Foundations of Macroeconomic Field Theory in Physics [Brief Item #77]

[2/16/20] Albert Einstein, Bernard Lonergan, and the theory of Riemannian manifolds: The contents of the excerpt below from CWL 3 are pretty standard stuff in an advanced physics course.  The ideas are not Lonergan’s discoveries.  Nevertheless, it is worthwhile to point out that Lonergan knew his physics and indeed taught physics.  He understood and appreciated the difference between Newtonian mechanics and modern field theory.  And he brought that thinking to his revolutionary ideas in purely relational Functional Macroeconomic Dynamics.  So, to provide an indication of the mind that Lonergan brought to macroeconomics, we print this excerpt.

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 n2 products under the summation.  Since this equation defines the infinitesimal interval, it must be invariant under all permissible transformations. … … … Thus in the familiar Euclidean instance, gij is unity when i equals j; it is zero when i 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 x4 equals 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. [#77]  [CWL 3, 146 -147/170-71] (Click here for previous “Single Paragraphs” or “Brief Items”)

 

 

All the Concepts Tumble Out Together [Brief Item #76]

[2/12/20] (In) every basic insight there is a circle of terms and relations, such that the terms fix the relations, the relations fix the terms, and the insight fixes both.  If one grasps the necessary and sufficient conditions for the perfect roundness of this imagined plane curve, then one grasps not only the circle but also the point, the line, the circumference, the radii, the plane, and equality.  All the concepts tumble out together, because all are needed to express adequately a single insight.  All are coherent, for coherence basically means that all hang together from a single insight.  [CWL 3, 12/36]

… it will be well at once to draw attention to J.A. Schumpeter’s insistence on the merits of the diagram as a tool. (Schumpeter, History 240-43, on the Cantillon-Quesnay tableau.) … First, there is the tremendous simplification it effects.  From millions of exchanges one advances to precise aggregates, relatively few in number, and hence easy to follow up and handle. … Francois Quesnay’s tableau economique. … was the first to make explicit the concept of economic equilibrium.  All science begins from particular correlations, but the key discovery is the interdependence of the whole. … the diagram (of the interconnections of a few precise aggregates) has compensating features that Quesnay’s system of simultaneous equations may imply but does not manifest. [CWL 15, 53 and 177]

 

 

 

 

 

 

 

 

To understand how the system of interdependent monetary circulations meets the system of production and exchange is to understand how the economy works.  It is to grasp all the production and monetary concepts together in a single coherent set of relations.  It is to see all the dynamic interactions of the current dynamic process in a single view, or better, to understand explanatory macroeconomics in a single comprehensive act of understanding. “All science begins from particular correlations, but the key discovery is the interdependence of the whole.”

… once initial difficulties are overcome and basic insights are reached, the investigation approaches a supreme moment when all data suddenly fall into a single perspective, …. [CWL 3, 47/71]

More positively, the channels account for booms and slumps, for inflation and deflation, for changed rates of profit, for the attraction found in a favorable balance of trade, the relief given by deficit spending, … [CWL 15, 17] [#76] (Click here for previous “Single Paragraphs” or “Brief Items”)

 

FMD’s Take on Greg Mankiw’s Take on Modern Monetary Theory

Contents:

  • .I. Introductory
  • .II. The “legal” basis of our criticism; the “laws” of the process
  • .III. Key objections to Modern Monetary Theory
  • .IV. Observations re “A Skeptic’s Guide to Modern Monetary Theory”
  • .V. Why and how the Basic Expansion fails to be implemented
  • .VI.  Addendum #1: Primary relativities of the economic process
  • .VII. Addendum #2: Excerpts re the drift to totalitarianism

Continue reading.

Walras’s System Lacks Dynamic Significance [Brief Item #75]

[2/10/20] Schumpeter, Walras: While we agree with Schumpeter that Walras’s system implicitly includes the aggregates commonly considered in macroanalysis, (Walras’s system) can hardly be credited with distinctions between basic and surplus expenditure, receipts, outlay, income, and much less with an account of their various dynamic relations.  But until such distinctions are drawn and their dynamic significance understood, the aggregates and relations cannot be contained implicitly in any system.  [#75] [CWL 15,  91-92] (Click here for previous “Single Paragraphs” or “Brief Items”)

Lonergan on the Foundations of the Theories of Relativity, by Patrick H. Byrne [Brief Item #74]

[2/8/20] Albert Einstein, Bernard Lonergan: In a paper recently presented before the Boston Colloquium of the History and Philosophy of Science, Prof. Max Jammer of Bar-Ilan University surveyed the history of the attempts to provide axiomatic (or conceptual) foundations for the Special Theory of Relativity (hereafter abbreviated as “STR”). Among other things, Prof. Jammer’s paper revealed that, in contrast to quantum mechanics, no generally accepted axiomatic foundations for STR have yet emerged.  Furthermore, Jammer’s paper showed that several attempts at axiomatic foundations were beleaguered with problems not to be found in the use of the theory by Einstein or the successive generations of practicing physicists. ¶ The shortcomings of these efforts to develop axiomatic foundations for STR  –  and indeed of any parallel efforts directed towards the search for axiomatic foundations for the General Theory of Relativity as well  –  are, in my judgement, inherent in the theories themselves.  That is, the proper foundations of the theories of relativity reside, not in conceptual axioms, but in the foundational reality of the subject as subject.  It is not my purpose in this paper to enter into a detailed critique of the various attempts at axiomatization discussed in Prof. Jammer’s paper.  Rather on this occasion celebrating the achievements of Bernard Lonergan, I simply intend to show how his phenomenological appropriation of the structure of consciousness has opened up the possibility of approaching the question of the foundations of the theories of relativity from the viewpoint of the subject as subject.    Byrne, Patrick H. “Lonergan on the Foundations of the Theories of Relativity,” Creativity and Method, Matthew Lamb (ed.), Milwaukee: University of Marquette Press, 1981, pp. 477-478 in pages 477-94. [#74] (Click here for previous “Single Paragraphs” or “Brief Items”)

A Superior and Far Less Expensive Macroeconomics Textbook

A very expensive macroeconomics textbook, having 700-1000 pages, would contain a lot of interesting history, a lot of fuzzy psychology, unscientific analysis, and uncertain conclusions.  A reader would not gain a clear theory and complete explanation of the dynamics of the real economic process.  However, is there not a superior 228-page, far less expensive  textbook right in our hands?  How about this?  Reword the subtitle of CWL 15 from An Essay in Circulation Analysis to A Textbook of Circulation Analysis, and let the professor instruct the serious student to read the book three times, then report back to discuss the following:

  • the canons of empirical method
  • a scientific, dynamic  heuristic
  • the technique of implicit definition; explanatory terms defined by the functional relations in which they stand with one another
  • velocitous functional unities of scientific and explanatory significance replacing the BEA’s descriptive, commonsense, accountants’ unities
  • the structure of the lagged, rectilinear productive process
  • money as a dummy invented by man
  • the perspective of a hierarchical series of monetary circuits
  • how a monetary circulation meets the rectilinear production-and-vending process
  • the primary relativities and concomitance in the Diagram of Rates of Flow
  • dynamic equilibrium replacing static Walrasian general equilibrium
  • the velocity of money in terms of magnitudes and frequencies
  • prices are not a given and not requiring explanation; rather prices are in need of explanation
  • interpretation of prices, quantities, interest rates in the light of significant explanatory variables
  • the pure cycle and its constituent phases in the expansion of the objective economic process
  • the abstract primary relativities and concrete secondary determinations in the expansion of the economic process
  • the statistical residue and why prediction is impossible in the general case; predicting weather vs. predicting planetary motion
  • the significance of investment’s monetary correlate
  • the ineptitude of manipulating interest rates
  • the explanation of government and foreign-trade imbalances by the dynamics of superposed circuits
  • the distinction between efficient cause and formal cause
  • distinguishing between self-healing and the effect of interventions
  • the intelligibility and explanatory power of the basic price-spread ratio
  • Figures 14-1, 24-7, and 27-1 in CWL 15

The student would learn much that is radically different, explanatory, and very useful; and he/she would gain a perspective or framework by which to evaluate and criticize the flawed premises and tenets of conventional textbooks and traditional theories.

 

Why Economists Don’t Flock to Functional Macroeconomic Dynamics

Economists don’t have the methodological and conceptual toolkit needed for appreciation of FMD’s scientific and historical significance.

  • They don’t know what they don’t know.
    • They’re not methodologists and don’t know what constitutes good theory.
    • They never read CWL 3, pages 3-172 and 490-97 and, thus, they never studied the canons of empirical method, especially the Canon of Parsimony and the Canon of Complete Explanation; they have no idea of the deficiencies of their method.
  • Thus, they lack a purely scientific and explanatory heuristic.
    • They do not adequately distinguish description vs. explanation.
    • They do not know the type of answer they’re seeking, i.e. their known unknown.
    • They do not put questions in the right order to discover basic terms of scientific significance.
    • They are mired in muddy premises and disorienting assumptions.
    • They are unable to employ a scientific, dynamic heuristic adequate for analysis of a current, purely dynamic process.
    • They don’t understand what constitutes the normative system’s requirement for  concomitance, continuity, and equilibrium of flows.
  • They lack a background in theoretical physics. They don’t understand the principles and abstract laws of hydrodynamics, electric circuits, or field theory.  Nor do they understand adequately the idea of continuity and the conditions of equilibrium in macroeconomic dynamics.  They are unaware of analogies from physics applicable on the basis of isomorphism to the phenomena of Functional Macroeconomic Dynamics. (Continue reading.)