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The Role of Support Prices in a Full-Employment Economy*
Published online by Cambridge University Press: 07 November 2014
Extract
In both Canada and the United States the agricultural programmes that attempt to support or raise the level of farm prices were conceived during the inter-war period of readjustment and depression. Now that we have had ten years of full employment and high-level incomes in our respective economies, it is perhaps time to reassess the role of support prices.
The reassessment that I propose to make is based on the assumption that we will be able to maintain full-employment economies most of the time and that if a depression should come, it will be relatively mild and of reasonably short duration. Fear of war, war, and preparation for war are likely to lead to a full-employment economy for some time. It may not be too much wishful thinking to believe that if the happy era should come when war no longer serves as an impetus for aggregate demand, our economies will be guided by competent monetary and fiscal leadership and will be able to maintain a fairly even keel. The mild recession which the United States experienced in 1949 and which had almost ended before the fateful attack in Korea offers some support for, though obviously not confirmation of, this view. In any case, we should clearly separate in our thinking and in our actions the problems of agricultural price policy as they relate to conditions of full employment and to conditions of depression.
- Type
- Research Article
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 17 , Issue 3 , August 1951 , pp. 352 - 359
- Copyright
- Copyright © Canadian Political Science Association 1951
Footnotes
*
This paper was read at the annual meeting of the Canadian Political Science Association in Montreal, June 7, 1951.
References
1 See Johnson, D. Gale, “Allocation of Agricultural Income,” Journal of Farm Economics, XXX, 1948, 739.Google Scholar The statement in the text is based on the assumption that the purchasing power of income of farm people is 25 per cent greater than for non-farm people and that the labour capacities of farm workers are equal to those of the average worker in manufacturing, mining, and railroads. Commercial farms are those in that half of all United States census farms which produced 91 per cent of the net agricultural output and utilized two-thirds of all farm labour. The remaining farms include rural residences, part-time farms, and small-scale subsistence farms.
2 See Johnson, D. Gale, Forward Trices for Agriculture (Chicago, 1947), 77 Google Scholar, and Schultz, T. W., Production and Welfare of Agriculture (New York, 1949), 64–82.Google Scholar
3 See Shefrin, Frank, Farm Income: Cash and Net, 1926 to 1948 (Ottawa, 1949), 30, 6-7.Google Scholar
4 Schultz, T. W., Production and Welfare of Agriculture, 162–75.Google Scholar
5 See U. S. Congress, Joint Committee on the Economic Report, Underemployment of Rural Families (Washington, 1951), 5, 13–15.Google Scholar The estimate of net incomes includes income from off-farm work, and assumes that net farm income is roughly half of gross farm income. The writer is responsible for the net income figure given above.
6 For a similar point of view, see T. W. Schultz, Production and Welfare of Agriculture, chap. XIV.
7 For a more complete discussion, see Johnson, D. Gale, Trade and Agriculture: A Study of Inconsistent Policies (New York, 1950), esp. pp. 1–76.Google Scholar
8 These points have been more fully developed in Forward Prices for Agriculture, chaps, IV, V, VI.
9 See Forward Prices for Agriculture, chap. VI.