We have frequently taken excerpts from Lonergan’s other works – especially *Insight, A Study of Human Understanding*[CWL 3] – and paraphrased them. Lonergan studied human knowing, especially the knowing of mathematicians and scientists. So, he had much to say about what constitutes scientific knowing, scientific method and science itself. He understood the difference between description and scientific explanation, between common sense and theory, and between the application of common sense and the application of explanatory theory.

He sought to discover a scientific macroeconomics which explains the economic process, tells how the process really works, and offers a framework for criticism and management. He knew how important it is to the world to discover a science of economics which yields a set of norms to which free people can properly adapt.

So, we have taken some key paragraphs, in most of which Lonergan was talking about aspects of science and scientific method rather than macroeconomics, and we have paraphrased them to statements relative to macroeconomics to demonstrate the underpinning of Functional Macroeconomic Dynamics by the contents of *Insight*.

*****

Now the principal technique in effecting the transition from description to explanation is measurement. We move away from colours as seen, from sounds as heard, from heat and pressure as felt. In their place, we determine the numbers named measurements. In virtue of this substitution, we are able to turn from the relations of sensible terms, which are correlative to our senses, to the relations of numbers, which are correlative to one another. Such is the fundamental significance of measurement. [CWL 3, 165/188-89]

**Paraphrasing**:

Now the principal technique in effecting the transition from description to explanation is implicit definition. We move away from subjective categories of getting and spending as performed, wealth or poverty as experienced, standards of living as admired or envied. In their place, we identify the interlocking functional velocities. In virtue of this substitution, we are able to turn from the relations of sensible terms, which are correlative to our senses and perceptions, to the relations of velocitous functionings, which are correlative to one another and implicitly define one another by the functional relations in which they stand. Such is the fundamental significance for explanatory science of implicit definition.

*****

From the viewpoint of explanation, the planets move in approximately elliptical orbits with the sun at their focus.

From the viewpoint of ordinary description, the earth is at rest and the sun rises and sets. [CWL 3, 295/

**Paraphrasing:**

From the viewpoint of *explanation*, the current, purely dynamic, economic process is composed of interdependent, mutually conditioning, velocitous functional flows of products correlated with circulations of payment money. Analysis yields a system of laws and norms independent of human psychology to which human psychology must adapt.

From the viewpoint of ordinary *description*, the economic process is a process of the getting and spending of households and firms whose commonsense psychological interests are adequately described by generally accepted accounting categories tallying revenues and expenses into net changes in personal income and wealth.

*****

When a special effort is made,

the mathematical expression of physical principlesand laws undergoes no change in form despite changes in spatio-temporal standpoint and then the mathematical expression is said to be invariant under some specified group of transformations. [ CWL 3, 40/64]

**Paraphrasing**:

When an analysis of the real economic process is made, **the mathematical expression of macroeconomic principles**and laws undergoes no change in form despite differences in political systems and then the mathematical expression is said to be invariant under some specified policies and laws

*****

Thus, masses might be defined as the correlatives implicit in Newton’s law of inverse squares.[1] Then there would be a pattern of relationships constituted by the verified equation; the pattern of relationships would fix the meaning of the pair of coefficients, m

_{1}, m_{2}; and the meaning so determined would be the meaning of the name, mass. In like manner, heat might be defined implicitly by the first law of thermodynamics (insert) and the electric and magnetic field intensities, E and H, might be regarded as vector quantities defined by Maxwell’s equations of the electromagnetic field.[2][CWl 3, 80/102-03]

**Paraphrasing**:

Thus, costs, i.e. basic expenditures, might be defined as the correlatives implicit in Lonergan’s law of what limits profit. (There exists) a pattern of relationships (which) … would fix the meaning of the scalar dot product of the price and quantity vector indices of *costs*and *profits*; and the meaning so determined would be the meaning of the names functional costs and functional pure surplus income. (Physics has given us clues:) … the pattern of relationships would fix the meaning of the pair of coefficients, m_{1}, m_{2}; and the meaning so determined would be the meaning of the name, mass. In like manner, heat might be defined implicitly by the first law of thermodynamics (*Δ**U = Q – W*) and the electric and magnetic field intensities, E and H, might be regarded as vector quantities defined by Maxwell’s equations of the electromagnetic field.

*****

The whole structure is relational: one cannot conceive the terms without the relations nor the relations without the terms. Both terms and relations constitute a basic framework to be filled out, first by the advance of the sciences and, secondly, by full information on concrete situations. [CWL 3, 492/516]

**Paraphrasing**:

The whole structure is relational: one cannot conceive the functional velocities without the relations defining them nor the relations without the functional velocities. Both terms and relations constitute a basic framework to be filled out,

In Lonergan’s circulation analysis, the basic terms are rates – rates of productive activities and rates of payments. The objective of the analysis is to discover the underlying intelligible and dynamic (accelerative) network of functional, mutually conditioning, and interdependent relationships of these rates to one another.

*****

Thus if ‘mass’ is conceived as a quantity of matter and matter is conceived as whatever satisfies the Kantian scheme of providing a filling for the empty form of time, then the law of inverse squares is external to the notion of mass. On the other hand, if masses are conceived as implicitly defined by their relations to one another and the law of inverse squares is the most fundamental of those relations, then the law is an internal relation, for the denial of the law would involve a change in the concept of mass. [CWL 3, 493-94/514-20]

**Paraphrasing A**

if the outlays for factors of production are conceived as implicitly defined by their correspondences with factors integrated in a product or service which is sold, and if expenditures (P’Q’) for basic products equaling macroeconomic costs (p’a’Q’ + p”a”Q”) of basic products are the most fundamental of those relations, then these law are **internal and primary relations**, for the denial of the laws would involve a change in the concepts of flows of factors of production, basic expenditures, and macroeconomic costs.

**Paraphrasing B**

If the current interest rate is conceived as the current relation of implicitly defined functionings to one another, then **the interest rate is an internal relation**, for the denial of the law would involve a change in the concept of the current interest rate

*****

The basic terms of the sciences … are defined by their respective relations to one another. To distinguish between the defining relation and the defined term can be no more than a notional operation; and even then it cannot be carried through, for if one prescinds from the defining relation, one no longer is thinking of the term as defined but of some other term that is mistakenly supposed to be absolute. Finally, while there are relations other than such defining relations, still they are not adequately distinct from them; for these other relations are concrete; their primary relativity consists in the defining relations; and their secondary determinations are neither relations nor the reality of relations but the contingent concrete differentiations of the primary relativities. [CWL 3, 496/520]

**Paraphrasing**:

The basic terms of the science of Functional Macroeconomic Dynamics – velocitous functionings, … are implicitly defined by their respective relations to one another. To distinguish between the defining relation and the defined term can be no more than a notional operation; and even then it cannot be carried through, for if one prescinds from the defining relation, one no longer is thinking of the functional velocity as defined but of some other term that is mistakenly supposed to be absolute. Finally, while there are relations (such as pricings) other than such defining functional relations, still they are not adequately distinct from them; for these other relations are concrete; their primary relativity consists in the defining relations; and their secondary determinations – their measures – are neither relations nor the reality of relations but **the contingent concrete differentiations of the primary relativities**.

*****

On the one hand, there is the movement of empirical science from description to explanation, from proper domains of data to systems of laws that implicitly define the terms they relate; and at the end of this movement there is the ideal goal that is to be attained when all aspects of data, except the empirical residue, will have their intelligible counterpart in systems of explanatory conjugates and ideal frequencies. [CWL 3, 313/337]

**Paraphrasing **

On the one hand, there is the movement of macroeconomic science from description to explanation, from proper domains of economic data to systems of laws that implicitly define the terms they relate; and at the end of this movement there is the ideal goal: systems of explanatory conjugates and ideal frequencies.

*****

… 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]

**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 scientific economists; … if mathematicians and physicists can surmount their surds, the economist can learn to master his.

*****

my book

Insightis a study of operations. The fundamental operation examined there is the act of understanding, insight. Everything else is defined in terms of one’s experience of insight. Three fundamental levels of experiencing, understanding, and judging are worked put. The universe of proportionate being is found to be isomorphic with the three basic operations of experiencing, understanding, and judging [CWL 10, 131]

**Paraphrasing**

my book, *Macroeconomic Dynamics: An Essay in Circulation Analysis, *is a study of functional macroeconomic dynamics. The fundamental relations examined there are

- the composition of a product,
- the functional relations of products to one another,
- the timing of functional flows in both production and exchange,
- and the patterns of circulation of payment moneys.

Fundamental and superstructural equations are defined in terms of these relations in these patterns.

*****

Whenever the scientist (economist) is seeking to determine some indeterminate function, he is relating things to one another. And that is just what common sense does not do. It understands things in their relations to us. Thus we have Whitehead’s two worlds. Eddington said that he had two tables in his room: there was a brown table, made of oak, solid, that had a certain shape, and then there was the scientific table that consisted of electrons bounding about and so on. Most of it was empty space. Where do the two tables come from? They come from two approaches. Common sense understands the table in its relations to us: a table is something you can lean on, something you do not bump into, something you can use for writing; it has a certain visible appearance, certain tactile qualities, and so on. The table is integrated into the flow, the interests, the

Sorge, the concern, of the subject. But science relates measurements to one another; and it does not have to go very far along that route to discover that it is introducing an entirely new world…. Common sense, like grammar, is egocentric; it concerns the intelligibility of things forme. In grammar, time and tense relate tomytime,mypresent. The meaning of fundamental adverbs like ‘here’ and ‘there’ is related tome. The first person is the point of reference. … The scientific procedure of relating things to one another builds up maps and clocks that leave the whole commonsense approach to things out of the picture. [CWL 10, 140]

**Paraphrasing **in part:

Whenever the economist is seeking to discover the immanent intelligibility of the current, purely dynamic process, he is relating velocitous functionings to one another. And that is just what bookkeeping and National Income accounting do not do. They understand things in their relations to us. … But economics relates measurements of explanatory functional flows to one another; and it does not have to go very far along that route to discover that it is introducing an entirely new world…. It revises the whole commonsense approach of bookkeeping and National Income accounting to introduce an entirely new world.

*****

The conceptual system must be rich in implications. In other words, its basic terms have to be properly defined and its range of implications clearly determined. Then you have an empirical science and apply a canon of selection which picks out of the conceptual system the elements that can be verified. [CWL 10, 142 ]

**Paraphrasing:**

the conceptual system of Functional Macroeconomic Dynamics must be rich in implications. In other words, its fundamental functional terms – basic, surplus, ordinary surplus, pure surplus, macroeconomic costs, macroeconomic profit – have to be implicitly defined by the functional relations in which they stand with one another; and their range of implications must be clearly determined. Then you have an empirical, scientific, purely relational hypothesis and can apply a canon of selection which picks out of the conceptual system the relations that can be verified.

*****

… again, as to the notion of cause, Newton conceived of his forces as efficient causes, and the modern mechanics drops the notion of force; it gets along perfectly well without it. It thinks in terms of a field theory, the set of relationships between

nobjects. The field theory is a set of intelligible relations linking what is implicitly defined by the relations themselves; it is a set of relational forms. The form of any element is known through its relations to all other elements. What is a mass? A mass is anything that satisfies the fundamental equations that regard masses. Consequently, when you add a new fundamental equation about mass, as Einstein did when he equated mass with energy, you get a new idea of mass. Field theory is a matter of the immanent intelligibility of the object. [CWL 10, 154]

**Paraphrasing**:

… again, as to the notion of cause, academics and government officials conceive of the manipulation of interest rates as the efficiently causal movement of a magical economic lever in a naïve mechanics, but Functional Macroeconomic Dynamics … understands the economic process in a more general way as not requiring manipulation of interest rates. It thinks in terms of a field theory, the set of relationships between interdependent, mutually defining functionings. The functional macroeconomic field theory is a set of intelligible relations linking what is implicitly defined by the relations themselves; it is a set of *relational forms*. The *form *of any functioning is known through its relations to all other functionings. What is a basic product? A basic product is any composite that satisfies the fundamental equations of the first degree that connect component factors with their composite product exiting the process into a standard of living. Consequently, when you add a new fundamental equation relating functional flows, as Functional Macroeconomic Dynamics does when it interconnects functionings to one another, you get a new theory of macroeconomics. Macroeconomic field theory is a purely relational conception of the immanent intelligibility of the overall functioning process.

*****

The point I wish to make is that modern science is not simply an addition to what was known before. It is the perfecting of the very notion of science itself, of knowing things by their causes, by analysis and synthesis. What are the causes? The field of intelligible relations that implicitly define the objects. The objects with which a science deals are whatever is defined by its field of intelligible relations, whatever falls into that field. The causes are formal causes; it is only applied science that is concerned with agents and ends. [CWL 10, 155]

**Paraphrasing**

modern scientific macroeconomics is not simply a horizontal and statistical refining of what was known before. It is the perfecting of the very notion of science itself, of knowing things by their causes, by analysis and synthesis. What are the causes? The field of intelligible relations that implicitly define the fundamental terms and relations. The objects with which Functional Macroeconomic Dynamics deals are whatever is defined by its field of intelligible relations, whatever falls into that field. The causes are formal causes; it is only applied science that is concerned with agents and ends.

*****

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. … 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

theway out is through a more general field. [CWL 21, 6-7]

**Paraphrasing**:

Lonergan moved macroeconomics back to premises more remote than Walrasian statics, microeconomic price theory, neoclassical macroeconomics and Keynesian macroeconomics; he developed explanatory formulae quite unlike others’, and though he did not impugn them, neither was he very interested in them; casually and incidentally combinations of prices and quantities turn up as particular coincidental cases in an enlarged and radically different field. … Lonergan employed a new field-theory dynamics to make aggregate, mutually-defining, velocitous functionings the basic interdependent variables; and as Newton transformed the formulation and interpretation of Kepler’s laws, so Lonergan transforms the neoclassical and Keynesian laws of how the economy actually functions. … He achieved a scientific generalization of the old political economy and of modern economics that yields the new political economy which we need. … Plainly the way to settle disputes about the intelligibility of the economic process is through a sublating, more general, dynamics of implicitly defined functionings.

*****

if the mechanics of motors included, in a single piece, the anthropology of drivers,

criticismcould be no more thanhaphazard.[3][CWL 21, 109]

**Paraphrasing**

if the mechanics of the intrinsically cyclical, macroeconomic mechanism included, in a single piece, the anthropology of households and firms, **criticism **could be no more than **haphazard**.[4]

*****

Again, to take perhaps a simpler and more familiar example, if someone is doing physics and you open his book, what do you find? You find just mathematical equations. He is solving problems, and what is it? It is more mathematics. Why do you say he is doing physics? He seems to be doing mathematics all the time. It is because there are regions of mathematics that are isomorphic with physical reality. There is the same relational structure between a given mathematical theory or system as there is between events that can be observed. This is another case, a big case, of isomorphism: on the one hand, mathematical expressions, and on the other hand, physical events. There is the same relational structure. But in the mathematical case, the relational structure links symbolic expressions, or mathematical concepts, with one another, while in the physical case what are related are concrete physical events, wave lengths that you observe through a machine and so on. ¶ So there is an isomorphism of geometry, algebra, physics; the same relational structure can be found in all three. Consequently, one’ symbolism can be given a geometrical interpretation, or an algebraic interpretation, or a physical interpretation. [CWL 18, 32-33]

**Paraphrasing:**

Again, to take perhaps a simpler and more familiar example, if someone is doing macroeconomics and you open his book, what do you find? You find just mathematical equations. He is solving problems, and what is it? It is more mathematics. Why do you say he is doing macroeconomics? He seems to be doing mathematics all the time. It is because there are regions of mathematics that are isomorphic with macrodynamic reality. There is the same relational structure between a given mathematical theory or system as there is between macroeconomic functionings that can be observed. This is another case, a big case, of isomorphism: on the one hand, mathematical expressions, and on the other hand, macroeconomic functionings. There is the same relational structure. But in the mathematical case, the relational structure links symbolic expressions, or mathematical concepts, with one another, while in the economics case what are related are concrete macroeconomic dynamic functionings. ¶ So there is an isomorphism of geometry, algebra, macroeconomic dynamics; the same relational structure can be found in all three. Consequently, one’ symbolism can be given a geometrical interpretation, or an algebraic interpretation, or a macrodynamic interpretation.

*****

Taking into account past and (expected) future values does not constitute

the creative key transition to dynamics.Those familiar with elementary statics and dynamics (in mechanics-physics) will appreciate the shift in thinking involved in passing from equilibrium analysis…to an analysis where attention is focused on second-order differential equations, on d^{2}θ/dt^{2}, d^{2}x/dt^{2}, d^{2}y/dt^{2}, on a range of related forces, central, friction, whatever….. What is significant is the Leibnitz-Newtonian shift of context. [McShane 1980, 127]

**Paraphrasing**

…Taking into account past and (expected) future values does not constitute *the creative key transition to dynamics *any more than Tycho Brahe’s historical data or Galileo’s measurements in and of themselves constituted a creative key transition. Those familiar with elementary statics and dynamics (in mechanics-physics) will appreciate the shift in thinking involved in passing from microeconomic static, supply-demand equilibrium analysis…to an analysis where attention is focused on first-order velocities and second-order accelerations, on d^{2}θ/dt^{2}, d^{2}x/dt^{2}, d^{2}y/dt^{2}, on a range of interrelated productive and monetary differentials … What is significant is the Leibnitz-Newtonian shift of context, which effects the superseding of Tycho Brahe’s historical data, Galileo’s measurements in and of themselves, and microeconomic statics.

*****

One might be reminded here of a parallel in hydrodynamics: if what is at issue is a general specification of the dynamics of free water waves, a premature introduction of general boundary conditions or worse, specific channel conditions, botches the analytic possibilities….the Robinson-Eatwell analysis is hampered, not only by an absence of paradigmatic heuristic thinking in a field whose principles involve ends, but also by their building the economic

priora quoad nosof profits, wages, prices, etc., into explanation, when in fact thepriora quoad nosare last in analysis: they require explanation. [McShane 1980, 124][1]

**Paraphrasing**

if what is at issue is a general specification of the dynamics of productive and monetary quantities, a premature introduction of general boundary conditions such as coincidental prices and quantities or worse, specific price-quantity conditions, botches the analytic possibilities….the Robinson-Eatwell analysis is hampered, not only by an absence of paradigmatic heuristic thinking in a field whose principles involve ends, but also by their building the economic *priora quoad nos *of profits, wages, prices, etc., into explanation, when in fact the *priora quoad nos *of profits, wages, prices, etc. are last in analysis: they require explanation.

Δ H = 0

Δ E = 0

[3]Haphazard means marked by lack of plan, order, or direction (Webster)

[4]Haphazard means marked by lack of plan, order, or direction (Webster)