From 1978 to 1983 Bernard Lonergan taught a graduate theology course at Boston College called ‘Macroeconomics and the Dialectic of History.’ His choice of subject was surprising given that nothing he had taught or published in his nearly forty years as a professor of systematic theology indicated any special interest or competence in macroeconomics. Lonergan’s reputation and influence up to this point rested on his work in philosophy and theology, notablyInsightandMethod in Theology. However, Lonergan was interested in economics before he was interested in theology.¹ A half-century earlier, when he was still a student and during his...

The aim of this book is to trace the stages in the development of Lonergan’s solution to a fundamental problem in economic theory. The problem was manifest in the standard model in economic theory in 1930, the so-called great theory.² That model assumed a self-regulating, inherently self-optimizing stable and coherent economic system existing in a timeless equilibrium. The conception was logically coherent but, as the Great Depression showed, divorced from the reality of actual economies. Real economies were not a static optimum; their courses were often unpredictable and the occurrence of depressions was a less than optimum outcome. The challenge...

To discover the fundamental variables for a science of economics required a methodology that handles dynamic process. The challenge for Lonergan was considerable. In mainstream economics, issues of time and development were bracketed in the analysis or treated in terms of comparative statics in which the changes between two fixed points in time were contrasted. By the 1930s Joseph Schumpeter’s approach in hisTheory of Economic Developmentwas the most advanced; however, he derived its basic structure from the static analysis developed by Leon Walras. Lonergan’s goal was a fully dynamic method. Previously, and most famously, in the nineteenth century...

In the fall of 1933, Lonergan set to work out a theology of Catholic Action. By the end of his theology degree in 1937 he had made significant progress towards specifying the sought-after differentials for a philosophy of history, a key component of the larger effort. Lonergan’s ambition for this project was an ‘integration of things’ capable of directing Catholic Action, that is, a practical philosophy of history. Lonergan intended to do what Plato had failed to do: to develop atheorythat could directpractice. In his early ‘Catholic Action’ essays, while he made a good start, he had...

Lonergan’s work in the philosophy of history and economics was set aside as he began working on his dissertation proposal in the fall of 1938. Lonergan had expected that he would write a doctoral thesis in philosophy. However, in September of that year his superiors moved him to theology in order to meet a need for theology professors in Lonergan’s Jesuit home province of Upper Canada. After Lonergan completed his thesis in 1940 he returned to Montreal to teach theology at the College of the Immaculate Conception. The unexpected shift to a theology dissertation and, following its completion, the opportunity...

Lonergan’s work in economics in the 1930s bears its fruit in the first four years of the next decade. He returned to Canada from Italy in 1940 to teach theology at Immaculate Conception College in Montreal. He prepared for the defence of his thesis, requiring the publication of five articles drawn from his thesis,² and in the first three years wrote two significant articles, ‘The Form of Inference’ and ‘Finality, Love, Marriage.’³ His summer vacations at Regiopolis in Kingston, Ontario, provided the time for uninterrupted study, and Lonergan used that time for work on economics.⁴

It is unclear how far...

So far, Lonergan has differentiated two distinct kinds of production, each constituting a distinct circuit: one circuit produces consumer goods that enter directly into the standard of living and another circuit produces the means of production that accelerates the flow of the basic circuit. By considering how these kinds of production work over time, Lonergan works out a pure cycle of production and its sequential phases in an economy. The pure cycle takes into account the extra effort and time involved in the development and exploitation of new means of production that would improve the collective standard of living. The...

In keeping with the title of our book we could well stop here. Lonergan’s account of the two-circuit economy, in which exchange decisions adjust to the realities of the production process, whether stationary or in a period of development, is the breakthrough to economic science. On the basis of its fundamental terms and relations Lonergan derives the pure cycle and generates precepts for good economic decision-making in light of the phases of the cycle. The ‘equilibrium’ of the system is met by balancing the crossover flows in light of the shifts of the phases in the pure cycle. Knowing the...

Schumpeter said, ‘The foundations of significant creative achievements, notably theoretical ones, are almost always laid in the third decade of a scholar’s life.’² Macroeconomic dynamics was Lonergan’s third-decade achievement. In charting its development, we have identified five stages in its emergence. Lonergan began with the received tradition of Catholic social theory. This is the initial viewpoint. He takes as his own the social-reconstruction challenge of the Catholic encyclicalQuadragesimo Annoand situates his economics as part of a larger task of developing a theology of Catholic Action based on the Pauline theme from Ephesians 1:10, of ‘the integration of all...