Category Archives: Science and Explanation

Notes Re Reading Graphs In CWL 15, pp. 121-25

In the graphs of CWL 15, pages 121-25, it is easy to become disoriented by the symbols on the vertical axes and by the titles and annotations.  In particular, one might tend mistakenly to view Q as a symbol for an absolute quantity or an accumulation rather than for a rate of flow of a quantity.  Recall:

In Lonergan’s circulation analysis, the basic terms are ratesrates 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]

Lonergan never used terms for magnitudes, only for rates and their accelerations (‘rates of rates’) in the Essay in Circulation Analysis.  [CWL 15, 182]

But if the ultimate product qi is related by a double summation to the contributions of factors of production qijk, then the total flow of ultimate products Qi is also related by a double summation to the rates of the contributions of the factors of production Qijk, where both Qiand Qijk are instances of the form so much or so many every so often.’  (CWL 15, 30)

In the graphs superscripts identify basic (‘) or surplus (“) elements.  Absence of superscripts here indicates “in any case.”

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Are We Outside Or Inside The Economic Process? And What Constitutes The Equilibrium To Be Achieved?

Our inquiry differs from classical analysis and from traditional economics.  Functional Macroeconomic Dynamics prescinds from human psychology to replace Walras’ general equilibrium with a prior and more fundamental equilibrium to which human participants must adapt.

Participants are not to dominate as willy-nilly, ignorant, external, efficient causes, but rather to adapt to the immanent intelligibility of the objective mechanism.  This immanent intelligibility is the set of laws explaining the process – laws not to be enforced by a civilian police force but rather abstract laws to be understood and honored by enlightened free people. Continue reading

“We Wish to Suggest a Structure … “

We wish to suggest a structure for the salt of deoxyribose nucleic acid (D.N.A.). This structure has novel features which are of considerable biological interest. [J. D. Watson and F.H.C. Crick] (Attribution below)

We wish to suggest a structure for the objective, dynamic, economic process. This structure, which is independent of human psychology, is composed of both productive and correlated monetary flows.  The structure of the interdependent, pretio-quantital, monetary flows is double-circuited and has novel features which are of considerable macroeconomic interest.

Attribution and URL:

reprinted with permission from Nature magazine

A Structure for Deoxyribose Nucleic Acid
J. D. Watson and F. H. C. Crick (1)

April 25, 1953 (2), Nature (3), 171, 737-738

Explanatory Macroeconomic Dynamics; Relevant In Any Instance

There are five figures below from CWL 15:  The single figure on the left represents the interrelations of interdependent Monetary Flows; and the figure contains the important condition of dynamic equilibrium: G = c”O” -i’O’ = 0.  The four figures stacked on the right demonstrate aspects of the productive phases constituting a Pure Cycle of Expansion. The bidirectional arrows uniting the two sides signify that the dynamic equilibrium among interdependent flows specified on the left is to be achieved consistently throughout the long-run expansion represented on the right.  This condition of dynamic equilibrium is that the crossover flows between the two interacting circuits must continuously balance even as they continuously vary in magnitude in the succession of phases constituting the expansionary process.  Just as the general laws of simple parabolic or pendular motion are explanatory and applicable to any particular instance of initial angle and velocity, so a) the primary relativities of productive and monetary flows, and b) the primary differentials of long-term expansion explain the economic process, and are normatively relevant in every particular instance.  All five diagrams are unitary.  Each and every velocitous and accelerative flow of products and money has proximate or remote explanatory aspects embedded in all five diagrams. (Continue reading)

Field Theory in Physics and Macroeconomics

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)

M. Leon Walras, and the “Curvature” of the Exchange Equations [Brief Item #78]

[2/23/20] M. Leon Walras developed the conception of the markets as exchange equilibria. Concentrate all markets into a single hall. Place entrepreneurs behind a central counter.  Let all agents of supply offer their services, and the same individuals, as purchasers, state their demands.  Then the function of the entrepreneur is to find the equilibrium between these demands and potential supply. … The conception is exact, but it is not complete.  It follows from the idea of exchange, but it does not take into account the phases of the productive rhythms. As has been shown, economic activity moves through a series of transformations and exploitations; and this series generates the succession of (point-to-line, point-to-point, cultural, and static phases.)  Now each phase in the exchange economy will have its exchange equilibrium, but the equilibria of the different phases differ radically from one another.  By this cyclic variation within the exchange equilibria there is effected the “curvature” of the exchange equations. [CWL 21, 51-52] [#78] (Click here for previous “Single Paragraphs” or “Brief Items”)

All the Concepts Tumble Out Together [Brief Item #76]

[2/12/20] (In) 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.  If one grasps the necessary and sufficient conditions for the perfect roundness of this imagined plane curve, then one grasps not only the circle but also the point, the line, the circumference, the radii, the plane, and equality.  All the concepts tumble out together, because all are needed to express adequately a single insight.  All are coherent, for coherence basically means that all hang together from a single insight.  [CWL 3, 12/36]

… it will be well at once to draw attention to J.A. Schumpeter’s insistence on the merits of the diagram as a tool. (Schumpeter, History 240-43, on the Cantillon-Quesnay tableau.) … First, there is the tremendous simplification it effects.  From millions of exchanges one advances to precise aggregates, relatively few in number, and hence easy to follow up and handle. … Francois Quesnay’s tableau economique. … was the first to make explicit the concept of economic equilibrium.  All science begins from particular correlations, but the key discovery is the interdependence of the whole. … the diagram (of the interconnections of a few precise aggregates) has compensating features that Quesnay’s system of simultaneous equations may imply but does not manifest. [CWL 15, 53 and 177]

 

 

 

 

 

 

 

 

To understand how the system of interdependent monetary circulations meets the system of production and exchange is to understand how the economy works.  It is to grasp all the production and monetary concepts together in a single coherent set of relations.  It is to see all the dynamic interactions of the current dynamic process in a single view, or better, to understand explanatory macroeconomics in a single comprehensive act of understanding. “All science begins from particular correlations, but the key discovery is the interdependence of the whole.”

… once initial difficulties are overcome and basic insights are reached, the investigation approaches a supreme moment when all data suddenly fall into a single perspective, …. [CWL 3, 47/71]

More positively, the channels account for booms and slumps, for inflation and deflation, for changed rates of profit, for the attraction found in a favorable balance of trade, the relief given by deficit spending, … [CWL 15, 17] [#76] (Click here for previous “Single Paragraphs” or “Brief Items”)