Functions are not seen, but must be understood. (Catherine Blanche King, private communication)
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
We hope to inspire serious graduate students of economics a) to seek and achieve an understanding of “Macroeconomic Field Theory,” b) to verify empirically Lonergan’s field relations, and c) to use the explanatory field relations as the basis of influential scholarly papers.
We trace developments
- in physics from Newtonian mechanics to modern field theory, and
- in economics from Walrasian supply-demand economics to purely relational, Modern Macroeconomic Field Theory.
Key ideas include a) abstraction and implicit definition as the basis and ground of invariance in both physics and macroeconomics, b) the concept of a purely relational field, c) immanent intelligibility and formal causality, and d) the canons of parsimony and of complete explanation. We highlight some key ideas: (continue reading)
In the ideal pure cycle, the long-term expansion proceeds from a static phase through a proportionate-expansion phase , then through a surplus-expansion phase, then through a basic-expansion phase, and finally into a higher static phase.
At (the beginning of a basic expansion) an economic system is confronted with an intrinsic test. It success will be established if it can complete the major basic expansion and – without mishap, without inflation, without unemployment, without a break in confidence – make its way serenely into the haven of the stationary state. I mean of course, not the stationary state of mere backwardness, not the stationary state of stagnation when a disastrous crash follows on an earlier apparent triumph, but the stationary state that preserves all the gains of the preceding major expansions. It is (then) content to produce their gains at a constant rate. Its duration may be short or long, for in each case it must wait until such time as further new developments are grasped by human intelligence and eventually become practically conceived possibilities. [CWL 15, 80] (Continue reading)
A distinction has been drawn between description and explanation. Description deals with things as related to us. Explanation deals with the same things as related among themselves. The two are not totally independent, for they deal with the same things and, as we have seen, description supplies, as it were, the tweezers by which we hold things while explanations are being discovered or verified, applied or revised. … [CWL 3, 291/316]
The analysis of the overall dynamic functioning, which we call in nominal terms the economic process, must seek the explanation of the process. It must seek the objective immanent intelligibility among the interdependent, dynamic “functionings” which altogether constitute the process. The functionings are rates of so much or so many every so often, and, thus, they are velocities. And the scientific analysis must be in terms of abstract, implicitly-defined, explanatory conjugates rather than in terms of the descriptive accountants’ unities of merely legal or proprietary entities called “firms.” (Continue reading)
Part I. Two economic mechanisms. Two components of concrete relations. Two simultaneous roles for human participants
It is the viewpoint of the present inquiry that, besides the pricing system, there exists another economic mechanism, that relative to this 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]
What the analysis reveals is a mechanism distinct though not separable from the price mechanism which spontaneously coordinates a vast and ever shifting manifold of otherwise independent choices from demand and of decisions from supply. It is distinct from the price mechanism, for it determines the channels within which the price mechanism works. It is not separable from the price mechanism, for a channel is irrelevant when nothing flows through it. [CWL15, 17] [Continue reading).
The Functional Macroeconomic Dynamics Collaborative
Website: Bernard Lonergan’s Functional Macroeconomic Dynamics
Brian C. Moyer, Director
Bureau of Economic Analysis (BEA)
4600 Silver Hill Road
Washington, DC 20233
Dear Mr. Moyer,
Presently the Bureau of Economic Analysis (BEA) publishes three general versions of the National Income and Product Accounts (NIPA).
- Gross Domestic Product, Current $
- Gross Domestic Income by Type of Income; National Income by Type of Income; and, National Income by Sector …; Current $)
- Gross Value Added by Sector; Current $)
Would it be possible for the BEA staff to develop a fourth which would be explanatory of the production-and-exchange process? Continue reading
In this section, we are contrasting familiar textbook models of macrostatic equilibrium, with Lonergan’s explanatory theory of macrodynamic equilibrium. We are contrasting a macrostatic toolkit with a purely relational field theory of macroeconomic dynamics. Lonergan discovered a theory which is more fundamental than the traditional wisdom based upon human psychology and purported endogenous reactions to external forces. His Functional Macroeconomic Dynamics is a set of relationships between n objects, a set of intelligible relations linking what is implicitly defined by the relations themselves, a set of relational forms wherein the form of any element is known through its relations to all other elements. His field theory is a single explanatory unity; it is purely relational, completely general, and universally applicable to every configuration in any instance. (Continue reading)
New foundations for a new science of macroeconomics are grounded in
- a scientific, dynamic heuristic
- the technique of implicit definition
- precise, purely relational, analytical distinctions between fundamental terms representing functional flows of products and money
- the functional interrelations among these interdependent, mutually defining, explanatory functional flows