The Minister of Finance, Paul Martin, announced that Canada had a record a surplus of $2.9 billion, their promises of tax relief have been executed and the unemployment rates has fallen to 7.5 per cent, its lowest level in more than nine years (Finance Canada). The costs of this good news are the budget cut of the federal government on social welfare programs in recently years. Hospital rejected to accept new patients. Toronto High Schools was shut down. Homeless people sleep outdoors. Is the monetary policy that Mike Harris exercising harms the people? The aim of this article is to look at historical reason of Canada being a welfare state and being changed to a more capitalistic society. The era of Keynesian Welfare State (KWS) and contemporary Neo Liberalism and the effects of Mike Harris" government policy will be discussed .

             In 1878, McDonald national policy was introduced. McDonald introduced a set of import tariffs to protect the domestic market. This policy became the diving force of Canadian economy until 1930"s with the problems of the great depression, world economic crisis and government deficit. In 1936, John Maynard Keynes published his book "The General Theory of Employment, Interest and Money". He argued that a depression was a short run phenomenon because of a lack of demand. If the government could inject money to the private sector, the private sector would be better off and spending money and the government could collect tax. It has been called as demand-management policy.

             The crises were solved by the breakout of the Second World War (WWII) in 1937.

             After WWII, many governments (including Canada, UK and US) pursued Keynesian demand-management policy. .

             On the level of production, in 1940"s, Henry Ford decided to bring a new method of production, assembly line production, with a 5 dollars day policy. His idea was to create a new type of workers who could afford to own cars and to avoid alienation of workers.