In the graphs of CWL 15, pages 121-25, it is easy to become disoriented by the symbols on the vertical axes and by the titles and annotations. In particular, one might tend mistakenly to view Q as a symbol for an absolute quantity or an accumulation rather than for a rate of flow of a quantity. Recall:
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 (accelerative) network of functional, mutually conditioning, and interdependent relationships of these rates to one another. [CWL 15 26-27 ftnt 27]
Lonergan never used terms for magnitudes, only for rates and their accelerations (‘rates of rates’) in the Essay in Circulation Analysis. [CWL 15, 182]
But if the ultimate product qi is related by a double summation to the contributions of factors of production qijk, then the total flow of ultimate products Qi is also related by a double summation to the rates of the contributions of the factors of production Qijk, where both Qiand Qijk are instances of the form‘so much or so many every so often.’ (CWL 15, 30)
In the graphs superscripts identify basic (‘) or surplus (“) elements. Absence of superscripts here indicates “in any case.”
Our inquiry differs from classical analysis and from traditional economics. Functional Macroeconomic Dynamics prescinds from human psychology to replace Walras’ general equilibrium with a prior and more fundamental equilibrium to which human participants must adapt.
Participants are not to dominate as willy-nilly, ignorant, external, efficient causes, but rather to adapt to the immanent intelligibility of the objective mechanism. This immanent intelligibility is the set of laws explaining the process – laws not to be enforced by a civilian police force but rather abstract laws to be understood and honored by enlightened free people. Continue reading →
We wish to suggest a structure for the salt of deoxyribose nucleic acid (D.N.A.). This structure has novel features which are of considerable biological interest. [J. D. Watson and F.H.C. Crick] (Attribution below)
We wish to suggest a structure for the objective, dynamic, economic process. This structure, which is independent of human psychology, is composed of both productive and correlated monetary flows. The structure of the interdependent, pretio-quantital, monetary flows is double-circuited and has novel features which are of considerable macroeconomic interest.
There are five figures below from CWL 15: The single figure on the left represents the interrelations of interdependentMonetary Flows; and the figure contains the important condition of dynamic equilibrium: G = c”O” -i’O’ = 0. The four figures stacked on the right demonstrate aspects of the productive phases constituting a Pure Cycle of Expansion. The bidirectional arrows uniting the two sides signify that the dynamic equilibrium among interdependent flows specified on the left is to be achieved consistentlythroughout the long-run expansion represented on the right. This condition of dynamic equilibrium is that the crossover flows between the two interacting circuits must continuouslybalanceeven as they continuously vary in magnitude in the succession of phases constituting the expansionary process. Just as the general laws of simple parabolic or pendular motion are explanatory and applicable to any particular instance of initial angle and velocity, so a) the primary relativities of productive and monetary flows, and b) the primary differentials of long-term expansion explain the economic process, and are normatively relevant in every particular instance. All five diagrams are unitary. Each and every velocitous and accelerative flow of products and money has proximate or remote explanatory aspects embedded in all five diagrams. (Continue reading)
We hope to inspire serious graduate students of economics a) to seek and achieve an understanding of “Macroeconomic Field Theory,” b) to verifyempirically 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)
Paul Krugman, currently Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for The New York Times, commented on the unfavorable events of 2008 with his book:
Krugman, Paul (2009) The Return of Depression Economics and the Crisis of 2008, (New York, NY, W. W. Norton & Company)
Early in the book Krugman states his intention to explain what went wrong; he would address not so much what happened but why it happened. But to explain scientifically what went wrong requires a theory, a scientific explanation of the normative behavior of the economy. The theory would be a general theory universally applicable to all equilibrated and disequilibrated configurations of aggregate functional flows in the economic process. And since the economic process is a dynamic process, with flows of money and products per period of time, the theory must be a theory of economic dynamics. Professor Krugman does not appear to have reached such a general theory which explains all situations as either meeting the norms of the theory or diverging from the norms so as to require systematic correction. Continue reading →