Business Cycles in Canada: The Postwar Experience and Policy Directions

Aluin Gilchrist is a Vancouver-based Canadian government civil
litigation lawyer.

In 1981 Senator Lamontagne (1917-1983) became too ill to do the final chapters of this book, so Professor Robert Campbell, drawing on the Senate study on science policy, has concluded the book with a presentation of the fifty-year cycle and a discussion of useful kinds of long-term government policies.

There is no algebra here. The graphs and text have the clarity that comes of long hours of discussion with intelligent people who have divergent views.

Walter L. Gordon, who writes the foreword, is remembered for his budget of 13 June 1963. He had diagnosed a medium-term upswing and proposed to curb overall investment. The budget was controversial, and several of its measures had to be withdrawn or modified.

The short cycle peaks about every three years, when producers overestimate their markets. The intermediate cycle (John Maynard Keynes’s marginal efficiency of capital) has rising interest rates pinching off productive investment every seven to ten years.

The authors are tactful, but here are some things I read between the lines: No government has managed to apply a timely curb when a cycle was peaking toward imminent fall. No government has managed to supply stimulus and support to soften the descent. What was done was often too late, pushing the economic pendulum of Canada into worse gyration than ever. Fortunately, government manipulation was often feeble and relatively ineffective. Unfortunately, as the art of intervention develops, errors become more expensive.

Stagflation comes with greed, as labour goes on welfare rather than wash dishes, and capital plays at take-over rather than build homes.

Governments are committed to do their best for Canadians. They cannot sit idle when they know that if only they try the right tools at the right time, they may avert misery. Past trials have been learning experiences, and there is surely much to learn.

One can hardly say that economics is fun, but this book is brief, clear, very much to the point, and surprisingly easy to read.