Philip McShane understands Lonergan’s Functional Macroeconomic Dynamics better than anyone else alive, due I believe to his ability to apply his background in mathematics and theoretical physics to a scientific macroeconomics. He has stated:
Concomitance is, I would claim, the key word in Lonergan’s economic thinking. [Philip McShane, [Fusion 1, page 4 ftnt 10]
My other extravagance (in preparing the index) is to bring into focus, by entries under ‘Concomitance,’ the total challenge of the new political economy. Are we to respect the heart-pulses of the productive machine, or are we to continue the ‘absurdity’ (see Index) of counterpulsing, locally and globally? (Can we say with Wordsworth) “And now I see with eye serene, the very pulse of the machine.” [CWL 21, 326 Editor’s Introduction to the Index.]
In treating the current, purely dynamic, economic process, we deal with correlated, companionate flows. Let bare concomitance denote a bare companionship of flows. In Latin, comes, comitis denotes a “fellow traveller,” “a companion”. We need not stray far from the Latin to grasp the importance of concomitance in Functional Macroeconomic Dynamics.
Concomitance of the companionate flows is required for the achievement of normative continuity and dynamic equilibrium.
There are flows of types of products, and, as indicated in the Diagram of Rates of Flow, there are companionate flows of money which must keep pace with the flows of products. Thus, there are flows of money in a conditional circulatory dependence on one another. Outlays become Incomes, which become Expenditures and Receipts, which become Outlays in the next round. Round and round it goes. In reverse order, Expenditures for goods and services are conditioned by a concomitance of Incomes. Incomes are conditioned by their concomitance with Outlays. Outlays are conditioned by a concomitance with Receipts from Expenditures or from credit.
Let normative concomitance denote the requisite keeping pace of interdependent, mutually conditioning, functional flowings.
Concomitance of flows is a condition of continuity. The absence of normative concomitance constitutes a slowdown or break in the action.
The quantity of a product flow in an interval is the numerator in dQ/dt or ΔQ/Δt. The moving together with respect to time is expressed in the abstract ratio of so much or so many per standard interval . Not , however, that in Lonergan’s notation Q is used to denote a rate of flow.
So, assuming a constant price, an acceleration, which is to keep pace with another acceleration, is expressed as d(PQ)/dt = PdQ/dt or Δ(PQ)/Δt = PΔQ/Δt with PQ representing a sum of money, P representing price, and Q representing a rate of flow of a quantity of units of material or service.
A condition of circuit acceleration was seen in section 15 to include the keeping in step of basic outlay, basic income, and basic expenditure, and on the other hand, the keeping in step of surplus outlay, surplus income, and surplus expenditure. Any of these rates may begin to vary independently of the others, and adjustment of the others may lag. But any systematic divergence brings automatic correctives to work. The concomitance of outlay and expenditure follows from the interaction of supply and demand. The concomitance of income with outlay and expenditure is identical with the adjustment of the rate of saving to the requirements of the productive process. [CWL 15, 144]
(We) state the necessary and sufficient condition of constancy or variation in the exchange value of the dummy (money). To this end we compare two flows of the circulation: the real flow of property, goods, and services, and the dummy flow being given and taken in exchange for the real flow….Accordingly, the necessary and sufficient condition of constant value in the dummy lies in its concomitant variation with the real flow….More briefly, if there is concomitance between the two flows, then the proportion in which dummies and goods exchange remains the same. If there is lack of concomitance, then this proportion changes. But exchange value is a proportion. Therefore, the concomitance of the two flows is the condition of constant exchange value. [CWL 21, 37-39]
Please note in the excerpts above:
- the synonymity of “keeping in step” and “concomitance”
- that any systematic divergence from concomitance of comcomitandal flows brings automatic correctives to work
- that in a system composed of a basic and a surplus circuit, the velocitous or accelerative concomitance within each respective circuit of respective Incomes with Outlay and Expenditure is identical with the adjustment of the rate of saving to the requirements of the productive process
- that the concomitance of the two flows of a product and its purchase moneys is the condition of constant exchange value, and
- the truism or absoluteness of supply matching demand and demand matching supply because of their mutuality- they are merely two aspects of a single exchange – in an exchange interaction. A transaction is constituted by the exchange of something demanded-purchased and sold-supplied. In the sense that a) what is not yet sold is still under process because it has not yet exited the process, and b) no matter how much something is desired, if it is not bought it has not been supplied, in that sense it is a truism that actual supply and demand are conjoined and unitary.
Concomitance is a condition of continuity, dynamic equilibrium, normative circuit acceleration, and stable prices. Again,
…: two types of firms implies two interdependent circuits, and two types of income; and continuity within and among the interdependencies necessitates concomitance.