The events of the last thirty years have reinforced the attachment of the thoughtful to the Rule of Law. After watching the shocking excesses of rulers who had escaped from the restraints of law, we can think of dozens of reasons for maintaining the authority of law, which we could not have articulated thirty years ago. But agreement on the end has not enabled us to agree on the means. What kind of institutional arrangements are needed to meet the requirements of the Rule of Law? Since there are infinite possible gradations between the untrammelled licence of rulers and the Rechtstaat of eighteenth-century England, what minimum framework of restraints on rulers is needed? Supposing we could determine the formal requirements of the minimum, in what kind of a society can they be maintained and guaranteed? To be specific, will the inner nature and the inexorable requirements of the collectivist societies in which we live erode and submerge them?

What is required for the Rule of Law to be effective? On the one hand, some have contended that the phrase is essentially meaningless because it means only that the exercisers of power must show that it was conferred on them by law. Hitler showed a scrupulous regard for legal and constitutional forms as he persuaded the German Reichstag to confer on him practically boundless discretion. He could always point to legal warrant for the substance of his actions. In this sense, we might become subject to the most capricious tyranny without ever abandoning the Rule of Law.

Much of the current discussion of theories of economic growth is coloured by one of two factors which repeatedly crop up in the pertinent literature. The theoretical treatment of economic growth is either too strongly policy-oriented, or it is stated in an overly general form whose results are applicable only with difficulty, and often with grave reservations, to actual cases of economic growth.

Since the practical needs of policy-makers in the United Nations and its specialized agencies and in national governments concerned with developmental policies or colonial development have provided a strong impetus for the recent study of economic growth it is not surprising that the literature on this subject should have taken on a strong policy-oriented coloration. What the practitioners needed and continue to need are general guide-lines for their work. What they ask from the theorist, therefore, is to prescribe for them a series of relatively simple formulas which make up the basic equipment of the tool-kits they can take to the four corners of the world and from which they can select, as the situation demands, the appropriate item for application. The result of this situation has been the elaboration of a large amount of knowledge, the parts of which are little integrated. This is especially unfortunate since the concept of technical assistance has tended to embrace knowledge in many fields of social science and has brought together scholars and administrators in various fields and with varied technical competence.

At the outset I will freely confess that the preparation of this paper has caused me some misgivings. For one thing, the times beg to Heaven for a masterfully brilliant statement on the subject of federal-provincial financial relations, and few occasions could be more propitious for such a performance than the present. For another I was disturbed to find that my efforts this morning are itemized in the programme under the heading “Economics,” which suggests that I am an economist and that my subject falls primarily into that field of study.

As to making a brilliant analysis, the challenge that others might have felt was barely aroused in me and succumbed very quickly. I am beginning to feel that I now hold a record for having sustained complete sterility of new thought on federal-provincial relations over a longer period of active writing and study than any other person in Canada. Recently my score in this respect has been perfect, and the thought of abandoning this unique position was more than I could contemplate. I had somewhat more of a problem in making peace with the programme, however. I hesitate to classify the subject as part of “Economics,” but at least I am impelled to agree that it should fall within one of the social sciences. My own difficulty in deciding which one is that years of close contact with negotiations between the federal and provincial governments have shown me that in practice this subject is a compound of a great deal of simple arithmetic, a considerable element of practical politics, and a modicum of pretentious nonsense. Whether these are the earmarks of “Political Science,” “Political Economy,” or simply “Economics” I will leave it to the adherents of these disciplines to decide for themselves. For my part I am content to leave the subject unclassified, allowing it to follow its own bent and speak its own language. I have tried, however, to extract it from the heat of political skirmishing so that we can look at it in some detachment, and as well for the most part the all-important question of federal arithmetic has been left in abeyance.

The question underlying the tax agreements is whether the advantages of uniformity in the three chief progressive taxes outweigh the disadvantages involved in restricting provincial autonomy. The federal government can use the taxes in question not only to control the economy but also to avoid the injustice of double taxation and the waste of unequal taxation. In 1867 customs duties and excise taxes were handed over to the federal government for much the same reasons. They could be used to control the economy and it was desirable that interprovincial trade should be free. In both cases the problem had to be faced of ensuring to the provinces revenues adequate for their needs.

Although the tax agreements have increased the de facto autonomy of some provinces by enabling them to find money for social services which have come to be considered essential in Canada, they have involved some restriction of provincial autonomy in two important respects. By depriving the provinces of the taxes which can most easily be made progressive they prevent them from placing the burden of new social services on the shoulders best able to bear it; for example, the cost of hospitalization in British Columbia is defrayed by a sales tax. In the second place the federal government has made some of its payments to the provinces conditional and has thus encouraged and, indeed, almost compelled them to accept the priorities in expenditure chosen by the federal government. This process is sometimes called buying control. Conditional subsidies do not have this effect when the federal government and the provincial governments are substantially partners in a matter of common interest. However, a subsidy given in aid of any service which is distinctively provincial, for example, education, might easily carry conditions giving effect to federal policy. It is in these two ways that the tax agreements are a threat to provincial autonomy and a serious modification of the Canadian federal system.

Canadian experience in governmental compulsion in labour relations has now extended over a period of half a century. The degree of compulsion has fluctuated in relation to changing circumstances. Periods of crisis have usually called forth intensified and extended government interference and restraint on one or both of the parties to the dispute. The termination or decline of tension has not, however, resulted necessarily in a reversion to the status quo ante. Indeed there has been a tendency for legislatures to attempt to profit by experience and redraft the law so as to avoid, if possible, the repetition of similar unhappy episodes of destructive or disruptive conflict. This has been an additive process and has produced a body of law governing the behaviour of labour and management which can quite properly be described as a Canadian labour relations code. Parallel with the development of law there has been a construction and elaboration of institutions of labour, industry, and government which function in the field of labour relations. The Canadian pattern, while exhibiting similarities with those found in other industrial countries, has certain important features which render it somewhat different. These special features have had a pervading effect on the character of the industrial relationship, and have drastically influenced collective bargaining as a dynamic process. There is evidence that the imposition of the labour relations code has failed in some degree to produce the expected results, even to the extent of defeating the achievement of the objectives it was developed to accomplish.

The most important source of data for research into Canadian society is the federal census. These decennial inventories, of which there have been nine since Confederation, contain hosts of numbers, most of them unfortunately rather widely ignored by social scientists. Of the battery of questions to which every individual is subjected, a few are singled out as yielding fundamental facts, and appear again and again in the tabulated product in cross-classification with other subjects. The three basic attributes, which are the sine qua non of a personal census, are age, sex, and geographical location. Next to these in importance, if we may judge by the volume and detail of published tabulations and analysis, is origin. Now the intriguing circumstance about this highly emphasized piece of information is that it remained undefined until 1951. There was no explicit indication of the operations required to identify the referent of the term. Furthermore, the answers obtained and published clearly applied to an array of different types of evidence, which could easily overlap for a given individual.

Consider, for example, the 1941 census, and its question, there termed “racial origin.” The “Instructions to Commissioners and Enumerators,” which are required reading for anyone making serious use of census statistics, give the following clues:

What is racial origin? The word “race” signifies—“Descendants of a common ancestor.” [It may be asserted that this does not specify a practicable operation.] … a person's racial origin and nationality very often are different …. The name of a country from which a person came to Canada gives no indication of that person's racial origin …. The word “Canadian” does not denote a racial origin, but a nationality; the same applies to the word “American” …. What determines racial origin? As a general rule a person's racial origin is to be traced through his father ….

The Dominion Bureau of Statistics is currently completing a table of the inter-industry flow of goods and services in Canada for the year 1949. This paper is a preliminary report on the project which tries to answer the following questions: (1) What are the objectives of the Bureau's study of inter-industry relationships? (2) What are the principal characteristics of the 1949 table of inter-industry flows? (3) What are the principal sources of the data, the methods of estimation, and the reliability of the estimates? (4) What are the limitations of the use of the 1949 table for input-output analysis? The task of evaluating the results of the project must be left until the table has been completed and has been carefully studied.

The primary reason for constructing a set of inter-industry accounts for 1949 was to bring together, in an integrated framework, industrial and other economic statistics collected by the Bureau in order to create a tool for statistical management which draws attention to inconsistencies in classification and gaps in the data. The backbone of a good statistical system is standard classification of industries and commodities but, to ensure that the classifications are being implemented uniformly and to ensure that the classifications are analytically useful, statistics based on them should be integrated in some suitable framework. A table of inter-industry flows is ideally suited for this integration since one of its main features, as will be explained later, is that the total value of output of an industry is defined to be identical to the total value of input. If input and output can be estimated independently, the discrepancy between the two estimates provides an indicator of the accuracy of the data. Moreover, as Dr. Milton Gilbert has suggested: “It is only by having such an all-embracing framework that one can establish any order of priority in statistical collection. Otherwise the national ‘program’ of data-gathering tends to be like the program of a variety show; the first act is an acrobat, the second is an Irish tenor, the third is a tap dancer, and so on, with no connection between them. The parts of the program do not make up a whole drama or tell one story.”

Gaetano Mosca, in his work which has been translated as The Ruling Class, engaged in an extensive criticism of the democratic theory that stems in particular from Rousseau. In the light of the historical evidence which he considered important he concluded:

Among the constant facts and tendencies which are to be found in all political organisms one is so obvious that it is apparent to the most casual eye. In all societies—from societies that are meagerly developed and have barely attained the dawnings of civilization, down to the most advanced and powerful societies—two classes of people appear—a class that rules and a class that is ruled. The first always the less numerous, performs all political functions, monopolizes power and enjoys the advantages that power brings, whereas the second, the more numerous class is directed and controlled by the first ….

Mosca, of course, is but one of a long line of writers who have tried to show that as an explanation of the power processes democratic theory is absurd. At the same time, however, most of these anti-democratic writers grant that there is, in all human beings, a compelling sentiment that justice and equality should temper power; that the masses should enforce some restraint on their leaders; and that government always involves some kind of consent of the governed. Those who bring an empirical method to the study of power are frequently condemned on the ethical grounds that they seek to justify some kind of tyranny, but what they do more than anything else is to show up the realities of power. Only after some examination of a power system has been made, can it be determined whether or not that system conforms to some ethical ideal. The ideals which are widespread in the Western democracies are, first, that there is popular participation in decision-making; and, second, that the class system is open, that is, that recruitment to positions of power is the result of personal achievement in a competitive society.

During the recent session of Parliament a Conservative member flourished a small garment before the House to dramatize the fact that a Canadian baby is surrounded by the influence of our tariff from the time he is first wrapped in a tariff-protected blanket until at length he is driven out to some cemetery in a tariff-protected hearse and interred in a tariff-protected coffin. And yet I suspect that most economists have been less surprised at the continued importance of our tariff than at the consistency with which Canada has moved in the direction of freer trade during the past decade or more. One admittedly defective measure of tariff levels, the ratio of the total amount of duty collected to the total value of dutiable imports, has fallen from 29.6 per cent in 1933 to 18.6 per cent in 1953 and during the past few years has been at its lowest level since Confederation. Moreover, despite the acute import competition in a number of industries during recent years, the Government has steadily refused any openly protective measures on their behalf. The sharp declines in employment in our woollen textile and deep-sea shipping industries suggest a willingness to tolerate substantial readjustments in employment arising at least in part out of the changing pattern of international competition. The active role our Government has taken in supporting the General Agreement on Tariffs and Trade, the International Monetary Fund and the International Bank and in pressing for a removal of quantitative restrictions and the restoration of a more multilateral pattern of trade is further evidence of tins freer-trade attitude. After a regrettable lapse in 1947, Canada has been one of the few countries that has managed to avoid the use of import quotas since the end of the war and is almost alone in her abandonment of exchange controls. Then too, in line with the provisions of GATT, our regulations with respect to the valuation of goods for duty purposes and the application of dumping duties have been revised and in some respects made even more liberal than a strict interpretation of GATT would require. Even the party of Sir John A. Macdonald no longer gives outright support to the cause of protection. One European economist has suggested that Canada now has the most open economy in the world. Nowhere else is the international movement of goods, people, and capital as free as it is across the Canadian border.