In this section Lonergan demonstrates that Marx’s economics is insufficiently abstract and is contaminated by descriptive sociological and political categories; he finds Marx’s summons to class conflict perilous to humanity because it promotes and enforces a drift away from liberty to a totalitarianism culminating in the dreadful conditions of a no-escape “frontier, clear and firm indoctrination, controlled media of information, a vigilant secret police, and the terrifying threat of labor camps,” – all in the name of a mythical macroeconomics.
Below is a gathering of excerpts from different sources. Careful reading should inspire the reader to consult the sources for the rich context of each excerpt and for a fuller appreciation of Lonergan’s understanding and reasoning about the need for liberty.
The far more confusing error of Marx was to lump together both progress and the two principles of decline (group bias and general bias against sound explanatory theory) under the impressive name of dialectical materialism. … The basic service of the higher viewpoint will be a liberation from confusion through clear distinctions. [CWL 3, 234-235/259-60]
Marx’s labor theory of value invoked an admixture of political, sociological, and especially proprietorial dimensions. Moreover, Lonergan had no respect for the way an illegitimate importation of sociological categories into the properly economic sphere lends support to the simpliste Marxist-socialist penchant for setting entrepreneurs and workers against each other. Marxist advocacy of group bias and the use of propaganda and violence short-circuit democratic solidarity. To Lonergan’s way of thinking, a moral vision that substitutes propaganda and force for its lack of intellectual acuity is a self-contradiction much more radical than the ‘contradictions’ that supposedly drive dialectical materialism. [CWL 15 Editors’ Introduction, xlvi-xlvii]
A. Politics and Political Economy
There is such a thing as progress and its principle is liberty. … However, while there is progress and while its principle is liberty, there also is decline and its principle is bias. There is the minor principle of group bias which tends to generate its own corrective. There is the major principle of general bias and, though it too generates its own corrective, it does so only by confronting human intelligence with the alternative of adopting a higher viewpoint or perishing. To ignore the fact of decline was the error of the old liberal views of automatic progress. The far more confusing error of Marx was to lump together both progress and the two principles of decline under the impressive name of dialectical materialism, to grasp that the minor principle of decline would correct itself more rapidly through class war, and then to leap gaily to the sweeping conclusion that class war would accelerate progress. What, in fact, was accelerated was major decline which in Russia and Germany leaped to fairly thorough brands of totalitarianism. The basic service of the higher viewpoint will be a liberation from confusion through clear distinctions. Progress is not to be confused with decline; the corrective mechanism of the minor principle of decline is not to be thought capable of meeting the issues set by the major principle. [CWL 3, 234-235/259-60]
Cosmopolis is not simpliste. It does not leap from a fact of development to a belief in automatic progress nor from a fact of abuse to an expectation of an apocalyptic utopia reached through an accelerated decline. It is the higher synthesis of the liberal thesis and the Marxist antithesis. It comes to minds prepared for it by these earlier views, for they have taught man to think historically. It comes at a time when the totalitarian fact and threat have refuted the liberals and discredited the Marxists. [CWL 3, 241/266]
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”: in [Lamb, 1981, 557-58]
A metaphysic of history is … important … to meet the attack of the Marxian materialistic conception of history and its realization in apostolic Bolshevism: it is imperative if man is to solve the modern politico-economic entanglement, if political and economic forces are to be subjected to the rule of reason … CWL 15, xxvi – xxvii
The materialist totalitarian is a bad person.
As healing can have no truck with hatred, so too it can have no truck with materialism. For the healer is essentially a reformer; first and foremost he counts on what is best in man. But the materialist is condemned by his own principles to be no more that a manipulator. He will apply to human beings the stick-and-carrot treatment that the Harvard behaviorist B.F. Skinner advocates under the name reinforcement. He will maintain with Marx that cultural attitudes are the byproduct of material conditions, and so he will bestow upon those subjected to communist power the salutary conditions of a closed frontier, clear and firm indoctrination, controlled media of information, a vigilant secret police, and the terrifying threat of labor camps. [CWL 15, 104]
The helplessness of tolerance to provide coherent solutions to social problems called forth the totalitarian who takes the narrow and complacent practicality of common sense and elevates it to the role of a complete and exclusive viewpoint. On the totalitarian view, every type of intellectual dependence whether personal, cultural, scientific, philosophic, or religious, has no better basis than non-conscious myth. The time has come for the non-conscious myth that will secure man’s total subordination to the requirements of reality. Reality is the economic development, the military equipment, and the political dominance of the all-inclusive State. Its ends justify all means. Its means include not merely every technique of indoctrination and propaganda, .. but also the terrorism of a political police, of prisons and torture, of concentration camps, of transported and extirpated minorities, and of total war. [CWL 3, 231-32/256-57]
Also, see [CWL 3, 232-34/257-59] re the general bias of common sense.
Empirical human science can become practical only through theology, and the relentless modern drift to social engineering and totalitarian controls is the fruit of man’s effort to make human science practical though he prescinds from God and from the solution God provides for man’s problem. [CWL 3, 745/767]
The drift to totalitarianism can be stopped only in the measure that human scientists work out intelligent and reasonable solutions to human problems and theologians succeed in convincing hard-headed practical men, on the one hand, that by God’s grace intelligent and reasonable solutions can work and, on the other hand, that the desertion of intelligent and reasonable solutions for ‘realist’ policies is the operative principle in the breakdown and disintegration of civilizations. [CWL 3, 747/768]
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 underground 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 Volk obeys the Fuhrer. But if that idealism can be brought to 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 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, Editors’ Introduction, lxxi]
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 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, 209-210/235]
Lonergan did not think Marx achieved an explanatory grasp of the intelligibility of the economic sphere as such. Marx’s labor theory of value invoked an admixture of political, sociological, and especially proprietorial dimensions. Moreover, Lonergan had no respect for the way an illegitimate importation of sociological categories into the properly economic sphere lends support to the simpliste Marxist-socialist penchant for setting entrepreneurs and workers against each other. Marxist advocacy of group bias and the use of propaganda and violence short-circuit democratic solidarity. To Lonergan’s way of thinking, a moral vision that substitutes propaganda and force for its lack of intellectual acuity is a self-contradiction much more radical than the ‘contradictions’ that supposedly drive dialectical materialism. [CWL 15 Editors’ Introduction, xlvi-xlvii]
Lonergan’s meaning of ‘exploitation’ in this sentence moves in just the opposite direction from Marx’s usual meaning, … ¶Exploitation for Marx generally refers to the systemic relations of production that regularly cause the expropriation of the surplus part of the labor value produced by the workers so that it becomes the profits of capitalists, while the workers’ standard of living collectively approaches the mere subsistence level. That Lonergan was quite aware of Marx’s position is shown from a supplement handed out in his class in 1979: ‘We, on the other hand, have to distinguish basic and surplus [prices and quantities], P’ and P”, Q’ and Q”. for unless surplus is conceived as a distinct circuit with its own final market, the Marxists object that the basic final market is demanding payment not only for basic goods and services but also for surplus as well; hence the accusation [that] profit is robbing workers of part of the labor value of their ‘contribution.’ ¶ In the present context of Lonergan’s presentation of the surplus stage of the pure cycle of production, the point is that the new basis for overall production of the standard of living of the total economy brought about by the significant addition of more and/or new plant and equipment is to be exploited in the widening and deepening of basic production that raises the standard of living of everyone, but especially of the workers (or, as he used to say in class, ‘of widows and orphans’). The whole point of Lonergan’s analysis, then, is to emphasize what he also makes clear in the 1979 page mentioned above: ‘And now with the circuits distinguished, the crossover makes it manifest that it supplements the wages paid in the basic circuit, so that profits are not robbery and there is no need for the gifts of bank credit to supplement workers’ basic wages.’ (for a fuller quotation, see note 87 below) (CWL 15, 33-34, ftnt. 34)
B. Economics and Science
the subject matter of macroeconomics is the fundamental value of a properly functioning economy….analysis addresses the strictly economic process of production and its divisions; the process of payments and its divisions; the various forms of interdependence of these flows; finally, the conditions under which they function or malfunction and their respective consequences……..either men learn rules to guide them or they surrender their liberty to be ruled along with the machine by a central planning board. [CWL 15, Editors’ Introduction, lxviii]
the aggregate primary price spread is a function of two purely objective factors, of the rate of secondary costs p”Dq”, and the rate of primary production, DQ’. The greater p”Dq” and the lower DQ’, then the greater the price spread; …Obviously there is no necessary correspondence between this law and either the classical view that profits are due to intelligence, enterprise, and risk, or the Marxian view that profits are due to reckless exploitation of labor. … the primary price spread will increase no matter how benevolent and stupid the entrepreneurs may be: indeed it will increase even in Bolshevist Russia, where to avoid constant inflation the state must take the surplus which it denounces capitalists for taking. On the other hand, given a decrease in secondary costs with no corresponding decrease in primary sales, the primary price spread is bound to contract, no matter how wicked and clever and enterprising the entrepreneurs may be; it contracts even in the lands of most rugged individualism. [CWL 21, 78]
Lonergan’s meaning of ‘exploitation’ in this sentence moves in just the opposite direction from Marx’s usual meaning, … ¶Exploitation for Marx generally refers to the systemic relations of production that regularly cause the expropriation of the surplus part of the labor value produced by the workers so that it becomes the profits of capitalists, while the workers’ standard of living collectively approaches the mere subsistence level. That Lonergan was quite aware of Marx’s position is shown from a supplement handed out in his class in 1979: ‘We, on the other hand, have to distinguish basic and surplus [prices and quantities], P’ and P”, Q’ and Q”. for unless surplus is conceived as a distinct circuit with its own final market, the Marxists object that the basic final market is demanding payment not only for basic goods and services but also for surplus as well; hence the accusation [that] profit is robbing workers of part of the labor value of their ‘contribution.’ ¶ In the present context of Lonergan’s presentation of the surplus stage of the pure cycle of production, the point is that the new basis for overall production of the standard of living of the total economy brought about by the significant addition of more and/or new plant and equipment is to be exploited in the widening and deepening of basic production that raises the standard of living of everyone, but especially of the workers (or, as he used to say in class, ‘of widows and orphans’). The whole point of Lonergan’s analysis, then, is to emphasize what he also makes clear in the 1979 page mentioned above: ‘And now with the circuits distinguished, the crossover makes it manifest that it supplements the wages paid in the basic circuit, so that profits are not robbery and there is no need for the gifts of bank credit to supplement workers’ basic wages.’ (for a fuller quotation, see note 87 below) (CWL 15, 33-34, ftnt. 34)
Indeed, economics seems little different from other areas of knowledge in its tendency to form closed schools of thought (I.e. Keynesian, Monetarist, Marxist, etc.) This fragmentation into schools places political and other social values at the source of theoretical differences. [Michael Gibbons, Economic Theorizing in Lonergan and Keynes]
(Marx’s) notion of surplus value has sociological and proprietorial dimensions – that is, the difference between the full value bestowed on a commodity by the laborers and what is returned to laborers in the form of wages – rather than the sheerly functional dimensions that constitute its intrinsic meaning for Lonergan. [CWL 15, Editors’ Introduction, lxi ftnt 104]
C. The Incompetence of a Central Bureaucracy
The excellence of the exchange solution becomes even more evident when contrasted with the defects of a bureaucratic solution. The bureaucrat … (gives the people) what he thinks is good for them, and he gives it in the measure he finds possible or convenient; nor can he do otherwise, for the brains of a bureaucrat are not equal to the task of thinking of everything; only the brains of all men together can even approximate to that. … when a limited liability company has served its day, it goes to bankruptcy court; but when bureaucrats take over power, they intend to stay. … when the pressure of terrorism (by the obedient goons of the power-mad bureaucrats) is needed to oil the wheels of enterprise, then the immediate effect is either an explosion or else servile degeneracy. [CWL 21, 34-35]
Again,
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 are not functioning properly, X fails to recur. As the economy, so too the polity can fall apart. In a revolution violence goes unchecked; laws lose their meaning; governments issue unheeded decrees; until from shear weariness with disorder men are ready to accept any authority that can assert itself effectively. Yet a revolution is merely a passing stroke of paralysis in the state. There are deeper ills that show themselves in the long-sustained decline of nations and, in the limit, in the disintegration and decay of whole civilizations. Schemes that once flourished lose their efficacy and cease to function; in an ever more rapid succession, as crises multiply and remedies have less effect, new schemes are introduced; feverish effort is followed by listlessness; the situation becomes regarded as hopeless; 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, 209-210/235]
We are at the heart of Picketty’s plight: he has no clue of the needed grip on the grounds of the inequality in history. So, what else can he offer but a centralist solution, taxation, to history’s drunken careening. [McShane 2014, 53]
Again,
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, Editors’ Introduction, lxxi]
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 underground 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 Volk obeys 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) broad backing of centralism and bureaucracy are signaled, in the long run, for phlogiston flushing. [McShane 2014, 56]
D. Self-Enlightenment
And again,
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]
A metaphysic of history is … important … to meet the attack of the Marxian materialistic conception of history and its realization in apostolic Bolshevism: it is imperative if man is to solve the modern politico-economic entanglement, if political and economic forces are to be subjected to the rule of reason … CWL 15, xxvi – xxvii