Category Archives: Organicism

John H. Cochrane’s Article in The Wall Street Journal, Thursday 8/25/2022

The Wall Street Journal of Thursday, 8/25/2022 featured John H. Cochrane’s commentary entitled  “Nobody Knows How Interest Rates Affect Inflation.”  We would say, “In order to understand how interest payments from Smith to Jones should circulate in order to achieve price stability, continuity, equilibrium and realization of the economy’s potential, one must have a unified theory explaining the whole, organic, dynamic, pretio-quantital,economic process.  Then, within that theory one can know How Interest Rates Might Affect Inflation.”  (Click here, and here)  We would also assert that manipulation by the Fed of the rental price of money – the interest cost – can be counterproductive. (Continue reading)

 

Elizabeth Warren’s Advice to Jerome Powell; Sentiment Without Intelligence

The Wall Street Journal of 7/25/2022 featured an article by Senator Elizabeth Warren:  “Jerome Powell’s Fed Pursues a Painful and Ineffective Inflation Cure.” Because she lacks an objectivenormative, abstract, explanatory theory and, thus, fails to understand the functional interdependencies constituting the organic economic process, particular arguments in her article are a) sometimes contaminated by psychopolitical wishful opinions, b) often ignorantly one-sided because she is unaware that some policies have double edges, c) sometimes contradictory of her other arguments, and d) in at least one case, supercilious.

E. Warren suffers from the same plight as Thomas Picketty. To satisfy her responsibility to the public, she needs to achieve a scientific understanding of the organic economic process; she needs to get a “grip.”

We are at the heart of Picketty’s plight: he has no clue of the needed grip on the grounds of the inequality in history.  So, what else can he offer but a centralist solution, taxation, to history’s drunken careening. (McShane, Philip, Picketty’s Plight, 53)

In equity (the basic expansion following the surplus expansion) should be directed to raising the standard of living of the whole society.  It does not.  And the reason why it does not is not the reason on which simple-minded moralists insist.  They blame greed.  But the prime cause is ignorance.  The dynamics of surplus and basic expansion, surplus and basic incomes are not understood, not formulated, not taught….. [CWL 15, 82]

(Continue reading)

Concomitance and Credit;  A New Paradigm for the Federal Reserve Bank; Functional Macroeconomic Dynamics Drives Establishment Economics into the Shadows

The macroeconomics textbooks feature three key macrostatic models, all three of which are sublated by the purely relational field theory called Functional Macroeconomic Dynamics.  The textbooks’ three featured graphs are two momentary intersections of supply and demand curves plus the Phillips Curve correlation of unemployment and interest rates:

  1. the intersection of the supply and demand curves at a certain price of goods and services (the macrostatic AD-AS model),  
  2. the intersection of the supply and demand curves at a certain interest-rate, rental-price of money (the macrostatic IS-LM model),  plus,
  3. the now-debunked Phillips Curve correlation of unemployment and interest rates.

The key elements grounding the discovery and formulation of the immanent, field-theoretic intelligibility of the organic, unified, whole economic system include: (Continue reading)

The Ineptitudes in Central Bank Operations

This entry should be read in conjunction with the reading of The Road Up is the Road Down; The Mechanism of Rising or Falling Prices.  Also, in “the Road UP …”, note well the phrase “a merely theoretical possibility.”

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 actual recent 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)

Macroeconomic Field Theory’s Higher Laws Stand Above and Are Indifferent to the Endless Complexity Within the Exchange Solution

Part I – The Exchange Solution’s Complexity and Change:

The exchange solution stands above and is indifferent to endless complexity and endless change; it stands on a level above all particular products and all particular modes of production.

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The Economic Process Is The Current Process, Grasped In A Unified Whole, Requiring The Contribution of Academics, Control Theorists, And System Dynamicists

The economic process always is “the current process” constituted by current  interdependent velocitous flows of so-much or so-many every so often.

The productive process is, then, the (current) aggregate of activities proceeding from the potentialities of nature and terminating in a standard of living.  Always it is the current process, and so it is distinguished both from the natural resources, which it presupposes, and from the durable effects of past production. [CWL 15, 20]

The goal of scientific analysis is explanation of the objective economic process, i.e. to discover the abstract immanent intelligibility which explains any particular configuration of flows of products and money in any instance.  Such immanent intelligibility would be always relevant and universally valid. (Continue reading)

 

Conflicting Ways Of “Viewing” The Objective Economic Process

Click on the topic desired.

.1. Lonergan’s “Macroeconomic Field Theory” (MFT), AKA “Functional Macroeconomic Dynamics” (FMD)

.2. Marxism

.3. Modern Monetary Theory Quackery (MMQ)

.3.1. Stephanie Kelton’s “The Deficit Myth”

.4. Establishment Economics

.5. Commonsense Economics vs. Scientific Economics