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 timein 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 →
Philip McShane had a strong background in mathematics and theoretical physics; thus he was able to understand the scientific significance of Bernard Lonergan’s macroeconomicfield theory in an Einsteinian context.
First we display, in brief, key excerpts, many of which contain analogies from physics and chemistry, relevant to the science of Functional Macroeconomic Dynamics; then we show the same excerpts more fully within lengthier quotes. Continue reading →
To help the reader gain an appreciation of Lonergan’s achievement of Modern Macroeconomic Field Theory we will, in each section, print leading excerpts, then highlight the key concepts of those excerpts. We will comment on the historically-significant advances in geometry of Euclid and Hilbert, in physics of Newton andEinstein, and in macroeconomics of Lonergan.
Euclid’s great achievement was his rigorous deduction of geometry.
Hilbert’s great achievement was his employment of implicit definition to reorder Euclid’s geometry.
Newton’s two great achievements were unifying the isolated insights of Galileo and Kepler into a unified system of mechanics and his invention of the calculus.
One of the great achievements of Einstein was the invention of the field theories of Special Relativity, General Relativity, and Gravitation.
One of Lonergan’s several great achievements was his systematization of macroeconomic phenomena in his Modern Macroeconomic Field Theory. He combined the technique of implicit definition introduced by Hilbert and the concept of a field theory developed by Faraday and Einstein; and he developed an explanatory macroeconomics, which is general, invariant, and relevant in any instance. (Continue reading)
“if we want 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 of the question along with all the connections between them.” [McShane, 2016, 44]