The Single Paragraph for Consideration Today [35]

[9/17/19] DSGE models conceive of exogenous events as stochastic in nature, and as random efficient causes. “Every period, random exogenous events perturb the equilibrium conditions …, injecting uncertainty in the evolution of the economy and thus generating economic fluctuations. Without these shocks, the economy would evolve along a perfectly predictable path, with neither booms nor recessions.” [Sbordone, Tambalotti, Rao, Walsh, 2010]// … 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 between objects.  The field theory is a set of intelligible relations linking what is implicitly defined by the relations themselves; it is a set of relational forms.  The form of any element is known through its relations to all other elements. … Field theory is a matter of the immanent intelligibility of the object. CWL 10, 154/// Paraphrasing …as to the notion of cause, macroeconomists mistakenly conceive of subjective preferences as elements of formal cause, and they conceive of changes in subjective preferences as random external efficient-cause shocks. Functional Macroeconomic Dynamics drops the notion of subjective preferences; it gets along perfectly well without it.  And it thinks in terms of a field theory, the set of relationships between interdependent, 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 is a set of relational forms.  The form of any functioning is known through its relations to all other functionings. ….  The field theory of macroeconomic dynamics is a matter of the immanent intelligibility of the objective, dynamic functional process. (Also, see The Significance of Burley’s and Csapo’s Characteristic Equation and Its Root Solution demonstrating that the normative interest rate and its inevitable normative changes are aspects of the immanent intelligibility of the economic process rather than external levers to be pushed or pulled.) (And also see Prediction is Impossible in the General Case. (Click here for previous “Single Paragraphs) [35]

 

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