“Sectors”, Circuits, Explanatory Conjugates, Multiplier and Lagged Temporality

Lonergan’s Functional Macroeconomic Dynamics specifies an always-current requirement for  equilibrium in its system of interdependent functional flows.  A balance of interdependent flow rates is always required, but the rates will change in a normative sequence as the properly managed economy proceeds through the phases of an expansionary, ideal pure cycle.

Like Lonergan’s Diagram of Rates of Flow, the Romer-Lonergan Diagram is a diagram of rates of flow of payments correlated with rates of flow of products.  The flows are defined by their functional relations.

I would add that the aims and limitations of macroeconomics (that is, the circulation analysis presented here) make the use of a diagram particularly helpful, …  For its basic terms are defined by their functional relations.  [CWL 15, 54]

(The diagram is) a closely knit frame of reference that can envisage any total movement of an economy as a function of variations in rates of payment, and that can define the conditions of desirable (equilibrated) movements as well as deduce the causes of (disequilibria called) breakdowns.  Through such a frame of reference one can see and express the mechanism to which classical precepts are only partially adapted; and through it again one can infer the fuller adaptation that has to be attained. [CWL 21, 111]

On such a methodological model (i.e. explanatory definition and implicit definition superseding nominal definition)… classes of payments quickly become rates of payment standing in the mutual conditioning of a circulation;  … and from the foregoing dynamic configuration of conditions during a limited interval of time, there is deduced a catalogue of possible types of change in the configuration over a series of intervals. There results a closely knit frame of reference [CWL 21, 111]

… the productive process was defined as a purely dynamic entity, a movement taking place between the potentialities of nature and products.  … there has been attempted a dynamic division of that entity..  Elements in the process are in a point-to-point, or point-to-line, or point-to-surface, or even some higher correspondence with elements in the standard of living. … The division is not based upon proprietary differences, … for the same firm may be engaged at once in different correspondences with the standard of living.  Again, it is not a division based upon the properties of things; the same raw materials may be made into consumer goods or capital goods; and the capital goods may be point-to-line or point-to-surface or a higher correspondence; they may have one correspondence at one time and another at another. … the division is, then neither proprietary nor technical.  It is a functional division of the structure of the productive process: it reveals the possibilities of the process as a dynamic system, though to bring out the full implications of such a system will require not only the next two sections, on the stages of the process, but also later sections on cycles. [CWL 15, 26-7]

A Gathering: Important elements of the Romer-Lonergan Diagram:

This 4-page gathering has been compiled a) to help the reader get a sense of the organization of Romer’s and Lonergan’s work, and b) as a reference when reading the Romer-Lonergan schematic on this website.  It may remind one of the common practice of printing lists found inside the back or front covers of some textbooks.

1. Romer’s three “sectors” are each classified by us in the diagram as a functional level-circuit having outlays-incomes and expenditures-receipts:

  • research and development: called level 3, or level n
  • production of producer durables: called level 2, or level n-1
  • production of final outputs: called level 1, or level n-2

We note that Romer specifies three sectors, but his levels 2 and 3 use the same technology without distinction as to normative temporality. They are distinguished as two sectors but they are unitary in that they produce items every one of which – whether producer durables or consumables – can be characterized as some combination of η, the fundamental conceptual unit of all products and values.  It is just a matter of how they direct their resources.  Also, (N16) the final goods producers are assumed to operate in perfect competition and not be able to set prices.

2. Lonergan’s analytically-distinct functional levels-circuits. (CWL 15, 23-29, 42-43)

If we were, for example, to identify at an adequate level of abstraction four levels-circuits distinguished by each’s relation of its velocitously applied factors to the component factors of the integral composite finally being sold at the retail checkout counter, we would have:

  • point-to-volume; called level 4, or level n, colloquially the highest “surplus” level
  • point-to-surface; called level 3, or level n-1, colloquially the next lowest “surplus” level
  • point-to-line; called level 2, or level n-2, colloquially the lowest “surplus” level
  • point-to-point: called level 1, or level n-3 colloquially the “basic” level

3. Romer’s five properties of very-long-run economic growth [NobelPrize.org, Romer and Nordhaus; Press Release, 2018, page 14]

  1. “The accumulation of ideas is the source of long-run growth”
  2. “Ideas are non rival”
  3. “A larger stock of ideas makes it easier to find new ideas”
  4. “Ideas are created in a costly but purposeful activity”
  5. “Ideas can be owned and the owner can sell the rights to use the ideas at a market price”

4. The explanatory conjugates of Romer’s production function, implicitly defined by their functional relations to one another, representing velocities in that production function:

  • HA, the velocitous functional application of compensated human capital (i.e. intelligence capable of insight) to the store of knowledge for the purpose of invention of a design in R&D on level 1; the “design” is for a producer durable to be subsequently manufactured on level 2 (Note: the invention of a design is the production of a product having economic value)
  • HY, the velocitous functional application of compensated human capital on levels 2 and 3; because existing producer durables represent cumulative forgone output, total capital being used equals ηΣ1xl = ηΣ1Axi  (S82); therefore, by Romer’s assumption and definition, total equals cumulative forgone output.  Also, we note that per (7) (S89), total capital being used may be formulated in terms of total designs, A, times x-bar, with x-bar being assumed to be the “level of use” of all producer durables. (S88)
  • L, Labor, the velocitous functional application of compensated human, bodily skills on levels 2 and 3
  • x(i), the velocitous use of existing specialized producer durables (index i) in quantities (x) on levels 2 and 3

5. Lonergan’s explanatory conjugates are rates, i.e. velocities of quantifiable flows; they are the interrelated, interdependent, velocitous, functional payments correlated with the flows of products within and between the functional circuits, which they constitute, as indicated by his title Diagram of Rates of Flow. His two levels-circuits are “surplus (point-to-line) and “basic” (point-to-point). For simplicity and pedagogy he has represented what may be relations of point-to-surface, point-to-volume, and higher in the single, point-to-line surplus circuit.

 6. Romer’s parameters include:

η, a multi-purpose parameter representing the primitive unit in all products and the correlative unit monetary value of that primitive unit.  Romer’s proof hangs heavily on the assumptions regarding the rationale of ηx-bar, and the linearity of Aη represents at once

    • The primitive unit of “general capital” available for conversion into a consumable or a specialized producer durable
    • a primitive unit of general capital available for formation and aggregation into a final product (N15) ‘Once it owns the design, the firm can convert η units of final output into one durable unit of good i”   “to produce one unit of x(i), η units of general capital are needed.” (N15)
    • the primitive unit of a consumable (S82)
    • a primitive unit of general capital available for formation and aggregation into a final product (N15) ‘Once it owns the design, the firm can convert η units of final output into one durable unit of good i”   “to produce one unit of x(i), η units of general capital are needed.” (N15)
    • the quantifier of so many units of foregone consumption required per one unit of durable goods (S82); thus existing total capital K = ηΣiAxli.e. η times all the designs times all the specialized capital goods(S82).  All specialized capital goods, having been formed and in use, may be represented either as a) total designs times the level in use, (x-bar), or as total designs times total capital divided by the product of the primitive units η times the total designs.
    • Thus x(i) – quantity, x, of specialized durables, i, has a linear production structure; e.g.1i = 5η, a linear equation
    • A unit having putty-putty character; it is assumed that producer durables are putty-putty, so that the firm can convert units of specialized durables back into general capital at any time (S86)
    • the multi-purpose representative unit of so many units of itself required per unit of durable goods (S88) because “capital” is measured in units of consumption goods (S78-79)
    • the unit of value for the price of capital goods; the spot price of “capital” is one (S85)
    • (S90) all producer durables previously produced are used at the same level, (x-bar)
    • (N15) all ideas (designs) are equally good and have identical costs of production. This would imply that unit quantity η and unit value η are the absolute primitives
    • (S90) over time x-bar, the level of use for all x(i), remains constant and A grows at a constant Cobb-Douglas exponential rate.
    • the unit of value in general, thus wages are denominated in units of η
    • the unit of denomination for loans

δ, the productivity parameter;  we direct the reader to its functioning in Romer’s formulae:

    • (S83) δHjAand δHAA
    • (S83) Å = δHAA
    • (S90) by equation (3) (S83), Å= δHAA, the productivity, δA, of human capital, HA, in R&D grows in proportion of δ to A
    • (S90) Because of the equal rate of accumulation of K to A in a balanced growth equilibrium, the wage w paid for human capital in the final output sectors will grow in proportion to A,
    • (S90) Thus, the productivity of human capital δgrows at the same rate in both sectors.
    • (S85) (S91) wHA = PAδ[PA = …] (9) (S91)
    • (10)(S91) H= 1/δ
    • (S91) “For a fixed value of HA = H – HY, the implied exponential growth rate is δHA
    • (S92) g = Ċ/C = … = δHA
      • (11)(92) g = δHA=
      • (11’)(92) g = δHA=

x-bar as representation of so many η’s in specialized capital’s level of use. Because of Romer’s analytical inter-firm-ism, in contrast  with Lonergan’s more abstract but simpler inter-function-ism, Romer’s proof hangs heavily on the assumptions regarding the rationale of x-bar, η, and the linearity of A.

“All the producer durables that have been designed up to time t are used at the level x-bar, … Over time x-bar remains constant and A grows at a constant exponential rate.” (S90

    • (7)(S89) and (N15) In the first three equations of (7), the reader should carefully grasp the demonstration of the alternative formulations at the right extreme of the integral-over-x(i) [i.e. all specialized durables produced] into A[x-bar] into A[K/(ηA)]. Again, all specialized capital goods may be represented either as a) total designs times the quantity produced, (x-bar), or as total designs times total capital divided by the product of the primitive units times the total designs.
    • (S88-89) all durable goods available are supplied at the same level, denoted as x-bar
    • (S89) Thus total capital in use is K = ηA(x-bar)
    • (7)(S89) Thus, (x-bar) = K/ηA, an average level of use
    • (8) (S91) PA= …
    • (9) (S91) wH= …

7. Nonobvious symbols of interest in Romer include

  • A, an index of the quantity of economically useful knowledge
  • η, a unit of final output (S80); a unit of forgone output; a unit of capital (S88); a unit of value; a parameter (See 6 above re parameters)
  • i, a unique piece of capital, not substitutable for another and additively separable in Romer’s production function from all others (S80)
  • K, the total capital at work; K = ηΣ1xl; K = ηΣ1Axi (See S82)   Total capital includes
    • Physical capital, xi
    • by derivation, its primitive compositional element, η
    • η, as a consumption item, saved to support future production
    • η as a value, a sort of monetary capital
  • wH, (9) (S91)  wage rental rate per unit of human capital in R&D and in production of durables or final products
    • (S85) (S91) wHA = PAδ[PA = …] (9) (S91)
  • π, the present value of future profits, as specified in the references below:
    • (6) (87) the present value of the net revenue that a monopolist can extract
    • (6) (S87) PA(t) = …
    • (6’) (S87) π(t) = r(t)PA
    • (S91) the present value of the flows (stream over time) of profit extractable by the seller of (the output of) any particular durable input; i.e. the flow of profit embedded in the selling price p-bar(i) of the producer of the producer durables
    • (5)(86) the monopoly pricing problem:
    • π= maxxp(x)x – rηx
    • π= maxx(1-α-β) …– rηx
    • (8) (S91) π/r = PA …
  • r, the interest rate and the rate of return, used as listed below:
    • (6)(S87) re the elasticity of demand
    • (6’) (S87) π(t) = r(t)PA
    • (S89) along Romer’s balanced growth path, r, x-bar, and the ratio of to are all constant
    • (S85) the spot price for capital is one and its rate of return is r
    • (5)(S86) the monopoly pricing problem: maximize revenues minus costs
    • π= maxxp(x)x – rηx
    • π= maxx(1-α-β) …– rηx
    • (S90) the relation of the growth rate of output to the rate of return on investment
    • (10) (S91) HY= Γ(r/δ)
    • (S91-92) x-bar is constant if is
    • (11) (S92) g = δHA= δH – [α/{(1-α-β)(α+β)}]r
    • (11’) (S92) g = δHA = δH – Γr

8. Other nonobvious symbols of interest in Lonergan include

  • G; G = I”O” – c’O’; the condition of dynamic equilibrium (CWL 15, 53-55)
  • subscript k (in qijk) as a compensated velocitous application by humans of a factor of production(CWL 15, 30)
  • multiplier kn in lagged technical accelerator kn[f’n(t-a)-Bn] = f”n-1(t) – An-1[CWL 15, 37]
  • t, t-a, t-b, time lags in lagged technical accelerator (CWL 15, 37)
  • c, what limits profit (CWL 15, 156-57)
  • a’ and a”, acceleration factors, by comparison of elements currently under process with elements currently being sold. (CWL 15, 157)
  • I’ = Σwiniyi basic income per interval (CWL 15, 134)
  • f = vw, the pure surplus-income ratio (CWL 15, 148)
  • J = P’/p’ = a’ + a”(p”Q”/p’Q’) the basic price-spread ratio (CWL 15, 158)

Commentary:

Romer’s and Lonergan’s works have a formal similarity of distinct levels or circuits interacting in sequence with one another.  Thus both can be placed in ths same framework of hierarchical-sequential levels and circuits.

But there are qualifying differences:  Romer’s temporal perspective in the framework is the very long run of decades, or even centuries.

Romer’s and Nordhaus’s prize-winning contributions belong to the field of long-run macroeconomics.  In textbooks, macroeconomic analysis is usually defined over different time horizons. Most well-known is the short-run perspective on the macroeonomy: the study of business cycles – the ups and downs of output over, say, a 10-year horizon.  In the midst of such ups and downs, it is easy to forget the long-run perspective: the study of economic growth – development of output, and more broadly human welfare, over decades or even centuries. [NobelPrize.org, Romer and Nordhaus; Press Release, 2018, page 2]

Romer vaults himself and us to the final retrospective of a balanced growth equilibrium.  Lonergan keeps us in the here and now of an equilibrium of balanced current flows.  Lonergan’s forms and systematics are the always-current, or ideal instantaneous, conditions of equilibrium and how they can best play out through short-run phases of expansion-after-expansion over Romer’s decades, or even centuries. Romer seeks to formulate a constant, exponential, smoothed-out, linear growth in the very-long run.  Lonergan walks us carefully through the immanent intelligibility and norms of the always-curent, dynamic process of multiple waves or cycles over decades, or even centuries.  Romer forces a straight line. Lonergan accepts and explains an intrinsically curvilinear systematic structure.

Romer states that his analysis deliberately bypasses the transitional dynamics of business cycles.

By focusing only on balanced growth paths, the analysis neglects the transient dynamics that arise when the economy starts from a ratio of to that differs from the ratio that is maintained along the balanced growth path.  One should be able to study convergence to the balanced growth ratio of to using the tools used for studying the Solow and Uzawa models, but this analysis is not attempted here. (S90)

Interestingly enough, Romer and Lonergan are in substantial agreement about results in the very long run. Innovation benefits all sectors equally.

One may expect the increment of a volume to stand to the increment of a surface as the volume does to the surface.  To suppose the contrary leads to absurd conclusions…  If, for instance, dQ”/Q” were on a long-term aggregate much greater or much less than dQ’/Q’, then a series of long-term periods would make this difference multiply in geometrical progression to effect a convergence of Q” and Q’ or else a mounting divergence.  Such a convergence or divergence would imply that the more roundabout methods of capitalist progress were increasingly less efficient or increasingly more efficient in expanding the supply of consumer goods.  Neither view is plausible.  New ideas and new methods increase existing efficiencies in both the surplus and the basic stages; the ratio between the quantity of surplus and the quantity of basic products per interval is not a matter of efficiency but of the point-to-line correspondence involved in any more roundabout method, in the fact that a single surplus product gives a flow of basic products. CWL 15, 124

Romer’s productive process may be viewed in our diagram as a hierarchical three-level process.  The vertical graphical series descends from top to bottom with a temporal-productive series from first to final. Top is first; bottom is last.  He proceeds, so to speak, first from the “top down”: from the “topmost” accelerator level of the invention of a “design,” which is then transmitted downward to the accelerated intermediate level for the production of accelerator capital, which is then transmitted downward to the lowest level for accelerated producing of final products.

However, only by leaping over the transitional dynamics associated with systematic time lags can he leap over separately accelerated, intrinsically curvilinear, serial surges to final very-long-term, smoothed-out, equal velocity, linear accelerations. Thus, as the Romer-Lonergan diagram shows, while there does exist in both men’s systematics the use of implicit definition of explanatory conjugates and a formal similarity of levels, Lonergan’s treatment is a double treatment: it includes a) the always-currently-applicable conditions of dynamic equilibrium symbolized by the baseball diagram, and as well, b) a sequence, subject to the always-currently applicable conditions of dynamic equilibrium of differently-timed, differently quantified, transitional velocities and accelerations in the expansion of the process through the phases of the many cycles.  While Romer’s ratio of to is constant in the very long run, Lonergan’s always-current, cyclically-varying ratio of to is practically never constant.

But at the end of the very long run, both agree that all sectors benefit equally.  Because Lonergan’s analysis is purely functional, he can explain this in one simple paragraph, while Romer is forced by his interfirmism to make many assumptions and machinations with δ, HA, A, η, and x-bar to get himself mathematically to a constant-growth equilibrium in retrospect. Further, functional analysis specifies that systematically necessary adjustments will be required to correct the disequilibria called booms and slumps; and thus, after these adjustments it will always agree with Romer regarding the final retrospective results.

Lonergan appreciated the criticality of a) valid premises for any logical expansion, and b) the identification and careful definition of basic terms of scientific, explanatory, significance.  He made, in the first place, precise, foundational, analytic distinctions (e.g. the functionings of point-to-line, point-to-point, etc.) upon which he could build a superstructure comprising a full scientific explanation of the overall functioning process.  His basic explanatory terms ( click here and here and here) were at a high level of abstraction rather than commonsensically descriptive; e.g. n, n-1; and point-to-line and point-to-point. [1]  Lonergan’s analytically precise terms have temporality and geometric and algebraic significance.  Point-to-point, point-to-line, point-to-surface, point-to-volume, and higher, all have projective-geometric aspects; and the point-to-point relation between any levels and n-1 has algebraic significance as a linear function of the first degree.  Romer’s conjugates of human talent and specialized durables applied over a very long term, though applicable for proof of endogeneity, are, due to assumptions of fixity and linearity, not in and of themselves fully adequate for explanation of the current, but phased, economic process and its intrinsically cyclical, mounting accumulations over time.

To further demonstrate Lonergan’s treatment of the intrinsic cyclicality and transitional dynamics which Romer chose not to treat, we insert below a) the formulae from [CWL 15, 36-38] expressing the multiplier (k) and the lag (t-a) of lagged technological acceleration, b) the table of possibilities on [CWL 15, 114] relevant to phases of an expansion, c) Figure 24-7 showing the differing rather than constant accelerations over a pure cycle (CWL 24-7), and d) Figure 27-1 showing the different careers of the elements of the pure surplus-income ratio (CWL 15, 150).  Please examine these and their surrounding context in [CWL 15, pages 36-38].

Formulae of lagged technological change:

k2[f2’(t-a) – B2] = f1”(t) – A1

k3[f3’(t-b) – B3] = f2”(t-a) – A2

k4[f4’(t-c) – B4] = f3”(t-b) – A3

Table of possibilities:

dQ”, dQ’
        I. Unspecified Surplus Advantage Proportionate Phase Basic Advantage
II. Neither negative Surplus Expansion Proportionate Expansion Basic Expansion
III. Neither positive Surplus Contraction Proportionate Contraction Basic Contraction
       IV. Both zero Mixed Phase
        V. One positive,

one negative

Mixed Phase Mixed Phase

 

Differing rather than constant accelerations over a pure cycle:

The different careers of the elements of the pure surplus-income ratio:

Romer makes distinctions, critical to his systematics and startlingly revelatory to his readers, between rivalrous and nonrivalrous knowledge,

https://www.nobelprize.org/uploads/2018/10/fig2-rival-nonrival.pdf

and excludable and nonexcludable (available to all) knowledge.  He emphasizes the foundational importance of the existence and availability of the pool of non-rivalrous, non-excludable knowledge, A, – such as, for example, the law of cosines, the Newton-Leibnitz-Euler calculus, a principle of mechanical, electrical, or chemical engineering, software, a mechanical drawing, and copiable, skirtable, or stealable patents – which is not privately embodied in a single individual, not fully protected by patent or trademark, and cannot be excluded from use by anyone and everyone doing research.  To be sure, some knowledge may be temporarily patented or encrypted and sold, but it may ultimately be plucked, stolen, or skirted and can, perhaps sooner rather than later, be exploited by anyone anywhere in the creation of a new design on Romer’s level n of point-to-surface R&D.  The two inputs of production in profit-motivated R&D – cumulative intelligence, HA, applied at a productivity parameter, δ, and the store of knowledge conveniently quantified as a count of designs” or “forms,” – will be point-to-point with the formal elements of each new design in the flow of designs exiting level n; then each new design will be a factor of production in a point-to-point relation to each new and better machine in the flow of specialized producer capital; and then each new use will be a factor of production in a point-to-point relation to the final, completed, products for which it is used.  Thus, in the Romer-Lonergan Diagram, the R&D level will constitute the initiation of a sequential flow of flows of flows.

While others – notably Robert Solow –  had recognized this pool of knowledge as the reason for increasing returns to ward off Malthus’ and Ricardo’s decreasing returns, Romer’s stroke of genius was to formulate its profit-motivated, endogenous use by human capital in profit-motivated R&D in order to initiate a flow of flows of flows. Romer had the mathematical chops to supply a “proof” of what was obvious, yet mysterious, to all – that technological change is endogenous.  And, because the source of technological change was demonstrated to be endogenous, then effective and responsible R&D became a matter of responsibility and control for national governments. (Click here and here.)

In Lonergan’s framework, both Romer and Lonergan descend graphically, so to speak, from the top first. Both proceed from a precise analytical basis through to the derived superstructure.  In both conceptualizations, the primary economic activity is the rate of application by a compensated human of a factor of production in the serial composition of a final product.  qi= qijk  [CWL 15, 30] [formula (1)], e.g. a design is composed of the factors of knowledge and insight applied in a series of units of enterprise j.  However, Lonergan identified and thematized a temporal succession of expansive and expanding waves.

Again, the integral product, qi, which finally exits being-under-process is a composite of components, with these components, subscript k (below), being understood as factors of production applied at rates by compensated humans in a series of units of enterprise j over time (or in an interval).

qi= qijk  [CWL 15, 30] [formula (1)]

k2[f2’(t-a) – B2] = f1”(t) – A1

k3[f3’(t-b) – B3] = f2”(t-a) – A2

k4[f4’(t-c) – B4] = f3”(t-b) – A3

And the primary temporality is given by Lonergan’s lagged technical accelerators (CWL 15, 36-38), featuring the terms of timing  (t), (t-a), (t-b), (t-c).  Appropriately, these foundational formulae are the leadoff formulae in CWL 15. And, while Romer’s ratio of to is constant in the very long run, Lonergan’s always-current ratio of to is practically never constant.

Romer’s major challenge was posed by his inter-firm-ism, contrasted with Lonergan’s inter-function-ism, requiring Romer to make some questionable assumptions so as to force microeconomic accounting concepts into a macrofunctional proof.

Great credit is due to both men.  As a physicist-economist, Lonergan sought the “hydrodynamic” conditions of continuity and equilibrium when interdependent functional sectors operate at different functional velocities always currently in an intrinsically cyclical expansion, while, as a mathematician-economist, Romer seeks to demonstrate the endogeneity of technological change and the conditions of very-long-run equilibrium by a set of equations relating the applications of mind, muscle, and capital in equal velocities over the very long run.

In Lonergan’s Essay in Circulation Analysis,the whole intelligibility of a normative pure cycle and of the maladaptive distortions called booms and slumps have their ultimate explanation in equilibrated or disequilibrated functional productive flows, the nature of these flows as accelerators or accelerateds, and in their different timings in the transitional dynamics of expansion.

Lonergan discovered and conceptualized a Functional Macroeconomic Dynamics field theory, a purely relational system constituted by interdependent flows of products and payments within and between circuits on levels.  It is at an adequate level of abstraction.  As a field theory, his system was not contaminated by the experiential residue of force or mass or utility or liquidity preference; it was constituted simply by purely relational point-to-point, etc.; lags t-a, t-b; multipliers kn, and velocities d/dt  and accelerations d2/dtof interdependent functionings implicitly defined by the functional relations in which they stand with one another.

Lonergan’s whole structure, by virtue of his use of implicit definition a la Hilbert,  is purely relational, and all his verbiage converges on a few coherent equations in which the terms are defined by the relations and the relations are defined by the terms.  His work is not a deduction from premises of absolutes known in and of themselves; it is a set of pure relations of terms defined by their functional relations.  It is an uncontaminated field theory of pure relations, which explains the always current, purely dynamic, objective, functional, economic process.

I have insisted on focusing on the central issue: the need of a functional analysis of the productive process and its correlated monetary flow. [McShane 1980,200] (Again,) Lonergan’s analysis is concrete but heuristic.  It focuses on functional relations intrinsic to the productive process to reach eventually a general theory of dynamic equilibria and disequilibria. [McShane 1980, 117]

 

 

 

 

 

[1]Think, for example, of Clerk-Maxwell’s explanatory rather than descriptive terms: electric intensity and magnetic intensity.