THE STAPLES THEORY

Definition of a staple: a commodity which dominates an economy’s exports. In the staples thesis, the commodity must be relatively unprocessed. Fish, wheat and flour, timber and furs are all considered Canadian staple products.

1. Determinants of the staple produced in a region
1. Cost of Production of the staple
1. Resource base
2. Technology
2. External demand
3. Transportation costs
1. Technology
2. Public investment
2. Characteristics of the staple determines the extent of development resulting from staples production.
1. Social organization of production
2. Linkages of staple production: inducement to further investment.
1. Backward
2. Forward
3. Final Demand or income linkage
3. Note that the model is essentially demand driven. Demand for the export product creates derived demand through linkages.

Algebraically: AD = C + I + G + X - M. A good staple not only increases X but also stimulates I and C and tends to reduce M. You have likely seen this equation in discussions of the multiplier and Keynesian economics in macroeconomics classes.

3. Growth paths of a staple producing nation.
1. Successful transformation from one staple to another as markets or technology change. Dried cod is replaced by frozen cod blocks which are later replaced by fresh lobster exports. Oil production becomes a staple export in addition to fish production.
2. Diversification around staples production to the extent that the nation ceases to be a staples producer. Ontario’s development has been interpreted as starting with wheat exports and progressing to industrial development.
3. The staples trap. Continue to produce a staples product which no longer generates an adequate income. Guysborough County still relies primarily on its fisheries which does not provide high incomes in the area. Natural gas production has not yet provided substantial benefits to the region.

Overview of the staples thesis.

Argued that the pattern of settlement and economic development in Canada, up to the 20th century, and perhaps even now, has been shaped by production of a few products for export.

1. Staple production motivated European contact.

2. The technical characteristics of the staple determined the extent of settlement and the other forms of economic production in settlement area. i.e. fishery led to ship building.

3. Successful economic growth required flexibility in shifting from one to another staple and economic circumstances changed.

4. The most successful pattern was when the subsidiary production (for example, agricultural implements and consumer goods for wheat farmers) became more important than the staple, and the economy ceased to be a staple producer.

5. The characteristics of the staple product shaped the type of society which evolved.

The dispersed independent nature of the fishery led to the fragmented political structure of the Maritimes.

The need to defend long trading routes in the fur trade led to the centralizing, imperialistic tendency of Central Canada.

6. Recently there has been increased controversy about the importance of staples exports in determining the path of economic development in Canada.

Intellectual contribution of the staples thesis

1. Harold Innis began to see technology creating social patterns. Paper, papyrus and radio all shaped societies in different ways.

2. Marshall McLuan was a student of Harold Innis and other staples economic historians. The medium is the message and the global village are concepts McLuan developed in the 1970s. The role of the computer in reshaping society has renewed interest in his ideas.

3. The staples thesis and the ideas developed from it by McLuan are uniquely Canadian intellectual contributions.