Category Archives: Implicit Definition

FMD’s Take on Greg Mankiw’s Take on Modern Monetary Theory

Contents:

  • .I. Introductory
  • .II. The “legal” basis of our criticism; the “laws” of the process
  • .III. Key objections to Modern Monetary Theory
  • .IV. Observations re “A Skeptic’s Guide to Modern Monetary Theory”
  • .V. Why and how the Basic Expansion fails to be implemented
  • .VI.  Addendum #1: Primary relativities of the economic process
  • .VII. Addendum #2: Excerpts re the drift to totalitarianism

Continue reading.

A Superior and Far Less Expensive Macroeconomics Textbook

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 abstract primary 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 formal cause
  • 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.

 

Why Economists Don’t Flock to Functional Macroeconomic Dynamics

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.)

 

 

Two economic mechanisms. Two components of concrete relations. Two simultaneous roles for human participants

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).

A Note on Disagreeing with Einstein and the Determinists, on Avoiding a Vicious Circle, and on the Need for Precise Analytical Distinctions

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

Prediction is Impossible in the General Case

In his book, FREEFALL (2009, Penguin Books), Joseph Eugene Stiglitz, a professor at Columbia University and a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979), states that economics is a predictive science. Now, one must distinguish between predicting a) planetary motion in its scheme of recurrence, and b) this afternoon’s weather vs. next month’s weather, or this afternoon’s prices and quantities vs. next year’s prices and quantities, all subject to to conditions diverging in space and time.   Continue reading)