Category Archives: A New Paradigm

Conflicting Ways Of “Viewing” The Objective Economic Process

Click on the topic desired.

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

.2. Marxism

.3. Modern Monetary Theory Quackery (MMQ)

.3.1. Stephanie Kelton’s “The Deficit Myth”

.4. Establishment Economics


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 explanatory it explains; as science it employs scientific method. (Continue reading)

The Method of Circulation Analysis; Brief Item #94

The method of circulation analysis resembles more the method of arithmetic than the method of botany.

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

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)

Field Theory in Physics and Macroeconomics

We hope to inspire serious graduate students of economics a) to seek and achieve an understanding of “Macroeconomic Field Theory,” b) to verify empirically Lonergan’s field relations,  and c) to use the explanatory field relations as the basis of influential scholarly papers.

We trace developments

  • in physics from Newtonian mechanics to modern field theory, and
  • in economics from Walrasian supply-demand economics to purely relational, Modern Macroeconomic Field Theory.

Key ideas include a) abstraction and implicit definition as the basis and ground of invariance in both physics and macroeconomics, b) the concept of a purely relational field, c) immanent intelligibility and formal causality, and d) the canons of parsimony and of complete explanation. We highlight some key ideas: (continue reading)

“The Most Significant Book of the Twentieth Century”

A quote 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.

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)

The Labor Theory of Value Debunked

Macroeconomists must grasp the difference between economic value and exchange value.

…  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]

… , 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

Jamie Dimon’s Challenges to Himself and to the Nation

4/7/2021:  Yahoo Finance today featured an article by Julia La Roche entitled ‘The fault line is inequality’: J.P. Morgan’s Dimon calls for fixing America’s ‘self-inflicted’ problems.  La Roche was reviewing the Public Policy section of Dimon’s 67-page Chairman and CEO Letter to Shareholders.  Mr. Dimon seeks to end the nation’s self-infliction of problems threatening the culture, the economy and the polity.  He particularly regrets “false arguments of fanatics, the certitude of ideologues and cycles of intolerance.” Continue reading