The **“formal cause” **of the economic process is its **immanent intelligibility. **The formal cause consists in the **primary relativities **or **general laws **of the process, which hold in any number of instances. In the formal cause we apprehend many things as **one**; we grasp **all in a unified view**. The formal cause contains the normative theory but explains both equilibria and disequilibria. Particular boundary conditions, such as past and future prices and quantities are relatively insignificant for the analysis; these boundary conditions are further determinations that are contingent from the very fact that they have to be obtained from a non-systematic manifold. (CWL 3, 491-6/)

Taking into account past and (expected) future values does not constitute

the creative key transition to Functional Macroeconomic Dynamics.Those familiar with elementary statics and dynamics (in physical mechanics) will appreciate the shift in thinking involved in passing from (static) equilibrium analysis (of a suspended weight with subscripts for time not needed)…to an analysis (of, say, the motions of planets or pendula) where attention is focused on second-order differential equations, on d^{2}θ/dt^{2}, d^{2}x/dt^{2}, d^{2}y/dt^{2}, on theprimary relativitiesof a range of related forces, central, friction, whatever.Particular secondary boundary conditionsin Functional Macroeconomic Dynamics, past and future pricings and quantities (analogous to a particular planet’s particular past or future angular position, velocity, acceleration), arerelatively insignificantfor the analysis of theprimary relativityimmanent in, andapplicable to, every instance of the process. What is significant is theLeibnitz-Newtonian shift of context. [McShane, 1980, 127]… conjugate forms or terms ( such as [P’Q’], [p’a’Q’], and [p”a”Q”] ) are defined implicitly by their explanatory and empirically verified relations to one another. … Such relations (e.g.

P’Q’ = p’a’Q’ + p”a”Q”;_{Basic circuit R&M}dJ = a’ + a”R) aregeneral laws; they hold in any number of instances; they admit application to the concrete only through the addition of further determinations (such as the indices and coefficients of price and quantity FMC), (however) such further determinations pertain to a non-systematic manifold.[1] There is then, a primary relativity (such as the correspondence of compensated factors of production with either elements accelerating the process or elements exiting the process) that is contained in the general law (P’Q’ = p’a’Q’ + p”a”Q”FMC); (the primary relativity) is inseparable from its base in the conjugate form which implicitly it defines; and to reach the concrete relation that holds at a given place and time, it is not enough to think about the general law; one has to add further determinations (such as coincidental pricings and quantities) that are contingent from the very fact that they have to be obtained from a non-systematic manifold. [CWL 3, 492/516] (In addition, read in the entirety CWL 3, 491-6/)The

whole structure is relational: one cannot conceive the terms without the relations nor the relations without the terms. Both terms and relations constitute a basic framework to be filled out, [CWL 3, 492/516] (In addition, read in the entirety CWL 3, 491-6/514-20)General laws contain a primary relativity and are applied to the concrete “only through the addition of further determinations, and such further determinations pertain to

a non-systematic manifold. … it is not enough to think about the general law; one has to add further determinations that are contingent from the very fact that they have to be obtained from a non-systematic manifold. [CWL 3, 492/516]

Functional flows are implicitly defined by the functional relations in which they stand with one another. Again,

… conjugate forms are

defined implicitlyby theirexplanatoryandempirically verified relationsto one another. Still, such relations are general laws; they hold in any number of instances; they admit application to the concrete only through the addition of further determinations, and such further determinations pertain to a non-systematic manifold. There is, then, a primary relativity that is contained in the general law; it is inseparable from its base in the conjugate form which implicitly it defines;[2]and to reach the concrete relation that holds at a given place and time, it is not enough to think about the general law; one has to add further determinations[3]that are contingent from the very fact that they have to be obtained from a non-systematic manifold. [CWL 3, 492/516] (In addition, read in the entirety [CWL 3, 491-6/514-20])

The “formal cause” of the planar circle is not the radius; the formal cause is the **equality of all radii**– as discovered by insight. The formal cause is the immanent intelligibility of the planar circle. The point, the line, the circumference, the radii, the plane, and equality are all **concepts **contained in the insight that defines and explains the planar circle. **All the concepts tumble out together**, because all are needed to express adequately a single insight. All are coherent, for coherence basically means that all hang together from a single insight.

Similarly, the formal cause of the dynamic macroeconomic process is not the interest rate, rather the formal cause is the **immanent intelligibility **consisting of the set of coherent relations at an adequate level of abstraction which explain the process. The form of these relations is isomorphic with, and explanatory of, the pattern of functional interrelations of the inner, constituent, interdependent, dynamic flows. And these dynamical relations are the general laws which hold in any number of instances and explain both equilibria and disequilibria.

Particular secondary boundary conditionsin Functional Macroeconomic Dynamics, past and future pricings and quantities, arerelatively insignificantfor the analysis of theprimary relativityimmanent in, andapplicable to, every instance of the process. What is significant is theLeibnitz-Newtonian shift of context. [McShane, 1980, 127]

In functional Macroeconomic Dynamics, functional velocities are defined through the laws by which they are connected to one another; by the functional relations in which they stand with one another; by the functions they have with regard to the whole organic system.

The fact that we conceive nothing without relations is clear on both a priori and a posteriori grounds: a priori, because every finite act of understanding is synthetic as

apprehending many things as one; a posteriori, because in going through every primary concept you will always find analogy, proportion, and comparison, … Similarly, in mathematics rules determine operations, and operations generate numbers of every kind; in physics objects are defined through the laws by which they are connected to one another; in chemistry elements are defined through the various series of relations that are found in the periodic table; in physiology organs are defined by the functions they have with regard to the whole body; and so on. [CWL 12, 717](In) every basic insight there is a circle of terms and relations, such that the terms fix the relations, the relations fix the terms, and the insight fixes both. If one grasps the necessary and sufficient conditions for the perfect roundness of this imagined plane curve, then one grasps not only the circle but also the point, the line, the circumference, the radii, the plane, and equality.

All the concepts tumble out together, because all are needed to express adequately a single insight. All are coherent, for coherence basically means that all hang together from a single insight. [CWL 3, 12/36]

Similarly, the point-to-point algebraic relations of the first degree, the point-to-line (and higher) relations of accelerator production to accelerated production, the time lags, the interdependencies among velocitous flows, and the role of dummy money’s circulation in production and sale are all concepts contained virtually in the precise analytic distinctions upon which is constructed the superstructure of terms and relations explaining the economic process.

Some macroeconomists would have it that the interest rate and its changes, rather than being aspects of the formal cause of the process, are the “efficient cause” of the process. To them, the interest rate is an external lever to whose change the whole system responds. But the interest rate, as a formulated relation among inner functional constituents of the process rather than a lever, is not the primary efficient cause of the process; rather it is an internal relation among terms; it is virtually contained in the prior and more fundamental terms and relations which constitute the immanent intelligibility of the process. And further, the artificial manipulation of this rental price of money amounts only to a form of price fixing no more sacred than the price fixing of steel or bread.

Similarly, in the case of a simplified pendulum – a rigid rod of constant length and zero mass; zero air resistance; the only force present is constant vertical gravitation; etc.: The **external** **efficient cause** of the particular pendulum’s oscillations is the release of the pendulum by a human at a certain angular position and at zero velocity and zero acceleration. The **external** **final cause** would be the human’s purpose or goal. But neither of these **external** causes, **despite their utility** to the human, would constitute the immanent intelligibility which is the formal cause of the simplified pendulum’s motion. Nor would a **single concept, such as** length alone, *L*, of the rod constitute the complete intelligibility; rather the length, like initial position and initial velocity, would be an isolated “further determination that is **contingent** from the very fact that it has to be obtained from a **non-systematic manifold**.” The **immanent formal cause**, i.e. **immanent** intelligibility, is the set of primary concepts and relations given by the insight at an adequate level of abstraction yielding the function which **explains** the oscillations of the simplified pendulum, in which function the terms would define the relations and the relations would define the terms. All the concepts **tumble out together in the insight**, and all relations would be coherent so as to constitute a complete and satisfactory explanation. In the case of the simplified pendulum the primary relativity would be [Brauer and Nohel, 10]

*d ^{2}*

*θ/dt*

^{2 }+ (g/L)sin*θ = 0*

whose solution, *Φ(t)*, would provide the angular position of the pendulum for each value of time, *t > 0*. Thus, the pendulum’s actual course is determined by the applications of the particular initial values of velocity and angular position; i.e. the application of **secondary** coincidental initial values to the function expressing the **primary relativity, immanent intelligibility, formal cause** of the process. So, again,

**Paraphrasing **[CWL 21, 6-7] Lonergan moved macroeconomics back to premises more remote than Walrasian statics, microeconomic price theory, neoclassical macroeconomics and Keynesian macroeconomics; he developed explanatory formulae quite unlike others’, and though he did not impugn them, neither was he very interested in them; casually and incidentally combinations of prices and quantities turn up as particular coincidental cases in an enlarged and radically different field. … Lonergan employed a new **field-theory dynamics **to make aggregate, mutually-defining, velocitous functionings the basic interdependent variables; and as Newton transformed the formulation and interpretation of Kepler’s laws, so Lonergan transforms the neoclassical and Keynesian laws of how the economy actually functions. … He achieved a **scientific generalization **of the old political economy and of modern economics that yields the new political economy which we need. … Plainly the way to settle disputes about the intelligibility of the economic process is through a **sublating, more general, dynamics of implicitly defined, interdependent functionings**.

We are not going to discuss wealth or value, supply and demand, price levels and price patterns, capital and labor, interest and profits, production, distribution, and consumption. Because we are not, it certainly will be objected that our discussion has nothing to do with economic science, for economics is precisely the study of wealth and value, supply and demand, and so on. The answer is as follows. The discussion moves on a more

generalplane to terminate in a moregeneralconclusion. Because thegeneralincludes the particular, ageneralizedeconomics cannot but include the particular economics. [CWL 21, 8]

In an adequate theory, the prices of products and the rental price of money are neither a given nor a starting point from which to make deductions; they are further, contingent, secondary determinations to be added to the primary relativity in order to admit the primary relativity to the particular concrete process. Pricing must itself be explained in the context of the inner functional constituents of the overall process.

As Newton, according to the tale, forgot the distinction between planets swinging through the sky and apples falling in autumnal orchards, as he reached beyond Kepler’s and Galilei’s laws to the profounder unity of the theory of motion, so too we must forget distinctions between production, distribution, and consumption, and reach behind the psychology of property and the laws of exchange to form a more basic concept and develop a more general theory. [CWL 21, 11]

Previewing the excerpt immediately to follow: Only such an explanatory framework will enable the all-important discrimination either of 1) the causes and the variations in prices (CWL 15, 75-80, 113-20) or of 2) a relative and an absolute rise or fall of monetary prices so as to make possible a correct interpretation of their significance.

To repeat, then, Lonergan holds that prices as a concern for the bookkeepers or accountants are known- first-to-us by description and commonsense classification; and that his own functional analysis of production and circulation reveals an explanatory system known-first-in-itself. Only such an explanatory framework will enable the all-important discrimination either of the causes and the variations in prices (CWL 15, 75-80, 113-20) or of a relative and an absolute rise or fall of monetary prices, only such an explanatory framework will make possible a correct interpretation of their significance. [CWL 15, Editors’ Introduction lvi] [4]

There is a further type of insight that arises immediately from the data. Such is the grasp (insight, or act of understanding) that precedes and grounds the definition of the circle. Such was Galileo’s insight formulated in the law of falling bodies. Such was Kepler’s insight formulated in the laws of planetary motion. Such was Newton’s insight formulated in the theory of universal gravitation. Such has been the point in the now well established technique of measuring and correlating measurements. Such is the goal of classical heuristic structure that seeks to determine some unknown function by working out the differential equations, of which the unknown function will be a solution, and by imposing by postulation such principles as invariance and equivalence … this intelligibility, immanent in the immediate data of sense, resides in the relations of things, not to our senses, but to one another. Thus, mechanics studies the relations of masses, not to our senses, but to one another. Chemistry defines its elements, not by their relations to our senses, but by their places in the pattern of relationships named the periodic table. Biology has become an explanatory science by viewing all living forms as related to one another in that complex and comprehensive fashion that is summarily denoted by the single word, evolution. [CWL 3, 77-78; 100-102]

Lonergan, like Euclid, Newton, and Mendeleyev, moved from his field of inquiry to **the level of ****system **and discovered and formulated the **field theory **of Functional Macroeconomic Dynamics.

… a science emerges when thinking in a given field moves to

the level of system. Prior to Euclid there were many geometrical theorems that had been established. The most notable example is Pythagoras’ theorem on the hypotenuse of the right-angled triangle, which occurs at the end of book 1 of Euclid’sElements. Euclid’s achievement was to being together all these scattered theorems by setting up a unitary basis that would handle all of them and a great number of others as well. … Similarly, mechanics became a system with Newton. Prior to Newton, Galileo’s law of the free fall and Kepler’s three laws of planetary motion were known. But these were isolated laws. Galileo’s prescription was that the system was to be a geometry’; so there was something functioning as a system. But the system relly emerged with Newton. This is what gave Newton his tremendous influence upon the enlightenment. He laid down a set of basic, definitions, and axioms, and proceeded to demonstrate and conclude from general principles and laws that had been established empirically by his predecessors. Mechanics became a science in the full sense at that point where it became an organized system. … Again, a great deal of chemistry was known prior to Mendeleev. But his discovery of the periodic table selected a set of basic chemical elements and selected them in such a way that further additions could be made to the basic elements. Since that time chemistry has been one single organized subject with a basic set of elements accounting for incredibly vast numbers of compounds. In other words, there is a point in the history of any science when it comes of age, when it has a determinate systematic structure to which corresponds a determinate field. [Method, 241-42]

*Ought there not to be introduced a technical term to denote this type of intelligibility? … The intelligibility that is neither final nor material nor instrumental nor efficient causality is, of course, formal causality…what we have called the intelligibility immanent in sensible data and residing in the relations of things to one another, might be named more briefly formal causality… [CWL 3, 78/101-102]*

**Paraphrasing:**

Ought there not to be introduced

a technical termto denote this type ofintelligibility in the macroeconomic process? … the intelligibility that isneither final nor material nor instrumental nor efficient causalityis, of course,…what we have called theformal causalityfield theoryor theintelligibility immanentin sensible data of thedynamiceconomic process and residing inthe relations of functional flows to one another, might be named more briefly theformal causality of the economic process… CWL Insight, 78; x/x

Lonergan discovered a **field theory**.

again, as to the notion of cause, Newton conceived of his forces as efficient causes, and the modern mechanics drops the notion of force; it gets along perfectly well without it. It thinks in terms of

a field theory, the set of relationships betweennobjects. The field theory is a set of intelligible relations linking what isimplicitly defined by the relations themselves; it isa set of relational forms. The form of any element isknown through its relations to all other elements. What is a mass? A mass is anything that satisfies the fundamental equations that regard masses. Consequently, when you add a new fundamental equation about mass, as Einstein did when he equated mass with energy, you get a new idea of mass. Field theory is a matter of the immanent intelligibility of the object. [CWL 10, 154]

**Paraphrasing**

again, as to the notion of cause, macroeconomists

mistakenlyconceive of subjective preferences as formal causes. Functional Macroeconomic Dynamics drops the notion of subjective preferences; it gets along perfectly well without it. It thinks in terms of a field theory, the set of relationships betweenninterdependent, implicitly defined functional activities. The field theory of Functional Macroeconomic Dynamics is a set of intelligible functional relations linking functionings which are implicitly defined by the relations themselves; it isa set of relational forms. The form of any functioning isknown through its relations to all other functionings. …. Thefield theory of macroeconomics is a matter of the immanent intelligibility of the objective, dynamic functional process.

[1]CWL 3, 48 etc re non-systematic manifold

[2]That is, there is a general relation which is inseparable from the terms it relates; for the terms define the relations and the relations define the terms. The primary relativities are Productive point-to-point vs. point-to-line, and monetary P’Q’ = p’a’Q’ + p”a”Q” and Π”Κ” = π”α”Κ”.

[3]The further determinations are particular pricings-quantities combinations comprising the functional flows.