Week 4 Lecture: Canadian Political Economy (Part 2)

Introduction

• Focus on Canada's political economy and Staples Theory.
• Importance of understanding political economy for analyzing Canada's economic development and interactions.

Political Economy Concepts

• Definition: Intersection of state (political) and market (economy).
• Application:
  • Domestic: Unique state-market combination in countries like Canada.
  • International: Role of states and markets at an international level.

State and Market Dynamics

• State:

  • Can have a large or small role in society.
  • Provides public goods (e.g., healthcare, education) in different extents across nations.
  • Monopoly on legitimate use of physical force and sovereignty (Max Weber's definition).
  • Composed of political institutions (police, military, judiciary, etc.).
  • Different from government (temporary rulers) and society.
  • Role in resource distribution affects wealth and political ideologies.

• Market:

  • Space for voluntary exchange beyond state control.
  • Relies on price determined by supply and demand.
  • Can be egalitarian in theory, but not always in practice due to initial property rights disparities.

State vs. Market

• Both are interdependent; each can correct the other's failures.
• Debate on the size and role of the state in society is central to political discourse.

Canada's Political Economy

• Economic System: Capitalism

  • Ownership of production means by a small group, aiming for profit.
  • Importance of property rights.

• State:

  • Historically mostly small, but grew larger post-WWII.
  • Democratic: Citizens have a say in the extent of state power.

Key Takeaways

• The balance between state and market is crucial for understanding a country's political economy.
• Canada's mix includes a capitalist market system and a democratic state structure.
• Upcoming discussion on Staples Theory in the next part of the lecture.