Category Archives: Concomitance

Facing Facts: The Ideal Of Constant Value Of The Currency vs. The Fact Of Inflation

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    • Ideally, (dummy) money would be constant in exchange value.
    • Scarcity is the normal cause of inflation
    • The maladaptive cause of inflation is maladjustment of incomes as required by the current phase of the pure cycle of expansion
    • The quantity of money infused by the Central Bank must be properly calibrated to serve the normative requirements of the actual magnitudes and frequencies of turnovers in the productive process

      • Economists must carefully consider tiers of basic incomes and propensities to consume:

      I’ = Σwiniyi   (35) [CWL 15, 134]  and

      dI’ = Σ(widni + nidwi)yi (36) [CWL 15, 134]. 

      • Also, Economists must carefully consider expansion in phases and the interpretation of its effect on the Basic Price-Spread Ratio. (CWL 15, 156-62):

    • P/p = a’ + a”p”Q”/p’Q’   (CWL 15, 156-62) (45)

      i.e.,   J = a’ + a”R   (CWL 15, 156-62) (45)

      so,  dJ = da + a”dR + Rda”   (CWL 15, 156-62) (47)

Note: The treatments of price changes in CWL 15 are mainly in 1) pp.75-80, 2) 128-44, and 3) 156-62.

Sequence of Contents

  • Ideal and practical aspects of the economic process 
  • Ideally, money would be constant in exchange value 
  • The condition of constancy in exchange value 
  • Characteristics of dummy money in an exchange economy 
  • Promise and trust between two parties
  • The dynamic structure of the productive process and classes of monetary flows 
  • But prices do change.  The changes have causes and intelligibilities and the changes must be interpreted.
  • Concomitance and intensity among flows
  • Real analysis and the everyday use of money 
  • Price tendencies (prescinding from excess or deficient money supply) 
    • The first kind of cause of inflation – ordinary scarcity
    • The second kind of cause of inflation – disproportion between monetary and real consumer income
  • Misconceptions of professional economists as to interest rates and responsibilities
  • Adjusting the rate of saving to the phase of the expansion
  • Further re interpretation of price changes 
  • The basic price-spread ratio

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The Einsteinian Context: Curvature and Relativity

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Albert Einstein, Steven Weinberg, Lillian Lieber, Douglas Giancoli, Raymond A. Serway, Bernard Lonergan, Philip McShane, Peter Burley,

.1. Introductory

Graduate students seeking a thesis topic may expand this treatment of the Einsteinian context of Functional Macroeconomic Dynamics.  It should be of special interest to those having a strong background in theoretical physics and, thus, able to appreciate the analogies from physics.  “Similars are similarly understood.” (CWL 3, 288/313)

Philip McShane alerted us to the resemblances between Lonergan’s context of general macroeconomic dynamics and Einstein’s context of general relativity.

(Part Two entitled Fragments) belongs almost entirely in what I call the Einsteinian context of Part Three, in contrast to the Newtonian achievement of Part One; … [CWL 21, Index, 325]

A new science has emerged.  Lonergan has elevated conventional macrostatics to a macrodynamics explaining economic accelerations. (Continue reading)

The Significance of Zero in Functional Macroeconomic Dynamics: Dynamic Equilibrium, Implicit Definitions, Concomitance, Turning Points

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It will be informative and thought-provoking to regard various instances of zero –  expressed or implied – and each zero’s significance in the normative theory of Functional Macroeconomic Dynamics.  We may say that zeroes are “normatively forceful”, or, speaking metaphorically, “quasi-gravitational”;  They signify a systematic exigence for a “normative pull” on all interdependent pretio-quantital flows into their proper concomitance and solidarity, so as to provide a tightly knit framework and general explanation of the whole, intelligible, unitary, dynamic functioning.  

First, we simply list, without context or backup, 12 instances of zero; then second, we relist and add substantiation regarding each instance. We hope the reader will consult the context of the zeroes and their substantiation on the pages referenced at the end of the excerpts. Continue reading →

Connecting the Notions of “Concomitance,” “Solidarity,” “Implicit Definition,” “Functional Relations,” and “Unification”

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Concomitance is, I would claim, the key word in Lonergan’s economic thinking. (Philip McShane, Fusion 1, p. 4, ftnt 10)

“Concomitance,” “solidarity,” “implicit definition,” “functional interdependence,” and “unification” are the key principles foundational to the equation(s) providing the scientific general explanation of the organic economic process. Proper adherence to the principles ensures a unification of all explanatory conjugates and relations of the unitary system. The patterns in the terms and relations of the explanatory equation(s) would be isomorphic with the actual patterns constituting the process of velocitous (dynamic) production and exchange. (Also click here)

Consider the theoretical significance and, thus, the explanatory significance of the following:

There is a sense in which one may speak of the fraction of basic outlay that moves to basic income as the “costs” of basic production. … the greater the fraction that basic income is of total income (or total outlay), the less the remainder which constitutes the aggregate possibility of profit.  But what limits profit may be termed costs.  Hence we propose ….to speak of c’O’ and c”O” as costs of production, having warned the reader that the costs in question are aggregate and functional costs…. [CWL 15 156-57]  

Thus, we have basic Outlays-Incomes, c’O’ +c”O” = I’, explanatorily conjugate with – i.e. functionally related to – basic expenditures, E’ = P’Q’, which are implicitly defined in the following implicit equation: 

P’Q’ = p’a’Q’ + p”a”Q”  [CWL 15,156-62].

As was pointed out regarding Einstein’s general relativity equation – Gab = 8πTab – in our treatment The Einsteinian Context: Curvature and Relativity (click here and here): Continue reading →

John H. Cochrane’s “The Federal Reserve Deserves a Pat on the Back”

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The Wall Street Journal of 12/26/2023 featured an article by John H. Cochrane (Hoover Institution) titled “The Federal Reserve Deserves a Pat on the Back.”   Continue reading →

Bloomberg Wall Street Week: “Economics Has No Good Theory of Inflation.”

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This is a companion-piece to Facing Facts: The Ideal Of Constant Value Of The Currency vs. The Fact Of Inflation.  Please read both.

This past weekend, 11/4-5/2023, Cecilia Rouse, future President of The Brookings Institution, appeared on Bloomberg Wall Street Week with moderator, David Westin.  Under the pressure of scant time, they briefly, but inadequately, discussed the notion of a “theory of inflation.” It was opined that

“The reality is that in economics there’s not a fabulous theory and one theory of inflation.”

“…economics doesn’t have one solid and established theory of inflation.”

Also, commenting on the same topic, David mentioned that the Phillips Curve “correlation”, which is a staple of of the Fed’s thinking and decision-making, and which has been supposed by many economists to be a valid correlation of fluctuating wage rates and their resulting pressure on inflation with unemployment, has not been proven valid and reliable.  That is to say that its two main variables are not directly correlated and inextricably linked; that the supposed reliability is bogus; that no matter how often it is considered and bandied about internally among supposedly-expert economists and externally to the truth-seeking public, the Phillips Curve theory is simplistic, insufficiently nuanced, and has been debunked.

Lonergan’s Macroeconomic Field Theory is a comprehensive general theory. It has many aspects and relations, all of which can be grasped at once in a unified whole.  Also, this unified whole virtually and implicitly contains a set of terms and relations constituting a unitary theory of inflation.  So, obviously we disagree with the two opinions quoted verbatim above, but left hanging on Bloomberg Wall Street Week.

It is the viewpoint of the present inquiry that, besides the pricing system, there exists another economic mechanism, that relative to this (other) system man is not an internal factor but an external agent, and that the present economic problems are peculiarly baffling because man as external agent has not the systematic guidance he needs to operate successfully the machine he controls. [CWL 21, 109]

In the mid-70’s, economists were mystified by stagflation, the combination of stagnant production and rising prices. According to the Phillips Curve, the correlation of inflation with unemployment, stagflation should not happen. … the U.S. economy was experiencing the phenomenon of ‘stagflation’ – a clearly discernible overturning of the conventional economic wisdom about the tradeoff between inflation and unemployment so neatly expressed in the Phillips curve. So-called ‘Keynesian fine tuning onto the neoclassical track’ was not working; and forms of socialist planning only promised to deepen rather than resolve the anomalies of welfare economics. … (Lonergan) believed he had an explanation for what, in a statement from the essay we are editing, he described as a “situation – sometimes thought mysterious – in which consumer prices continuously inflate, new enterprise is evaded, unemployment becomes chronic, and despite inflation the value of stocks declines.” [CWL 15, Editors Introduction, xli]

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Two Summaries in Functional Macroeconomic Dynamics

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.I.   Summary of the Analysis:  Heuristic, Observations, and Discoveries

.II.  Summary of the Argument (verbatim from CWL 15, 5-6)

.III. Supplement to the Summaries

(Continue Reading)

Key Concepts of CWL 15, Section 26: The Cycle of Basic Income

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There is sufficient content in this Section 26 to serve as the basis of an impressive graduate thesis featuring explanatory first- and second-order differentiations of interdependent functional activities implicitly defined by their functional relations to one anther.  The set of equations would constitute a significant part of a complete explanatory theory.

  • Part I: Introductory

  • Part II – Divergent Flows of Products and Money; Consequent Inflation or Deflation

    • Case A: The problem of an inadequate rate of saving in a surplus expansion; I”/(I’+I”)

    • A note re stagflation stifling a full surplus expansion

    • Case B: The problem of an excessive rate of saving in a basic expansion

  • Part III – Outline of Traditional Theory’s Lack of Understanding re Artificially Manipulating Interest Rates

  • Part IV – Selected Excerpts and Comments Relevant to CWL 15, Section 26, “The Cycle of Basic Income,”  pages 133-44

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Insight Into The “Baseball Diamond”: Discovery For Implementation

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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).

A Greg Mankiw Blog

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Introductory

Our concern, as always, is to understand and verify how money should circulate to meet the rectilinear primary process of production and sale.  We seek a normative theory which scientifically explains, rather than merely describes, the current, purely dynamic economic process.  The scientific explanation will be in the form of the objective relations of explanatory velocities and accelerations to one another.  These explanatory conjugates will be abstract correlations defined by their functional relations among themselves – rather than descriptions – no matter how literary and vivid –  of conditions, states, and events as they are related to us and affect us for better or worse.  Our goal is to achieve a scientific explanation yielding norms to which we must adapt. (Continue reading)