TYPOLOGIES OF ECONOMIC THEORY AND THE FOUNDATION OF THE TWO CANONS

It has been said that economics as a science – or pseudoscience – is unique because parallel competing canons may exist together over long periods of time. In other sciences, periodic gestalt-switches terminate old theoretical trajectories and initiate new ones. In a paradigm shift, the scientific world moves from a situation in which everyone knows that the world is flat to a new understanding that the world is round (Kuhn 1970). This occurs in a relatively short time. In economics, the theory that the world is flat has been coexisting for centuries with the theory that the world is round. In this chapter we shall argue for the existence of an alternative to today's mainstream theory: the continuation of the canon that dominated the worldview of the Renaissance – The Other Canon. Using a metaphor from Kenneth Arrow, ‘this tradition acts like an underground river, springing to the surface every few decades’.

We argue that during the Cold War, the ‘underground river’ of Renaissance Other Canon economics all but disappeared from economic theory, and that it is time to reintroduce it. Traditionally, The Other Canon has been resurrected in times of crisis, such as national emergencies, which bring production – not barter – into focus. This occurs, for example, when an exclusive focus on barter has caused financial bubbles that subsequently burst, when nations are engaged in serious catching up with the prevailing world leader (as the United States, Germany and Japan were in the nineteenth century, or as Korea was until later), or when a war economy forces a national political system to focus on production (of materials of war). Today the urgency of a change of focus towards the Renaissance conception of economics is particularly acute in the Third World and in formerly communist Eastern Europe. Unfortunately, this is not where economic theory is produced.

The two different canons are based on fundamentally different worldviews, which can be traced back to ancient Greece, where the term ‘economics’ was first used. Today's standard economics is based on a mechanistic, barter- and consumption-centred tradition – static in the tradition of Zeno – that explains human economic activity in terms of physics.