Canada embraced a socialist approach to balance its economy defined as a “postwar liberal consensus”. Welfare state is a process of government intervention to gain the purpose of redistributing wealth. Government involvement was feared by many Canadians because it gave government officials more power. However, the social programs were designed for the security of citizens. Universal programs such as medical insurance, social assistance, family allowances and old age pensions were formed to benefit citizen’s financial state, therefore improving Canada’s economy.
C.D Howe was a key architect in developing the beginning of welfare state. Canada’s national debt was 1.25 times the annual gross national production in 1945. C.D Howe wanted to delay paying Canada’s debt until the economy was stable. Canada was under industrial development by conversion of wartimes to peacetime industries. War factories changed to manufacturing productions such as automobiles, housing, and clothes. In Canada production was slow, exports were limited, thus causing inflation. The Marshall Plan profited Canada’s export markets improving European countries by their purchase of Canadian goods, recuperating Canada’s economy.
The Cold War, was an ideological battle promoting political and economic options available to nations on either side of the capitalist-communist divide. Preparation of the Cold War advanced Canada’s economy because millions of dollars invested into defence production. The United States replaced the United Kingdom as a main source of foreign investment increasing takeovers of Canadian firms by United States companies. 1 billion dollars was spent on defence during the 1950s, shaping Canada’s economy on military defence.