Category Archives: Science and Explanation

A Vicious Circle; The Welfare State

Now this type of surplus is not confined to warlike concerns.  Once the possibility of an unbalanced budget is established, the precedent can be invoked to persuade politicians to carry on other wars: wars on illiteracy, on poverty, on ill health, on unemployment, on insecurity.  Where the profit motive does not prove efficacious, the state must intervene. … the increasing volume of transactions requires a larger money supply, and the central bank can be persuaded to meet the demand. … it appears to be less evident that a vicious circle of ever more demands for a larger money supply with no increase in real income is inflationary … In any case there has emerged in fact if not in name the welfare state. … Its mechanism is rather strikingly similar to that of the favorable balance of foreign trade. The debt once owed by colonies to richer countries now is replaced by the national debt. … now the long overdue basic expansion is doled out to one’s fellow countrymen under the haughty name of welfare. [CWL 15, 85-86]

The excellence of the exchange solution becomes even more evident when contrasted with the defects of a bureaucratic solution.  The bureaucrat … (gives the people) what he thinks is good for them, and he gives it in the measure he finds possible or convenient; nor can he do otherwise, for the brains of a bureaucrat are not equal to the task of thinking of everything; only the brains of all men together can even approximate to that. … when a limited liability company has served its day, it goes to bankruptcy court; but when bureaucrats take over power, they intend to stay. … when the pressure of terrorism is needed to oil the wheels of enterprise, then the immediate effect is either an explosion or else servile degeneracy. … the exchange solution is a dynamic equilibrium resting on the equilibria of markets. … every product of the exchange economy must mate through exchange with some other product, and the ratio in which the two mate is the exchange value.  The generality of this equilibrium makes it indifferent to endless complexity and endless change; for it stands on a level above all particular products and all particular modes of production.  While these multiply and vary indefinitely, the general equilibrium of the exchange process continues to answer with precision the complex question, Who, among millions of persons, does what, among millions of tasks, in return for which, among millions of rewards?  Nor is the dynamic solution unaccompanied by a continuous stimulus to better efforts and more delicate ingenuity.  For the uniformity of prices means that the least efficient of those actually producing will at least subsist, while every step above the minimum efficiency yields a proportionately greater return.[CWL 21, 34-35]

Also, read John F. Cogan’s article in the 1/3/2021 WSJ, “Entitlements Always Grow and Grow”.  Mr. Cogan is a senior fellow at Stanford University’s Hoover Institution.

Understanding The Whole Organic System; Purely Intelligible Relations Among Explanatory Terms

The human mind seeks understanding of the whole.

For the human mind is such that it does not wonder about things just individually but, understanding individual elements, goes on to ask how they are connected with one another. [CWL 12, 17]

Lonergan was seeking the explanatory intelligibility underlying the ever-fluctuating rhythms of economic functioning.  To that end he worked out a set of terms and relations that ‘implicitly defined’ that intelligible pattern. [CWL 15, 179-80]

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Stagflation Demystified

The general form of so-called stagflation is more money chasing fewer goods in the basic circuit and a dearth of investment in the surplus circuit to keep pace with the strong basic demand. (Click here)

Lonergan gave one theoretical example of stagflation – without calling it that – wherein the condition of equilibrium between the circuits of the process is violated: Continue reading

“The Most Significant Book of the Twentieth Century”

A quote from [McShane, 2017, Preface xii]:   “I have brought you face to face with the first page of the most significant book of the twentieth century.* … You are on the edge of the invention of the permanent science of econo-dynamics. What is your next move? Obviously, if you are an economist, you get moving towards a Nobel Prize.” Continue reading

Paul H. Rubin’s “The Woke Left’s Primitive Economics”

The Wall Street Journal of 10/6/2021 featured Paul H. Rubin’s article, “The Woke Left’s Primitive Economics”.  Rubin makes several valid points in a) criticizing The Woke’s and the Marxist’s simple-minded, psycho-political, self-damaging, hate-and-envy macroeconomics, and b) recognizing that new and better human and material capital benefit the entire society.  We wish Rubin had explicitly and clearly a) legitimized by nuanced theory the practical balance of taxation and spending for responsible waste-free activities, which only we, in our governmental form as We-The-People, can perform, and b) stated specifically that the level of taxation and the incidence of stratified taxation depend upon the requirements of the current phase of an economic expansion – Is it an initial non-expanding static economy, a proportionate expansion, a surplus expansion, a basic expansion, or a higher non-expanding static economy? Continue reading

Economics Is Economics, Sociology Is Sociology, Politics Is Politics; A Is a Distinct Science; It Is neither B nor C

On Friday, October 8, N. Gregory Mankiw’s Blog featured Nick Romeo’s interesting article entitled “Is It Time For a New Economics Curriculum?”  Greg provided a quote from Romeo’s paragraph re  Jonathan Gruber’s take on CORE.

Jonathan Gruber, who teaches introductory economics at M.I.T., felt that CORE might introduce too much complexity for a foundational course. He worried that so much emphasis on the ethical and political dimensions of economics might make the subject feel like a different discipline altogether. “The question is, do you want the students to feel like they’re coming out of, you know, to be blunt, a sociology class or an economics class?” Gruber said.

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Bootcamp To Educate the House, Senate, Federal Reserve, and Bureau of Economic Analysis, Especially Janet Yellen and Jerome Powell

One Week Bootcamp

Restricted to persons with solid backgrounds in mathematics and the natural sciences


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How’s She Cuttin’ ? How’s The New Money Circulatin’ ?

How’s it goin’ ?

How’s she cuttin’ ?  

How’s she cuttin’? This phrase comes from farmers asking about the conditions for hay or crop cutting during the harvest season and has since been adopted across Ireland to be a way to ask how you are.  (Google)

How’s the new money circulatin’ ? Continue reading

Resistance Of Macroeconomists To New and Better Ideas

Macroeconomists should be scientists seeking better explanations of the economic process of production and exchange.

By “scientific development” I mean development in mathematics or natural science.  The scientific horizon recedes, expands when there occurs a crisis in existing methods, procedures, theories, assumptions which are seen to fail.  They cannot handle known results, known observations or data, known conclusions. … Thus we have the triple revolution of Copernicus, Darwin, and Freud; the revolutions effected by Galileo, Newton, Einstein, quantum theory; the revolution in mathematics that began with analytic geometry and the calculus, went on to Riemannian geometry, and then to the developments in algebra due to Galois and to later developments  In these cases there was a radical revision in concepts. (CWL 10, 92-3)

In the following passage, substitute “macroeconomists” for “scientists; and substitute “scientific macroeconomics” for “science.” Continue reading

Commonsense Economics vs. Scientific Economics

A sound theory is a good thing to keep around.  Clerk-Maxwell’s electromagnetic theory and Kirchoff’s laws of electric circuits are good systematics to consult when one is designing a system to deliver electricity.  Similarly, when one is seeking to understand, affirm, and manage the economic process, a reliable, scientific macroeconomics, which both explains how the process actually works and yields norms for adaptation by human participants, is a good thing to have around.

Common sense is different from science.  Common sense describes; science explains.  Common sense relates things to us; science relates things to one another.  And scientific Macroeconomic Field Theory, also called Functional Macroeconomic Dynamics, is different from the mere commonsense compilation of descriptive accounting aggregates called Gross Domestic Product. Continue reading