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’swebsite.
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)
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)
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)
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 atvelocities 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 abstractprimary 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 →
We are commenting with respect to Andrew Lilley and Kenneth Rogoff’s “conference draft” discussing the advisability of a FRB policy of negative interest rates:
Lilley, Andrew and Kenneth Rogoff, April 24, 2019: “The Case for Implementing Effective Negative Interest Rate Policy” (Conference draft for presentation at Strategies For Monetary Policy: A Policy Conference, the Hoover Institution, Stanford University, May 4, 2019, 9:15 am PST) [Lilley and Rogoff, 2019] (Continue reading)
Special Relativity and Functional Macroeconomic Dynamics are field theories. (Click here and here and here) We wish to gain further appreciation of FMD as a field theory by juxtaposing it with Special Relativity.
… Special Relativity is primarily a field theory, that is, it is concerned not with efficient, instrumental, material, or final causes of events, but with the intelligibility immanent in data; but Newtonian dynamics seems primarily a theory of efficient causes, of forces, their action, and the reaction evoked by action. … Special Relativity is stated as a methodological doctrine that regards the mathematical expression of physical principles and laws, but Newtonian dynamics is stated as a doctrine about the objects subject to laws. [3, 43/67] (Continue reading)