Category Archives: A New Paradigm

Lonergan’s Entry into Economics (1930-1944) and Reentry into Economics (1978-1983); Democratic Economics vs. Liberalism and Socialism

The reader will note that most of what’s quoted below comes from a single section, “Lonergan’s Entry into Economics, 1930-1944”, of CWL 15’s “Editors’ Introduction,” authored by Frederick G. Lawrence.  Previously, in several of our own sections we have recommended that Editors’ Introduction as beneficial for putting Lonergan’s Essay in its historical, political, and purely theoretical contexts.  It is a must-read.  We have printed the Introduction’s Table of Contents in several places:  Click here, here, here, and here.  The Table is again printed at the end of this entry.

Lonergan’s Entry into Economics, 1930-1944

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Circulations: Blood, Electricity, Water, Money

The method of circulation analysis … involves a minimum of description and classification, a maximum of interconnections and functional relations.  … Analytic thinking uses classes based on similarity only as a springboard to reach terms defined by the correlations in which they stand.  [CWL 21, 111]

… the introduction of the notion of the monetary function… takes a further step towards defining a circulation of money……..not a rotational movement……. rather a circular series of relationships of dependence of some flows of payments on other flows.  Money moves only at the instant of payment or transfer.  Most of the time it is quiescent. … it may also be dynamically quiescent, and then it is held in reserve for some definite purpose. … Money held in reserve for a defined purpose will be said to be in a monetary functionFive such functions are distinguished: basic demand, basic supply, surplus demand, surplus supply, and a fifth redistributive function. (CWL 15,  48)…….

Volume 15 of Collected Works of Bernard Lonergan is entitled Macroeconomic Dynamics: An Essay in Circulation Analysis. Lonergan analyzes and explains the economic process as a circulatory process; that is, as a dynamic organic process of interdependent circulatory flows of goods and services and their functionally-congruent payments.  It is to be understood and verified as a coherent set of flows implicitly-defined by their functional relations to one another. Continue reading

Lonergan’s “Macroeconomic Field Theory” (MFT), AKA “Functional Macroeconomic Dynamics” (FMD)

Functional Macroeconomic Dynamics seeks not merely to “view” and describe the economic process; rather it seeks to understand and explain the process in order to provide norms of adaptation and systematic guidance to managers of the process(Continue reading)

 

U.K. Officials Need To Be Enlightened As To Macroeconomic Field Theory

U.K. officials need to spend $38.60 plus shipping for Bernard Lonergan’s “Macroeconomic Dynamics:  An Essay In Circulation Analysis.”  To satisfy their obligation to the U.K. public, they must read, understand, and thus gain enlightenment from Macroeconomic Field Theory as to how the dynamic system of production, finance, and exchange actually works. What are its norms and what practical precepts does the explanation of the dynamic organic process yield to free people?

Also. they need to call a colloquium in which several economists lecture and present scholarly technical papers on Macroeconomic Field Theory to help all government officials understand their nation’s present problems, past mistakes, and future solutions.

U.S. officials at the Fed. the Treasury, and Congress should seek the same enlightenment; and bankers, money managers, and financial talk-show hosts should do the same. (Click here and here)

 

 

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Concomitance and Credit;  A New Paradigm for the Federal Reserve Bank; Functional Macroeconomic Dynamics Drives Establishment Economics into the Shadows

The macroeconomics textbooks feature three key macrostatic models, all three of which are sublated by the purely relational field theory called Functional Macroeconomic Dynamics.  The textbooks’ three featured graphs are two momentary intersections of supply and demand curves plus the Phillips Curve correlation of unemployment and interest rates:

  1. the intersection of the supply and demand curves at a certain price of goods and services (the macrostatic AD-AS model),  
  2. the intersection of the supply and demand curves at a certain interest-rate, rental-price of money (the macrostatic IS-LM model),  plus,
  3. the now-debunked Phillips Curve correlation of unemployment and interest rates.

The key elements grounding the discovery and formulation of the immanent, field-theoretic intelligibility of the organic, unified, whole economic system include: (Continue reading)

Bernard Lonergan, Marx, and Liberty – Relevant to Issues of Today

Lonergan demonstrates that Marx’s economics is insufficiently abstract and is 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)

Explanation By Gross Domestic Functional Flows To Supplement Description By Gross Domestic Product

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]

The analysis of the overall dynamic functioning, which we call in nominal terms the economic process, must seek the explanation of the process.   It must seek the objective immanent intelligibility among the interdependent, dynamic “functionings” which altogether constitute the process.  The functionings are rates of so much or so many every so often, and, thus, they are velocities.  And the scientific analysis must be in terms of abstract, implicitly-defined, explanatory conjugates rather than in terms of the descriptive accountants’ unities of merely legal or proprietary entities called “firms.” (Continue reading)

Re “Function”, “Implicit Definition”, “The Objective of the Analysis”, and “Scientific Significance”

“Functional” is for Lonergan a technical term pertaining to the realm of explanation, analysis, theory; it does not mean “who does what” in some (descriptive) commonsense realm of activity.  ¶ Lonergan illustrates his basic meaning of ‘explanation’ by referring to D. Hilbert’s method of implicit definition: ‘Let us say, then, that for every basic insight there is a circle of terms and relations, such that the terms fix the relations, the relations fix the terms, and the insight fixes both.’  … ‘Thus the meaning of both point and straight line is fixed by the relation that two and only two points determine a straight line. ‘In terms of the foregoing analysis, one may say that implicit definition consists in explanatory definition without nominal definition.’ (See CWL 3 Insight 12/ 36-37)  Lonergan went on to identify the contemporary notion of a “function” as one of the most basic kinds of explanatory, implicit definition – one that specifies “things in their relations to one another” (CWL 3, 37-38/61-62)…In Lonergan’s circulation analysis, the basic terms are rates – rates of productive activities and rates of payments.  The objective of the analysis is to discover the underlying intelligible and dynamic network of functional, mutually conditioning, and interdependent relationships of these rates to one another.  [CWL 15, 26-27  ftnt 27] Continue reading

Elizabeth Warren’s Advice to Jerome Powell; Sentiment Without Intelligence

The Wall Street Journal of 7/25/2022 featured an article by Senator Elizabeth Warren:  “Jerome Powell’s Fed Pursues a Painful and Ineffective Inflation Cure.” Because she lacks an objectivenormative, abstract, explanatory theory and, thus, fails to understand the functional interdependencies constituting the organic economic process, particular arguments in her article are a) sometimes contaminated by psychopolitical wishful opinions, b) often ignorantly one-sided because she is unaware that some policies have double edges, c) sometimes contradictory of her other arguments, and d) in at least one case, supercilious.

E. Warren suffers from the same plight as Thomas Picketty. To satisfy her responsibility to the public, she needs to achieve a scientific understanding of the organic economic process; she needs to get a “grip.”

We are at the heart of Picketty’s plight: he has no clue of the needed grip on the grounds of the inequality in history.  So, what else can he offer but a centralist solution, taxation, to history’s drunken careening. (McShane, Philip, Picketty’s Plight, 53)

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]

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