Category Archives: Implicit Definition

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

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 economists and externally to the 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

.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)

Insight Into The “Baseball Diamond”: Discovery For Implementation

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


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)

The Einsteinian Context: Curvature and Relativity

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 Notion of Organic Unity; Macroeconomic Field theory as a Unified, Systematic Whole

.1. Introduction

Lonergan’s treatment of the intelligibility of the plane circle provides to us a clue.  In the basic insight defining the plane circle, – that all radii are equal – all the interrelated concepts tumble out together in an intelligible unity.  The all-together intelligibility points to a template for explanation in the macroeconomic field; it fore-casts a singular unified intelligibility of the dynamic, organic economic process.  In the sweeping comprehensive act of understanding, all the abstract explanatory conjugates explaining the dynamic economic process are “yoked” together by their functional relations to one another.  The interdependencies of the flows which constitutethe whole dynamic system are grasped in a solidary whole.  And the patterns of the formulation are isomorphic with the patterns in the objective, unitary economic process.  The principle of unity and wholeness is a single, comprehensive intelligibility. (Continue reading)

To and For Economists, Investment Analysts, and Commentators on Bloomberg Surveillance, Squawk Box, and Mornings with Maria

To Tom Keene, Andrew Ross Sorkin, Maria Bartiromo, Lisa Abramowicz, Becky Quick, Francine Lacqua, Dagen McDowell, Joe Kernen, Jonathan Ferro, Larry Kudlow, Charles Payne, Neil Cavuto, Stuart Varney, Jim Cramer, Henrietta Treyz, Larry Summers, David Weston, Courtney Donohoe, Romaine Bostick, Hallinda Amin, Dani Burger, Gina Cervetti, Margaret Collins, Manus Cranny, Abigail Doolittle, Scarlet Fu, June Grasso, Kriti Gupta, Ritika Gupta, Morgan Brennan, David Faber, Steve Liesmann, Carl Quintanilla, Kate Rooney, Rick Santelli, Michael Santoli, Liz Claman, Gerry Baker, Taylor Riggs, Anastasia Amoroso, Jackie DeAngelis, Brian Brenberg.

Lonergan’s Preface to his seminal work Insight, A Study of Human Understanding, begins …

In the ideal detective story the reader is given all the clues yet fails to spot the criminal.  He may advert to each clue as it arises.  He needs no further clues to solve the mystery.  Yet he can remain in the dark for the simple reason that reaching the solution is not the mere apprehension of any clue, not the mere memory of all, but a quite distinct activity of organizing intelligence that places the full set of clues in a unique explanatory perspective. (CWL 3, Preface ix)

Paraphrasing the above (CWL 3, Preface, ix): Continue reading

New Foundations in 30 Minutes

New foundations for a new science of macroeconomics are grounded in

  • a scientific, dynamic heuristic
  • the technique of implicit definition
  • precise, purely relational, analytic distinctions between abstract fundamental terms and relations from which a superstructure of complete explanation may be deduced
  • the relativistic, field-theoretic functional interrelations among interdependent, mutually-defining, explanatory functional flows

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The Road Up is The Road Down; The Mechanism of Rising and Falling  Prices

This post was originally entered on May 30, 2022.  We repeat it now because it 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