**.I. Introduction: Contrasting Diagrams and What They Represent**

**.II. The Dynamic Process Consists of Interdependent Rates of Flow**

**.III. The Treatment of Prices as Constituents of Explanatory Flows**

**.IV. ****Primary Relativities and Secondary Determinations; an Excursus and Repetition**

**.I. Introduction: Contrasting Diagrams and What They Represent**

We contrast an **assumption and description** with an **explanation and interpretation**. We contrast the Dynamic Stochastic General Equilibrium (DSGE) **assumption** **and description** of pricing as **exogenously** given and acceptable as a **lead item** in analysis of economic problems with Functional Macroeconomic Dynamics’ (FMD’s) **explanation** and **interpretation** of pricing **in the light of** the significant functional pretio-quantital flows which **explain** the dynamic economic process.

We conclude that pricing is an **endogenous** element of pretio-quantital **explanatory** flows; and pricing is understood **last, **rather than passively accepted as** first, **in one’s search for the **immanent intelligibility **of the process. Also. the heuristic tracing of the continually changing **Basic Price-Spread Ratio** through the phases of an expansion reveals a radically different understanding of pricing from that of the Walrasian textbooks of Abel and Bernanke, Krugman and Wells, Mankiw, Blanchard, Baumol and Blinder, et al. The difference is startling. There is a contrast, but there is hardly any basis for comparison.

From the premises and conclusions of this analysis it then will be argued (9) that

prices can not be regarded as ultimate norms guiding strategic economic decisions, (10) thatthe function of prices is merely to provide a mechanism for overcoming the divergence of strategically indifferent decisions or preferences, and 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 theenlightenment of the enlightened self-interestthat guides exchanges [CWL 15, 5-6]

A distinction has been drawn between description and explanation. Description deals with thingsas related to us. Explanation deals with the same things asrelated 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]Lonergan agreed with Schumpeter on the importance of

systematicoranalytic frameworkin order toexplain, rather than merely record or describe, the aggregate phenomena of macroeconomics; … to be able toexplain the booms, slumps, and crashesof the trade or business cycles the economist’s analysis had to beas dynamic as the subject matterunder investigation; and he agreed that the economist had to know what are thesignificant variablesin thelight of whichprice changes are to be interpreted. According to Lonergan, standard economic theory had successfully achieved none of these desiderata. [CWL 15, Editors’ Introduction liii]

Also, we emphasize that **real analysis** is analyzing what money buys. Money in the operative circuits buys what is produced in the productive order. The production process is a process of surges and taperings in an advance from a lower to a higher level of abundance. Thus, analysis of the structure and timing of the productive process is **more fundamental than**, and must occur **prior to**, an analysis of the payments correlated with the productive process. In fact, the structure of the productive process of making and selling must be projected onto payments in general to get the specific classes of payments – – Outlays-Incomes, Expenditures-Receipts, basic receipts and “macroeconomic costs”, pure surplus incomes and investments – – correlated with production and, so, forming circulations in basic and surplus circuits.

In order to illustrate and explain some differences between DSGE and FMD, we focus on the basic (point-to-point) circuit and we contrast, as our example, different views of supply-demand pricing in the basic circuit of the economic process. First, we display two graphs: an AD-AS graph of a basic-circuit **static momentary ****balance** and, beside it, a FMD diagram of basic-circuit **dynamic flows**. For further perspective on the flows in the basic circuit, below those two diagrams we display three versions of the Diagram of Rates of Flows: the leftmost diagram truncated so as not to show basic-circuit dealings with the Redistributive Function; the center diagram showing the possible lending and borrowing dealings with the Redistributive Function; and the rightmost diagram representing basic-circuit velocities in the full context of an equilibrated, closed, field-theoretic and invariant two-circuit system of interdependent flows. Finally, for the reader’s convenience, we show an enlarged and clearer version of the full-context Diagram of Rates of Flow. The theory represented by this full system is a **purely-relational field theory; **and it is an **invariant** relevant to explanation of the economic process **in any instance**.

The leftside AD-AS supply-demand diagram makes one a master of the obvious – transactions are effected at a price! At any moment pricing, all by its isolated self, is assumed to determine curvatures of the effective subjective willingness of buyers and sellers of “basic” goods and services. The rightside FMD diagram represents the “basic” part ofa **dynamic process**; it is a diagram of interrelated **rates** of monetary flow which have conditions of **continuity and equilibrium**; it represents a set of velocities implicitly-defined by the relations in which they stand with one another; the rates are mutually-conditioning, implicitly-defining **rates **(dynamic velocities) of monetary supply-and-demand **flows** in the basic-circuit channels. The key contrasts embedded in the passages to follow, are:

**at rest vs. in motion**:**snapshot intersections**absent time subscripts contrasted with**evolutionary velocities**of differential or difference pretio-quantital flows**inadequate heuristic vs. adequate heuristic**: satisfaction with a Walrasian**static heuristic**contrasted with dissatisfaction mandating a Newtonian, Einsteinian**dynamic heuristic****efficient cause vs. formal cause**: description by**static**pricing as**efficient cause**contrasted with**explanation**by**normative formal cause****serial shifts vs. concomitant equilibration**: shocks and reactions vs. a new basis of**concomitance, continuity, and equilibrium**among**dynamic**flows**the non-systematic concrete vs. the formally abstract: secondary determinations**of prices and quantities from the**non-systematic manifold**distinguished from**primary relativities**of abstract terms and relations which explain the process**money as master of the process vs. money as servant of the process**: money assumed to be the ventriloquist distinguished from money properly understood as the ventriloquist’s dummy**explanation attempted on sand or on rock**: careless grounding in the shifting sand of random and “shocking”**exogenously-determined**pricing contrasted with solid grounding on the invariant rock of the**formal structure**of production and exchange**incoherent vs. coherent**: seriation of descriptive aspects of the economic process mistaken for unitary explanation by an invariant set of functional relations; the terms in the equations**cohere**and the equations themselves**cohere**; they hang together in an**intelligible unity**.**single circuit or double circuit**: a single-flow theory contrasted with a two-flow theory

The analyst should put all interrelated velocitous elements together in a single schematic or view and, thus, come to understand the **unitary whole** in a **single sweeping act of understanding** in which all the concepts tumble out together. (Click here)

All science begins from particular correlations, but the key discovery is the

interdependence of the whole. (CWL 15, 53 and 177)I have spoken of the analysis as revealing channels … . The

channelsof circulation replace the overall dominance claimed for general equilibrium theory, but they reveal the conditions under which partial equilibria can exist … More positively, thechannels account forbooms and slumps, for inflation and deflation, for changed rates of profit, for the attraction found in a favorable balance of trade, the relief given by deficit spending, … . [CWL15, 17]

A **shift in thinking** is required. The analyst must employ a **scientific, dynamic heuristic**. He/she must be searching for a set of differentials or differences with respect to time which are adequate to explain what is always the **current**, **purely-dynamic** process.

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

the creative key transition to dynamics.Those familiar with elementary statics and dynamics (in physical mechanics) will appreciate theshift in thinkinginvolved in passing from equilibrium analysis (of for example a suspended weight or a steel bridge)…to an analysis where attention is focused onsecond-order differential equations, ond^{2}θ/dt, on a range of related forces, central, friction, whatever. Particular boundary conditions, “past and future values” are^{2}, d^{2}x/dt^{2}, d^{2}y/dt^{2}relatively insignificantfor the analysis. What is significant is theLeibnitz-Newtonian shift of context. [McShane, 1980, 127]

The AD-AS supply-demand diagram represents a static balance at a particular moment; the Diagram of Rates of Flow represents a set of **general, field-theoretic relations constituting an invariant,** which is relevant **in any and every instance**. Like the equations of Electromagnetics and Special Relativity, the terms and relations of **purely-relational** FMD do not change. **Particular concrete values** from the non-systematic manifold, such as chosen electric current in Electromagnetics, ratio of vehicle speed to light speed in Special Relativity, or prices and quantities in Macroeconomic Field Theory, may change, but the set of **abstract primary relativitionships** explaining the phenomena do not change. They constitute an **invariant,** applicable in any instance.

**.II. The Dynamic Process Consists of Interdependent Rates of Flow **

The analysis prescinds from human psychology to discover the **objective laws** of the process to which **participants must adapt**. In the Diagram of Rates of Flow, Outlays which are Incomes become Expenditures which are Receipts. *O = I = E = R*. The four dynamic elements are in a **continuing circular dependence** round after round. By the **principle of concomitance** they are **unitary, **and for **continuity and equilibrium **they must **keep apace**. They **define and condition** one another** by the functional relations in which they stand with one another**.

The

concomitanceof outlay (p’a’Q’ and p”a”Q”) and expenditure (P’Q’) follows from the interaction of supply and demand. The concomitance of income (I’) with outlay and expenditure isidenticalwiththe adjustment of the rate of saving to the requirements of the productive process. CWL 15 144[1]

The structure applies in any case of psychological disposition. Just as Clerk-Maxwell’s electromagnetic equations underlying the flow of electricity do not change depending upon the mood of the person operating the controls, so the **relativistic invariant** of the laws relating the economic flows of basic and surplus incomes and expenditures do not depend on the mood, preferences, utility, or rationality of the persons operating the economic controls. The laws prescind from, and are both prior to and more fundamental than, human psychology. The system of laws is **an objective invariant**.

We seek to understand **the objective conditions of a properly functioning economy**.

… such

macroequilibria are more fundamental than the microequilibriaassembled by Walras. The (macroequilibria) arethe conditions of a properly functioning economy. (CWL 15, 92)

The analyst’s heuristic must be **adequate to a dynamic** exchange process. Again,

Lonergan agreed with Schumpeter on the importance of

systematicoranalyticframeworkin order toexplain, rather thanmerely record or describe, the aggregate phenomena of macroeconomics; he agreed with Schumpeter that to be able to explain thebooms, slumps, and crashesof the trade or business cycles the economist’s analysis had to beas dynamic asthe subject matter under investigation; and he agreed that the economist had to know what are thesignificant variablesin the light of which price changes are to be interpreted. According to Lonergan, standard economic theory had successfully achieved none of these desiderata. [CWL 15, Editors’ Introduction liii]

We are not seeking to **describe** the **microeconomic** exchange process; rather we seek to **explain** the phenomena of the **macroeconomic** business or trade cycle.

the set of terms and relations capable of explaining the phenomena of the business or trade cycle would not be the same as

any given pricing systemthat automatically coordinates a vast coincidental manifold of decisions of demand and decisions of supply, Such a system comes to sight as bookkeeper’s entities that form the basis of the preliminary descriptive classifications that need to be explained: they are the similarities “first-for-us.” The relevant set of explanatory terms and relations would have to expose similarities that reside in the relations of things to one another or what is “first-in-itself”: namely both the dynamic elements (distinct, implicitly-defined, productive and monetary functionings) and the differentials (velocities and accelerations) of the economic mechanism which reveal the significance of aggregate changes inprices that by themselves are in need of interpretation……prices as a concern for the bookkeepersor accountants areknown-first-to-usby description and commonsense classification; and that (Lonergan’s) own functional analysis of production and circulation reveals an explanatory systemknown-first-in-itself(continue to lvii “significance”) [CWL 15, Editor’s Introduction lvi]

Again, there is required a shift in the economist’s thinking. The economist must construct his/her explanation of the dynamic process in** second-order differential equations**.

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

the creative key transition to dynamics.Those familiar with elementary statics and dynamics (in physical mechanics) will appreciate theshift in thinkinginvolved in passing from equilibrium analysis (of for example a suspended weight or a steel bridge)…to an analysis where attention is focused on second-order differential equations,on d^{2}θ/dt, on a range of related forces, central, friction, whatever. Particular boundary conditions, “past and future values” are^{2}, d^{2}x/dt^{2}, d^{2}y/dt^{2}relatively insignificantfor the analysis. What is significant is theLeibnitz-Newtonian shift of context. [McShane, 1980, 127]

**.III. The Treatment of Prices as Constituents of Explanatory Flows**

Monetary flows, such as Outlays-Incomes and Expenditures-Receipts, are pretio-quantital flows. An advanced treatment would be in terms of pretio-quantitality reminiscent of Special-Relativity’s spatio-temporality.

… tensors are defined by their transformation properties and it can be shown that, in the present case, if the coefficients g

_{ij}are any instance of a covariant tensor of the second degree, then the expression for the interval will be invariant under arbitrary transformations. … Thus in the familiar Euclidean instance,g_{ij}is unity when_{ }iequalsj; it is zero whenidoes not equalj; and there are three dimensions. In Minkowski space, theg_{ij}_{ }is unity or zero as before, but there are four dimensions, andxequals_{4 }ict. In the General Theory of Relativity, the coefficients are symmetrical, so thatgequals_{ij }g; and in the Generalized Theory of Gravitation, the coefficients are anti-symmetrical. [CWL 3, 146 -147/170-71]_{ji}

Outlays-Incomes and Expenditures-Receipts implicitly define one another.

There is a sense in which one may speak of the fraction of basic outlay that moves to basic income as the “costs” of basic production. It is true that that sense is not at all an accountant’s sense of costs; … But however remote from the accountant’s meaning of the term “costs,” it remains that there is an aggregate and

functionalsense in which the fraction… is an index of costs. For the greater the fraction that basic income is of total income (or total outlay), the less the remainder which constitutes the aggregate possibility of profit. Butwhat limits profit may be termed costs. Hence we propose ….to speak of (c’O’ = p’a’Q’) and (c”O” = p”a”Q”) as costs of production, having warned the reader that the costs in question areaggregate andfunctionalcosts…. [CWL 15, 156-57]

The Diagram of Rates of Flow implicitly contains the **principle of concomitance **informing the implicit definition of Outlays-Incomes and Expenditures-receipts. Again,

The

concomitanceof Outlay (p’a’Q’ and p”a”Q”) and Expenditure (P’Q’) follows from the interaction of supply and demand. The concomitance of Income (I’) with Outlay and Expenditure isidenticalwiththe adjustment of the rate of saving to the requirements of the productive process. CWL 15 144[1]

Employing the principle of concomitance and the technique of implicit definition, we advance beyond the simplistic AD-AS scheme; we seek, with a) the aid of the Diagram of Rates of Flow, and b) per CWL 15, pages 107-113, and 156-58, to discover the primary, abstract, field-theoretic relativities which **explain** the **evolutionary** economic process:

(c’O’ = p’a’Q’) (41)

(c”O” = p”a”Q”) (42)Whence, by equation (4)

I’ = p’a’Q’ + p”a”Q”(4) (page 49) and (43)Now, when (

D’-s’I’) satisfies general conditions of circuit acceleration by being zero, so thatE’ = I’, then sinceE’ = P’Q’one may write

P’Q’ = p’a’Q’ + p”a”Q” (44)

In implicit equations, Expenditures, *P’Q’,** and “costs”, *** p’a’Q’ + p”a”Q”, **are implicitly-defined by the relations in which they stand with one another.

*P’Q’ = p’a’Q’ + p”a”Q”*

Since the equation expresses implicit definition, we may read from left to right, right to left, or back and forth between right and left. From left to right, expenditures-receipts *P’Q’ *define and determine concomitant macroeconomic costs, *p’a’Q’ *and* p”a”Q”* as they are defined (CWL 15, 156-58) From right to left, basic and surplus costs-outlays constitute the incomes which define and determine the limit and norms of what is concomitantly spent for basic products. Travelling back and forth between left and right, the equals sign mandates the reciprocal constraining influence on one another of pretio-quantial expenditures-receipts and pretio-quantital costs-outlays constituting basic incomes.

We may then proceed to define the Basic Price-Spread Ratio in terms of accelerations and costs flows and trace its path of expansion and contraction in the evolution from lower to higher levels of abundance.

Dividing through by *p’Q’* one may write

*P’/p’ = a’ + a”(p”Q”)/(p’Q’) (45)*

Letting

representJP’Q’,andrepresentR(p”Q”)/(p’Q’),we have

J = a’ + a”R, (45)

and, thus, dJ = da’ + a’d + R’da” (47)

As seen, understood, and appreciated, we have finally attained the intelligibility of prices. We get to understand **prices last in the analysis**. Note in particular the two equations labeled (45) above: the ratio of the index of selling price to the index of cost price. The prices are boundary values from the non-systematic manifold to which the governing primary relativities are applied. They are understood **in light of** the flows of Outlays (*p’a’Q*’ and *p”a”Q”*) and Expenditures (P’Q’) of which they are **constituent** **elements**. Further, macroeconomic “costs” (*p’a’Q’* + *p”a”Q”*) and macroeconomic “revenues” (*P’Q’*) implicitly-define and mutually-determine one another; and the equation (44), *P’Q’ = p’a’Q’ + p”a”Q” *can be read from right to left or from left to right. And note in particular the implicit mutual determination of *P’* and *p’* and *p”*. The level of *p’* and *p”* must be in satisfaction of the level of *P’*, and vice versa. *I’ *is, so to speak, the middle term. Again, for the third time,

The

concomitanceof outlay (p’a’Q’ and p”a”Q”) and expenditure (P’Q’) follows from the interaction of supply and demand. The concomitance of income (I’) with outlay and expenditure isidenticalwiththe adjustment of the rate of saving to the requirements of the productive process. CWL 15 144[2]

These flows of costs and revenues are, by the principle of concomitance in the implicit equation, purely relational, mutually definitive, mutually determinative, and, thus, by this mutuality of definition and determination, they are **specially relative**. We have a relativistic general specification of the dynamics of the two-circuit economic process, in which prices are explained by the interdependent flows of two circuits correlated ultimately with the structure of the flows of point-to-point and point-to-line products.

One might be reminded here of a parallel in hydrodynamics: if what is at issue is a

general specificationof thedynamicsof free water waves, a premature introduction of general boundary conditions or worse, specific channel conditions, botches the analytic possibilities….the Robinson-Eatwell analysis is hampered … by their building the economicof profits, wages,priora quoad nosprices, etc., into explanation, when in fact the[3] are last in analysis:priora quoad nosthey require explanation. [McShane, 1980,124]

Paraphrasing: One might be reminded here of a parallel in hydrodynamics: if what is at issue is a general specification of the dynamics of pretio-quantital monetary flows, a premature introduction of general boundary conditions, (happenstantial prices and quantities) … botches the analytic possibilities….the analysis is hampered … by building the economic *priora quoad nos* of quantities, prices, interest rates etc., into explanation, when in fact the *priora quoad nos*[5] are **last in analysis: they require explanation** in the form of general, dynamic, functional interrelations.

All science begins from particular correlations, but the key discovery is the

interdependence of the whole. (CWL 15, 53 and 177)

DSGE’s simplistic AD-AS model takes the psychological demand curve (composed of utility, time preferences, and irrationality) and the psychological supply curve (profit maximization) as isolated and independent elements of analysis. And, because transactions do occur, it is a truism that the price paid is the price received; the curves intersect at a price and, thus, the guessed-at and merely-postulated psychological curves are determined by the pricing. And, thus, pricing on the vertical axis can be said to determine the point of output on the horizontal axis.

Thus, in Walrasian analysis, exogenously-determined prices may be taken as first in the analysis, and said to determine the level of a standstill output supplied and demanded at a moment in time. FMD, on the other hand, understands prices in terms of the interdependent velocitous and accelerative pretio-quantital flows which constitute and explain the process in a purely relational field theory. Prices are understood **in the light of** the significant variables which constitute the process. And this understanding of prices is not reached until the end of the analysis. Note that the intelligibility of prices,

*P’/p’ = a’ + a”(p”Q”)/(p’Q’)*

*J = a’ + a”R*

is reached in the third last chapter, before the two appended treatments of exceptional superposed circuits.

**.IV. ****Primary Relativities and Secondary Determinations; an Excursus and Repetition**

In CWL 21, Lonergan treats separately “the Normative Proportion” and “The Crossover Ratio.” There is always a “size” of price, a “size” of quantity, a “size of pretio-quantital monetary flow. One particular concrete size suggests comparison and relation to other concrete sizes. And the **primary relations** of one price to another, one quantity to another, one magnitude of flow to another would be primary **abstract relations of proportion**, while the secondary determinations themselves from the non-systematic manifold would happen to be in some numerical ratio such as 1:1, 2:1; 3.5:1, 8:1, etc..

… it is necessary to distinguish in concrete relations between two components, namely, a

primary relativityandother secondary determinations. Thus, if it is true that the size of A is just twice the size of B, then theprimary relativityis aproportionand thesecondary determinationsare thenumerical ratio, twice, and the two observable sizes. Now ‘size’ is adescriptive notionthat may be defined as an aspect of things standing in certain relations to our senses, and so it vanishes from an explanatory account of reality. Again, the numerical ratio, twice, specifies the proportion between A and B, but it does so only at a given time under given conditions; moreover, this ratio may change, and the change will occur in accord with probabilities; but while probabilities will explain why objects like A and B every so often have sizes in the ratio of two to one, they will not explain why A and B are in fact in that relation here and now; and so the numerical ratio, twice, is anon-systematic elementin the relation. However, if we ask what a proportion is, we necessarily introduce theabstract notion of quantityand we make the discovery that quantities and proportions are terms and relations such that the terms fix the relations and the relations fix the terms. For the notion of quantity is not to be confused with a sensitive or imaginative apprehension of size; a quantity is anything that can serve as a term in a numerical ratio; and, inversely, a proportion, in the present context, is a numerically definable ratio between two quantities. [CWL 3, 491]

The distinction of primary relativity and its secondary “coincidental” and absolute determinations **separates the systematic and the non-systematic.**

The point, then, to our distinction between the primary relativity of a relation and its secondary determinations is that it

separates the systematic and the non-systematic.If A and B are things of determinate kinds, then they must be quantitative; and if they are quantitative, there must be some proportion between their quantities. But just what that proportion will be at any given time, will depend on the manifold of factors that form the non-systematic pattern of a diverging series of conditions, and so there is within the limits of human science no ultimate and fully determinate explanation of why A happens to be just twice B at a given moment. [CWL 3, 491]

So, we distinguish the primary, abstract, purely relative relation from the non-systematic secondary determinations to which it can be applied.

There is a further point to our distinction. As it separates the systematic from the non-systematic, so also it

separates the relative from its absolute determinations. All that is relative in the notion, twice, is also found in the notion, proportion; the difference between them is that ‘twice’ is a proportion specified by a pair of quantities such as one and two, or two and four, etc.; and such pairs of quantities, simply as pairs of quantities, prescind from the relations of one to the other. [CWL 3, 492]

Again,

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]

In Functional Macroeconomic Dynamics, a simple, yet **fundamental and explanatory,** relation of proportion is the Aggregate Basic Price-Spread Ratio (CWL 15, 156-60):

**P’/p’ = a’ + a”p”Q”/p’Q’ **or

**J = a’ + a”R**

Its differential is

**dJ = da’ + a”dR + Rda” **

** **

The heuristic tracing of the continually changing Basic Price-Spread Ratio through the phases of an expansion necessitates a radically different macroeconomic understanding of pricing from that of the Walrasian textbooks of Abel and Bernanke, Krugman and Wells, Mankiw, Blanchard, Baumol and Blinder, et al. The difference is startling. There is a contrast, but there is scarcely any basis for comparison.

This **variable** ratio of the indexes of selling price to cost price has vast implications for understanding and interpreting the ever-shifting, evolutionary, economic process. The variable ratio, since it is a variable, changes. And that primary relation of **proportion** is, in this case, defined by the collocation of significant explanatory **variables** of acceleration, surplus productive outlays and basic productive outlays. Functional variables implicitly define other variables by the relations in which they stand with one another. The discovery of this central, purely-relational, key intelligibility of the economic process is last in the analysis. The gem, called the **Basic Price-Spread Ratio**, is hidden in the process until it is finally discovered and becomes the capstone of the process.

One may easily get disoriented by everyday words such as “costs”, “outlays”, “profits” used to describe concrete experiences; and one may fail to grasp that Lonergan has applied new meanings and is using these terms as abstract, explanatory conjugates, ultimately grounded in precise analytic distinctions such as point-to-point and point-to-line in the production-and-sale process, for which the money suggested by “costs” etc. is a dummy servant. …

FMD is concerned with equilibrium among the flows constituting payments in the dynamic productive process.

… 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)

[1] Equivalent statements of this idea of concomitance are those of “the crossovers balancing” and “the adjustment of the rate of saving to the phase of the process”

[2] Equivalent statements of this idea of concomitance are those of “the crossovers balancing” and “the adjustment of the rate of saving to the phase of the process”

[3] The *priora quoad nos* – first for us – are the things which we notice first because they are related to our sensitive selves, e.g. hot and cold, fast, slow. The *priora quoad se* – first among themselves – are the things or terms which are related to each other, e.g. pressure, volume, temperature, space, time, mass, etc.

[4] More fully, the quote is: One might be reminded here of a parallel in hydrodynamics: if what is at issue is a general specification of the dynamics of free water waves, a premature introduction of general boundary conditions or worse, specific channel conditions, botches the analytic possibilities….the Robinson-Eatwell analysis is hampered, not only by an absence of paradigmatic heuristic thinking in a field whose principles involve ends, but also by their building the economic *priora quoad nos* of profits, wages, prices, etc., into explanation, when in fact the *priora quoad nos* are last in analysis: they require explanation. McShane, Philip (1980) *Lonergan’s Challenge to the University and the Economy*, (Washington, D.C.: University Press of America) P. 124[4]

[5] The *priora quoad nos* – first for us – are the things which we notice first because they are related to our sensitive selves, e.g. hot and cold, fast, slow. The *priora quoad se* – first among themselves – are the things or terms which are related to each other, e.g. pressure, volume, temperature, space, time, mass, etc.