Category Archives: Bernard Lonergan

Distinctions of Dynamic Significance; The Interdependence of the Whole (Brief Item #81)

[5/2/2020] … , the task of developing a dynamic theory is very difficult and cannot be accomplished simply by adding dynamic qualifications to static theory.  It requires new techniques and raises fundamental problems of its own.  An example of the new techniques required is the theory of difference equations.  An example of the new fundamental problems is economic equilibrium, which, if considered from a dynamic standpoint, appears in a new light.  (Schumpeter, Joseph A., History of Economic Analysis (London: Oxford University Press, 1954, page 110, as quoted in CWL 15, 91] Continue reading

Harvard Magazine’s Podcast, “Ask a Harvard Professor”

Harvard Magazine’s podcast, “Ask a Harvard Professor,” recently featured an interview of professors Doug Elmendorf and Karen Dynan – two good people – under the title Doug Elmendorf and Karen Dynan: How Much Can the Federal Budget and the Deficit Continue to Grow? (Click here for video and print versions of the interview)

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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)

Truth, Progress, and Decline (Brief Item #80)

So we are brought to the profound disillusionment of modern man and to the focal point of his horror.  He had hoped through knowledge to ensure a development that was always progress and never decline.   He has discovered that the advance of human knowledge is ambivalent, that it places in man’s hands stupendous power without necessarily adding proportionate wisdom and virtue, that the fact of advance and the evidence of power are not guarantees of truth, that myth is the permanent alternative to mystery and mystery is what his hubris rejected. ¶ The real issue, then, is truth.  Though it has concerned us all along, it will not be amiss to bring together at least the main points made on different occasions and in different chapters.  Accordingly, we distinguish

          1. the criterion of truth,
          2. the definition of truth,
          3. the ontology of truth,
          4. truth in expression,
          5. the appropriation of truth, and
          6. the truth of interpretation.

(#80) (CWL 3, 549/572-73) (Click here for previous “Single Paragraphs” or “Brief Items”)

The Relativistic Invariant: The Ideal Pure Cycle at the Root of the Aberrant Trade Cycle

The heart of the normative theoretical framework that can actually explain business and trade cycles is what (Lonergan) calls the ‘Pure Cycle’ (§10, §24, 114).  This cycle generalizes into clearly articulated relationships the ideal phases characteristic of major economic transformations as they depart from a stationary phase and move through phases first of surplus expansion and then of basic expansion, only to return to a new stationary phase. … (CWL 15, Editors’ Introduction, lxiii)  (Continue reading)

Notes Re Reading Graphs In CWL 15, pp. 121-25

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 ratesrates 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.”

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Are We Outside Or Inside The Economic Process? And What Constitutes The Equilibrium To Be Achieved?

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