A very expensive macroeconomics textbook, having 700-1000 pages, would contain a lot of interesting history, a lot of fuzzy psychology, unscientific analysis, and uncertain conclusions. A reader would not gain a clear theory and complete explanation of the dynamics of the real economic process. However, is there not a superior 228-page, far less expensive textbook right in our hands? How about this? Reword the subtitle of CWL 15 from An Essay in Circulation Analysis to A Textbook of Circulation Analysis, and let the professor instruct the serious student to read the book three times, then report back to discuss the following:
the canons of empirical method
a scientific, dynamic heuristic
the technique of implicit definition; explanatory terms defined by the functional relations in which they stand with one another
velocitous functional unities of scientific and explanatory significance replacing the BEA’s descriptive, commonsense, accountants’ unities
the structure of the lagged, rectilinear productive process
money as a dummy invented by man
the perspective of a hierarchical series of monetary circuits
how a monetary circulation meets the rectilinear production-and-vending process
the primary relativities and concomitance in the Diagram of Rates of Flow
dynamic equilibrium replacing static Walrasian general equilibrium
the velocity of money in terms of magnitudes and frequencies
prices are not a given and not requiring explanation; rather prices are in need of explanation
interpretation of prices, quantities, interest rates in the light of significant explanatory variables
the pure cycle and its constituent phases in the expansion of the objective economic process
the abstractprimary relativities and concrete secondary determinations in the expansion of the economic process
the statistical residue and why prediction is impossible in the general case; predicting weather vs. predicting planetary motion
the significance of investment’s monetary correlate
the ineptitude of manipulating interest rates
the explanation of government and foreign-trade imbalances by the dynamics of superposed circuits
the distinction between efficient cause and formalcause
distinguishing between self-healing and the effect of interventions
the intelligibility and explanatory power of the basic price-spread ratio
Figures 14-1, 24-7, and 27-1 in CWL 15
The student would learn much that is radically different, explanatory, and very useful; and he/she would gain a perspective or framework by which to evaluate and criticize the flawed premises and tenets of conventional textbooks and traditional theories.
Economists don’t have the methodological and conceptual toolkit needed for appreciation of FMD’s scientific and historical significance.
They don’t know what they don’t know
They’re not methodologists and don’t know what constitutes good theory.
They never read CWL 3 and, thus, they never studied the canons of empirical method, especially the Canon of Parsimony and the Canon of Complete Explanation; they have no idea of the deficiencies of their method.
Thus, they lack a purely scientific and explanatory heuristic.
They do not adequately distinguish description vs. explanation.
They do not know the type of answer they’re seeking, i.e. their known unknown.
They do not put questions in the right order to discover basic terms of scientific significance.
They are mired in muddy premises and faulty assumptions.
They are unable to employ a scientific, dynamic heuristic adequate for analysis of a current, purely dynamic process.
They don’t understand the normative system’s requirement for concomitance of flows.
They lack a background in theoretical physics. They don’t understand the principles and abstract laws of hydrodynamics, electric circuits, or field theory. Nor do they understand adequately the idea of continuity and the conditions of equilibrium in the dynamic process. They are unaware of analogies from physics applicable on the basis of isomorphism to the phenomena of Functional Macroeconomic Dynamics. (Continue reading.)
Part I. Two economic mechanisms. Two components of concrete relations. Two simultaneous roles for human participants
It is the viewpoint of the present inquiry that, besides the pricing system, there exists another economic mechanism, that relative to this 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]
What the analysis reveals is a mechanism distinct though not separable from the price mechanism which spontaneously coordinates a vast and ever shifting manifold of otherwise independent choices from demand and of decisions from supply. It is distinct from the price mechanism, for it determines the channels within which the price mechanism works. It is not separable from the price mechanism, for a channel is irrelevant when nothing flows through it. [CWL15, 17] [Continue reading).
Economic process – like other world processes – has an immanent intelligibility consisting of primary relativities which can be applied to the coincidental secondary determinations which occur throughout time in a non-systematic manifold. Economic process is constituted by schemes of recurrence under the dominance of abstract principles and laws; nevertheless, the actual concrete workings of the economic schemes of recurrence are shot through and throughout time with indeterminancy. So, it is a fact that prediction is impossible in the general case, since the concrete patterns of events occurring throughout time are a non-systematic aggregate. Thus, the point-to-line and higher correspondences are based upon the indeterminacy of the relation between current surplus products and the ultimate later basic products that eventually exit the dynamic process and enter into the standard of living.
An event in an economic scheme of recurrence has a diverging series of conditions. Continue reading →
In this section, we are contrasting familiar textbook models of macrostatic equilibrium, with Lonergan’s explanatory theory of macrodynamic equilibrium. We are contrasting a macrostatic toolkit with a purely relational field theory of macroeconomic dynamics. Lonergan discovered a theory which is more fundamental than the traditional wisdom based upon human psychology and purported endogenous reactions to external forces. His Functional Macroeconomic Dynamics is a set of relationships between n objects, a set of intelligible relations linking what is implicitly defined by the relations themselves, a set of relational forms wherein the form of any element is known through its relations to all other elements. His field theory is a singleexplanatory unity; it is purely relational, completely general, and universally applicable to every configuration in any instance. (Continue reading)
The process is always the current, purely dynamic process. The analysis is purely functional, purely relational and explanatory analysis. The theory is general and universally applicable to concrete determinations in any Instance; The theory is a normative theory having a condition of equilibrium.
Our subheadings in this treatment are as follows:
Always the Current Process:
A Purely Dynamic Process Requiring a Dynamic Heuristic:
A Purely Functional Analysis:
A Purely Relational, Explanatory Analysis:
A Theory, General and Universally Applicable to Concrete Determinations in Any Instance:
A Normative Theory Having a Condition of Equilibrium: