As the trend toward total war creates an ever increasing demand for manpower, the necessity for establishing a programme for the rehabilitation of the physically handicapped becomes a national necessity. Industry is forced to employ marginal workers and to plan conservation of manpower. Rehabilitation, therefore, can no longer be regarded solely as a welfare measure designed to salvage the morale of the disabled. The handicapped person is a valuable person; he must be rehabilitated because the nation needs him. He must be vocationally trained, not in some diverting handicraft, but in skills that will fit him for a place in war-time industry.

The problem of the handicapped is essentially that of vocational maladjustment caused by social and economic prejudices. These prejudices are based on false concepts of working capacity which have developed social attitudes that serve to handicap the disabled in their efforts to earn a livelihood. Instead of utilizing their capacity for productive work, society has attempted to compensate them by providing relief.

Recent publications have once more drawn the attention of the scientific world to the School of Lausanne. While economists emphasize chiefly the originality of the conception of economic equilibrium in Walras, sociologists and mathematicians pay homage to Pareto's versatile genius. Contemporary authors are mainly interested in the mathematical method and the conception of pure economics advanced by these two men. But the same authors forget too easily that Walras and Pareto dealt with numerous political and social questions, and that their opinions in these matters are important from the point of view of both applied economics and methodology. The object of this paper is to discuss these opinions. We shall first state the great philosophical antithesis which marks the division between the ideas expressed by Walras and Pareto, and secondly, consider the ideas themselves.

Although the works of Walras and Pareto on the subject of pure economics are complementary, their methods in dealing with practical economics are completely different. According to Walras, the duty of a politician is to apply the principles and data deduced by the pure economist. The pure economist must scientifically deduce laws from the “good old Natural Law.” Walras believes in scientific ideals and in the permanence of political laws; in philosophy, he is a Realist, in the sense given to this word by the quarrel of the Universals. In contrast with this, the conception of Pareto is much more flexible, much more pragmatic. His doctrine is that certain principles, rationally erroneous, can in practical reality be excellent, because people are usually governed by their feelings and not by their intelligence. To the great Italian, scientific laws were only “experimental uniformities.” This is the conception of the nominalist philosophy, which Pareto stresses when he writes: “Io sono il piu nominalista dei nominalisti.”

Discussion of the issue of the welfare effects of direct, as compared with indirect, taxes have been greatly clarified by the recent contributions of Mr. Little and Professor Friedman. Both of them show that the usual method of using indifference curves to prove the superiority of income tax over sales tax makes “no overt reference to marginal costs. Yet it is well known that nothing can be proved without some such reference.” They employ an alternative mode of analysis which is designed to take account of conditions of cost of production.

Before the appearance of their articles, Professor Boulding showed the comparative welfare effects of proportional, progressive, and regressive income taxes by the use of indifference curves. His conclusion is that, even if the same amount of revenue is exacted, an individual is better off under a proportional than under a progressive income tax and still better off under a regressive one. Friedman questions the validity of Boulding's result because he thinks Boulding is one of those who base their arguments on a fallacious proof, although Friedman does not set out his criticism in detail. Since Boulding's results, if valid, are of great significance and since the weak point of his analysis cannot be derived directly from Friedman's contributions, it is the purpose of this paper to show the limitations of Boulding's conclusion, which, if known, would deprive it of much of its generality and usefulness.

Any planned growth is embedded in a set of institutions and attitudes which come from the past; in Asia a rich past obtrudes into the present in every aspect of life. One can see the layers of history lying one on the other in both material and mental life, in every field from archaeology to arithmetic, from ethics to economics. There is no hope of doing justice to this past in any summary that can be included here, but it may be useful to frame remarks about the future in terms of a simplified account of the three Asias which this century inherits.

The three Asias of the past. The periods of Asian history are most easily described in agricultural terms: Stone Age shifting cultivation; advanced irrigated rice culture which had spread to most of the more heavily settled portions of the continent hundreds of years ago; plantations established under imperial rule. In recent years all of these forms of agriculture and associated industry have merged into nation-states created since the Second World War.

We may begin by stating three fundamental factors which in their interrelationship and when set into our scheme of economic competition are the basis of the minority group status of the Japanese immigrants in America. It is also these three factors which serve to relate the American-born Japanese to the present world crisis.

To be considered first is the factor of race. It has been used as a discriminating category for land ownership, for naturalization, and for regulating immigration. In 1913 California passed the first of the anti-alien land laws, prohibiting aliens ineligible for citizenship from owning land. Other states followed later with similar laws. In 1922 the United States Supreme Court upheld a lower court decision that members of the “Mongolian race or the Malay race” could not be naturalized. The final legal disability placed upon the Japanese on a basis of race was denying them the right of any further immigration. This was established by the National Immigration Act of 1924, often called the “Exclusion Act.” Other groups face social problems because of discrimination based upon racial features, but in the case of the Japanese, when race is combined with the other two factors, it gains unique significance.

The second factor of fundamental importance is that of the Japanese ethnic heritage, of which a central point of concern was the Japanese family system. As early as 1900 the Americans in San Francisco were demanding exclusion, but then the immigrants were mainly single males, as the sex ratio of 2,369.9 males for every hundred females shows, but by 1910 this had dropped to 694.1.

To understand the effect of the war upon the Canadian economy it is first necessary to examine briefly the position of the country on the eve of the struggle. By the midsummer of 1913 Canada had come to the end of a long period of expansion and prosperity. For seventeen years the country had been engaged in the construction of the immense capital facilities which stimulated and resulted from the rapid settlement of the Prairie Provinces. The construction of transcontinental railways, the building of new cities and towns in Western Canada, the improvement of waterways and harbours, and the provision of machinery and equipment for nearly 200,000 new farms constituted an uniquely large proportion of the total economic activity of the country. In 1912-13, nearly one-fourth of all the labour and productive facilities of the economy was either directly or indirectly engaged in the production of capital goods. The employment of these resources could not, of course, be financed entirely out of the current savings of Canadians. Much of the money was borrowed abroad. About one-half of the total capital invested in Canada during the pre-war wheat boom came from foreign sources. In 1913 capital imports rose to more than $500 million, a figure equal to almost one-fourth of the national income. Such huge external borrowings could not be continued indefinitely. The money was obtained from abroad for the purpose of enlarging the export capacity of the country and it was necessary at some time to slow down expansion to enable the use of the facilities for the production of increased exports.

Most serious students of modern politics in the English-speaking democracies have regarded the two-party system as the norm of the liberal-democratic polity. The arguments for the superiority of such a pattern proceed along the following lines: (a) stability is encouraged when the powers of the political executive are at all times monopolized by members of a single party who are united by mutual adherence to common leaders, traditions, and policies and whose past and future fate at the polls is to a significant degree interdependent; (b) effective accountability of government to electorate is encouraged when power is not shared among parties and when a ruling party is therefore completely responsible for the use of such power; and (c) constructive opposition is encouraged when the party out of office is constantly faced with the challenge of justifying itself to the electorate as an effective alternative to the party in power.

Professor Leslie Lipson has defined the two-party system as one in which: “1. Not more than two parties at any given time have a genuine chance to gain power. 2. One of these is able to win the requisite majority and stay in office without any help from a third party. 3. Over a number of decades two parties alternate in power.”

In Alberta, the Municipal Districts are the centre, or at least the most important units, of rural, local government. They possess a greater diversity of function than either school or hospital districts and, for the most part, they assume the task of collecting all local and provincial taxes on real property within their borders. An attempt will be made in the following pages to analyse their present position and to determine what adjustments are necessary to enable them to survive.

Historically, the Municipal Districts mark a comparatively recent stage in the evolution of Alberta's municipal units. They are the lineal descendants of the Statute Labor and Local Improvement Districts which were created while Alberta was a part of the North West Territories. There seems to have been no long struggle for local government, comparable to that which the people of Ontario waged for similar privileges at a much earlier date. The theory and practice of popular municipal government had been well established and accepted by senior governments before Alberta was settled. Hence the territorial, and later the provincial, government took the initiative in the formation of municipal institutions, and the comparative instability and sparseness of the population made possible a fairly strong central control.

The year 1912, seven years after the formation of the Province, is a landmark in Alberta's municipal history. A Department of Municipal Affairs was created to administer the various municipal acts and to furnish guidance and supervision to the local authorities. An arbitrary unit, a square of nine townships (324 square miles), was adopted as the physical basis of rural municipal organization. Provision was made for the establishment of Rural Municipalities with corporate powers. In addition to this “permanent” form of municipal government, provision was made for the formation of “small” and “large” Local Improvement Districts. The former were to possess elected councils with more restricted powers than those of the Rural Municipalities; the latter were to be directly administered by the Provincial Department of Municipal Affairs.

In the Canadian constitution, that which relates to the national interest is the responsibility of the federal government; while the provincial governments deal with those matters of local concern. In a perfectly static situation this division of labour would present no problem because the national interest would always assume the same form. But governments operate in a situation that is never static. Changes in techniques or beliefs, in the location of population, and in the political and economic conditions of the external world are taking place all the time. If there is an equilibrium within the Canadian federal system, it is a dynamic equilibrium in which those common purposes which are the proper concern of the federal government are in a constant state of flux. The national interest expands and contracts: it is ever shifting its ground.

It has been quite impossible to contain this elusive concept within the angular Victorian frame of the British North America Act. It would be unreal to suppose that the division of legislative power produced entirely water-tight compartments of action for the Dominion and the provinces. It could not. There is a large range of governmental activity which quite evidently may be the preserve of either the federal parliament or of the provincial legislatures, or, in fact, of both. Much of the difficulty which was created by the judicial interpretation of the constitution between the eighteen-nineties and the nineteen-thirties flowed from an attempt to make the enumerated heads of Sections 91 and 92 represent fields of exclusive legislative power. The only way in which this could be done was by interpreting away the meaning of several heads of Section 91 in order to preserve some meaning for Section 92. This search for water-tight compartments was unnecessary and contributed to the unsatisfactory decisions of those years. One of the results of this before 1939 was that it limited the effective range of action of Canadian governments—Dominion and provincial—to such activities as would commend themselves to a Victorian liberal.

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.

In 1953 a new formula for dealing with the complicated racial problems of the settler communities was introduced into the African scene. This innovation—the doctrine of inter-racial partnership—was launched with the merger of the territories of Southern Rhodesia, Northern Rhodesia, and Nyasaland into a federal state. In its brief life, government under the “partnership” banner can already claim several noteworthy reforms in this community of some 280,000 Europeans, 34,000 Asians and persons of mixed race, and more than 7,300,000 Africans. A new university has been established which opens its doors to members of all races. In Southern Rhodesia, the long-established legal bars to the ownership of urban property by Africans have been relaxed. In Northern Rhodesia, the first breach in the industrial colour bar has been made in the important copper fields. Further, serious discussion has been given to several proposals with more sweeping implications, for example the draft bill which would scrap segregation in the trade unions of Southern Rhodesia and proposals which would extend the franchise to substantial numbers of Africans.

Few today would deny the necessity for subordinate legislation. The true business of Parliament remains the debate over the major principles of policy, but Parliament has neither the technical skill nor the time to process the mass of detailed regulation. Nevertheless, even with a sound division of function between Parliament and the departmental sources of delegated legislation, a serious problem remains. The initiative in the framing of public policy has passed to the bureaucracy, and machinery is required to ensure that bureaucratic legislation may receive the same debate, criticism, and review as ordinary legislation. The objective of administrative reform has been to safeguard the public against bureaucratic tyranny by three devices: (a) systematic publication of subordinate legislation; (b) opportunity for parliamentary review; and (c) continuance of judicial review of the scope of delegated authority.

In the United Kingdom, where these matters are more highly developed than under any other parliamentary system, the first two of these requirements are met by the Statutory Instruments Act, 1946, by various Statutory Instruments Regulations made thereunder, by the activity of the House of Commons Select Committee on Statutory Instruments, and through various techniques of parliamentary review.

The expected behaviour of aggregate corporate saving is an unsettled problem that has received considerably less attention in economic research than personal saving behaviour. In part this has reflected the rather uncertain status of the corporation as a separate behavioural entity in much of economic analysis. Keynes in the General Theory emphasized personal saving behaviour, and in a brief discussion of saving by corporations, governments, and other institutions he suggested rather obscurely that their motives for saving were “largely analogous to, but not identical with, those actuating individuals.’ Keynes's neglect of corporate saving was not new in the development of economic analysis, and H. G. Johnson has argued that it “reflects Marshall's inability to integrate the modern corporation into his system of economic analysis.”

An attempt to sort out some of the significant determinants of corporate saving is particularly important for two broad questions in economics. First, is the cyclical behaviour of corporate saving an important stabilizer? This question involves a study not only of the marginal relationship between changes in planned corporate saving and corporate income but also of the interdependence between planned corporate saving and planned corporate investment. Secondly, does the behaviour of corporate saving in our society adversely affect the allocation of economic resources? This question is important for the position one takes on whether or not government policy should be designed to increase the distribution of corporate income and thus to increase the channelling of new corporate funds through the capital market.

In 1965, many Canadian and British writers paid tribute to the seven hundredth anniversary of the founding of the British Parliament, and this year, Canadians celebrate the one hundredth anniversary of theirs. Criticism of parliament has been vigorous and almost continuous throughout all these years, and in the midst of these celebrations Canadians are conscious of an apparent decline in the time-worn institution. On October 8, 1963, the Globe and Mail reprinted excerpts from prominent Canadian newspapers describing parliament as “a farce,” “a wasteful bore,” whose members were “incompetents and buffoons” who “had played the role of clowns.” If parliament is to remain a vital and central part of our democracy, it must be resurrected from the morass of ineffectuality into which it has fallen. Although much of the criticism can be dismissed as irresponsible because the public does not understand its workings or functions, there still remains a hard core of difficulties that must be examined.

British post-war experience constitutes the best case yet available for study of a conscious government policy of combining full employment and price stability within the framework of free collective bargaining. In this paper, a few of the unresolved problems inherent in a full-employment economy are examined in the light of British experience. The hard core of the problem of full-employment price instability is the difficulty of restraining demands for higher wages, not because labour is less “responsible” than other sectors of the economy, but because wages constitute the largest single item both of costs and of income. It is therefore interesting to determine whether British governments have produced a wage policy which could compress wage demands within the limits say, of the productivity of labour. Has any principle (other than uninhibited self-interest) provided a new orientation to the process of collective bargaining? Has collective bargaining with a fully employed labour force in Britain disturbed the traditional constancy of distributive shares to capital and labour and if so, what was the impact of this, in turn, on economic reconstruction? What, in general, has been the rationale of trade unions in the environment of full employment? Britain has attempted to discover answers to these problems. Only by knowing these answers can we intelligently appraise the policy of maintaining full employment.