On Friday, October 8, N. Gregory Mankiw’s Blog featured Nick Romeo’s interesting article entitled “Is It Time For a New Economics Curriculum?” Greg provided a quote from Romeo’s paragraph re Jonathan Gruber’s take on CORE.
Jonathan Gruber, who teaches introductory economics at M.I.T., felt that CORE might introduce too much complexity for a foundational course. He worried that so much emphasis on the ethical and political dimensions of economics might make the subject feel like a different discipline altogether. “The question is, do you want the students to feel like they’re coming out of, you know, to be blunt, a sociology class or an economics class?” Gruber said.
Gruber’s question is, for the most part, right on the money. In contrast to CORE’s hodgepodge of subjective psychopolitics, Macroeconomic Dynamics remains the explanatory science of an objective, intrinsically-dynamic process. Like the systematics of Mechanics from Galileo to Einstein, it prescinds from psychology. It employs the technique of implicit definition to reach basic terms (functional velocities) defined by the functional relations in which they stand with one another. It makes precise analytic distinctions to arrive at basic terms which – like Newton’s second law of motion, F = ma – virtually contain a superstructure comprising a comprehensive explanatory theory of functional interdependencies. The theory is a set of terms and relations in implicit equations; the equations are coherent with one another and all together comprise a modern field theory of terms related among themselves. The normative theory yields precepts for the proper management and very survival of the process; thus, the ethics of FMD are not “sentiment without intelligence”; rather they are grounded in, and compelling in virtue of, the immanent intelligibility of the objective, dynamical process. FMD is purely relational; again, it is a normative field theory of the economic process; and, as a single theory on which all can agree, it sublates Ha-Joon Chang’s twelve schools of economic thought.
Sociology is the study of human social relationships and institutions. Sociology’s subject matter is diverse, ranging from crime to religion, from the family to the state, from the divisions of race and social class to the shared beliefs of a common culture, and from social stability to radical change in whole societies. Unifying the study of these diverse subjects of study is sociology’s purpose of understanding how human action and consciousness both shape and are shaped by surrounding cultural and social structures. (University of North Carolina)
Sociology roams full of wanderlust over diverse social phenomena; its descriptive, commonsense findings do not constitute “ethical and political dimensions” of a scientific, explanatory economics. They may be influential with respect to political policy and culture, but sociology does not prescind from psychology to reach a scientific explanation of the objective economic production-for-exchange process. Lonergan was careful to understand macroeconomics correctly as an objective science, uncontaminated by the sentiment without intelligence of Modern Monetary Theory, Marxism, or unbridled Laissez-Faire-ism. (Click here, and here, and here.) (Also, re Laissez-Faireism and Socialism, see CWL 15, xxxii-xxxvii)
Additional to the several click-ons above, here are a few often repeated excerpts from Lonergan and McShane:
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 things 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. … [CWL 3, 291/316]
our inquiry differs radically from traditional economics, in which the ultimate premises are not production and exchange but rather exchange and self-interest, or later, exchange and a vaguely defined psychological situation. Our aim is to prescind from human psychology (so) that, in the first place, we may define the objective situation with 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]
To our knowledge, no one else considers the functional distinctions between different kinds of productive rhythms prior to, and more fundamental than, wealth, value, supply and demand, price levels and patterns, capital and labor, interest and profits, wages, and so forth … only Lonergan analyzes booms and slumps in terms of how their velocities, accelerations, and decelerations are or are not equilibrated in relation to the events, movements and changes in two distinct monetary circuits of production and exchange as considered both in themselves and in relation to each other by means of crossover payments. [CWL 15, Editors’; Introduction lxii]
Lonergan’s Modern Macroeconomic Field Theory is not a theory based upon the psychology of efficient-causal participants.
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 between n 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. 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]
Field theory is a matter of the immanent intelligibility of the object or process under investigation. Newton’s Mechanics was brilliant with respect to basic terms and their superstructure, but his mechanics was a theory of (external) efficient cause, not of formal cause or immanent intelligibility of explanatory conjugates among themselves.
… Special Relativity is primarily a field theory, that is, it is concerned not with efficient, instrumental, material, or final causes of events, but with the intelligibility immanent in data; but Newtonian dynamics seems primarily a theory of efficient causes, of forces, their action, and the reaction evoked by action. … Special Relativity is stated as a methodological doctrine that regards the mathematical expression of physical principles and laws, but Newtonian dynamics is stated as a doctrine about the objects subject to laws. [3, 43/67]
Establishment economics and left-wing sentimentalists are both on the wrong track. Their pronouncements are groundless and/or deficient. They don’t understand the significance of what may be called investment income; and they don’t grasp the idea of the pure cycle of expansion and the necessity to implement the basic expansion. Their so-called solutions are not solutions.
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]