Preface to Part I

In these times, we are faced with social, economic and ecological crises on an unprecedented scale.

The first four sections of this series provide a brief introduction to the solution to the economics part of the problem. It was discovered by Bernard Lonergan in the 1930’s. (Part of what moved him to think about economics was the Great Depression.)1Pierrot Lambert and Philip McShane, Bernard Lonergan, His Life and Leading Ideas (Vancouver: Axial Publishing, 2010), 40-42. See also the penultimate paragraph of Section 3.3. In 1998, his results were published by the University of Toronto Press2Bernard Lonergan, For a New Political Economy, vol. 21 of Collected Works of Bernard Lonergan, ed. Philip J. McShane (Toronto: University of Toronto Press, 1998). Henceforth, CWL 21.. Lonergan’s discovery has not yet been picked up by professional economists. If, however, you work through our introduction, it will become evident that his results provide the needed basis for economics’ new standard model.

Below, we will say something about our approach. It will help to say something first about the approach taken in mainstream economics. It is common knowledge that today’s economics is based on “models that have little or nothing to do with the real world.”3For instance, a basic feature of contemporary economics is the “circular flow” model. See, e.g., Chapter 2 of Mankiw’s book (Gregory N. Mankiw, Macroeconomics, 9th ed. New York: MacMillan Learning, 2016). “Imagine an economy that produces a single good, bread, from a single input, labor. Figure 2-1 [the figure in Mankiw’s book] illustrates all the economic transactions that occur between households and firms in this economy.” The problem is that the circular flow economy that one is asked to imagine does not exist. That will become evident by the end of Section 3, below. The circular flow model is used, however, as a premise for defining and measuring GDP/GNP and related quantities. See Section 4.1, below, in “Economic Malpractice.” See also references given in the Introductory Works part of the Bibliography, below, all of which discuss problems with the circular model. And, attempts to reform economics are in that same tradition and consequently do not escape its fundamental limitations.

This is not the place for historical analysis of economic thought. But we can illustrate with an example, an Op Ed4An oped, short for “opposite the editorial page”, is a written prose piece typically published by a newspaper or magazine which expresses the opinion of an author usually not affiliated with the publication’s editorial board. Wikipedia contributors, “Op-ed,” Wikipedia, The Free Encyclopedia, (accessed August 2, 2019). in the Financial Times on “how to fix university economics courses.” Wendy Carlin (University College London) and Sam Bowles (Professor Emeritus at the University of Massachusetts Amherst) observe that

an introductory economics course can be pluralistic in two ways. It can juxtapose schools of economic thought or disciplines in a kind of paradigm tournament. Or, they went on, it can integrate the insights of the different schools of thought and disciplines in a common narrative and related analytical models. Both approaches can be valuable; but CORE takes the second approach because we have concluded that it better equips students to reason analytically and empirically, and come to their own conclusions about problems such as inequality, the future of work and climate change. The FT op ed illustrates CORE’s pluralism-by-integration approach with our model of the labour market and the firm.5“How to fix university economics courses,” Financial Times, Jan. 17, 2019, Boldface ours.

Notice that in both of the two ways described, one either juxtaposes or integrates “schools of thought” and “models.” That effectively blocks the possibility of escaping already established paradigms and methods. Unfortunately, what the authors construct, then, is another model, “our model of the labour market and the firm.”

Why not begin with facts and data?6See John Benton and Terrance Quinn, Journeyism: A Handbook For Future Academics, Toronto: Island House Press, 2021. (Hereafter cited as Benton et al., Journeyism.) How does any particular business actually operate? Where does the money go, in fact? What function does it serve? How, in fact, do different goods and services contribute to production, provision and standard of living in any particular village, town, city or region? As it happens, beginning with facts and data provides a way wherein one can discover key functions and relations by which to understand any economy and any economic event.

Preliminary insights are accessible to a wide audience. The articles in this series are at that level. The main result discovered by Lonergan goes much further. And so, in footnotes and Bibliography, we provide a few complementary references.

As in the book, Journeyism, there is our use of the expression “we.” We do not mean this in the old-fashioned sense as though the author(s) know what readers are thinking. It is just that we are co-authors, and so we invite you, the reader, to join us in various observations and reflections.

Sections are organized as follows: 1. “Early Innovations” is on the beginnings of economies. The setting is prehistory but the structure revealed is part of all economies, ancient and modern.  2. “Two Kinds of Work” goes further and describes two kinds of work and two kinds of goods and services in any economy. 3. “Modern Economics” provides an ultra-brief glimpse of a correct heuristics for two kinds of supply and demand and financial structures in modern exchange economies. 4. “Economic Malpractice” looks into aspects of contemporary models and financial structures that are inimical to economies, humanity and ecosystems. 5. Reaching a correct understanding of economic processes is only part of the problem. The dynamical structures revealed by the new theory7See Benton et al., Journeyism, chs. 9-10 (dynamics of knowing) and 15-16 (dynamics of doing); also, the horizon shift to theoretical understanding, chs. 17-18. are present in any economy, whether it is one that is controlled by a dictator or is an economy that is more or less steadily providing goods and services needed to support some approximation to a standard of living. So, in the fifth section, “The Culture & The Economy,” we touch on the larger context which includes culture and economics, recovery and the possibility of (ongoing) progress. In a short section at the end of a brief introduction, we cannot go into any details. But we describe something of the context and provide references for further reading.