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
We have recited some aspects of the dynamic economic process:
- (Dummy) money “must be constant in exchange value.”
- Prices alone do not explain the economic process. Prices must be interpreted in the light of those significant variables which actually explain the economic process.
- The economic process of production and exchange always is the current, purely-dynamic process
- The economic process is an organic whole
- The process has an exigence for a normative pure cycle of expansion.
- Equilibrium requires the keeping of pace and balance among interdependent flows of products and money
- Scarcity is the normal cause of inflation
- Maladjustment of incomes is the maladaptive cause of inflation
- Just as the surplus phase of the expansion is anti-egalitarian in tendency, postulating an increasing rate of saving, … so the basic phase of the expansion is egalitarian in tendency; it postulates a continuously decreasing rate of saving [CWL 15, 139]
- The central adjustment to the respective phases of the process may be formulated as adjustment of I”/(I’ + I”), the ratio of surplus income to total income
- Interpreters of prices must distinguish between real and relative price increases monetary and absolute changes in prices We have recited some aspects of the dynamic economic process: (Continue reading)
Presenters John Siegfried and David Colander, and discussants Daron Acemoglu, Melissa S. Kearney, John A List, N. Gregory Mankiw, Deirdre McCloskey, and Betsey Stevenson recently collaborated in a virtual ASSA meeting entitled “What Does Critical Thinking Mean in Economics, the Big and Little of It?” Handouts from the meeting can be found in an Announcement in a blog of Saturday, January 2, 2021 on N. Gregory Mankiw’s website.
Preliminarily, note the subtitle in Lonergan’s seminal work, Insight: A Study of Human Understanding. In the present context we might reword the subtitle A Study of Critical Thinking. A very smart person – learned in advanced mathematics and theoretical physics – called Lonergan’s book “The Most Significant Book of the Twentieth Century.” (Continue reading)
PART A – Examples and Comments
Our contention is that a large discretionary injection of “free money” into the channels of Demand – whether by the Fed or the Treasury – rather than as “money justified” through the channels into productive supply, (S’-s’O’) and (S”-s”O”), is intrinsically inflationary. New money channeled into either the market for secondary financial assets or into the market for basic products, without the money being “justified” by productive output, is dangerously inflationary. (Continue reading)
Functions are not seen, but must be understood. (Catherine Blanche King, private communication)
A systematic explanation, then, requires a normative theoretical framework. The basic terms and relations of such a framework would specify the distinctions and correlations that articulate the causes, which are not necessarily visible, of events that are apparent to all. (CWL 15, Editors’ Introduction, lv) (Continue reading)
Concomitance is, I would claim, the key word in Lonergan’s economic thinking. [Philip McShane, [Fusion 1, page 4 ftnt 10]
Recall that the subtitle of CWL 15 is “An Essay in Circulation Analysis”. It is by virtue of concomitance that continuity and equilibrium are achieved so as to constitute an orderly process of circulations. (Continue reading)
Lonergan is alone … Only Lonergan … Continue reading
Thus, if we want to have a comprehensive grasp of everything in a unified whole, we shall have to construct a diagram in which are symbolically represented all the various elements along with all the connections between them. [McShane 2014, 11 (quoting CWL 7, 151)]
We wish here to suggest the insights the reader should have to fully appreciate all that is contained in the Diagram of Rates of Flow. (Continue reading).
Functional Macroeconomic Dynamics has a definite, normative, dynamic structure. Evidently, there is a high degree of indeterminacy to events within such a dynamic structure. All one can say is the game can go all awry. But despite this almost baffling indeterminacy, it remains that there is a definite dynamic structure. [CWL 21, 211-12]
The velocities of correlated, interdependent payments must keep pace and be in balance. Payments of dummy money move at velocities in circuits; e.g. O = I = E = R (CWL 15, 54) and O’ + O” = I’ + I” = E’ + E” = R’ + R” (CWL 15, 54) The arrows in the Diagram of Rates of Flow represent channels containing analytically-distinguished, interdependent, functional velocities. These dynamic functionings are defined by the functional relations in which they stand with one another.
The intelligibility of the concrete process consists of two components: an abstract primary relativity expressing the normative systematic structure, and a secondary component of concrete determinations from the non-systematic manifold. There is a normativity to the dynamic structure. An analogy from baseball may help to make the point regarding interdependence and keeping pace.
A large and positive crossover difference uncompensated by action from the pitcher’s box will result sooner or later in depriving the groups at second and third bases of all their balls, or if the crossover difference is large and negative, it will result in depriving the groups at home and first of all their balls. Continue reading