Category Archives: Science and Explanation

The Single Paragraph For Consideration Today [#41]

[10/9/19] Lonergan brought a deep knowledge of mathematics and physics to his work in Functional Macroeconomic Dynamics.

Now the principles and laws of a geometry are abstract and generally valid propositions.  It follows that the mathematical expression of the principles and laws of a geometry will be invariant under the permissible transformations of that geometry. … Such is the general principle and it admits at least two applications.  In the first application one specifies successive sets of transformation equations, determines the mathematical expressions invariant under those transformations, and concludes that the successive sets of invariants represent the principles and laws of successive geometries.  In this fashion one may differentiate Euclidean, affine, projective and topological geometries. … A second, slightly different application of the general principle occurs in the theory of Riemannian manifolds.  The one basic law governing all such manifolds is given by the equation for the infinitesimal interval, namely,

ds2= Σgijdxidxj           [i, j = 1,2…n]

where dx1, dx2… are differentials of the coordinates, and where in general there are n2products under the summation.  Since this equation defines the infinitesimal interval, it must be invariant under all permissible transformations. However, instead of working out successive sets of transformations, one considers any transformations to be permissible and effects the differentiation of different manifolds by imposing restrictions upon the coefficients.  This is done by appealing to the tensor calculus. …  Thus in the familiar Euclidean instance, gij is unity when equals j; it is zero when does not equal j; and there are three dimensions.  In Minkowski space, the gij is unity or zero as before, but there are four dimensions, and xequals ict. In the General Theory of Relativity, the coefficients are symmetrical, so that gij equals gji; and in the Generalized Theory of Gravitation, the coefficients are anti-symmetrical.   [CWL 3, 146 -147/170-71] [41] (Click here for previous “Single Paragraphs”)

Fundamental Disorientations at the Federal Reserve Bank and the National Bureau of Economic Research

We have arranged this Topic into four parts:

  • Part I: The Disorientations of Macroeconomists
  • Part II: Principles and Precepts of Analysis
  • Part III: A New Textbook, Lonergan’s Macroeconomic Dynamics: A Textbook in Circulation Analysis
  • Part IV Comments on The Federal Reserve’s Current Framework For Monetary Policy: A Review and Assessment, by Janice C. Eberly, James H. Stock, and Jonathan H Wright.

Part I: The Disorientations of Macroeconomists

One cannot help but admire and be grateful to the Federal Reserve Bank for its Flow of Funds matrices and the National Bureau of Economic Research for its GDP tables.  Great information, well done!  However, the Fed, the NBER, and the proponents of the DSGE methodology suffer from fundamental disorientations. The NBER’s descriptive, commonsense, national-income accounting must integrate the Fed’s data on credit and to be recast to provide an explanatory systematization of interdependent flows of products and money.  Devotees must reorient themselves.  (Continue reading)

Prediction is Impossible in the General Case

In his book, FREEFALL (2009, Penguin Books), Joseph Eugene Stiglitz, a professor at Columbia University and a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979), states that economics is a predictive science. Now, one must distinguish between predicting a) planetary motion in its scheme of recurrence, and b) this afternoon’s weather vs. next month’s weather, or this afternoon’s prices and quantities vs. next year’s prices and quantities, all subject to to conditions diverging in space and time.   Continue reading)

 

 

Letter to The Bureau of Economic Analysis

The Functional Macroeconomic Dynamics Collaborative

Website: Bernard Lonergan’s Functional Macroeconomic Dynamics

https://functionalmacroeconomics.com

functionalmacroeconomics@gmail.com

 

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).

  1. Gross Domestic Product, Current $
  2. Gross Domestic Income by Type of Income; National Income by Type of Income; and, National Income by Sector …; Current $)
  3. 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

The System of Abstract Primary Relativities Applied to Secondary Determinations

There is required a shift of focus by academics from the concrete secondary determinations of prices and quantities in a non-systematic manifold to the immanent, abstract, primary relativities which may be applied to these secondary determinations to reach particular laws.

Paraphrasing [McShane, 1980, 127]: Taking into account past and (expected) future values does not constitute the creative key transition to Functional Macroeconomic Dynamics.  Continue reading

The IS-LM, AD-AS, and Phillips Curve Models

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)