The non-Euclideans moved geometry back to premises more remote than Euclid’s axioms, they developed methods of their own quite unlike Euclid’s, and though they did not impugn Euclid’s theorems, neither were they very interested in them; casually and incidentally they turn them up as particular cases in an enlarged and radically different field. Continue reading
- THE STUDY OF ORGANISMS – ANIMAL AND ECONOMIC
- DETERMINISM AND INDETERMINISM – DISAGREEING WITH EINSTEIN
- CORRESPONDENCE IN THE CURRENT BASIC DYNAMIC, ORGANIC PROCESS; A DETERMINATE ALGEBRAIC FUNCTION OF THE FIRST DEGREE
- CORRESPONDENCE IN THE SURPLUS DYNAMIC, ORGANIC PROCESS; AN INDETERMINATE POINT-TO-LINE CORRESPONDENCE
- AVOIDING A VICIOUS CIRCLE OF CRITICISM
- THREE IMPLICITLY-DEFINED CIRCULATORY ORGANS
- THE TRANSITION TO SYSTEMATIZATION
- THE ROLE OF MIND IN THE DEVELOPMENT OF THE HUMAN AND THE ECONOMIC ORGANISMS
.1. THE STUDY OF ORGANISMS – ANIMAL AND ECONOMIC: (Continue reading)
In their article in the 10/21/2021 Wall Street Journal, John Greenwood and Steve H. Hanke evoked an image with which we are all familiar, water flowing in and out of a bathtub. The simple image was to be representative of monetary flows. The image attracted attention, which was a good thing; however, Macroeconomic Field Theory finds it more instructive to put forth a more adequate representative image of flows. 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)
- Functional Macroeconomic Dynamics seeks not merely to “view” and describe the economic process; rather it seeks to understand in order to explain and properly manage the economic process. (Continue reading)
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 abstract immanent 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)
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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)
We hope to inspire serious graduate students of economics a) to seek and achieve an understanding of “Macroeconomic Field Theory,” b) to verify empirically Lonergan’s field relations, and c) to use the explanatory field relations as the basis of influential scholarly papers.
We trace developments
- in physics from Newtonian mechanics to modern field theory, and
- in economics from Walrasian supply-demand economics to purely relational, Modern Macroeconomic Field Theory.
Key ideas include a) abstraction and implicit definition as the basis and ground of invariance in both physics and macroeconomics, b) the concept of a purely relational field, c) immanent intelligibility and formal causality, and d) the canons of parsimony and of complete explanation. We highlight some key ideas: (continue reading)
Macroeconomists must grasp the difference between economic value and exchange value.
… Adam Smith and all the proponents of the “labor” theory of value were never able to clarify the relationship between exchange value and “toil and trouble” as the measure of value. Lonergan shifted the issue entirely by explaining that an “economic value relates an object to human effort, but an exchange value relates objects among themselves.”31 (CWL 21, 31) [Fred Lawrence; “Money, Institutions, and The Human Good,” in Liddy, 2010, 183-84]
… , like Smith, Locke, Ricardo, and Marx later on, Aristotle did not seem to understand money in terms of exchange value, and therefore as relating objects among themselves in relation to the concomitance or lack of concomitance between “the real flow of property, goods, and services and the dummy flow being given and taken in exchange for the real flow.”39 CWL 21, 40 Still less did they grasp that in an advanced industrial society, the real flow and the money flow are channeled within two separate circuits of production and circulation functionally distinguished into producer goods and consumer goods, and operating in real time in accord with distinct phases of expansion. Besides misunderstanding money of account, they misunderstood the relationship of money to time. [Fred Lawrence; “Money, Institutions, and The Human Good,” in Liddy, 2010, 186] Continue reading