The history of the British Admiralty, like that of the War Office, furnishes an exceptionally good opportunity for reviewing the relationship which exists between a Cabinet Minister and his subordinates. This relationship, of course, presents in all departments essentially the same general features, namely, the control of a specialized group of officials by one who, though ignorant in a technical sense, nevertheless possesses unusual competence in his own field of administration and politics. But in the fighting services parts of this picture are etched with deeper and darker lines. In the first place, there is obviously a greater disparity of talent between Minister and official than occurs in most departments, and the experts seem as a rule less able, or willing, to appreciate the political implications of the demands they are constantly making. The relationship is thus apt to be more difficult and occasionally more exacerbating; but it creates by that very fact a greater need for providing the department with a sympathetic spokesman and advocate in the Cabinet, while insisting at the same time on the absolute supremacy of the political power. In the second place, the pervasive influences of bureaucracy and departmentalism, on which the Minister must wage relentless war, occur in the fighting services in an acute and aggravated form. Officials in other departments may hold narrow and circumscribed views, but their counterparts at the War Office and the Admiralty will frequently add to those a complacent and unimaginative professionalism of their own; the fondness of a civil servant for unnecessary formalism may have a military or naval parallel in ponderous methods and obsolete techniques; bureaucratic prejudice may become red-tabbed or gold-braided intolerance; an esprit de corps may be transmuted into an un-discriminating loyalty to the ship, to the battalion, or to the service.

In his latest volume, W. I. Jennings makes the comment that his researches into the working of parliament were much simpler than those he made into the operation of the cabinet. The reason for this he explains is that all the proceedings of parliament are a matter of record, whereas the cabinet proceeds in secrecy and works by stealth. On the face of it, this seems a very sound and perhaps a very obvious judgment. But I have to confess that I have found just the reverse to be the case in making a hasty review of war government. We have an immense amount of material about the working and procedure of parliamentary institutions in peace-time and comparatively little about the machinery of the cabinet; but in war-time, or at least in the last war, we have diminishing information about parliamentary activities and an ever increasing quantity of material about the cabinet operations. Take, for example, the nature and functioning of the British War Cabinet. In addition to the official reports, the proceedings of the Cabinet have been scrutinized and investigated by several noted authors. The subject of a war cabinet is a pet topic for administrative disquisition. Every text-book finds it proper to enlarge upon the experience of the last war and its consequences in administrative efficiency. But turn to the parliamentary side and you will find that the standard volumes are careful to omit all reference to war-time devices except in an incidental and apologetic manner. It seems to be axiomatic with the authorities that war-time parliamentary practices are so exceptional that they are not to be cited as precedents and are so irregular that they may be noted only as warnings of what is not good parliamentarianism. Of the innumerable volumes of memoirs, biographies, and autobiographies the centre of attention is directed almost exclusively to the working of the cabinet system, and little or no attention is devoted to the legislature's part in the matter. There are but half a dozen articles on war parliaments, and only one book is devoted to a somewhat specialized side of parliament and war. There are the volumes of Parliamentary debates, the Parliamentary Papers, and other documents, but these are much fewer than in peace, and it may be noted that when something of vital importance is to be discussed parliament resorts to its own brand of secrecy in the secret session. On the other hand, the cabinet, though its meetings are still somewhat secretive, proceeds in war to more careful recording of its doings; in fact, records seem to be of the essence of a war cabinet, and every member of the administration seems to desire to have himself on the record—posthumously at least—to a greater degree than the mere parliamentarian.

At the outbreak of war in August, 1914, plans to cope with a possible food scarcity in the Allied countries were of a rudimentary character. For example, in the War Book of the British Government, there was only one measure dealing directly with food, and that a measure for obtaining information. In France the only legislation on agriculture or foodstuffs existing at the outbreak of war was a law of the period of the Revolution, dating back to July, 1791, which authorized the fixing of retail prices for bread and meat. Hence, methods of procedure had to be improvised as difficulties arose and it was not until well on towards the close of hostilities that anything like a comprehensive food policy had been devised.

As the central foodstuff in the diet of the peoples of the western Allied powers, bread came to play a leading role in the development of food policy. In the words of the body that was later to dominate world import trade in wheat, bread was “the only diet which sufficed in isolation and was therefore, indispensable.” Other foods might fail or be in short supply, but starvation seemed a long way off so long as there was enough bread. In the United Kingdom an implicit “breadstuffs policy” underlay the whole structure of food policy. Though never expressed in any one document, that policy has been stated in these words: whatever else was allowed to be in short supply, whether for human or for animal consumption, there should be a sufficiency of breadstuffs to meet in full all demands for them without rationing. In the other European Allied countries the direction of policy is not so clear but, with surprising unanimity, efforts were directed to keeping bread cheap and plentiful.

Dominion aids to Canadian wheat marketing extend back at least to the beginnings of the western wheat trade and have been of three traditional types, viz.: (1) regulation, (2) investigation, and (3) elevator operation on a limited scale. Regulation of the Canadian grain trade has long been of a quality unsurpassed in other grain producing countries and has evolved in recent decades through repeated revisions of the Canada Grain Act. Investigation dealing specifically with the western wheat trade has involved a notable series of royal commissions commencing with the present century. Elevator operation by the Dominion Government started in 1913 with experimentation and compromise as its objects, and the Dominion Government still retains substantial interests in interior and other terminal elevator plants. In addition to the customary federal aids to wheat marketing before 1929, mention should be made of the exceptional intervention accompanying the Board of Grain Supervisors, which marketed part of the 1916 wheat crop and the crops of 1917 and 1918, and the first Canadian Wheat Board, which marketed the crop of 1919.

Important as the above-mentioned aids have been in shaping the destiny of the Canadian grain trade, they form a striking contrast in simplicity compared with the interventions of the decade4 herein considered. Dominion regulation, investigation, and elevator operation have continued to the present time, but the notable innovations in Dominion activity after 1929 lie beyond the traditional categories and include more or less sustained sorties in attempted stabilization, in bonusing, in international consultation, and in various types of wheat board operation. Dominion aids to wheat marketing, of special significance from 1929 to 1939, may therefore be classified as follows: (1) stabilization activities, (2) bonus payments, (3) international consultation and agreement, (4) wheat board operations; and since several important federal investigations of the grain trade took place within the decade, there should be added (5) investigation. These topics have, for the most part, been analysed individually and at short range in various current writings, so that factual material may here be reduced to a minimum and the emphasis placed upon interpretation in perspective.

While the war lasts most decisions and policies can only be provisional. It has now become apparent that the view that the conflict had settled down into siege warfare, supported by the Allied blockade of Germany, has been belied by events. In the last war the long military stalemate in France gave the Allies time to organize their superior economic strength, and in the end this superiority tipped the scales. The economic strategy so far would seem to have been based upon the assumption of much the same kind of military development. If, however, the military situation is as critical as it appears to be, the economic strategy will have to alter. Our economic and financial measures are then likely to undergo a series of improvisations which will defy all attempts at precise calculations. Germany's blitzkrieg will certainly warrant new forms of economic mobilization in the United Kingdom, and probably in Canada too. In this situation careful attempts to minimize costs, involving a widespread reliance on private-initiative and the free pricing system, must and will be thrown overboard. And with them will go the framework and modes of thought of much of our traditional economic theory.

Discussion of the finance of war is also complicated by the fact that public finance—or the larger problem of war economics—is as much a problem of politics as it is of economics. And it is the political aspect of the subject which surrounds war finance with most of the controversy which it possesses. Whether a particular form of taxation, or the decision to do by government decree what is normally done by taxation, is desirable or not, turns more and more on the state of political sentiment, and less and less on questions of economic analysis. In this domain of politics the economist has no particular jurisdiction; and for the politician himself the condition of public opinion changes so rapidly during war that measures deemed impolitic today may be universally demanded tomorrow.

In all popular discussions of death rates or of the probable duration of human life one finds the phrase “according to the mortality table.” Sometimes it even appears that a writer is assuming that a definite law of mortality has been discovered from which deviations are not to be expected and which has been embodied in the mortality table. Every serious student of the subject knows that this is far from the truth and that there are many mortality tables, each representing the mortality which was experienced by a specified group of lives during a specified time.

To the actuary, any mortality table is simply a mathematical tool with which to study such problems as population growth or change, or to calculate the monetary values of benefits dependent on life contingencies. It is a tool in the same sense that a gauge is a tool for a machinist. In some parts of a machinist's work only the most accurate precision gauges are acceptable, and similarly in calculating premiums for non-participating insurance or rates for life annuities, the actuary must use the most accurate and up-to-date mortality table available. On the other hand, a machinist may use a less exact gauge for other types of work where conditions are suitable. For certain purposes such as calculating policy liabilities, the actuary has a corresponding choice, for, as will appear later in the paper, reserves by all mortality tables are remarkably similar.

The basic principle on which life insurance is founded is that of mutual co-operation. Many persons co-operate to assume and to share risks which the individual could not afford to bear alone. This cooperation takes the form of contributions to a common fund, from which claims are paid as they occur. In the modern form of life insurance the contributions are “level” and dependent chiefly on the age of the contributor at entry to the fund. Since the life insurance risk increases with increasing age it will be obvious that level contributions sufficient to meet all risks will more than suffice to meet the lighter risks of the early years and will be insufficient to meet the heavier risks of the later years. Accordingly, the early excess contributions must be accumulated in the fund to make good the later deficiencies. It is these excess contributions accumulated to meet the future risks that are invested and form the assets of the life companies. These assets are not the property of the companies in the commonly accepted sense of the word, but instead represent the accumulated savings of the individual policy-holders, to whom they are ultimately to be returned. The companies are simply acting as trustees or custodians of these savings, and, in common with other trustees, the assets in which these savings may be invested are prescribed and limited by law. There exists, of course, in most of our Canadian companies a shareholders' interest which, however, is small and of little account, while in the large American companies the shareholders' interest is entirely negligible or non-existent. Since the life insurance business is of a quasi-public nature there has developed a close government supervision over its affairs, with the result that the companies are subjected to regular extensive examinations and also are required to prepare and file periodically complete detailed reports of their business.

The story of the relation between political philosophy and economics records many curious twists and turns, anachronistic survivals, and striking anticipations. But nothing is more astonishing than the contrast between the current preoccupations of economists and their tacit methodological beliefs. During the last war and today economic enquiry has inevitably been harnessed to problems of government. But even during the two decades of armistice the bulk of the work of economists has been intimately related to policy. Not only has activity in the empirical and applied fields increased greatly, but purely theoretical analysis, too, has had a strong practical bias. Probably the three outstanding topics in theoretical discussion during the last few years have related to the problems of crises, monopoly, and planning. All three, even when debated in the most abstract terms, have an obvious “tendency to use,” in the sense that they envisage the application of measures of control by government or other social agencies.

Thus, judged by their choice of topics, economists seem to have given up any implicit unquestioning belief in the virtues of laissez-faire, and, to some extent, even in the capitalist system. Yet there seems still to be lurking in their minds an inherited regard, if not for the Smithian “hidden land,” at least for the so-called economic case for laissez-faire as expounded by such members of the first generation of modern economics as William Stanley Jevons, Philip Wicksteed, and J. B. Clark. There are left, it is true, only a few citadels which would put up a full-bodied defence of this case. But a great many of the less intransigent economists still appear to subscribe to it when they are asked explicitly to discuss it.

It is most unfortunate that a paper the main content of which in terms of bulk consists of sound and valuable insights to the extent that this is true of Professor Talcott Parsons's article on “The Motivation of Economic Activities” should be utterly misleading with respect to the main question at issue. Without quoting or mentioning any single author, or referring in any specific way to any group, school, or tendency among economists themselves, Professor Parsons tells us merely that: “On the economic side the impression has been wide-spread that a predominantly ‘self-interested’ or ‘egoistic’ theory of the motivation of economic activities was a logical necessity of economic theory” (p. 189, my italics). Throughout his own article, Professor Parsons certainly gives the “impression” that the position he has indicated is that which characterizes the typical writings of reputable economists extant and down to date.

In view of the author's standing as a sociological interpreter of economic concepts to both sociologists and economists, and also, as already observed, the great merit of his concrete observations on motivation in this particular article, this second impression should not be allowed to stand unchallenged. For the facts are definitely to the contrary. And the true position regarding the type of attitude which may be referred to as “self-interest” in the structure and methodology of modern economic theory should be stated. Still more desirable, if it were possible, would be some intelligible statement as to what this attitude is, or what the expression may be taken to mean. For Professor Parsons gives practically no positive indication of the content of the position he is arguing against. He affords an example more flagrant than that of the economists criticized of what is their real fault. For he himself warily steers clear of any effort to say what he means by the term self-interest or egoism. We find only the negative and noncommittal statement that the assumption proper to economic theory “does not necessarily have anything to do with ‘egoism’ in the usual sense” (p. 189, my italics).

It is, perhaps, at least partly an unfortunate consequence of the pressure for brevity in the formulation of titles that Professor Knight begins his critical discussion of my article with the statement that though it “in terms of bulk consists of sound and valuable insights” it is “utterly misleading with respect to the main question at issue.” It may be permissible to suggest that for Professor Knight and myself the main questions at issue are not identical, as so often happens in intellectual discussion. To help clarify the question I shall attempt to state more explicitly than was done in the article itself what it was designed to accomplish.

The aim of this tentative outline was overwhelmingly positive rather than critical. It contained, in the introductory paragraphs, only sufficient statement of the historical and interdisciplinary aspects of the problem of “self-interest” to give a very broad orientation to the setting of the problem. The bulk of the article, which it may be hoped includes at least partly the “sound and valuable insights” of which Professor Kjiight speaks, was devoted to the outlining of what seems to the author, in the light of the present state of development both of economic and of sociological theory, to be the closest attainable approach, in such broad outline, to a satisfactorily usable account of the subject.