Just recently a new force in world politics, the multinational corporation, has become the focus of widespread interest and concern. Many students of the development and spread of these firms emphasize their actual and potential contribution toward global economic integration. Contingent upon this process, several observers have optimistically forecast the fundamental breakdown of the nation-state system and its replacement by some form of more stable and peaceful world polity. The Canadian case however, does not sustain this optimism. Among all the nations Canada has been the most consistently liberal host of these firms, providing particular attraction for expansionist American corporations. As a consequence, the country has experienced a new and profound dependence upon the American economy. Directly resultant upon this experience has been the forfeiture of broad areas of Canadian state sovereignty and national independence. But unlike the prophecy, this sacrifice has not been part of a more universal transfer of nation-state prerogatives to the claims of supranational authority. Instead, the forfeiture has been unilateral and horizontals from the Canadian state to the American state. Clearly, American multinational corporations have been successful promoters of continental economic integration. Ho other nation in the developed world shares with Canada the same unique degree of economic subordination. On the other hand, American multinational corporations are demonstrably inadequate institutions for furthering the general erosion of the nation-state system. They are themselves subordinate to and dependent upon the U.S. state. This relationship is made most explicit through American laws of extraterritoriality whereby the U.S. government has reserved the right to dictate trade, anti-trust and balance of payments policies to the foreign subsidiaries of American firms. The Canadian government has become acutely aware of this relationship on several occasions, most notably over the 'Time and Reader's Digest Affair' and the 'American Guidelines Issue'. Of even graver import, these occasions demonstrated the ease with which American economic controls in one area could be converted into substantial political leverage in entirely unrelated areas of Canadian policy formation. In each instance where the U.S. government has employed its authority over American multinational corporations to sway Canadian government policy, the Canadian government has eventually acquiesced. Ironically, Canadian government elites have proven themselves unwilling to respond to this challenge at its source. Instead of attempting to regulate or discourage American multinational corporations in Canada, they have co-operated actively in their promotion. To understand the paradoxical behavior of Canadian governments in aiding the demise of their own powers and the Canadian state, the career patterns of certain influential political and bureaucratic elites were investigated. This research uncovered the existence of a longstanding hybrid elite composed of Canadian governmental decision-makers who have been strongly identified with corporations committed to a continental economy. The economic interests which, inhere to these corporate government linkages have been complemented and given normative justification by a business ethos prevalent in Canadian society. Together they provide a motivating rationale for Canadian government elites in co-operating with, multinational corporations and, in effect, in undermining the sovereignty and independence of the Canadian nation-state. / Arts, Faculty of / Political Science, Department of / Graduate