There’s nothing as practical as good theory.
Our conscious and intentional operations have exigencies for systematics, criticism, and an adequate heuristic. We need to criticize.
If we are to consider the merits and demerits of an analysis or policy, if we are to point out faults and criticize, we must have a basis or framework for doing so. We must have a norm or standard by which to judge and criticize. In macroeconomics, we must have a normative theory, providing complete explanation of the macroeconomic process, in order to determine whether it is being conducted in an equilibrated manner or deformatively stretched so as to generate systematically necessary, corrective forces.
Our analysis must be viewed as normative. [McShane, 2017, 27]
Academic economists lack an adequate theory of the economic process and, therefore, lack a basis for timely, serious criticism. Lacking a normative, explanatory theory, they are consigned and resigned to second guessing. Their criticism can only be haphazard and opportunistic. They are supposed to be baseball managers, but they act as spectators, teaching their players nothing, then criticizing after the fact every wrong move the players make.
I make the outrageous claim that the basis of serious criticism and construction is lacking in the ruling economic community. Peter Drucker wrote in the eighties, “By now we know, as Schumpeter knew fifty years ago, that every one of the Keynesian answers is the wrong answer.”8 But this “we” does not seem to include the vast majority of either economics professors or economic advisors. [McShane, 2017, 84]
In the following, substitute “economics” for “human science”, and substitute “economist” for “human scientist.”
… human science cannot be merely empirical; it has to be critical; to reach a critical standpoint, it has to be normative. … people looking for easy tasks had best renounce any ambition to be scientists; and if mathematicians and physicists can surmount their surds, the human scientist can learn to master his. [CWL 3, 236/261]
Thus, there are difficulties to be surmounted in the achievement of a normative, purely relational, explanatory macroeconomics. Paraphrasing:
… economics cannot be merely empirical; it has to be critical; to reach a critical standpoint, it has to be normative. … academics looking for easy tasks had best renounce any ambition to be economists; … if mathematicians and physicists can surmount their surds, the economist can learn to master his. [Paraphrase of CWL 3, 236/ ]
Not only Picketty, but the entire academic community, lack the needed theory.
We are at the heart of Picketty’s plight: he has no (theory which offers) the needed grip on the grounds of the inequality in history. So, what else can he offer but a centralist solution, taxation, to history’s drunken careening. [McShane 2014, 53]
The discovery of adequate theory will 1) provide an explanatory basis for criticism of the present situation, but also 2) supply the theoretical basis of wealth creation, types of income, cycles of philanthropy, and intelligent and responsible taxation, and 3) supply a basis for a completely revised analysis and criticism of economic history.
… (we need) competence in judging whether the mercantilists were wise or foolish. That question is answered only by economic theory … with principles accepted by the judging mind. Accordingly, if we succeed in working out a generalization of economic science, we cannot fail to create simultaneously a new approach to economic history. Such an approach is already a historical synthesis.17 Lonergan, For a new Political Economy, CWL 21, 9-10[McShane 2017, 32]
… the attitude of the critical mind…effects the transition from the level of understanding and formulation … to the level of reflection and judgment. [CWL 3, 274/299]
The academic economic community has become warped by the statical conventions of the past 100 years. The professional economist, in defense of his flawed assumptions, premises, and conventions against the onslaught of a compelling dynamical and explanatory theory, has come to resemble in some respects the psychoneurotic.
Intelligence is dynamic. Just as the biased intelligence of the psychoneurotic sets up an ingenious, plausible, self-adapting resistance to the efforts of the analyst, so men of practical common sense become warped by the situation in which they live and regard as starry-eyed idealism and silly unpracticality any proposal that would lay the axe to the root of the social surd. [CWL 3, 230/255]
We speak of a basis for criticism. A basis is something on which something else is based. In a field of math or science, it is a set of basic principles. In the analysis of driving performance, the primary basis for criticism of the driver is the science of the mechanics of the motor vehicle and of its demands of adaptation to its laws of mechanics. The mechanics of the mechanism provides the basis for a criticism of drivers.
A study of the mechanics of motor-cars yields premises for a criticism of drivers, precisely because the motor-cars, as distinct from the drivers, have laws of their own which drivers must respect. But if the mechanics of motors included, in a single piece, the anthropology of drivers, criticism could be no more than haphazard.[CWL 21, 109]
Our analysis yields the systems of laws explaining the current, purely dynamic, economic process. It is an always-current, purely dynamic process. Our theory is general and stands above the particular boundaries of present pricings and quantities. It explains at once both normative adaptations and distortive maladaptations (such as booms, slumps, or stagflation) of functionally related activities. Our theory is constituted by laws expressing functional relationships. Our theory yields normative relationships as a basis for criticism, because, of course, criticism is required; the norms yielded by the proper theory of the economic mechanism can be violated by the drivers.
There is the fundamental indeterminacy involving maladaptation to the norms of the mechanism by its drivers, the human participants. Specifically, the driver-agents may distort the double-circuited, crossover-balanced system in any one of several ways by maladaptive excesses or deficiencies along any of the flow arrows or “channels” of the Diagram of Rates of Flow.
In vector mathematics, a basis is a “set of linearly independent vectors in a vector space such that any vector in the vector space can be expressed as a lonear combination of them with appropriately chosen coefficients”