Human adaptation is necessary for SURVIVAL of an economy:
(CWL 21, 42-43) our inquiry differs radically from traditional economics, in which the ultimate premises are not production and exchange but rather exchange and self-interest, or later, exchange and a vaguely defined psychological situation. Our aim is to prescind from human psychology that, in the first place, we may define the objective situation with which man has to deal, and, in the second place, define the psychological attitude that has to be adopted if man is to deal successfully with economic problems. Thus something of a Copernican revolution is attempted: instead of taking man as he is or as he may be thought to be and from that deducing what economic phenomena are going to be, we take the exchange process in its greatest generality and attempt to deduce the human adaptations necessary for SURVIVAL. (CWL 21,42- 43)
The exchange process must not, by maladaptation, eliminate itself
(CWL 15, 5-6) Summary of the Argument:
The present inquiry is concerned with relations between the productive process and the monetary circulation. It will be shown 1) that the acceleration of the process postulates modifications in the circulation, 2) that there exist ‘systematic,’ as opposed to, windfall profits, 3) that systematic profits increase in the earlier stages of long-term accelerations but revert to zero in later stages – a phenomenon underlying the variations in marginal efficiency of capital of Keynesian General Theory, 4) that the increase and decrease of systematic profits necessitate corresponding changes in subordinate rates of spending – a correlation underlying the significance of the Keynesian propensity to consume, 5) that either or both a favorable balance of trade and domestic deficit spending create another type of systematic profits, 6) that while they last they mitigate the necessity of complete adjustment of the propensity to consume to the accelerations of the process, 7) that they cannot last indefinitely, 8) that the longer they last, the greater the intractability of ultimate problems. From the premises and conclusions of this analysis it will the be argued 9) that prices can not be regarded (by the stewards of the economy) as ultimate norms guiding strategic economic decisions, 10) that the function of prices is merely to provide a mechanism for overcoming the divergence of strategically indifferent decisions or preferences, and 11) that, since not all decisions and preferences possess this indifference, the exchange economy is confronted with the dilemma either of eliminating itself by suppressing the freedom of exchange or of certain classes of exchanges, or else of effectively augmenting the enlightenment of the enlightened self-interest that guides exchanges. [CWL 15, 5-6]
For SURVIVAL, the dynamics of disequilibria must be understood, and intelligence must replace ignorance, so as to overcome the first law of nature
[CWL 15, 82] In equity (the basic expansion phase following the surplus expansion phase) should be directed to raising the standard of living of the whole society. It does not. And the reason why it does not is not the reason on which simple-minded moralists insist. They blame greed. But the prime cause is ignorance. The dynamics of surplus and basic expansion, surplus and basic incomes are not understood, not formulated, not taught….. When intelligence is a blank, the first law of nature takes over: self-preservation. It is not primarily greed but frantic efforts at self-preservation that turn the recession into a depression, and the depression into a crash. [CWL 15, 82]
For SURVIVAL, liberty must be preserved
The principle of progress is liberty.
The old political economists were champions of democracy; and if the content of their thought has been found inadequate, its democratic form is as valid today as ever. That form consisted in the discovery of an economic mechanism and in the deduction of rules to guide men in the use of the economic machine, a rule of laissez faire for governments and a rule of thrift and enterprise for individuals … but it is still insufficiently grasped that new and more satisfactory rules have to be devised. Without them human liberty will perish. For either men learn rules to guide them individually in the use of the economic machine, or else they surrender their liberty to be ruled along with the machine and a central planning board …the one issue is the locus of control. Is it to be absolutist from above downwards? Is it to be democratic only in the measure in which economic science succeeds in uttering not counsel to rulers but precepts to mankind, not specific remedies and plans to increase the power of bureaucracies, but universal laws which men themselves administrate in the personal conduct of their lives. McShane, Philip, Features of Generalized Empirical Method and the Actual context of Economics: pp. 557-58
A rigidly egalitarian system belongs to a perfectly egalitarian world; (but) a world in which men are, in fact, unequal must find a different system. What system? If the idealism is sentiment without intelligence, it is as likely as not to mate with the cynicism of the revolutionaries to foist upon us a dictatorship of the proletariat in which the proletariat does not dictate, a dictatorship of the Herrenvolk in which the Volkobeys the Fuhrer. But if that idealism can be brought too learn the discipline of logic and of scientific reflection, then it will impose a generalization of the exchange economy. To determine the nature of such a generalization is the aim of this inquiry; but at once this is at least evident. The vast forces of human benevolence can no longer be left to tumble down the Niagara of fine sentiments and noble dreams. They have to be assigned a function and harnessed within the exchange system, for in no other way can that system shake off its fictitious fetters to move consistently towards its maximum. [CWL 21, 36]
The SURVIVAL of democracy requires enlightened self-interest
(CWL 15, lxxi ) The idea of engineering human welfare is repugnant to Lonergan, for ‘managing people is not treating them as persons. To treat them as persons one must know and one must invite them to know.’ Making the SURVIVAL of democracy possible by ‘effectively augmenting the enlightenment of … enlightened self-interest’ cannot be identified merely with the Enlightenment’s project of steering public opinion from unenlightened to enlightened self-interest. Instead, Lonergan envisaged a vast and long-term educational effort. He insisted that rational control of the economy ‘can be democratic only in the measure in which economic science succeeds in uttering not counsel to rulers but precepts to mankind, not specific remedies and plans to increase the power of bureaucracies, but universal laws which men themselves administrate in the personal conduct of their lives.’ (CWL 15, lxxi ) Also see CWL 3, 218-45/ 244-70)
A civilization can decline, dwindle, vanish
(CWL 3, 209-210/) Clearly schemes of recurrence exist and function. No less clearly, their functioning is not inevitable. A population can decline, dwindle, vanish. A vast technological expansion, robbed of its technicians, would become a monument more intricate but no more useful than the pyramids. An economy can falter, though resources and capital equipment abound, though skill cries for its opportunity and desire for skill’s product, though labour asks for work and industry is eager to employ it; then one can prime the pumps and make X occur; but because the schemes (of recurrence) are not functioning properly, X fails to recur. As the economy, so too the polity can fall apart. … much …in a twilight of straitened but gracious living men await the catalytic trifle that will reveal to a surprised world the end of a once brilliant day. (CWL 3, 209-210/)
Schemes of recurrence must continue functioning for SURVIVAL
(CWL 15, 92-93) one is led to think of schemes of recurrence, whose several carriers severally follow their own classical laws, whose assembly follows the probability of their emergence, and whose continued functioning follows the probability of their survival. Such in a nutshell is the evolutionary view that in Insight I sketched out under the name of emergent probability and, earlier in this essay, I have applied to economics. (CWL 15, 92-93)
There exists a probability for the SURVIVAL of schemes that have begun to function
(CWL 3, 120-21) Our outline of the notion of a conditioned series of schemes of recurrence supposes that one can attribute a probability to the emergence and to the SURVIVAL of a scheme of recurrence. However, our account of probability has been in terms of the frequency, not of schemes, but of events. Have schemes any probability? If they have, is there a distinct probability for their emergence and another for their SURVIVAL? Such questions must be met. … There exists, then a probability of emergence for a scheme of recurrence. … There also exists a probability for the SURVIVAL of schemes that have begun to function. The perpetuity of a scheme is not necessary. Just as classical laws are subject to the proviso, other things being equal, spa so are the schemes constituted by combinations of classical laws; and whether or not other things will continue to be equal, is a question that admits an answer only in terms of statistical laws. Accordingly, the probability of SURVIVAL of a scheme of recurrence is the probability of the non-occurrence of any of the events that would disrupt the scheme. (CWL 3, 120-21/143-44)
Science is necessary for SURVIVAL of the earth’s teeming population
… what occurred towards the end of the seventeenth century was the beginning not merely of much more and much better science but, basically, of a notion of science quite different from the notion worked out by Aristotle and taken for granted by his followers. To put the matter summarily, necessity was a key notion for Aristotle but today it is marginal; in its place is verifiable possibility. Causality was a key notion for Aristotle but today in effect, if not in name, it is replaced by correlation. The universal and abstract were normative in Aristotelian science, but modern science uses universals as tools in its unrelenting efforts to approximate to concrete process. Where the Aristotelian claimed certitude, the modern scientist disclaims anything more than probability … the prestige of this new idea of science is unquestioned, its effectiveness has been palpably demonstrated, its continuing necessity for the SURVIVAL of the earth’s teeming population is beyond doubt. [CWL 4] Lonergan, Bernard J. F. (1993 ) Collection, ed. Frederick E. Crowe and Robert E. Doran, Toronto: University of Toronto Press, and [Collection, 1967] Lonergan, Bernard J. F., Collection, ed. Frederick E. Crowe S.J., (1967, London, Darton, Longman & Todd LTD [Collection, 1967] A Second Collection, pages 103-4
A civilization in decline digs its own grave with a relentless consistency.
(Click here)
Clearly schemes of recurrence exist and function. No less clearly, their functioning is not inevitable. A population can decline, dwindle, vanish. A vast technological expansion, robbed of its technicians, would become a monument more intricate but no more useful than the pyramids. An economy can falter, though resources and capital equipment abound, though skill cries for its opportunity and desire for skill’s product, though labour asks for work and industry is eager to employ it; then one can prime the pumps and make X occur; but because the schemes (of recurrence) are not functioning properly, X fails to recur. As the economy, so too the polity can fall apart. … much …in a twilight of straitened but gracious living men await the catalytic trifle that will reveal to a surprised world the end of a once brilliant day. (CWL 3, 209-210/)
The good of order
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There’s the good of order. The good of order is very well represented negatively by an economic depression. In an economic depression there is no lack of material, there is no lack of capital, there is no lack of people willing to work, and there is no lack of people willing to buy, but things don’t run, they don’t work. You can prime the pump, and you get a single burst of water going round, but it doesn’t keep going round as when the economic system is functioning properly. You can keep priming and repriming and build up an enormous national debt, and things still aren’t clicking. … What is lacking is a good of order. … you have the good of order in a family, a family as an institution. … There is a good of order of the polity, the state. These objective schemes of recurrence – you have a good breakfast this morning, you have a good breakfast the next morning, and you keep on having a good breakfast every morning; you have a job to do that interests you today, and you’ll have it tomorrow and so on. … and the good of order is when the whole thing clicks together. It is good in the intelligible sense. It is the object of an insight. (CWL 5, 378-379; Please read these and following pages in CWL 5 in full.)