue of the Canadian Journal of Economics — is more controversial than it sounds.

Harold Innis may not be a household name today, but he was one of Canada’s most influential economists in the 1930s and 1940s, and he’s still honoured for his role in establishing many of the institutions supporting economic research in Canada.

The standard staples thesis narrative has an obvious starting point: economies like Canada’s that are rich in natural wealth have a comparative advantage in resources, so commodities will form the bulk of our exports. For one thing, commodity prices are volatile, and result in destabilizing cycles of booms and busts.

Moreover, if economic development is driven by capital accumulation and technical progress, and if those are more likely to occur in the manufacturing sector than in the resources sector, the prospects for long-term growth are weakened.

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