Author Archives: Functional Macroeconomic Dynamics

The Fundamental Quantum of Political Economy is Denoted by the Subscript k

 

Taking a cue from Descartes, Lonergan advised that we attend to the simple things that anyone can understand.

Again and again, in his regulae ad directionem ingenii, (Descartes) reverts to this theme.  Intellectual mastery of mathematics, of departments of science, of philosophy, is the fruit of a slow and steady accumulation of little insights.  Great problems are solved by being broken down into little problems.  The strokes of genius are but the outcome of a continuous habit of inquiry that grasps clearly and distinctly all that is involved in the simple things that anyone can understand.  (CWL 3, 3/27) Continue reading

The Wise Person Puts Questions In Their Right Order

In any analysis there is a right order of questions; and to violate this order is to invite misunderstanding, myth, and disaster.  To indicate the wisdom in Lonergan’s analysis, we present excerpts, mainly from his CWL 12,  which mandate clearly, for himself and for us, that one’s method and one’s heuristic necessitate putting questions in their right order.  The precepts apply whether one is doing physics, economics, philosophy or theology. Continue reading

The Mechanical Structure is a Pattern of Laws (Brief Item #85)

Our immediate task is to work out the correlations that exist between the velocity and accelerator rhythms of production and the corresponding rhythms of income and expenditure.  The set of such correlations constitutes the mechanical structure, a pattern of laws that stand to economic activity as the laws of mechanics to buildings and machines. [CWL 21, 43]  [#85]

In Macroeconomic Science, Beware Sentimentalism Lacking Intelligence (Brief Item #84)

[7/2/20] A rigidly egalitarian system belongs to a perfectly egalitarian world; (but) a world in which men are, in fact, unequal must find a different system.  What system?  If the idealism is sentiment without intelligence, it is as likely as not to mate with the underground cynicism of the revolutionaries to foist upon us a dictatorship of the proletariat in which the proletariat does not dictate (but secret police surveil and labor camps terrify), a dictatorship of the Herrenvolk in which the Volk obeys the Fuhrer.  But if that idealism can be brought to learn the discipline of logic and of scientific reflection, then it will impose a generalization of the exchange economy.  To determine the nature of such a generalization is the aim of this inquiry; but at once this is at least evident.  The vast forces of human benevolence can no longer be left to tumble down the Niagara of fine sentiments and noble dreams.  They have to be assigned a function and harnessed within the exchange system, for in no other way can that system shake off its fictitious fetters to move consistently towards its maximum. [CWL 21, 36]

generalization will … move to a higher synthesis that eliminates at a stroke both the problem of (insufficient basic incomes) and the complementary problem of (workers’ misinterpretations); it will attack at once both the neglect of economic education and the blare of advertisements leading the economically uneducated by the nose; it will give new hope and vigor to local life, and it will undermine the opportunity for peculation (embezzlement) corrupting central governments and party politics; … [CWL 21, 36-37] [84]

 

Lonergan, Marx, and Liberty

This section, Lonergan, Marx and Liberty, is presented simply in the form of a gathering of excerpts from different sources. The careful reading of the excerpts should inspire the reader to consult the sources for the rich context of each excerpt and for a fuller appreciation of Lonergan’s understanding and reasoning about the need for liberty. In brief, Lonergan demonstrates that Marx’s economics is insufficiently abstract and contaminated by descriptive sociological and political categories; he finds Marx’s summons to class conflict perilous to humanity because it promotes and enforces a drift away from liberty to a totalitarianism culminating in the dreadful conditions of a no-escape “frontier, clear and firm indoctrination, controlled media of information, a vigilant secret police, and the terrifying threat of labor camps,” – all in the name of a mythical macroeconomics. (Continue reading)

“The Most Significant Book of the Twentieth Century”

from [McShane, 2017, Preface xii] “I have brought you face to face with the first page of the most significant book of the twentieth century.* There the man suggests: 1) that a key move is to pause over little things, 2) that Archimedes invented the permanent science of hydrostatics by focusing on a crown-weighing problem. You are on the edge of the invention of the permanent science of econo-dynamics. What is your next move? Obviously, if you are an economist, you get moving towards a Nobel Prize.”

*The book is Bernard Lonergan’s Insight, A Study of Human Understanding, 1957, 1992 CWL 3, University of Toronto Press.

A Contrast: Understanding Pricing in Macrostatic DSGE and in Macrodynamic FMD

.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. (Continue reading)