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# Category Archives: Science and Explanation

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

**Functional Macroeconomic Dynamics** seeks not merely to “view” and describe the economic process; rather it seeks to **understand** and **explain** the process in order to provide **norms of adaptation** and **systematic guidance** to **managers **of the process**. **(Continue reading)

# Re “Function”, “Implicit Definition”, “The Objective of the Analysis”, and “Scientific Significance”

* “Functional” is for Lonergan a technical term pertaining to the realm of explanation, analysis, theory; it does not mean “who does what” in some (descriptive) commonsense realm of activity. ¶ Lonergan illustrates his basic meaning of ‘explanation’ by referring to D. Hilbert’s method of implicit definition: ‘Let us say, then, that for every basic insight there is a circle of terms and relations, such that the terms fix the relations, the relations fix the terms, and the insight fixes both.’ … ‘Thus the meaning of both point and straight line is fixed by the relation that two and only two points determine a straight line. ‘In terms of the foregoing analysis, one may say that implicit definition consists in explanatory definition without nominal definition.’ (See CWL 3 Insight 12/ 36-37) Lonergan went on to identify the contemporary notion of a “function” as one of the most basic kinds of explanatory, implicit definition – one that specifies “things in their relations to one another” (CWL 3, 37-38/61-62)…In Lonergan’s circulation analysis, the basic terms are rates – rates of productive activities and rates of payments. The objective of the analysis is to discover the underlying intelligible and dynamic network of functional, mutually conditioning, and interdependent relationships of these rates to one another. [CWL 15, 26-27 ftnt 27]* Continue reading

# Miscellaneous Notes Re The Notions Of Survival, Intelligence, Freedom, And the Good Of Order

**Human adaptation is necessary for SURVIVAL of an economy:**

(CWL 21, 42-43) our inquiry differs radically from traditional economics, in which the ultimate premises are not production and exchange but rather exchange and self-interest, or later, exchange and a vaguely defined psychological situation. Our aim is to prescind from human psychology that, in the first place, we may define the objective situation with which man has to deal, and, in the second place, define the psychological attitude that has to be adopted if man is to deal successfully with economic problems. Thus something of a Copernican revolution is attempted: instead of taking man as he is or as he may be thought to be and from that deducing what economic phenomena are going to be, we take the exchange process in its greatest generality and attempt to deduce the human adaptations necessary for **SURVIVAL**. (CWL 21,42- 43) Continue reading

# 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 **objective**, **normative,**** ****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]*

# Abstraction in Macroeconomics; Classical and Statistical Laws

**Abstraction is enriching**. The relation of things to our senses must be **transcended by abstraction**; abstraction yields **explanatory concepts** **implicitly defined** by their **functional relations** to one another.

The** commonsense accounting** **relations** constituting historical Gross Domestic Product must be supplemented by the **abstract explanatory formulation** of Current Gross Domestic Functional Flows. All participants must have the **scientific guidance of a normative theory** in order to properly adapt their personal conduct to the principles and laws of the objective process. (Continue reading)

# More re Picketty’s Plight and Centralist Modern Monetary Theory

In his blog entitled “Picketty in Brief,” dated Sunday, July 24, 2022, N. Gregory Mankiw asks what might be Thomas Picketty’s present thinking about inequality. Has it changed? If so, how and why? Also see on this website “Picketty’s Plight.” in which we quote Philip McShane’s claim that, unless one has a **normative explanatory theory** yielding **precepts** as to how **enlightened participants** in the economic process should adapt and conduct themselves, one can only helplessly and hopelessly suggest **harmful bureaucratic centralist solutions** – such as **disequilibrating taxation** and **intrinsically**–**inflationary deficit spending**. Continue reading

# The Leibnitz-Newtonian Shift of Context and Scientific Economics

Lonergan’s basic terms are **velocities**. There is a shift to **dynamics**. P. McShane called the creative shift from **Walrasian** **macrostatics** to **macroeconomic dynamics** the **Leibnitz-Newtonian shift**.

Please see under Key Notions the subtopic with the lengthy title: The Leibnitz-Newtonian Shift of Context and Scientific Economics; Basic Terms, Explanatory Conjugates, An adequate Level of Abstraction, No Premature Introduction of Boundary Conditions.

Taking into account past and (expected) future values does not constitute

Those familiar with elementary statics and dynamics (in physical mechanics) will appreciatethe creative key transition to dynamics.the shift in thinkinginvolved in passing from equilibrium analysis (of a suspended weight or a steel bridge)…to an analysis where attention is focused onsecond-order differential equations, on d^{2}θ/dt^{2}, d^{2}x/dt^{2}, d^{2}y/dt^{2}, on a range of related forces, central, friction, whatever. Particular boundary conditions, “past and future values” are relatively insignificant for the analysis. What is significant isthe Leibnitz-Newtonian shift of context. [McShane, 1980, 127]Note that the vertical axis of the Figure 24-7 below represents the accelerations: dQ’/Q’ and dQ”/Q”. Q’ and Q” represent velocities. The title underneath the Figure 24-7 fails to apply the proper superscript to surplus activity. Also, k-1 might be, for example 1.05-1 or .05 or 5% or a geometric increase period after period, while (1/r – 1)

Qmight be !/.95 – 1)100 or (1.05263-1)100 or (.05263)100 or 5.263 which would be a constant magnitude period after period and, therefore, a declining percent period after period. Thus the title indicating the Rate of Change of a percentage change._{1 }Lonergan’s basic terms are

velocities and their changes. There is a shift todynamics. P. McShane called the creative shift fromWalrasianmacrostaticstomacroeconomic dynamicstheLeibnitz-Newtonian shift. Again,

*In Lonergan’s circulation analysis, the basic terms are rates – rates of productive activities and rates of payments. The objective of the analysis is to discover the underlying intelligible and dynamic (accelerative) network of functional, mutually conditioning, and interdependent relationships of these rates to one another. [CWL 15 26-27 ftnt 27]*

# The Principle of Concomitance: The Foundation of Continuity, Equilibrium, and Explanatory Theory

**Contents**

**.1. Concomitance and Correlation in Macroeconomic Field theory****.2. Five Notes re Abstraction; Abstraction is Enriching****.3. Resume Focus on Concomitance and Correlation in Macroeconomic Field Theory**

**.1. Concomitance and Correlation in Macroeconomic Field theory**

**Concomitance **is, I would claim, **the key word** in Lonergan’s economic thinking. [Philip McShane, [Fusion 1, page 4 ftnt 10]

* All science begins from particular correlations, but the key discovery is the interdependence of the whole.…its basic terms are defined by their functional relations. [CWL 15, 53, 54, and 177]*