The method of circulation analysis resembles more the method of arithmetic than the method of botany.
A first step is to offer some definition of the positive integers, 1, 2, 3, 4…. … Further, let us suppose as too familiar to be defined, the notions of ‘one’, ‘plus’, ‘equals’…. As the acute reader will see, the one important element in the above series of definitions, is the etc., etc., etc…It means that an insight should have occurred. If one has had the relevant insight, if one has caught on, if one can see how the defining can go on indefinitely, no more need be said … In defining the positive integers there is no alternative to insight. … A single insight is expressed in many concepts. In the present instance, a single insight grounds an infinity of concepts. (CWL 3, 13-14/38-39) Continue reading →
4/7/2021: Yahoo Finance today featured an article by Julia La Roche entitled ‘The fault line is inequality’: J.P. Morgan’s Dimon calls for fixing America’s ‘self-inflicted’ problems.La Roche was reviewing the Public Policy section of Dimon’s 67-page Chairman and CEO Letter to Shareholders. Mr. Dimon seeks to end the nation’s self-infliction of problems threatening the culture, the economy and the polity. He particularly regrets “false arguments of fanatics, the certitude of ideologues and cycles of intolerance.” Continue reading →
We ask all serious graduate students and professors of macroeconomics, government economists, conscientious politicians, poorly educated journalists, and financial-talk-show “pundits” to please read Bernard Lonergan’s Macroeconomic Dynamics, (CWL 15), Section 26, “The Cycle of Basic Income”. That section addresses several important economic issues:
the adjustment of the rate of saving to the phases of the pure cycle of expansion in the economic process
the complementarymechanism of changing prices
the significance of a relative and an absolute rise or fall of monetary prices
the difficulty with the theory of manipulating interest rates in that a) it lumps together a number of quite different things, and b) overlooks the order of magnitude of the fundamental problem
the ineptitude of the procedure of manipulating interest rates.
Then, after the first reading, please read that section a second time.
[CWL 15] Lonergan, Bernard (1999),Macroeconomic Dynamics: An Essay in Circulation Analysis, ed. Frederick G. Lawrence, Patrick H. Byrne, and Charles Hefling, Jr., vol 15 of Collected Works of Bernard Lonergan, (Toronto: University of Toronto Press)
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 current pandemic calls for extraordinary measures.
Unwittingly, first out of ignorance and recently as necessitated by a pandemic, some nations, including the U.S., are wandering into the ultimatemenace to the financial system, the spending without constraint blessed and recommended by unscientific 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)
A systematic explanation, then, requires a normative theoretical framework. The basic terms and relations of such a framework would specify the distinctions and correlations that articulate the causes, which are not necessarily visible, of events that are apparent to all. (CWL 15, Editors’ Introduction, lv) (Continue reading)
We print three displays of the same Diagram of Rates of Flow, AKA the Diagram of Interdependent Velocities. The second and third displays simply suggest that the serious reader must keep in mind certain precepts as he/she seeks to achieve a new paradigm and a new framework for macroeconomic dynamics. Continue reading →
Concomitance is, I would claim, the key word in Lonergan’s economic thinking. [Philip McShane, [Fusion 1, page 4 ftnt 10]
Recall that the subtitle of CWL 15 is “An Essay in Circulation Analysis”. It is by virtue of concomitance that continuity and equilibrium are achieved so as to constitute an orderly process of circulations. (Continue reading)
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).