We note that several instructors in Lonergan’s **Functional Macroeconomic Dynamics** give conceptual priority to his Diagram of Rates of Flow in their essays. Continue reading

# Category Archives: Joseph Schumpeter

# Ray Dalio re Debt Crises (originally posted 9/11/18, now repeated 9/17/20)

This is a slightly-revised repeat of a Post of 9/11/18. It remains relevant to Mr. Dalio’s thinking.

The final paragraph of this Post is as follows: We hope that Mr. Dalio will study Bernard Lonergan’s ** Macroeconomic Dynamics: An Essay in Circulation Analysis (CWL 15)** to advance his present considerable understanding even further so as to understand

**the real grounds**that might make his predictions successful . We hope that, as a person of influence, Mr. Dalio will convey a more advanced,

**explanatory understanding**of the economic process to the nation and the world.

On 9/11/18 Ray Dalio, Co-Chairman and Founder of Bridgewater Associates, appeared on TV and reviewed some highlights of his new book, *A Template for Understanding Big Debt Crises*. The book is presently available as a free PDF (with some strings attached). An alternative, no-strings-attached, introduction to Mr. Dalio’s thinking is available on the Bridgewater website’s home page under the title *The Economy, How the Economic Machine Works*.

Mr. Dalio’s comments were cogent; they were somewhat aligned with much of what Lonergan has provided in his **scientific systematics** of the economic process. Both would agree that the repetition of crises is not inevitable; crises are caused by **repeated mismanagement**. But what Dalio loosely ** describes** Lonergan precisely

**. Continue reading**

*explains*# Theoretical Breakthroughs of Euclid, Newton, Hilbert, Einstein, and Lonergan

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 and** **Einstein, 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)**

# Understanding All in a Unified Whole

“if we want a

comprehensive grasp of everything in a unified whole, we shall have to construct a diagram in which are symbolically representedall the various elementsof the question along with allthe connections between them.” [McShane, 2016,44]

# A Contrast: Understanding Pricing in Macrostatic DSGE and in Macrodynamic FMD

**.I. Introduction: Contrasting Diagrams and What They Represent**

We contrast an **assumption and description** with an **explanation and interpretation**. We contrast the Dynamic Stochastic General Equilibrium (DSGE) **assumption** **and description** of pricing as **exogenously** given and acceptable as a **lead item** in analysis of economic problems with Functional Macroeconomic Dynamics’ (FMD’s) **explanation** and **interpretation** of pricing **in the light of** the significant functional pretio-quantital flows, which **explain** the dynamic economic process. (Continue reading)

# Efficient Cause vs. Formal Cause

The **“formal cause” **of the economic process is its **immanent intelligibility. **The formal cause consists in the **primary relativities **or **general laws **of the process, which hold in any number of instances. In the formal cause we apprehend many things as **one**; we grasp **all in a unified view**. The formal cause contains the normative theory but explains both equilibria and disequilibria. Particular boundary conditions, such as past and future prices and quantities are relatively insignificant for the analysis; these boundary conditions are further determinations that are contingent from the very fact that they have to be obtained from a non-systematic manifold. (CWL 3, 491-6/) Continue reading

# The Emergence of Science

Lonergan, like Euclid, Newton, and Mendeleyev, moved through his field of inquiry to **the level of ****system**.

(Given the failure to implement the basic expansion,) the

systematic requirementof a rate of losses will result in a series of contractions and liquidations. … [CWL 15, 155]… a

science emergeswhen thinking in a given field moves tothe level of system. Prior to Euclid there were many geometrical theorems that had been established. The most notable example is Pythagoras’ theorem on the hypotenuse of the right-angled triangle, which occurs at the end of book 1 of Euclid’sElements. Euclid’s achievement was to bring together all these scattered theorems by setting up aunitary basisthat would handle all of them and a great number of others as well. … Similarly,mechanics became a systemwith Newton. Prior to Newton, Galileo’s law of the free fall and Kepler’s three laws of planetary motion were known. But these were isolated laws. Galileo’s prescription was that the system was to be a geometry’; so there was somethingfunctioning as a system. But thesystem really emerged with Newton. This is what gave Newton his tremendous influence upon the enlightenment. He laid down a set of basic, definitions, and axioms, and proceeded to demonstrate and conclude from general principles and laws that had been established empirically by his predecessors. Mechanics became a science in the full sense at that point where itbecame an organized system. … Again, a great deal of chemistry was known prior to Mendeleev. But his discovery of the periodic table selected a set of basic chemical elements and selected them in such a way that further additions could be made to the basic elements. Since that time chemistry has been one single organized subject with a basic set of elements accounting for incredibly vast numbers of compounds. In other words, there is a point in the history of any science when it comes of age, when it hasa determinate systematic structureto which corresponds a determinate field. [CWL 14, Method, 1971, 241-42]