Rescue: Saving the Canadian Economy

K.J. Charles was Professor of Economics, Lakehead University, Thunder Bay.

The author of this book has a varied background. He had his own grain and cattle business for over twenty years. He has also served as an economist for the government of Saskatchewan and as a research economist for the Canada West foundation. He is thus well qualified to write on the current economic situation. The dramatic title of the book, and the glowing description of it by two well-known Canadian economists on the back cover, generate a sense of excitement and expectation that Mr. Hutcheon has some brilliant and original plan to save the Canadian economy. In the preface, he tells us that the Keynesian paradigm no longer adequately describes the economy in which we now live, and that the book is devoted to the formidable task of “rebuilding the theoretical foundations of economic policy” (p. lx). The book itself is presented in three parts. In the first, the author attempts to provide a diagnosis of the economic malaise that afflicts Canada, and indeed the countries of the western world. Part II prepares the patient, so to speak, for the treatment, by knocking down the blinding myths that have contributed to the present unhealthy state of affairs. The final part contains the cure — the “new and exciting” Hutcheon plan to save the Canadian economy. Thus, the arresting title, the glowing praise, and the plan of the book all combine to create in the reader a desire to zero in on that original solution that the author is supposed to provide. (As a result, the first two parts, which contain a great deal of useful information and analysis, are not likely to be read with that care and patience they require.) Although Hutcheon regards Marxism, Keynesianism, Monetarism, and supply-side Reaganomics as outmoded, and is convinced of the need for a revolution in ideas, the reader will not find the new theory in the book, but only a “catalyst for such a process” (p. 11). The final chapter does, however, contain a policy prescription that the author believes will set the economy on the road to recovery. In view of the sense of excitement the book builds up, the final chapter is something of a let-down. The author proposes an indexation of wages that would maintain a constant ratio of aggregate wages to aggregate profits, “no matter what happened to prices.” In implementing such a policy, a number of practical questions and problems will arise, and it is not clear how they will be dealt with. How can the wage share of the national income be maintained regardless of what happens to prices? Are not fluctuations of income and income shares the characteristic form of capitalistic growth? The book does not provide any fool-proof solutions, but it makes interesting reading, and the questions it raises may give us a better understanding of the problem.