Jamie Dimon’s Challenges to Himself and to the Nation

4/7/2021:  Yahoo Finance today featured an article by Julia La Roche entitled ‘The fault line is inequality’: J.P. Morgan’s Dimon calls for fixing America’s ‘self-inflicted’ problems.  La Roche was reviewing the Public Policy section of Dimon’s 67-page Chairman and CEO Letter to Shareholders.  Mr. Dimon seeks to end the nation’s self-infliction of problems threatening the culture, the economy and the polity.  He particularly regrets “false arguments of fanatics, the certitude of ideologues and cycles of intolerance.”

 We have identified public policy as an element of culture, because culture contains within itself politics, policy, and economics.  (See An Outline of General Values and Money’s Values, and A Must-Read: Fred Lawrence, “Money, Institutions, And The Human Good”)

The problems and policies to which LaRoche and Dimon attend can best be viewed and critiqued within an ordered perspective of culture.  Though Mr. Dimon’s perspective is truncated, to his credit, he courageously emphasizes the achievement of the “greater good”, which we understand to be contained in the concrete Good of Order. This good of order will not be achieved by a pep talk.  It is best achieved by, in the first place, understanding the concrete intelligibility of the good of order, and, in the second place, by human adaptation to the norms and precepts yielded by that intelligibility.  Academics, journalists, and politicians must discover and communicate how the economic process actually works and how politics and economics intertwine.

Unless Bank of America or Goldman Sachs beat them to it, J.P. Morgan could gain a competitive advantage in its various activities if Mr. Dimon were to assign members of JPM’s economics staff responsibility for mastering Functional Macroeconomic Dynamics (FMD), which explains how the normative, dynamic economic process should actually function.

Functional Macroeconomic Dynamics, also known as Macroeconomic Field Theory, is scientific and explanatory rather than merely descriptive.  It is radically different from Keynesian or neoclassical macrostatics; it is a macrodynamics.  It is a leap from the descriptive accounting of the Bureau of Economics to an enlightening explanatory point of view and a more profound understanding of what is essentially a process of dynamic interdependencies.  It is a systematics of production, exchange, and finance.  Its basic terms are interdependent functional velocities and their changes.  It is not contaminated by an admixture of a) sociological and psyche-based political inclinations, b) egoistic bias, c) group bias, or d) the general bias of common sense against verifiable explanatory theory.  As a theory all could agree upon, it would end vague, rhetorical political wailing and hand-wringing.  The deliberate-concealing of truths, convenient exploitation of half-truths, and deceitful one-sided egoistic and group political rhetoric would be brought to an embarrassed end.

Right at the start Lonergan makes precise analytic distinctions between point-to-point vs. point-to-line velocities and formulates their propagational interrelations; and, upon these “foundational” interrelations, he builds a superstructure of relations comprising a generalized explanation of the objective economic process.  With the combination of abstract field-theoretic relations and concrete determinations in the non-systematic probabilistic seriation of economic events, Macroeconomic Field Theory connects and mathematically formulates a) the velocitous invention and installation of new and better machines and methods, — aided as needed by credit to bridge the gap in time between payments made and payments received — , b) the temporal propagation of expansion of basic production and sale, and c) the resulting development of greater leisure and higher culture.

Macroeconomic Field Theory is the general immanent intelligibility explaining the conditions of continuity and equilibrium in a normative pure cycle of expansion.  Just as electromagnetics is a field theory of the propagational interrelations of electric and magnetic phenomena among themselves, so Lonergan’s Monetary Field Theory is a field theory of propagational interrelations between point-to-line (“surplus”) and point-to-point (“basic”) phenomena.  Its differential equations explain the economic field in which humans interact.

real analysis (is) identifying money with what money buys. … And that is the source of the problem in real analysis.  If you want to treat money that doesn’t make a difference, you can have a beautiful liberal monetary theory.  But it doesn’t say the way the thing works. [CWL 21, xxviii]

As explanatory, it is comprised of terms defined by the functional relations in which they stand with one another.

Already a distinction has been drawn between description and explanation.  Description deals with things as related to us.  Explanation deals with the same things as related among themselves.  The two are not totally independent, for they deal with the same thing and, as we have seen, description supplies, as it were, the tweezers by which we hold things while explanations are being discovered or verified, applied or revised.  But despite their intimate connection, it remains that description and explanation envisage things in fundamentally different manners.  The relations of things among themselves are, in general, a different field from the relations of things to us. (CWL 3, 291/316)

As normative, it is an explanatory theory yielding precepts for equilibrium and identifying the conditions of  disequilibria.


… In the figure above the reader will notice five circles representing the monetary functions. … I would add that the aims and limitations of macroeconomics (that is, the circulation analysis presented here) make the use of a diagram particularly helpful, …  For its basic terms are defined by their functional relations.  The maintaining of a standard of living is attributed to a basic process, an ongoing sequence of instances of so much every so often.  The maintenance and acceleration (positive or negative) of this basic process is brought about by a sequence of surplus stages, in which each lower stage is maintained and accelerated by the next higher.  Finally, transactions that do no more than transfer titles to ownership are concentrated in a redistributive function, whence may be derived changes in the stock of money dictated by the acceleration (positive or negative) in the basic and surplus stages of the process. … So there is to be discerned a threefold process in which a basic stage is maintained and accelerated by a series of surplus stages, while the needed additions to or subtractions from the stock of money in these processes is derived from the redistributive area. … it will be possible to distinguish stable and unstable combinations and sequences of rates in the three main areas and so gain some insight into the long-standing recurrence of crises in the modern expanding economy. [CWL 15, 53-54]

Subsequent to mastery of theory,  the Morgan analysts could implement a new science of measurable flows so as to scientifically determine any present distorted state of the dynamic economic process in which they participate professionally as lenders, investment bankers, managers of monetary reserves, traders, and everyday people.

Finally, in the interest of the nation’s being a beacon to the world, and because the Fed and the Bureau of economic analysis fail to do it, Mr Dimon could use his considerable influence and personal charisma to encourage a colloquium of eminent academic macroeconomists to write papers enlightening others regarding Macroeconomic Field Theory (Again, click here, and here) and its realistic and workable solutions to the concerns and problems which Dimon cited.

Again, Functional Macroeconomic Dynamics is also known as Macroeconomic Field Theory; it is enlightening by being scientific and explanatory rather than merely descriptive.  It is not just another Keynesian or neoclassical macrostatics; it is a macrodynamics.  It is a leap from the descriptive accounting of the Bureau of Economics to a higher explanatory point of view and a more profound understanding of what is essentially a dynamic process.  It is a systematics of production, exchange, and finance.  Its basic terms are interdependent functional velocitiesand their changes.  It is not contaminated by an admixture of a) sociological and psyche-based political inclinations, b) egoistic bias, c) group bias, or d) the general bias of common sense against verifiable explanatory theory.  Mastery would enable economists to specify the normative solutions correcting maladaptive disequilibria and crises.  As a theory all could agree on, it would end vague, rhetorical political hand-wringing and wailing.  The deliberately-concealed truths, convenient half-truths, and deceitful one-sidedness of egoistic and group political rhetoric would be brought to an embarrassed end.

Spurred by Dimon’s encouragement, economists, politicians, and journalists would learn the principles and laws of the process so as to encourage all to abide by these principles and laws and, thus, avoid unnecessary economic crises.  Here are some understandings that would be gained:

  • exactly how the dynamic economic process is constituted by rectilinear production flows, circulatory money flows, and two or more distinct monetary circulations of Outlays-Incomes-Expenditures-Receipts
  • that money is a dummy invented by humans to serve a vast and intricate dynamic process rather than to be served by the process
  • how the economic process expands in identifiable phases
  • exactly what constitutes dynamic continuity and equilibrium in the economic process
  • how the ratio of saving to spending must shift to conform to the shifting requirements of the successive expansionary phases (See CWL 15, 131-32)
  • what, therefore, are the implications of dynamic economic equilibrium for egalitarian and anti-egalitarian shifts of incomes
  • exactly how to make the health care system better – if something’s gotta give among a) insurers, b) the quality of care, c) hospitals, and d) patients, what should give? (Stop the political rhetoric!)
  • what exactly constitute vaguely-so-called “thoughtful” trade policies (See CWL 15, 12-13, 165-73)
  • exactly what parameters to use “to maintain” a strong financial system
  • exactly what are the rhetorically-so-called “proper” immigration policies
  • exactly what are the parameters of scientific tax and fiscal policy (See CWL 15, 162-65, 173-76, then 85-86)
  • a rationale for differences in income levels based upon differential economic contributions 
  • exactly how implementation of Modern Monetary Theory would constitute a swindle on older savers
  • what would constitute defective monetary circulations
  • what are the personal responsibilities of free individuals to abide by the principles and laws of the process and to replace the culture of opposition and antagonism
  • the role of culture in the proper management of technology, economics, and technology
  • etc.

In the light of the precepts and norms of FMD, psyche-based oppositions and antagonisms would be superseded by intellectual agreement and rational behavior.  The adaptations of the norms of behavior by enlightened participants is exactly what Dimon is calling for.

A note re Field Theory and implicit equations:

In implicit equations, the terms are implicitly defined by the relations in which they stand with one another.   In [d”inverno, 1992], under the heading of “Chapter 13, The Structure of the Field Equations”, Ray d’Inverno reads Einstein’s implicit field equations from right to left, left to right, and back and forth.  He states:

Before attempting to solve the field equations we shall consider some of their important physical and mathematical properties in this chapter.  The full field equations (in relativistic units) are

Gab = 8πTab

  1. The field equations are differential equations for determining the metric tensor gab from a given energy-momentum tensor Tab. Here we are reading the equations from right to left.  … one specifies a matter distribution and then solves the equations to ascertain the resulting geometry.
  2. The field equations are equations from which the energy-momentum tensor can be read off corresponding to a given metric tensor gab. Here we are reading the equations from left to right.
  3. The field equations consist of ten equations connecting twenty quantities, namely, the ten components of gabtand the ten components oftTab. Hence, from this point of view, the field equations are to be viewed as constraints on the simultaneous choice of  gab and Tab.  This approach is used when one can partly specify the geometry and the energy-momentum tensor from physical considerations and then the equations are used to try and determine both quantities completely. [d’Inverno, 1992, 169]

Analogously, focusing on one of Lonergan’s implicit equations, the terms are implicitly defined by the relations in which they stand with one another: P’Q’ = p’a’Q’ + p”a”Q”  [CWL 15,156-62].  We may read from left to right, right to left, or back and forth between right and left.

End of note re Field Theory and implicit equations

We list now a few excerpts buttressing what we have said above ands pointing the serious reader to further investigations.

The “Summary of the Argument”

The present inquiry is concerned with relations between the productive process and the monetary circulation.  It will be shown 1) that the acceleration of the process postulates modifications in the circulation, 2) that there exist ‘systematic,’ as opposed to, windfall profits, 3) that systematic profits increase in the earlier stages of long-term accelerations but revert to zero in later stages – a phenomenon underlying the variations in marginal efficiency of capital of Keynesian General Theory, 4) that the increase and decrease of systematic profits necessitate corresponding changes in subordinate rates of spending –  a correlation underlying the significance of the Keynesian propensity to consume, 5) that either or both a favorable balance of trade and domestic deficit spending create another type of systematic profits, 6) that while they last they mitigate the necessity of complete adjustment of the propensity to consume to the accelerations of the process, 7) that they cannot last indefinitely, 8) that the longer they last, the greater the intractability of ultimate problems.  From the premises and conclusions of this analysis it will the be argued 9) that prices can not be regarded (by the stewards of the economy) as ultimate norms guiding strategic economic decisions, 10) that the function of prices is merely to provide a mechanism for overcoming the divergence of strategically indifferent decisions or preferences, and 11) that, since not all decisions and preferences possess this indifference, the exchange economy is confronted with the dilemma either of eliminating itself by suppressing the freedom of exchange or of certain classes of exchanges, or else of effectively augmenting the enlightenment of the enlightened self-interest that guides exchanges.   [CWL 15, 5-6]

 The need for precise analytical distinctions:

Again, (Lonergan) approaches the focus armed with precise analytic distinctions upon which a superstructure of laws, coherent with one another and comprising a complete theory, may be constructed.  Paraphrasing [CWL 3, 80/103]:

 The aim of discursive reason is to understand; and it arrives at understanding not only by grasping how each conclusion follows from premises, but also by comprehending in a unified whole all the conclusions intelligibly contained in those very principles. … Thus, if we want to have a comprehensive grasp of everything in a unified whole, we shall have to construct a diagram in which are symbolically represented all the various elements (of the current dynamic process) along with all the connections between them. [McShane 2014 11 (quoting CWL 7, 151)]

For the human mind is such that it does not wonder about things just individually but, understanding individual elements, goes on to ask how they are connected with one another. [CWL 12, 17]

All science begins from particular correlations, but the key discovery is the interdependence of the whole. … the diagram (of a few precise aggregates) has compensating features that Quesnay’s system of simultaneous equations may imply but does not manifest. [CWL 15, 53 and 177]

Questions cannot be put in any order whatsoever.  Some questions simply cannot be answered until others have been resolved.  And sometimes the answers to one question immediately provide the answers to others. [CWL 12, 23]

… putting things in their right order is the special talent of the wise person, and so the wise person will start with the problem that is first in the sense (1) that its solution does not presuppose the solution to other problems, (2) that solving it will expedite solving a second problem, (3) that solving the first and second problems will lead right away to solving a third, and so on through all consequent connected problems. [CWL 12, 23]

Next, understanding is about principles.  A principle is defined as what is first in some order.  Therefore, it belongs to understanding to grasp the solution of that problem that is first in the order proposed by wisdom.  Since this order is such that solving the first means that the others are expeditiously solved, the understanding should be such as virtually to contain in itself the answers to the rest of the questions. [CWL 12, 23]

… the questions are put in such an order that, once the first is solved, the solutions to the others follow with almost no difficulty.  Therefore, because the later solutions are connected to the first as conclusions are connected to some principle, all solutions after the first seem to be the proper province of knowledge. [CWL 12, 25]

 A Copernican revolution is attempted

Our aim is to prescind from human psychology that, in the first place, we may define the objective situationwith which man has to deal, and, in the second place, define the psychological attitude that has to be adopted if man is to deal successfully with economic problems.  Thus something of a Copernican revolution is attempted: instead of taking man as he is or as he may be thought to be and from that deducing what economic phenomena are going to be, we take the exchange process in its greatest generality and attempt to deduce the human adaptations necessary for survival. [CWL 21,42- 43]

The way out is through generalization

The non-Euclideans moved geometry back to premises more remote than Euclid’s axioms, they developed methods of their own quite unlike Euclid’s, and though they did not impugn Euclid’s theorems, neither were they very interested in them; casually and incidentally they turn them up as particular cases in an enlarged and radically different field. … Einstein went beyond Newton by employing the new geometries to make time an independent variable; and as Newton transformed the formulation and interpretation of Kepler’s laws, so Einstein transforms the Newtonian laws of motion. … It is, we believe, a scientific generalization of the old political economy and of modern economics that will yield the new political economy which we need. … Plainly the way out is through a more general field. [CWL 21, 6-7]

The “creative key transition”

Taking into account past and (expected) future values does not constitute the creative key transition to dynamics.  Those familiar with elementary statics and dynamics will appreciate the shift in thinking involved in passing from (static) equilibrium analysis … to an analysis where attention is focused on second-order differential equations, on d2θ/dt2, d2x/dt2, d2y/dt2, on the primary relativities of a range of related forces, central, friction, whatever.  Particular secondary boundary conditions, past and future pricings and quantities, are relatively insignificant for the analysis of the primary relativity immanent in, and applicable to, every instance of the process.  What is significant is the Leibnitz-Newtonian shift of context. [McShane, 1980, 127]

Further Equilibria Must be Maintained

… without further clarification Schumpeter acknowledged that dynamic analysis called for a new light on equilibrium.  Such new light arises when, over and above (DSGE’s) equilibria of supply and demand with respect to goods and services (classic microeconomics), there are recognized further equilibria (crossovers balancing, concomitance of outlays with income and income with both outlays and expenditure) that have to be maintained if an economy chooses to remain in a stationary state, to embark on a long-term expansion, to distribute its benefits to the vast majority of its members, and so to return to a more affluent stationary state until such further time as further expansion beckons. … Moreover, such macroequilibria are more fundamental than the microequilibria assembled by Walras.  (FMD’s macroequilibria) are the conditions of a properly functioning economy. (CWL 15, 92)

Factors that are prior to changing interest rates and more effective

Traditional theory looked to shifting interest rates to provide suitable adjustment.  In the main we shall be concerned with factors that are prior to changing interest rates and more effective. … …  Evidently, then, suitable migrations are a means of providing adjustments in the community’s rate of saving.  To increase the rate of saving, increase the income of the rich; while they may be too distant from the current operations of the economic process to judge, at least they can put their money into the bank or bonds or stocks, and perhaps others there will see how it can best be used.  To decrease the rate of saving, increase the income of the poor. … The foregoing is the fundamental mode of adjusting the rate of saving to the phases of the productive cycle. [CWL 15, 133-134]

The traditional doctrine of thrift and enterprise looked to the supply of and demand for money to adjust interest rates and the adjusted rates to adjust the rate of saving to the requirements of the productive process.  But it can be argued that a) this view was not sufficiently nuanced in its estimate of the requirements of the productive process, b) that it missed the magnitude of the problem, and c) that it tended to lump together quite different requirements. … [CWL 15, 140, ftnt. 197]

The difficulty with (traditional) theory is that a.) it lumps together a number of quite different things and b.) it overlooks the order of magnitude of the fundamental problem… [CWL 15,  141-144]

The Good of Order

In civil community there has to be acknowledged a further component, which we propose to name the good of order.  It consists in an intelligible pattern of relationships that condition the fulfillment of each man’s desires by his contributions to the fulfillment of the desires of others, and similarly, protect each from the object of his fears in the measure he contributes to warding off the objects feared by others.  This good of order is not some entity dwelling apart from human actions and attainments. … much … Again, economic break-down and political decay are not the absence of this or that object of desire or the presence of this or that object of fear; they are the breakdown and decay of the good of order, the failure of schemes of recurrence to function.  Man’s practical intelligence devises arrangements for human living; and in the measure that such arrangements are understood and accepted, there necessarily results the intelligible pattern of relationships that we have named the good of order. CWL 3, 213-214/

Desires and fears:

A detached and disinterested desire to know … reveals to a man a universe of being in which he is but an item, and a universal order in which his desires and fears, his delight and anguish are but infinitesimal components in the history of mankind.  It invites man to become intelligent and reasonable not only in his knowing but also in his living, to guide his actions by referring them, not as an animal to a habitat, but as an intelligent being to the intelligible context of some universal order that is or is to be. … )But) the self as perceiving and feeling, as enjoying and suffering, functions as an animal in an environment, as a self-attached and self-interested center within its own narrow world of stimuli and responses.  But the same self as inquiring and reflecting, as conceiving intelligently and judging reasonable, is carried by its own spontaneity to quite a different mode of operation with the opposite attributes of detachment and disinterestedness.  It is confronted with a universe of being in which it finds itself, not the center of reference, but an object coordinated with other objects, … CWL# 498/

From the viewpoint of intelligence, the satisfactions allotted to individuals are to be measured by the ingenuity and diligence of each in contributing to the satisfactions of all; from the same high viewpoint the desires of each are to be regarded quite coolly as the motive power that keeps the social system functioning. [CWL 3, “The Tension of Community” 214-16/239-42]

Free people conducting their lives:

Lonergan’s intention was ‘to formulate the laws of an economic mechanism more remote and, in a sense, more fundamental than the pricing system…laws which men themselves administrate in the personal conduct of their lives. In 1978 he began to refer to Nicholas Kaldor in support of his judgment that the significance traditionally accorded to price theory by conventional economics since Adam Smith’s Wealth of Nations (1776) amounted to a virtual derailment of economic theory……….Lonergan’s interest in Kaldor’s sweeping statement was to emphasize that prices and their changes are not explanatory but accountants’ entities………Lonergan insists that the mechanism of the pricing system does not furnish economists with distinctions among significant variables of aggregate surplus (or producer-goods) and basic (or consumer-goods) supply and demand with their determinate yet flexible velocities and accelerations, any more than Galileo Galilei’s discrete measurements of distances and times at the Tower of Pisa of themselves provided the law of the acceleration of falling bodies…….the lack of ultimacy that Lonergan ascribes to prices and price theory can scarcely be overemphasized. CWL 15 xlvi-xlvi

Why the Basic Expansion Fails to be Implemented

In equity (the basic expansion following the surplus expansion) should be directed to raising the standard of living of the whole society.  It does not.  And the reason why it does not is not the reason on which simple-minded moralists insist.  They blame greed.  But the prime cause is ignorance.  The dynamics of surplus and basic expansion, surplus and basic incomes are not understood, not formulated, not taught….. [CWL 15, 82]

When intelligence is a blank, the first law of nature takes over: self-preservation.  It is not primarily greed but frantic efforts at self-preservation that turn the recession into a depression, and the depression into a crash. [CWL 15, 82]

The complaint is that there exist, in the mentality of our culture, no ideas, and in the procedures of our economies, no mechanisms, directed to smoothly and equitably bringing about the reversal of net aggregate savings to zero as the basic expansion proceeds.  Just as there is an anti-egalitarian shift to the surplus expansion, so also there is anegalitarian shift in the distribution of income in the basic expansion. But while we can effect the anti-egalitarianshift with some measure of success, in fact the egalitarian shift (required for the basic expansion) is achieved only through the contractions, the liquidations, the blind stresses and strains of a prolonged depression. (CWL 15, 153-54)

In addition, we provide the following links, some of which were embedded in the text above: 

Bernard Lonergan’s Goal: Generalization and Practical Precepts for Free People  

Bernard Lonergan, Marx, and Liberty

Field Theory in Physics and Macroeconomics  

The Animal Organism and the Economic Organism  

The Good of Order  

Imaginary Letter From an Imaginary Billionaire  

The Role of Philanthropy to Achieve the Good of Order; Notes Towards a Normative Model 

Help Wanted  

A Tale of Two Faulty Circulations  

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