Harold Innis, an underappreciated economist, on commodity-driven growth

This Canadian economist (1894-1952) deserves an installment in the “underappreciated economists” series.  In addition to his seminal work on the economics of media and communications (better and earlier than McLuhan), he has some excellent pieces on the fur trade in Canadian economic history, and they are more contemporary than at first meets the eye.  Innis’s editor, Daniel Drache, sums up the main point:

Innis could not stress strongly enough that internal markets respond to a different logic and set of needs than externally based systems of exchange.  This occurs because the international price mechanism is volatile and subject to violence and instability in income fluctuation.

Most of all, Innis is worried about commodity and resource-based growth.  Five or ten years from now, will Canadians, Australians, and Brazilians be talking about Harold Innis as we do Hyman Minsky?

Innis also argued that the importance of the fur trade gave Canada a somewhat more peaceful history with its Native Americans than we had in the United States.  Here is a very good Wikipedia entry on Innis, who is still worth reading.

Comments

Harold Innis is most definitely an underappreciated thinker, but you might be happy to learn his name was at least mentioned in my highschool history course with respect to the importance of the cod fishery to defining the Maritimes. The Staples thesis is a strong one as a life long Nova Scotian.

I wonder how relevant he is today, though. Local staples have marginal influence in an open service economy. I wonder how his time-space and "present mindeness" communications theories would interprete the rise of global internet communications. TCs first law answers that question for me:

How Prometheus Is Bound: Applying the Innis Method of Communications Analysis to the Internet
http://cjc-online.ca/index.php/journal/article/view/1338/1396

Reading that paper, it appears seriously flawed and dated. The author didn't foresee (how could she?) the rise of streaming video, chat, blogs and the power of the transferable meme.

"The capacity to self-construct an identity that can be revised at will is, from a certain postmodernist perspective, a step in the right direction (Poster, 2001). In contrast to traditional mass media, the Internet enables person-to-person or many-to-many communications, fosters a multi-associative information flow, and escapes the trap of linear text-based media. In short, it can in ways emulate certain features of oral communications. It remains to be seen, however, whether these features are taken advantage of in the future development of the medium or whether they will be pushed aside by the drive to realize monopoly potential."

The internet in its current state is probably one of the most difficult mediums to form a natural monopoly ever. My feeling based on this paper is that Innis' communications thesis, like his staples and railway theses, is a poor one for the 21st century, too.

Tyler, thanks for the reference. I didn't know Innis' work. I have just found that apparently he has left just one intellectual heir, Prof. Daniel Rache (York U.). Reflecting on the ongoing commodities boom, he has circulated this paper
http://www.yorku.ca/drache/academic/papers/Drache%20canada's%20resource%20curse%20dec%2018.pdf
that seems to be a 21st century-version of Innis' ideas. He pays special attention to Canada's relations with its southern neighbor.

You suggest a parallel between Innis and Minsky --will Innis be to future resource curses what Minsky has been to recent financial crises? Since I'm familiar with both problems, let me say:

1. Leaving aside the celebration of Minsky's work at the beginning of a financial crisis, his work has had little impact on the understanding of post-WWII financial crises. The first two financial crises of the post-WWII were in Argentina (1981-82) and Chile (1982-83) and I was there to rely on Minsky (and Kindleberger) to understand what had happened. I got some interesting ideas but not relevant to the two crises. Later in the 1980s, when I moved to work on other LA countries, it was quite clear that except for Chile, the region's financial crises had originated in the fiscal deficits and the accumulated public debt of national governments (indeed, fiscal deficits aggravated as a result of government bailouts of banks). Kindleberger's historical analysis of monetary and financial systems turned out to be more useful than Minsky to understand the relation between banks and public finance.

2. Although some economists rely on the metaphor of a curse, a review of the economic history of Latin America makes clear that the processes of economic growth based on natural resources have been quite different across countries and within countries and that LA wars and dictatorships in the past 200 years would have not been different from what happened in the past 50 thousand years everywhere. As much as I doubt that economists will rediscover Prebisch as an inspirational source for what may happen when the current boom is over, I doubt we will rely on the recent literature on the resource curse to explain LA's many policy errors and political conflicts while the boom lasts. For example, it'd be grotesque to argue that Argentina's ongoing political comedy (government view) or tragedy (opposition view) can be characterized as a resource curse; or that Chile's exchange rate policy (supported by both government and opposition) has been "caused"/"prompted" by a resource curse (the large nominal and real appreciation of the Chilean peso will cause serious Dutch-disease effects). To argue that abundance of natural resources is a curse amounts to say that guns kill --we know that people kill people and we know that people's past and future behavior determine the abundance/scarcity of natural resources (at least this is what I learnt in Econ 101 and from Julian Simon and other great economists).

"Five or ten years from now, will Canadians, Australians, and Brazilians be talking about Harold Innis as we do Hyman Minsky?"

You mean, as an irrelevant philosopher who refused to pose empirically-falsifiable statements about the economy? I would guess no.

I wouldn't say better than McLuhan, but different. McLuhan was much more of a cultural theorist of communication, not really an economist. He wrote in prose that was both dandy (despite his fairly strict Catholic background) and thought provoking. The canadian approach to communication theory is very interesting, as is their emphasis on a more heterdox approach to economics. As for underappreciated economists, I have to put Hirschman very high, followed by Coase and Schelling.

I excerpt some of Lawrence Keeley's discussion of the more peaceful interaction of European colonists with indigenous Canadian tribes here.

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