A graduate student of economics should find it rewarding – intellectually, monetarily, and prestigewise – to present to the economic community an analysis of how Piero Sraffa’s work influenced Lonergan’s insistence on understanding the structure of the economic process before treating the two dependent topics of exchange and finance. (See “Why Analyze The Rhythmic Pattern of the Productive Process First”)
The “Editors Introduction” to Lonergan’s Macroeconomic Dynamics: An Essay In Circulation Analysis notifies us that “Lonergan alone” and “only Lonergan” has scientifically formulated the functional relations which explain the dynamic economic process.Continue reading →
[5/4/2021] It is an old saying that veritas est una et error multiplex. Truth is constructed and apprehended as a unity, but error takes many grotesque shapes. … The worst of truth’s enemies is the one in one’s own household that so spontaneously and so naturally tends to adjust and color the truth which one knows to the hue of one’s temperament and to the exigencies of one’s socio-cultural milieu – the milieu of one’s tribe, political party, income stratum, macroeconomic “school” or “ism”, etc. One must courageously meet the challenges of one’s intelligence and of objective truth, goodness, unity, and order and, by meeting them, rise above one’s blind instincts of egoism, ressentiment, and tribal loyalty to the light of truth vs. falsity, good vs. evil, love vs. hate, and order vs. disorder. (Adapted for paraphrase from CWL 3, 682-83/705) [#93] (Click herefor previous Brief Items)
[5/1/2021] It is, we believe, a scientific generalization of the old political economy and of modern economics that will yield the new political economy which we need. … Plainly the way out is through a more general field. [CWL 21, 6-7]
Generalization comes with Newton, who attacked the general theory of motion, laid down its pure theory, identified Kepler’s and Galileo’s laws by inventing the calculus, and so found himself in a position to account for any corporeal motion known. Aristotle, Ptolemy, Copernicus, Galilei, and Kepler had all been busy with particular classes of moving bodies. Newton dealt in the same way with all. He did so by turning to a field of greater generality, the laws of motion, and by finding a deeper unity in the apparent disparateness of Kepler’s ellipse and Galilei’s time squared. … Similarly the non-Euclidean geometers and Einstein went beyond Euclid and Newton. … The non-Euclideans moved geometry back to premises more remote than Euclid’s axioms, they developed methods of their own quite unlike Euclid’s, and though they did not impugn Euclid’s theorems, neither were they very interested in them; casually and incidentally they turn them up as particular cases in an enlarged and radically different field. … Einstein went beyond Newton by employing the new geometries to make time an independent variable; and as Newton transformed the formulation and interpretation of Kepler’s laws, so Einstein transforms the Newtonian laws of motion. … (Again) It is, we believe, a scientific generalization of the old political economy and of modern economics that will yield the new political economy which we need. … Plainly the way out is through a more general field. [CWL 21, 6-7] [#92] (Click herefor previous Brief Items)
[4/26/2021] As healing can have no truck with hatred, so too it can have no truck with materialism. For the healer is essentially a reformer; first and foremost he counts on what is best in man. But the materialist is condemned by his own principles to be no more that a manipulator. He will apply to human beings the stick-and-carrot treatment that the Harvard behaviorist B.F. Skinner advocates under the name reinforcement. He will maintain with Marx that cultural attitudes are the byproduct of material conditions, and so he will bestow upon those subjected to communist power the salutary conditions of a closed frontier, clear and firm indoctrination, controlled media of information, a vigilant secret police, and the terrifying threat of labor camps. [CWL 15, 104] Continue reading →
The Wall Street Journal of 4/18/ 2019 had a column entitled “Easy Money, Bad Decisions” by James Grant reviewing Andrew H. Browning’s book, The Panic of 1819. Grant related how the government’s financing of excessive expansion with careless loans led to panic and crisis.
In the mid-70’s, economists were mystified by stagflation, the combination of stagnant production and rising prices. According to the Phillips Curve, the correlation of inflation with unemployment, stagflation should not happen. Economists could describe the phenomenon, but they could not explainit.
… the U.S. economy was experiencing the phenomenon of ‘stagflation’ – a clearly discernible overturning of the conventional economic wisdom about the tradeoff between inflation and unemployment so neatly expressed in the Phillips curve. So-called ‘Keynesian fine tuning onto the neoclassical track’ was not working; and forms of socialist planning only promised to deepen rather than resolve the anomalies of welfare economics. … (Lonergan) believed he had an explanation for what, in a statement from the essay we are editing, he described as a “situation – sometimes thought mysterious – in which consumer prices continuously inflate, new enterprise is evaded, unemployment becomes chronic, and despite inflation the value of stocks declines.” [CWL 15, Editors Introduction, xli] (Continue reading)
In this section Lonergan demonstrates that Marx’s economics is insufficiently abstract and is contaminated by descriptive sociological and political categories; he finds Marx’s summons to class conflict perilous to humanity because it promotes and enforces a drift away from liberty to a totalitarianism culminating in the dreadful conditions of a no-escape “frontier, clear and firm indoctrination, controlled media of information, a vigilant secret police, and the terrifying threat of labor camps,” – all in the name of a mythicalmacroeconomics. (Continue reading)
We extract a few of the precepts, but we encourage the reader to click onto the fuller entry (underlined above) , which includes several passages providing the scientific, explanatory basis for the precepts: Continue reading →
(CWL 15, 53-4) This section may be resumed by explaining the diagram of transfers between monetary functions. In figure 14.1 the reader will notice five circles representing the monetary functions: RD is the redistributive, O’ basic supply, O” surplus supply, I’ basic demand, and I” surplus demand. In a given interval the action from the redistributive function changes (positively or negatively) the quantities of money available in the other four functions by (S’ – s’O’), (D’ – s’I’), (S” – s”O”), (D” – s”I”), respectively. In the same interval basic supply makes basic initial payments O’, with c’O’ going to basic demand and i’O’ going to surplus demand. Similarly, surplus supply makes surplus initial payments O”, with c”O” going to basic demand and i”O” going to surplus demand. The circuit is completed with basic expenditure E’ going to basic supply, and surplus expenditure E” going to surplus supply. The other flows in the analysis are given by the equations beneath the diagram:
In the Journal of Macrodynamic Analysis (14) [Brown et al., 2020], Bruce Anderson and Philip McShane invoked the metaphor of the ” titanothore” in their article “The More General and Difficult Fields of Specialization” (pp. 133-53).
A society cannot be like a titanothore, a beast with a three-ton body and a ten-ounce brain, fortitanothore is extinct. Instead, a society must have a three-ton culture in which technology, economics, and politics are properly situated and properly coordinated. Continue reading →