Author Archives: Functional Macroeconomic Dynamics

Conflicting Ways Of “Viewing” The Economic Process (In Draft Status)

Time-consuming cares of our day and the nonsense on TV compel us, against our better judgment, to enter this section now in draft form.  We request the reader’s forbearance and suspension of his/her own judgment re the contents.  Also, note that we have included part of Subsection 3 first on the teaser below. Clicking on the “Click here” at the bottom will bring the reader to the top of the entry.

  1. Lonergan’s “Macroeconomic Field Theory” (MFT), AKA “Functional Macroeconomic Dynamics” (FMD) – Draft
  2. Marxism – Draft
  3. Modern Monetary Theory Quackery (MMQ) – Draft
  4. Establishment Economics – Draft

.3. Modern Monetary Theory Quackery (MMQ)


  • MMQ does not have a scientific heuristic; it does not seek, much less reach, an explanatory theory; it does not grasp that the province of science as explanation by terms related among themselves. MMQ is fundamentally disoriented.

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.  … 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)

No doubt Keynes was an economist first and a methodologist second but he was none the less very articulate about his theorizing……..Lonergan, for his part, is perhaps a methodologist first and an economist second, but, as we shall see, he was able to push his economic reflections further than Keynes because he had a firmer grasp of the essentials of an effective theory.   [Gibbons, 1987]

  • Thus, MMQ does not adopt a scientific method in order to explain.
  • MMQ does not display a trace of knowledge and appreciation of a) concomitance of functionings, composed of actual monetary flows often supported by credit, b) what constitutes continuity, c) what constitutes dynamic equilibrium, d) the analytic distinction of two or more circuits of monetary circulations, analytically distinguished but solidary with one another.

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Explanatory Conjugates; Formal Implicit Relations; Ideal Frequencies

… V. Lenzen in his Nature of Physical Theory emphasizes the genetic process that begins from experiential contents of force, heat, extension, duration, etc., to move through a process of redefinition towards terms implicitly defined by empirically established principles and laws.  .. Lindsay and Margenau in their Foundations of Physics, … may be said to exhibit a preference for terms implicitly defined by equations.  [CWL 3, 81-82/105]

Macroeconomics is an explanatory science; as science it employs scientific method. (Continue reading)

The Method of Circulation Analysis; Brief Item #94

A first step is to offer some definition of the positive integers, 1, 2, 3, 4…. … Further, let us suppose as too familiar to be defined, the notions of ‘one’, ‘plus’, ‘equals’…. As the acute reader will see, the one important element in the above series of definitions, is the etc., etc., etc…It means that an insight should have occurred.  If one has had the relevant insight, if one has caught on, if one can see how the defining can go on indefinitely, no more need be said … in defining the positive integers there is no alternative to insight. … a single insight is expressed in many concepts.  In the present instance, a single insight grounds an infinity of concepts.  (CWL 3, 13-14/38-39) Continue reading

Imaginary Letter From An Imaginary Billionaire

To whom it may concern:

I am a billionaire. To earn my wealth I assumed personal and financial risks continuously over several years. If I had failed and gone broke, no one would have felt sorry for me or bailed me out; nor would I have asked to be bailed out. I and my associates provided to the world superior material goods of higher value-for-money than comparably priced substitutes. We offered our high-quality products honestly and we charged what the market would bear.  Consumers purchased our goods wisely and gladly. Our incomes have been proportionate to our contribution to the economy and, thus, to society. (Continue reading)

Piero Sraffa: “Production Of Commodities By Means Of Commodities”

A graduate student of economics should find it rewarding – intellectually, monetarily, and prestigewise – to present to the economic community an analysis of how Piero Sraffa’s work influenced Lonergan’s insistence on understanding the structure of the economic process before treating the two dependent topics of exchange and finance. (See “Why Analyze The Rhythmic Pattern of the Productive Process First”)


The “Editors Introduction” to Lonergan’s Macroeconomic Dynamics: An Essay In Circulation Analysis notifies us that “Lonergan alone” and “only Lonergan” has scientifically formulated the functional relations which explain the dynamic economic process. Continue reading

Veritas est una et error multiplex; Brief Item #93

[5/4/2021] It is an old saying that veritas est una et error multiplex. Truth is constructed and apprehended as a unity, but error takes many grotesque shapes. … The worst of truth’s enemies is the one in one’s own household that so spontaneously and so naturally tends to adjust and color the truth which one knows to the hue of one’s temperament and to the exigencies of one’s socio-cultural milieu – the milieu of one’s tribe, political party, income stratum, macroeconomic “school” or “ism”, etc. One must courageously meet the challenges of one’s intelligence and of objective truth, goodness, unity, and order and, by meeting them, rise above one’s blind instincts of egoism, ressentiment, and tribal loyalty to the light of truth vs. falsity, good vs. evil, love vs. hate, and order vs. disorder. (Adapted for paraphrase from CWL 3, 682-83/705) [#93] (Click here for previous Brief Items)

A Scientific Generalization of Macroeconomics; Brief Item #92

[5/1/2021] 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]

Generalization comes with Newton, who attacked the general theory of motion, laid down its pure theory, identified Kepler’s and Galileo’s laws by inventing the calculus, and so found himself in a position to account for any corporeal motion known.  Aristotle, Ptolemy, Copernicus, Galilei, and Kepler had all been busy with particular classes of moving bodies.  Newton dealt in the same way with all.  He did so by turning to a field of greater generality, the laws of motion, and by finding a deeper unity in the apparent disparateness of Kepler’s ellipse and Galilei’s time squared. … Similarly the non-Euclidean geometers and Einstein went beyond Euclid and Newton. … 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. … (Again) 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] [#92] (Click here for previous Brief Items)

The Labor Theory of Value Debunked

As there exists such a thing as absolute value, there can be relative value by which “excellence may belong to an object in its relativity, its utility, its aptitude to excel in serving ulterior purposes … only some of them relative to man.”  Economic value is the human relative value that regards abundance or scarcity.  Economic value is specified by both the proportion of a product relative to the effort of producing it, and by the exchange value that results from any decision to strive for an object, even when the decision is independent of either the striving or the effort involved in producing it.  Adam Smith and all the proponents of the “labor” theory of value were never able to clarify the relationship between exchange value and “toil and trouble” as the measure of value.  Lonergan shifted the issue entirely by explaining that an “economic value relates an object to human effort, but an exchange value relates objects among themselves.”31 (CWL 21, 31) [Fred Lawrence; “Money, Institutions, and The Human Good,” in Liddy, 2010, 183-84]

However, like Smith, Locke, Ricardo, and Marx later on, Aristotle did not seem to understand money in terms of exchange value, and therefore as relating objects among themselves in relation to the concomitance or lack of concomitance between “the real flow of property, goods, and services and the dummy flow being given and taken in exchange for the real flow.”39 CWL 21, 40 Still less did they grasp that in an advanced industrial society, the real flow and the money flow are channeled within two separate circuits of production and circulation functionally distinguished into producer goods and consumer goods, and operating in real time in accord with distinct phases of expansion.  Besides misunderstanding money of account, they misunderstood the relationship of money to time. [Fred Lawrence; “Money, Institutions, and The Human Good,” in Liddy, 2010, 186] Continue reading

Controlled Media – Brief Item #90

[4/26/2021] As healing can have no truck with hatred, so too it can have no truck with materialism.  For the healer is essentially a reformer; first and foremost he counts on what is best in man.  But the materialist is condemned by his own principles to be no more that a manipulator.  He will apply to human beings the stick-and-carrot treatment that the Harvard behaviorist B.F. Skinner advocates under the name reinforcement.  He will maintain with Marx that cultural attitudes are the byproduct  of material conditions, and so he will bestow upon those subjected to communist power the salutary conditions of a closed frontier, clear and firm indoctrination, controlled media of information, a vigilant secret police, and the terrifying threat of labor camps. [CWL 15, 104] Continue reading