[1/23/20] Field Theory: … Special Relativity is primarily a field theory, that is, it is concerned not with efficient, instrumental, material, or final causes of events, but with the intelligibility immanent in data; but Newtonian dynamics seems primarily a theory of efficient causes, of forces, their action, and the reaction evoked by action. … Special Relativity is stated as a methodological doctrine that regards the mathematical expression of physical principles and laws, but Newtonian dynamics is stated as a doctrine about the objects subject to laws. [#72] [3, 43/67] (Click here for previous “Single Paragraphs” or “Brief Items”)
As represented below in the Diagram of Rates of Flow, in Functional Macroeconomic Dynamics the “basic terms are defined by their functional relations.” The basic terms are precise analytical terms upon which a superstructure of explanatory relations can be constructed. Thus, the terms are of scientific and explanatory significance. (Continue reading)
One cannot help but think that Bernard Lonergan had functional macroeconomic dynamics clearly in mind as he treated the intelligibility of world process in CWL 3, Insight: …, which is very much an implementation of the act of understanding of mathematicians and natural scientists. In his understanding of mathematics, the natural sciences, and the science of macroeconomics in particular, he grasped that the explanation of the dynamic concrete process is expressed by a mathematical conjunction of component abstract primary relativities with component concrete secondary determinations from the non-systematic manifold. And these secondary determinations, such as particular prices and quantities, are to be interpreted in the light of the significant, abstract, explanatory variables rather than in the obscurity of the IS-LM, and AD-AS models. (Continue reading)
Our references in this section are [Burley, 1992-2] and [Burley and Csapo, 1992-1].
Burley, Peter and Csapo, Laszlo, (1992) Money Information in Lonergan-von Neumann Systems, Economic Systems Research, Vol 4, No. 2, 1992 [Burley and Csapo, 1992-1]
Burley, Peter (1992) Evolutionary von Neumann Models, Journal of Evolutionary Economics 2 , 269-80 [Burley, 1992-2]
We consider a game-theoretic, von Neumann model of the transitional process from an initial stationary state to a more abundant stationary state, with matrix A of inputs and matrix B of outputs containing explanatory functional variables. (continue reading)
Andrei Shleifer is a professor of economics at Harvard University. Nicola Gennaioli is a professor in the Department of Finance at Bocconi University, Milan.
A Crisis of Beliefs is well worth reading as either a treatise on psychology or as an application of a model of psychology to people’s mistaken thinking and acting in certain economic circumstances.
But Gennaioli and Shleifer must ask, How would the human participants act if, instead of being a bundle of desires, fears, cognitive biases, and ignorance regarding the abstract primary relativities of the economic process, they understood the laws of the process and the precepts for adaptation yielded by the laws? That is to ask, Is there a set of laws independent of human psychology and above intellectual ignorance to which human participants would enlightenedly adapt if they understood them? And, if so, is not the primary responsibility of professors of macroeconomics to educate and enlighten participants as to the laws they are violating so as, thus, to curb automatically their irrational psychological tendencies? Continue reading
Lonergan’s two-circuit diagram (below) represents a theoretical breakthrough. It replaces the single-circuit diagram common to the textbooks of macroeconomics.
Lonergan started with a dominant one-flow economic analysis – think in terms of the household-firm diagram – and separated it into two flows “to form a more basic concept and develop a more general theory.” 21 …The distinction was never built scientifically (by other economists) into a systematics of dynamic economics [McShane, 2017, viii; ftnt 22]
To reach a theory of macroeconomic dynamics we need, in the first place, a scientific and dynamic heuristic guiding us to a scientific explanation of the current, purely dynamic, concrete, economic process.
(Ragnar) Frisch’s failure to develop a significant theory typifies the failure of economists who search for a dynamic heuristic. As well as a fundamental disorientation of approach there is also a tendency to shift to an inadequate level of abstraction with a premature introduction of boundary conditions in a determinate set of differential and difference equations. [McShane, 1980, 114]