This post was originally entered on May 30, 2022. We repeat it now because it is remains relevant.
“The road up and the road down is one and the same. (Heraclitus)
ὁδὸς ἄνω κάτω μία καὶ ὡυτή
Archaeologists and scholars have not found the context of this isolated fragment of Heraclitus. What “road” was he referring to, and was he was speaking literally or figuratively? I simply like the statement as an introduction to the ups and downs of distinct price-quantity flows, whether in a pure cycle of expansion or in a distorted cycle of inflationary boom and corrective slump. Continue reading →
The method of circulation analysis … involves a minimum of description and classification, a maximum of interconnections and functional relations. … Analytic thinking uses classes based on similarity only as a springboard to reach terms defined by the correlations in which they stand. [CWL 21, 111]
… the introduction of the notion of the monetary function… takes a further step towards defining a circulation of money……..not a rotational movement……. rather a circular series of relationships of dependence of some flows of payments on other flows. Money moves only at the instant of payment or transfer. Most of the time it is quiescent. … it may also be dynamically quiescent, and then it is held in reserve for some definite purpose. … Money held in reserve for a defined purpose will be said to be in a monetary function. Five such functions are distinguished: basic demand, basic supply, surplus demand, surplus supply, and a fifth redistributive function. (CWL 15, 48)…….
Volume 15 of Collected Works ofBernard Lonergan is entitled Macroeconomic Dynamics: An Essay in Circulation Analysis. Lonergan analyzes and explains the economic process as a circulatory process; that is, as a dynamic organic process of interdependentcirculatory flows of goods and services and their functionally-congruent payments. It is to be understood and verified as a coherent set of flowsimplicitly-defined by their functional relations to one another. Continue reading →
“Functional” is for Lonergan a technical term pertaining to the realm of explanation, analysis, theory; it does not mean “who does what” in some (descriptive) commonsenserealm of activity. ¶ Lonergan illustrates his basic meaning of ‘explanation’ by referring to D. Hilbert’s method of implicit definition: ‘Let us say, then, that for every basic insight there is a circle of terms and relations, such that the terms fix the relations, the relations fix the terms, and the insight fixes both.’ … ‘Thus the meaning of both point and straight line is fixed by the relation that two and only two points determine a straight line. ‘In terms of the foregoing analysis, one may say that implicit definition consists in explanatory definition without nominal definition.’ (See CWL 3 Insight 12/ 36-37) Lonergan went on to identify the contemporary notion of a “function” as one of the most basic kinds of explanatory, implicit definition – one that specifies “things in their relations to one another” (CWL 3, 37-38/61-62)…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 dynamicnetwork of functional, mutually conditioning, and interdependent relationships of these rates to one another. [CWL 15, 26-27 ftnt 27]Continue reading →
I hope that this Sampler will a) demonstrate the breadth and depth of the knowledge that Lonergan brought to Macroeconomic Dynamics, and b) inspire readers to compare their perspective to his in regard to science and macroeconomics. His thinking ranged over mathematics, natural science, method, history, philosophy, theology, and art. This sampler is arranged in groups of excerpts from particular books of Lonergan. Scroll down to see the arrangement.
CWL 3, Insight: A Study of Human Understanding
“The most significant book of the twentieth century,” (Philip McShane)
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. … 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 concrete intelligibilityof Space is that it grounds the possibility of those simultaneous multiplicities named situations. The concrete intelligibility of Time is that it grounds the possibility of successive realizations in accord with the probabilities. In other words, concrete extensions and concrete durations are the field or matter or potency in which emergent probability is the immanent form of intelligibility. (CWL 3, 172) Continue reading →
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]
Lonergan’s basic explanatoryterms are rates of so much or so many every so often; i.e. the foundational and superstructural explanatory terms of the economic process are velocities. What at first seem to be everyday commonsense descriptive utterances are “remeaningized”, given another meaning, or redefined, and precisely distinguished and related as functional point-to-point activities or functional point-to-line activities; and they are scientifically employed as abstract technical terms in an explanatory formulation.
The economic process always is “the current process” constituted by current interdependent velocitous flows of so-much or so-many every so often.
The productive process is, then, the (current)aggregate of activities proceeding from the potentialities of nature and terminating in a standard of living. Always it is the current process, and so it is distinguished both from the natural resources, which it presupposes, and from the durable effects of past production. [CWL 15, 20]
The goal of scientific analysis is explanation of the objective economic process, i.e. to discover the abstractimmanent intelligibility which explains any particular configuration of flows of products and money in any instance. Such immanent intelligibility would be always relevant and universally valid. (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’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)
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)