Frederick Lawrence (Boston College) is a co-editor of Bernard Lonergan’s Macroeconomic Dynamics. We’ll have more to say later about Fred’s article, “Between Capitalism and Marxism: Introducing Lonergan’s Economics”; but perspicacious economists in academe, government, and banking will benefit greatly from an immediate reading. For access to the article now, please use the following simple path:
In your main search bar, enter JSTOR and press your Enter key.
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Then, type into that box 40338243 and press your Enter key.
I do not have a video capability on this website, but perhaps the reader could, in his/her imagination, superpose simultaneously upon the Diagram of Rates of Flow several keyformulas and images. This exercise and self-testing should be beneficial to the serious student. In addition to seeing and having insight into each image in a sequence, the reader would, by superposition see the inner workings and interrelations of the velocities and accelerations all at once in interdependence rather than alone and separately.The superpositioning of each diagram with its formulas offers the opportunity to consider the ideas and schemes one-at-a-time. one-against-one, and all-at-once.An imagining and understanding and affirming would bring home to the reader’s mind the full complexity of the always-current, purely dynamic, organic process. And it would help the reader to appreciate the wisdom in Lonergan’s orderly presentation.
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).
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. (See Philip McShane in Categories in the right sidebar)
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 →
Here are a few brief selections from the above treatments:
Traditional theory looked to shifting interest rates to provide suitable adjustment. In the main we shall be concerned with factors that are prior to changing interest rates and more effective. [CWL 15, 133)Continue reading →
The method of circulation analysis … involves a minimum of description and classification, a maximum of interconnections and functional relations. … Analytic thinking uses classes based on similarity only as a springboard to reach terms defined by the correlations in which they stand. [CWL 21, 111]
… the introduction of the notion of the monetary function… takes a further step towards defining a circulation of money……..not a rotational movement……. rather a circular series of relationships of dependence of some flows of payments on other flows. Money moves only at the instant of payment or transfer. Most of the time it is quiescent. … it may also be dynamically quiescent, and then it is held in reserve for some definite purpose. … Money held in reserve for a defined purpose will be said to be in a monetary function. Five such functions are distinguished: basic demand, basic supply, surplus demand, surplus supply, and a fifth redistributive function. (CWL 15, 48)…….
Volume 15 of Collected Works ofBernard Lonergan is entitled Macroeconomic Dynamics: An Essay in Circulation Analysis. Lonergan analyzes and explains the economic process as a circulatory process; that is, as a dynamic organic process of interdependentcirculatory flows of goods and services and their functionally-congruent payments. It is to be understood and verified as a coherent set of flowsimplicitly-defined by their functional relations to one another. Continue reading →
Preliminary note: In this section we are addressing the proper understanding and management of the economic process in normal, non-pandemic times. We affirm that the recent pandemic called for extraordinary measures.
Unwittingly, first out of ignorance, more recently as necessitated by a pandemic, and most recently out of continuing ignorance, some nations, including the U.S., have wandered into the ultimatemenace to the financial system, the spending without constraint blessed and recommended by unscientific. so-called Modern Monetary Theory. (Click here and here) The systematic result of MMT’s unconstrained printing of money, unjustified by corresponding, concomitant production of goods and services, is rampant inflation in prices for a) goods and services and/or b) financial assets. (Continue reading)
Recently the Executive and Legislative Branches, through the agencies of the Treasurer and the Federal Reserve Board, have flooded the economic system with free money. Much of the resulting surfeit of new money is detached from any productive contribution. This free, intrinsically inflation-constituting money has had to sit or go somewhere and constitute an effect in circulations of the basic circuit, the surplus circuit, and the secondary market for stocks, bonds, housing, etc. Thus, in order to understand the present inflationary situation, an explanatory “Essay in Circulation Analysis” is a present need.
Please keep in mind that Lonergan, in his purely theoretical essay, does not treat specifically the actualrecent flooding of the money supply, and the associated ultra-low interest rates, in the two operative circuits and in the Redistributive Function. But one can easily glean from his treatments the inflationary implications of this actual flooding and the manner of its correction. Herein, as opportunity allows we graft onto his orthodox treatment comments regarding recent quantitative flooding. We trust the reader to discern what are graftings and what are the underlying matters under discussion at that point. (Continue reading)