The Original Construction of Lonergan’s Exchange Structure Model

Shute, Michael (2010) The Original Construction of Lonergan’s Exchange Structure Model. Journal of Macrodynamic Analysis, 5. pp. 69-93.

	[English] PDF (Migrated (PDF/A Conversion) from original format: (application/pdf)) - Published Version Available under License Creative Commons Attribution. Download (401kB) [English] PDF - Published Version Available under License Creative Commons Attribution. (Original Version)

Abstract

The key image for Lonergan’s economics is the ‘baseball’ or ‘circuit’ diagram,’ seen in Figure 1 above. The diagram first appeared in the 1942 essay “For a New Political Economy.” With revisions in nomenclature it remained the central image of his macrodynamic economics. In this image Lonergan brought together all the significant variables relevant to monetary functions and flows.My purpose in this paper is to examine the steps of the construction of the diagram and the theory of the structure of the exchange process that follows from it, as it appears in the 1942 essay. Lonergan’s account there is significant because it is the first expression of his theory of monetary circulation. Examining the details of the argument may contribute to understanding how Lonergan established the fundamental variables (and the relations among them) for his macrodynamic economics. In addition, the detailed explanation of the basic variables in “For a New Political Economy” differs in significant ways from the presentation in the 1944 “An Essay in Circulation Analysis,” Attention to the earlier argument highlights more prominently how Lonergan solved the problem of constructing a fully dynamic model of monetary circulation. I will move along in four steps. First, I briefly discuss the intention behind Lonergan’s effort to construct a model of the economic exchange process. Second, I introduce Lonergan’s argument for his version of the structure of the exchange process itself. Third, I review Lonergan’s argument for establishing the dynamic equilibria of the structure. Finally, I conclude with some comments on the methodological significance of Lonergan’s account of basic economic variables.

Actions (login required)

View Item