“The really fundamental questions of economics” it has been said, “are why all of us, taken together, are as well off—or as ill off, if that way of putting it be preferred—as we are, and why some of us are much better off and others much worse off than the average.”¹ In this chapter a preliminary answer to the first question is outlined: in a sense the whole book, indeed the greater part of economics, is an attempt to provide a more complete answer. In developing this answer it is convenient to examine first a smaller and simpler...

The fact ofscarcity,that is the fact that the things which men want are not available in such quantities that they canallsatisfyalltheir wants, makes imperative some form of “rationing,” i.e. some method of restricting consumption to that amount, or rate, which is consistent with the existing stocks, or rates of supply. At any one time there exists a givenstockof each commodity available for consumption; somehow this stock must be divided among the people. There is not enough to go round, so some method of sharing must be adopted. We are generally concerned, however,...

In Chapter II we examined the price system piecemeal, or bit by bit. We saw how the supply of a particular commodity was rationed by price, and how this rationing price influenced the future supply of that commodity and the present income of those equipped to assist in its production. We noted, however, the difficulty of treating each price separately. What price will ration the supply of any one commodity depends on what prices are established for a host of other goods, some of which are competing substitutes for the one, others of which are complementary goods which are consumed...

We have discussed some problems of growth in our simple model, problems arising from the growth of population and from the growth of wealth. We might have noticed that growth of population calls for growth of wealth if the standard of living is to be maintained, and that with a growing population the outlets for new investment are likely to be more obvious and the problem of maintaining full employment is likely, therefore, to be easier than with a stationary or declining population. We now turn, equipped with the tools fashioned while studying the model, to study population growth in...

When the Canadian government purchased the territories of the Hudson’s Bay Company in 1870, they contained a white population of less than 7,000 (of which 5,000 were half-breeds) and an Indian population of 50,000. The area was given over to the fur trade; barely 9,000 acres were cultivated to supply some food for the fur traders. By 1931 this same area had a population of nearly 2½ million, and had 110 million acres occupied, of which 25 million acres were under wheat. In the twenties it produced on the average 360 million bushels of wheat annually, worth some $500 million....

In the first quarter of this century the Canadian economy was geared to wheat. Other staple exports had played their part in the earlier development of the country and had, in turn, played the “dynamic” role assigned for a time to wheat. Still other staples have emerged in recent years to challenge the position of wheat. Amongst the earlier staples lumber once played the leading part; another forest industry, pulp and paper, took up the role in the twenties, supported by mining.

Square timber had emerged as a dynamic staple in the Napoleonic Wars, when naval action increased the demand...

In this chapter we shall be concerned with competition and monopoly in Canadian business, and with the policy of the Canadian government in dealing with the problems which arise therefrom. Fundamental to the discussion are certain ideas which have been introduced in the section on the hypothetical handicraft model in chapter III,¹ and that on the grain trade in chapter v.² Competition was there treated as a guarantee of low prices: first, because it provided a stimulus to efficiency and thus kept cost low; and, second, because supply would increase to the point where the price fell as low as...

In the “model” of chapter III, the problem of wages was eliminated by making each family produce and sell some one commodity. The earnings of the workers were determined when the prices of their products were determined; and, under the conditions of perfect competition, perfect mobility, and economic rationality, there assumed, the prices of the products would be such as to give equal earnings to all. In the wheat economy, which was examined in chapter v, the problem of wages could again be ignored. The typical wheat farmer produced with the aid of his family and employed no wage earners.¹...

In the first three chapters of this book much emphasis was placed on the automatic functioning of the price system. The necessity for some political organization to permit the proper functioning of the automatic economic system was noted, but the necessary economic activities of the state were, under the ideal conditions of the hypothetical handicraft model, extremely few. When we turned in later chapters to the study of the real world we found the state playing a very important part in moulding the Canadian economy and influencing the fortunes of various classes in the community. We were studying political economy,...