Old age pensions of $40 a month became available on January 1, 1952, to every Canadian over seventy years of age, who had lived in the country for twenty years. As Canada has now had pensions for old people (subject to a means test) for only a quarter of a century, the idea is usually thought of as relatively new. In point of fact, however, Canadians were interested in old age security as far back as 1889, when the Royal Commission on the Relations of Labour and Capital mentioned with approval a French scheme to provide annuities for elderly workmen and their widows. The need for government action in the matter has been widely discussed in the Dominion ever since.

Great Britain's example in this, as in so many other matters, had an important influence. As early as 1773 a bill to provide annuities for “the industrious poor” had been passed by the House of Commons at Westminster, only to be rejected by the Lords. During the eighteen-eighties and nineties British enthusiasm for pensions for the aged revived, largely owing to Charles Booth. His monumental study of the Life and Labour of the People of London showed that some thirty per cent of the population of the metropolis lived in conditions of extreme poverty, because their earnings were not high enough to allow a decent standard of living, much less to make feasible any provision against old age. The government, Booth argued, ought under these circumstances to accept some responsibility for its elderly citizens.

Until the Canadian dollar was raised to parity with the American dollar in July, 1946, Canadian foreign exchange reserves had been maintained at a satisfactory level by an inflow of capital which offset the substantial current account deficit with the United States. After the appreciation, which was undertaken to insulate the domestic price level from rising prices abroad, the capital flow was reversed and the official liquid reserves diminished rapidly until the end of 1947. The weakness in Canada's balance of payments position was caused by the fact that her surplus on current account was smaller than the rate at which her foreign loans were drawn down. The governmental policies undertaken to correct the balance of payments disequilibrium combined with a high level of national income in the United States to decrease the deficit in the current account with the United States and to replenish the reserves in 1948 and 1949.

The rapid increase in the merchandise deficit with the United States, evident in the first six months of 1951, and the declining rate of capital import pointed to the possibility of a deterioration in Canada's foreign exchange position. It is thus opportune to examine the effect of the policies followed by the Canadian government in its attempt to deal with the balance of payments disequilibrium of 1947. An attempt is made in this paper to discover how much these policies, especially import controls, contributed to the solution of the problem.

No topic has evoked so much discussion in all parts of Great Britain, and indeed in the world outside, as the Labour Party's programme to nationalize 20 per cent of the economy. Nationalization is recognized by all as the most important domestic issue facing the nation because the industries brought under public ownership are vital to Britain's economic recovery at home and a key to her future role in foreign affairs. As the Conservatives will continue the programme as conceived by Labour, except in the case of the iron and steel industry which will probably be returned to private ownership, an analysis of British nationalization is as pertinent today as it was during the Labour Party's tenure in office.

The Labour Party defined its nationalization plan in a 1945 electoral document titled Let Us Face the Future which stated in part:

There are basic industries ripe and over-ripe for public ownership and management in the direct service of the nation. There are many smaller businesses rendering good service which can be left to go on with their useful work.

There are big industries not yet ripe for public ownership which must nevertheless be required by constructive supervision to further the nation's needs and not to prejudice national interests by restrictive anti-social monopoly or cartel agreements, caring for their own capital structures and profits at the cost of a lower standard of living for all.

The theory of prices developed by Keynes in the General Theory is always likely to appeal strongly to the student approaching the subject from the side of value theory for in his analysis customary supply-demand categories are reaffirmed. Yet, despite its insights, his analysis here is incomplete: although there is a fairly detailed account of the supply curve the chapter is vague on the exact composition of the corresponding demand function. This paper reviews the problem, constructs an appropriate demand-supply apparatus, and uses it to analyse the determination of the price level of consumer goods, as measured by index numbers. It appears, however, that the same technique can be extended to explain the price level of investment goods if certain of the functional connections are modified.

The essential distinction between the analysis of the firm (or industry) and the analysis of the economy is that in the former supply and demand can be regarded as independent, whereas in the latter interdependence must be stressed from the very beginning. Causally, however, it is usually argued that the initial impetus comes from the supply side. Factors are viewed as being paid for by reason of entrepreneurial decisions to hire them for productive uses, and resource owners as thereafter expending these earnings, in whole or in part, on the forthcoming consumer good output. Viewing this as the essential proposition descriptive of the economic process, let us develop its implications for the theory of the price level.

The interrelationship of costs of production, profit, and output of a firm is a central problem of modern economic analysis. This problem has been so far conceived and investigated chiefly for a free market economy. The corresponding analysis of the equilibrium of a firm under the conditions of perfect and imperfect competition represents the first stage of what is known under the name of “the theory of value.” This analysis is a joint contribution of economists of many countries and a cornerstone of modern economics.

The parallel problem in a nationalized industry subject to complete government control (the problem of the interrelationship between controlled costs of production, controlled profit, and planned output) has so far escaped the attention of analytical economists. This gap in analysis is due partly to the fact that the dogmatic treatment of central planning in the hands of political writers has induced some authors to believe that central planning and nationalization succeed in abolishing this important problem altogether. Outputs are believed to be determined by targets and hence to be independent of profit considerations. In addition, some economists have been led to believe that the tools of modern economic theory in general, and the intellectual apparatus of the theory of value in particular, are inappropriate for dealing with what are believed to be problems of administration rather than economic problems proper.

The idea that scientific laws might apply to man and his society is not much more than one hundred years old, and even today many historians and other students of the so-called humanities fiercely deny the possibility of ascertaining sociological or historical laws similar to the laws of nature. In this sense, Anglo-American epistemology makes a distinction between the sciences proper and the humanities, as German and other European scholars distinguish between Natur- and Geisteswissenschaft, the natural sciences and the knowledge of cultural phenomena. Such distinctions are due, in part to an outmoded conception of the scientific law, but primarily to an even more obsolete conception of man, his society, culture, and history.

(1) Until the end of the nineteenth century, a scientific or natural law predominantly meant a law of causality, and such a law implied that the same cause always and invariably “produced” or “evoked” the same effect. The natural law, in this context, was not even a product of scientific cognition, but allegedly inherent in nature itself. The scientist merely “discovered” actually prevailing laws. This was the viewpoint of the so-called realistic school of thought. In a twofold way this concept of a law has been shaken.