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)
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)
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 →
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 singleexplanatory unity; it is purely relational, completely general, and universally applicable to every configuration in any instance. (Continue reading)
The process is always the current, purely dynamic process. The analysis is purely functional, purely relational and explanatory analysis. The theory is general and universally applicable to concrete determinations in any Instance; The theory is a normative theory having a condition of equilibrium.
Our subheadings in this treatment are as follows:
Always the Current Process:
A Purely Dynamic Process Requiring a Dynamic Heuristic:
A Purely Functional Analysis:
A Purely Relational, Explanatory Analysis:
A Theory, General and Universally Applicable to Concrete Determinations in Any Instance:
A Normative Theory Having a Condition of Equilibrium: