From the beginning

The first example of this kind of nihilism in Canadian economics appeared in John Rae's New Principles (1833—4), in which he took precisely the position attributed to Johnson. Specifically, Adam Smith's argument against tariffs would hold only if certain assumptions about conditions on the ground were made (James, vol.II, 1965, 384), and, in general, theory without empirical reference is no guide to policy (ibid., passim).

An analysis of Canadian economic thought in the nineteenth century must start with Craufurd Goodwin's account (Goodwin, 1961). Before the nineteenth century there was some economics in Canada, but very little (Neill, 1991). What one finds in Goodwin is a repeated assertion that most of what was to be found in nineteenth-century Canadian economic thought was too primitive to be called economics, and what was not primitive was borrowed from Britain and the United States. Still, Goodwin draws an interesting conclusion.

During these years [1867 to 1900] the principles of classical economics were generally accepted both in Great Britain and the Colonies, and Canadians were convinced that any use of economic science as a guide to policy would require compliance with doctrinaire laissez faire and the subordination of long run economic, social, and political goals of their policies of tariff protection, railway subsidy, and western land disposal to searching analysis because they feared that examination of means would lead to condemnation of ends. Governments hesitated to consult or to employ professional economists; avenues of publica­tion were closed to amateurs; and in the face of public disapproval universities were reluctant to offer extensive economic training. The ground was fertile in this period for growth of a distinctly Canadian “protectionist” economics, but no Friedrich List or Henry Carey appeared.

(Goodwin, 1961, 203)

But John Rae had appeared and was cited by Prime Minister Macdonald when the National Policy was proclaimed in 1877.

This is not a criticism of Goodwin's account. Goodwin defined economics as normative theory, what Richard Lipsey called “qualitative” theory, and Goodwin was not explicitly addressing the question posed here. Though much more could be said with respect to the nihilism of economic thought in nineteenth-century Canada, it is time to move on to the first decade of the twentieth century, to Gilles Paquet's accounts (Paquet, 1987; Neill and Paquet, 1983) and to Harold Adams Innis.

But before continuing, it is necessary to point out that there is a real difference in economics in the different regions of Canada, as I have detailed in my A History of Canadian Economic Thought. The reader must understand, however, that the delicate political position of French-speaking Quebec in the Canadian federation has generated a mindset that privileges that element in national discourse. Pensee economique has no more influence on the discipline in general in Canada, than has the economics produced in any other region. Indeed, major advances in the discipline have not originated in Quebec or in any other region.

Paquet answers the question, “What has been distinct about economics in Canada?” right off. Economics in Canada, particularly in Quebec, has been “heretical,” which is something beyond nihilistic, where “nihilistic” means “a considered qualification of qualitative theory.” A nihilistic reading of Canadian economics in general leads to a more moderate judgement (Neill, 1991, 39—56, 149—71). Etienne Parent wrote with Adam Smith and the nineteenth­century political economists in a supporting background, but was ready to abandon their theory for the sake of “national” survival.

Bouchette, particularly in his first book, Emparon nous de l'Industrie (1901), moved nationalism in Quebec away from agriculture to commerce and manufacturing where it was anchored by Edouard Montpetit. In his three-volume published works, La Conquete Economique (1939—42), Montpetit constructed economics to include values beyond those expressed in prices, specifically the values of French Canada. Angers was nihilistic in the Johnsonian sense.

Let us not forget that we have, within the past half century, witnessed the political bankruptcy of two theories in which our modern world, or at least certain parts of it, had placed its hopes — the liberal theory of economic equilibrium and the quantitative theory of money in its mathematical form... They leave behind them principles and experiences which are definite acquisitions for human knowledge and wisdom, but nothing to defend their integral application as policies.

(Angers, 1956, 297)

Pensee economique, in one respect, was typically Canadian. The principal development in turn- of-the-century qualitative theory was the “marginal revolution,” particularly as embodied in Marshall's Principles. The influence of even Marshallian economics, let alone of Marshall himself, was diffuse and weak in Canada before Keynesian Marshallian economics came on the scene (Dimand and Neill, 2010, 56—7).

This brings the story to Harold Adams Innis, commonly thought to have been the salient figure in “pre-war” economics in Canada. Innis certainly began by rejecting the boundaries of qualitative theory. Simply put, he chose American Institutionalism over Marshallian static micro economics:

Veblen has waged a constructive warfare of emancipation against the standardized static economics which has become so dangerous on a continent with ever increasing numbers of students clamouring for textbooks on final economic theory. He attempted to outline the economics of dynamic change and to work out a theory not only of dynamics but of cyclonics... The conflict between the economics of a long and highly industrialized country such as England and the economics of recently new and borrowing countries will become less severe as the theory of cyclonics is worked out.

(Innis, 1929, 56)

Innis began looking for a theory of growth in a new satellite economy. What he sought was not at all like the theory of growth that emerged at the time of Keynesian macroeconomics, nor was it simply a “vent for surplus” theory of expansion in a small, resource exporting economy as presented in the neoclassical formulations of Wynne Plumptre (1936), Archibald Currie (1942), or Richard Caves (1971). Certainly it was not at all like W.A. Mackintosh's early Keynesian version (1936, 462—3) or the later Melville Watkins' Marxist theory of the staple trap (1977). The point is not that these formulations were empirically questionable, as Ken Buckley (1958) and Chambers and Gordon (1966) suggested. The point is the staple theory presented by Innis was based on the “very long run” consequences of new “all-purpose technologies,” not the “short and long run” considerations featured in qualitative theory.

But evidently, there is another point to be made here. There was a reaction to Chambers and Gordon's counter factual, nihilistic questioning of the Staple Theory (Bertram (1973); J.H. Dales, J.C. McManus, and M.H. Watkins (1967); R.E. Caves (1971)). The point to be made is by mid-century, even without reference to the emerging high fashion of Keynesian macroeconomics, and even with respect to what has been touted as Canada's contribution to economics (the Staple Theory), there was more in Canadian economics than can be found in Innis' nihilistic approach.